Tanzania announces regulatory reforms

At the official launching of the OECD's investment policy review of Tanzania, the Prime Minister announced his intention to grapple with "the most problematic areas in the performance of business sector in the country (which) include access to credit, corruption, complex procedures in securing construction permits, cross-border trade licenses, payment of taxes, land and property registration... The government would now make delibefrate efforts to review the legal framework and regulations that have been deterring smooth operation of investment projects." A booming economy with enviable growth rates, Tanzania still suffers from a poor Doing Business ranking (145th out of 189 in the 2014 report.) For more, see IP Media and read the summary of the review on the OECD site.

Red tape cutting in Ethiopia

According to Addis Fortune, an online paper, the Ethiopian government is seeking to reduce the number of licenses and speed up official response times in an effort to improve the business environment. The method to achieve this seems orthodox: the ministry of trade signs "cooperation agreements" with "professional competence certificate issuing government offices" to enlist their support in achieving the red tape reduction objectives. This method seems to fall short, however, of true liberalisation that would really stimulate private initiative.

Doing Business in EAC 2013

Released 2 May, "Doing Business in the East African Community 2013" takes stock of the impact of regulatory reforms in this area which has registrered significant positive economic development. Rwanda remains the best pupil in the class of 5 economies, but Burundi jumped 10 places in the world ranking thanks to several key reforms. New data show the importance of access to regulatory information. The rise in e-government initiatives in the region (as in other parts of the world) provides an opportunity to increase access to information and transparency. The report finds that "The EAC has achieved greater convergence in the complexity and cost of regulatory processes than in the strength of legal institutions relevant to business regulation."

South Africa struggles with regulatory reform

An interesting editorial from Zambia casts a critical look on RR in neighbouring South Africa. It reports that regulation and red tape would be more offensive in SA than in the other Brics (Brazil, Russia, India China and SA). "Excessive moves by the government to control rather than facilitate business are increasingly hampering innovation, hiring and margins. The latest business pulse readings indicate stresses are rising due to the numerous constraints companies face. At a time when the world is looking to Africa to stave off global recession, SA stands a real chance of missing out on the boom as it loses its status as a gateway to the continent. The long delays in getting things done, especially in beefing up infrastructure, is proving to be most daunting for business owners and CEOs. But more subtle areas of delivery are also affecting sentiment — such as so many people remaining poor and unskilled despite business profits and employee salaries helping to pay for grants, and billions being ploughed into education. The results are simply not coming through; business is now sending a clear message that the government must get its act together, stamp out rampant corruption and work at improving equality. The consequences of failure are a limp-along economy and more street beggars. " (for more, visit Business Day.)

Kenyan regions more competitive

At the end of June, the World Bank issued its second report on comparative ease of doing business at the infranational level in Kenya.
It shows, using the Doing Business method, that over the past two years, all 13 cities have improved business registration processes while 2 cities expedited the approval of construction permits. Joint reform efforts by the national and local governments have reduced the average time to start a business by 22 days and the average cost by 5%. Mombasa is the city that saw most improvements across 3 out of the 4 areas measured. Due to a broad based business reform program, starting a business is more than one month faster today than in 2009; while the opening of a specialized court in September 2011 paved the way for more efficient commercial dispute resolution. This report, which measures the impact of regulatory reforms, offers encouragement to Kenyan reformers.

Kenya accelerates regulatory reforms

According to an online news article of The Star, one of the leading Kenyan papers, and other sources reporting an statement from the minister in charge, the Kenyan government has formed a Regulatory Reform Working Committee to coordinate all the regulatory reforms required for doing business in Kenya and follow the recommendations of the 2011/12 Doing Business Report. A Business Regulatory Reform Unit has been established in the Ministry of Finance to implement the reforms under the guidance of RRWC.”
To improve the country’s overall investment climate in future, the government has developed an implementation matrix that serves as a strategy document for improving performance in the next ranking. “A system of regulatory impact Assessment has also been developed with clear guidelines and will be launched soon,” the minister said. A Business Regulation Bill is currently under consideration to provide for the establishment of an electronic registry for business, in connection with a National Single Window System intended to integrate and enable the sharing of trade and regulatory data.

Doing Business in EAC report 2012 just published

Released on Wednesday, ‘Doing Business for East African Community Report 2012’ has revealed that the business environment for entrepreneurs in all five economies improved in 2010-2011, as the countries implemented critical regulatory reforms. For a factual comment, see IPPMedia article.
The report finds that Burundi is among the top ten most improved economies worldwide in 2010-2011, with four regulatory reforms: dealing with construction permits, protecting investors, paying taxes, and resolving insolvency. Rwanda, the top performer in the region, made the most progress over the past six years. Worldwide, it made the second-most progress. Over that period, Rwanda implemented 22 reforms, making it easier to do business across nine areas of regulation. Additionally, the economy has undertaken ambitious land and judicial reforms, introduced new corporate, insolvency, civil procedure, and secured transactions laws. Rwanda has also streamlined and remodeled institutions and processes for starting a business, registering property, trading across borders, and enforcing a contract through the courts.
If each member country were to adopt the region's best practice for each indicator measured by Doing Business, East Africa would rank 19 on the ease of doing business, comparable to Germany, rather than 115.

