Eritrea

Ease of Doing Business in

Eritrea

This page summarizes Doing Business 2015 data for Eritrea. The first section presents the Ease of Doing Business rank (out of 189 economies) and the distance to frontier (DTF)** measure, overall and by topic. The second section summarizes the key indicators for each topic benchmarked against regional averages.

Economy Overview

 
Region Sub-Saharan Africa
Income Category Low income
Population 6,333,135
GNI Per Capita (US$) 490
City covered Asmara
Doing Business 2015 Rank Doing Business 2014 Rank*** Change in Rank
189 189 0

Doing Business 2015 DTF** (% points) Doing Business 2014 DTF** (% points) Change in DTF** (% points)
33.16 32.72 down 0.44

Resolving Insolvency

Info

The time and cost required to resolve bankruptcies is shown below. The data identifies weaknesses in existing bankruptcy law and the main procedural and administrative bottlenecks in the bankruptcy process. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is also shown.

DB 2015 Rank 189 DB 2014 Rank*** 189 Change in Rank 0
DB 2015 DTF** (% points) 0.00 DB 2014 DTF** (% points) 0.00 Change in DTF** (% points) 0.00
Indicator Eritrea Sub-Saharan Africa OECD

The average duration of bankruptcy proceedings. The time of the proceedings is recorded in calendar years and includes all appeals and delays.

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Time (years)
no practice 3.1 1.7

The average cost of bankruptcy proceedings. The cost of the proceedings is recorded as a percentage of the estate’s value.

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Cost (% of estate)
no practice 23.3 8.8
View methodology Outcome (0 as piecemeal sale and 1 as going concern)
no practice 0 1

The recovery rate calculates how many cents on the dollar secured creditors recover from an insolvent firm at the end of insolvency proceedings.

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Recovery rate (cents on the dollar)
no practice 24.1 71.9

The index measures what type of proceedings (liquidation, reorganization or both) debtors and creditors can initiate and what standard is used to declare a debtor insolvent.

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Commencement of proceedings index (0-3)
2.5 2.2 2.8

The index tests provisions on continuation and rejection of contracts during insolvency, avoidance of preferential and undervalued transactions and post-commencement credit.

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Management of debtor's assets index (0-6)
4.0 4.0 5.4

The index measures whether and how creditors vote on a reorganization plan and what protections are available to dissenting creditors.

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Reorganization proceedings index (0-3)
1.0 0.4 1.8

The index tests creditors’ participation in and rights during liquidation and reorganization proceedings.

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Creditor participation index (0-4)
1.0 1.3 2.2

The index is the sum of four component indices: commencement of proceedings index, management of debtor’s assets index, reorganization proceedings index and creditor participation index.

View methodology
Strength of insolvency framework index (0-16)
no practice 7.9 12.2
Answer Score
Commencement of proceedings index (0-3) 2.5
What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for both liquidation and reorganization 1.0
Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor may file for liquidation only 0.5
What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) Debtor is generally unable to pay its debts as they mature 1.0
Management of debtor's assets index (0-6) 4.0
Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor? No 0.0
Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? No 0.0
Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0
Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0
Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings? Yes 1.0
Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary unsecured creditors but not over secured creditors 1.0
Reorganization proceedings index (0-3) 1.0
Which creditors vote on the proposed reorganization plan? (c) Other, please specify 1.0
Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation? No 0.0
Are the creditors devided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally? No 0.0
Creditor participation index (0-4) 1.0
Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative? No 0.0
Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0
Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative? No 0.0
Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims? Yes 1.0

**The distance to frontier score shows how far on average an economy is at a point in time from the best performance achieved by any economy on each Doing Business indicator since 2005 or the third year in which data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representing the frontier. Read more...

***Last year's rankings are adjusted. They are based on 10 topics and reflect data corrections.

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”.

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