African governments have long relied on subsidies and incentives for startups to drive innovation, but new research suggests that these measures alone are not enough.
What truly determines long-term economic progress is the strength, stability, and predictability of a country’s overall business environment.
This is the main finding of the 2026 Business Environment Index for Innovators (IBEI), released by StartupBlink.
The report evaluates more than 125 countries based on over 30 indicators, measuring the extent to which national systems are accessible and efficient for entrepreneurs.
Unlike broader economic rankings, the index focuses specifically on the conditions that matter to founders, including regulation, access to capital, taxation, digital infrastructure, and global mobility.
Countries are ranked on a scale of 0 to 100, based on institutional support and operational ease.
As countries compete for investment and talent, the report makes clear that reducing structural barriers—and not just offering specific incentives—is the determining factor for innovation potential.
Within the continent, South Africa ranks 61st globally, making it the country with the best business environment. It is followed by Kenya (68th) and Cape Verde (70th).
Although no African economy ranks among the world’s top 50, the rankings highlight progress in reforms that are beginning to create more predictable regulatory systems, better access to capital, and greater international connectivity.
The report argues that innovation ecosystems thrive not because of one-off injections of funding, but rather due to solid systemic foundations, transparent regulation, efficient governance, balanced tax regimes, and functional digital infrastructure.
How the index works
The IBEI is structured around three main pillars:
- Ease of Doing Business
- Business Incentives
- Market Perception
To deepen the analysis, these pillars are grouped into five functional categories: Regulation and Governance, Access to Capital and Financial Infrastructure, Taxation, Digital Infrastructure, and Global Mobility and Openness.
This framework shifts the focus from general macroeconomic indicators to the actual conditions entrepreneurs face when starting, expanding, and closing businesses.
Global leaders set the standard
Globally, the United States ranks first, followed by Singapore and the United Kingdom.
The Gulf region stands out for its tax competitiveness, with the United Arab Emirates ranking fifth globally and leading in favorable tax conditions. Meanwhile, Saudi Arabia ranks first worldwide in policies that reduce operational barriers.
The Nordic countries lead in digital infrastructure, while smaller economies, such as Estonia and New Zealand, demonstrate that market size is not an obstacle to creating highly competitive innovation environments.
Why this matters for Africa
As countries compete for global capital and talent, the index shows that long-term competitiveness depends less on one-off interventions and more on systemic reforms.
For African governments, the message is clear: reducing regulatory friction, improving financial infrastructure, and strengthening the credibility of governance will have a greater impact on promoting innovation than isolated funding programs.
For South Africa, Kenya, and Cape Verde, the rankings indicate progress—but they also highlight how far there is still to go to position Africa as a globally competitive destination for entrepreneurs and investors.
Source: Business Insider Africa
