n African Journal of Business and Economic Research - Does legal origin explain differences in regulations of business entry? A study of sub-Saharan African countries

Volume 4, Issue 2_3
  • ISSN : 1750-4554
  • E-ISSN: 1750-4562


The impact of legal origins on the regulations of start-up businesses in 47 sub-Saharan African (SSA) economies is investigated in this paper. Following the classification of SSA nations in English and French legal origin countries, the paper examines the extent to which the historical origins of countries play a determinant role in the ease of starting a new venture. This is examined in terms of the number of procedures with which an entrepreneur must comply in order to start a business and operate it legally, and the cost required. The paper examines data from the World Bank Annual report on the ease of Doing Business and World Bank Development Indicators. Findings indicate that the historical origins of SSA countries do not play a determinant role in the number of procedures required to start a new business. However, the legal origins of SSA countries do appear to playa determinant role in the official cost incurred as a percentage of GNI per capita. The findings also indicate evidence of an interaction between the legal origin of countries and the regulations associated with new business entry in SSA countries. In terms of the number of procedures required to start a new business, the results of the present study differ from those in previous research, which present evidence of Legal Origin Theory. Among the limited number of countries sampled that rank highly in political accountability, legal tradition falls short in its ability to explain the differences in the level of regulation across countries in the context of SSA. This study offers a more nuanced view than other studies concerning the Legal Origin Theory relative to the consequences of its application on the economic outcomes of SSA countries.

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