In Senegal, importing consumer goods means paying customs duties of up to 35 percent. Then you add 18 percent VAT, then the statistical charge, the community levy, and the ECOWAS levy, and before you’ve sold your first product, the government has taken more than half the value of what you brought in.
Once you’re past the border, it gets worse. Almost a quarter of Senegalese businesses call licensing alone a major constraint, nearly double the world average. And that’s before you get to the bribes.
Every time I bring this up, someone tells me regulations exist to protect consumers. And I get it. Nobody wants unsafe food or collapsing buildings.
But most of the regulations choking African economies have nothing to do with safety. They are paperwork requirements, import duties, licensing fees, and waiting periods that do one thing very well: they keep people from starting.
For every business that makes it through all those hoops, there are dozens that never tried; people who looked at the fees, did the math, and quietly went back to whatever they were doing before. You’ll never hear about them because their businesses never existed. Nobody protests a restaurant that was never opened or a clinic that was never built.
What you see vs. what you don’t
A Mercatus Center study found that for every 10 percent increase in regulatory restrictions, consumer prices rise by about 0.7 percent.
That sounds small until you learn that the poorest households spend the largest share of their income on the most heavily regulated goods — food and energy. Regulation works like a tax, and like most taxes, it hits hardest at the bottom.
I felt this personally.
When I started a business in the U.S., the whole process was done online in a few minutes. A few clicks, a form, and I was operating. When I tried to do the same thing in Senegal, I hit 45% tariffs, licensing requirements nobody could explain clearly, and wait times that made the whole thing feel designed to wear you down (it took me 2 years to register a business!), and I’m someone who already understood how business works. A teenager in Meckhe with a good idea and no connections wouldn’t stand a chance.
Who are regulations really protecting?
Most people imagine a thoughtful bureaucrat drafting rules to hold corporations accountable.
That version of reality exists in a handful of well-functioning agencies, in a few countries, some of the time. But the more common pattern, which economists call regulatory capture, works differently.
The American economist George Stigler won a Nobel Prize for describing it. Here’s how it works: the industries being regulated lobby the regulators, fund their campaigns, hire their former staffers, and gradually reshape the rules to serve themselves. It happens slowly enough that nobody sounds an alarm, and by the time you notice, the regulations that were supposed to restrain an industry have become the walls protecting it from competition. The companies already in the market can afford lobbyists. A small entrepreneur who can’t afford compliance officers doesn’t get a seat at that table.
The lead paint industry is the case study everyone should know.
Scientists understood by the early 1900s that lead was a neurotoxin — it lowered children’s IQ and caused permanent brain damage — and the industry’s own researchers knew it too. For seventy years, they lobbied against restrictions, funded junk science to create doubt, and pressured regulators to delay every proposed ban. Internal documents show industry executives bragging that their greatest accomplishment was “the deferral of implementation.” The US didn’t outlaw lead paint in homes until 1978. Seventy years and millions of children with permanently reduced cognitive capacity, and during all of it, the regulatory system was doing exactly what the industry had shaped it to do.
When someone tells me we need more regulation, the first question I ask is: written by whom? Because from occupational licensing laws that claim to guarantee quality while blocking anyone new from entering the market, to trade restrictions that claim to support local industry while making basic goods unaffordable, the pattern shows up across countries and decades and continents with remarkable consistency.
Rich countries can survive bad ideas. We can’t.
The US has terrible regulations, whole libraries of them.
But the US is also a $31 trillion economy! Bad regulations make Americans poorer than they’d otherwise be, but nobody’s going hungry because of a licensing fee. A rich country can waste money on stupid rules and still be rich.
African countries can’t do that. When a country where the average person earns $1,500 a year piles on licensing fees and tariffs and bribes and weeks of waiting, you’re asking people to spend three months and a few hundred dollars on paperwork that might not even get approved — and most people don’t have three months or a few hundred dollars to gamble with. So they don’t try. And then we wonder why nothing changes.
Governments across the continent love advertising “one-stop shops” and 24-hour registration. And technically, that last step might actually take 24 hours. But nobody tells you about the thirty steps before it.
You need a birth certificate, certified copies of your ID, passport photos glued to paper forms, a residence certificate, a tax clearance, proof of address, proof you already rent an office, sometimes a police background check, a fire inspection for a business that hasn’t even started, and sector licenses from agencies that keep different hours and sometimes don’t even exist in your city. Each document comes from a different office, each office charges its own fees, and some papers still need stamps or signatures from yet another office. Along the way, someone will usually hint, directly or indirectly, that things move much faster if you pay a little extra.
By the time you actually reach the “one-stop shop,” you’ve spent weeks running around and hundreds of dollars on paperwork that has nothing to do with whether your business is any good.
In October 2025, the World Bank published Africa’s Pulse: Pathways to Job Creation in Africa, trying to answer the question of why the continent isn’t producing enough jobs despite years of economic growth. The findings were bad across the board: regulatory quality across Sub-Saharan Africa has gotten worse, contract enforcement doesn’t work well, property rights aren’t secure, bribery is everywhere, and the business environment is so hostile that most people never even try to build anything formal.
They stay in one-person operations, selling what they can.
73% of employment in Sub-Saharan Africa is concentrated in one-person or family-run operations. Only 24% of workers have a wage-paying job, compared to about 50% in high-income countries. More than 80% of startup funding on the continent comes from outside Africa. Nearly one in four firms report being expected to pay bribes just to secure a government contract — about 1.5 times the global average.
We need more economic literacy
I’m not arguing for “let’s get rid of all rules.” Every economy needs basic rules to function, and nobody’s arguing with that. The problem is the mountain of regulations piled on top that help nobody except the people who wrote them.
We Africans stay poor because economically illiterate politicians pass policies that sound good but don’t work, and even more economically illiterate voters support them because nobody ever taught them to ask what a policy actually does instead of what it claims to do. “Protect local industry with tariffs” sounds patriotic until you trace the chain and realize the tariffs raise the cost of everything for the same people the policy was supposed to help.
The late George Ayittey, a Ghanaian economist, wrote a whole book about this called Applied Economics for Africa. In it he walks through how governments set prices, fix exchange rates, and pile on controls for “arcane, self-serving, and often political motives” and how those controls end up hurting the very people they were supposed to protect.
If a loaf of bread ordinarily sells for three kwachas and the government decrees that it must be sold at one kwacha, bread would vanish from the market instantly. There are two reasons for this. First, now that bread is cheaper, those previously purchasing it at three kwachas will now buy more. Second, the bakers, who were supplying bread at three kwachas, will now supply less. The combination of the two—more demand and less supply—would create a shortage. Obviously a consumer who cannot find the commodity to buy—regardless of the price—is not going to be happy.
Ayittey called African governments “vampire states” because the richest people on the continent are heads of state, governors, and ministers — so every educated person who wants to get rich goes into government instead of building something.
620 million more working-age people will enter Africa’s labor force by 2050. We can barely employ the people already here. If the cost of doing business doesn’t come down, those 620 million people will have no formal economy to enter.
Fantastic article!
https://m.youtube.com/watch?v=yKIE3IUkkp8