MENA and African officials support administrative reform

Photo: Ph. Ricard

Yesterday your blogger attended a high-level conference in Paris at the invitation of the ministry of finance's technical assistance agency, ADETEF. The theme, prompted by developments in the MENA region in the last 12 months, was "developing together the responsibility of the administration" to support democratic governance. Some 10 MENA and African countries discussed with experts from the US, France, Ukraine, Albania and multilateral agencies (EU, World Bank, OECD) how the new governance, with its emphasis on participation, transparency and accountability, could improve the quality and efficiency of public service delivery, and contribute to growth and more cohesive and inclusive civil society. Along the way several myths or apparent contradictions were dispelled: transparency need not limit efficiency of administrative processes, concern for sustainable growth did not necessarily thwart potential economic growth. Administrations must adapt to the new governance context: "it is the people who make the government, not the government that makes the people" said Minister Dr Asraf Abdel Wahad (Egypt) in his keynote address. Stakeholders, especially from the civil society, needed to engage fully, which required a well developed public service in the right mindset and effective leadership: "You must avoid capture of the political forces by economic interests" said Mr H. Larbi Head of MENA department, World Bank.
Several practicioners had been invited to illlustrate by practical success stories the validity of the new approaches, such as a regional director from Algeria who showed how tourism could be developed without jeopardising the environment and social cohesion. The impact of the regional dimension was highlighted by director Mrs H. Allal from the Mediteranean Energy Observatory.
Participants agreed that in many countries a focus on grass-root implementation through communication and training, for a better understanding of the requirements of democratic governance, was now the priority. Mr Cissé director of Customs of Sénégal concluded: "the necessary legal framework had been set up, what is now needed is implementation."
Overall, an inspiring and useful event to meet the concerns expressed by the "Arab spring" and support the forces of change within the administrations of the region. See also official press release.

Regulatory reform in Africa (OHADA)

For a good update on regulatory reform efforts in mostly francophone Africa, a newly released IFC/ World Bank “report, “Doing Business in the OHADA 2012”, draws on data from the annual global Doing Business study and takes a detailed look at business regulations in the 16 OHADA economies.
Founded in Mauritius in 1993, OHADA is a system of business laws and implementing institutions adopted by 16 West and Central African nations. OHADA is the French acronym for "Organisation pour l'Harmonisation en Afrique du Droit des Affaires."
The average ranking of the OHADA member states is 166 out of the 183 economies measured in the global Doing Business 2012 report. Mali, with a global rank of 146, is the easiest place among OHADA member states for an entrepreneur to do business, followed by Burkina Faso (150) and Senegal (154). In the past six years, all 16 OHADA member states made it easier to do business. Across the region, the average cost of starting a business decreased from 338 percent to 110 percent of the average per capita income. The average time required to register property also decreased by 28 percent.
The importance of international trade for all economies makes it worthwhile to pool information with a view to improve national and regional competitiveness.
One of OHADA's priorities is to establish a uniform legal framework to govern business activities in the region's economies, hence making the region more attractive to FDI and foreign business. This year, the first revision of the body of commercial laws in the region simplified business entry in eight member states and strengthened secured transaction laws in all 16 member states.

Enabling regulatory frameworks (Africa)

A good summary of the question in the Southern part of Africa is provided by a recent online news article (Johannesburg Financial Mail) reporting insights from a legal firm director, with a special emphasis on prospects for the continent's green economy. "Countries such as South Africa have established enabling legislation, including the Integrated Resource Plan to attract investment into the green economy, but politicians also needed to send the right message about the country embracing FDI. (...) Many African countries have implemented regulatory reforms to specifically attract FDI. Out of the 15 SADC member states, for example, 12 have a specific law governing private investment, and/or foreign investment or have established an investment promotion agency. Countries such as South Africa, Lesotho and Botswana have no specific FDI legislation, but have liberal investment regimes. FDI legislation is under review in Namibia, Seychelles and Zimbabwe, while Botswana’s Industrial Development Act, which deals with licensing, is also under review. According to a recent survey by Ernst & Young capital inflows into the continent are expected to reach US$150 billion by 2015, yet Africa still attracts less than 5% of global FDI projects. (...) With each of Africa’s 54 countries having different legal frameworks in place, bi-lateral investment treaties have proved successful in setting the ground rules for attracting FDI. Most of the major African countries, including Botswana, Nigeria, and South Africa, have bi-lateral treaties which set up specific conditions for investors in the host country. For example, some treaties set the rules for how disputes will be arbitrated, while others determine issues regarding tax incentives, double taxation, local procurement and trade." "Enabling" regulation is an approach quite different from deregulation, and entails an effort to inform stakeholders and streamline administrative processes, especially licensing. South Africa for instance announced that "within a year to a year and half a clear, legal regulatory framework will be in place so as to provide foreign and local business a clear picture of how to go about investing in South Africa."

Ethiopia: trade to be boosted by RR

According to an Ethiopia Press Agency report, the Ethiopian Government is launching a business and trade reform to attract foreign investment. The new policy is based on the idea that the Ethiopian trade system has failed to modernized and operate within the legal framework. The reforms that the trade ministry is undertaking will enforce existing policies and eliminate various loopholes. They include simpler and more rapid licensing procedures, more transparent competition and wider use of identification systems. To reduce the informal economy, all businesses are now required to obtain licensing although in the past businesses with a capital of less than 5000 Ethiopian birr (225 euros) were not required to register.

Sub-Saharan Africa attracts FDI

According to a report by Kenyan paper Business Daily, a reduction in red tape and an improvement in political conditions means that sub-Saharan Africa is becoming a more attractive destination for foreign direct investment, especially from India. This theme was highlighted at a conference organised by the South African Institute of International Affairs where experts from India and Africa examined ways of deepening engagement between South-South economies.The South African Institute of International Affairs (SAIIA) is highly attuned to Regulatory Reform issues and publishes reports focusing on ways to improve the business climate, with detailed studies on NTBs. Its site also promotes the African Peer Review Mechanism, an interesting tool for the 21 members (2006 figure) to work together to implement reforms to achieve better governance and consolidate democracy. A conference will be held on 28 June by SAIIA to monitor progress of APRM in Southern Africa.
For background on RR in Africa, see paper by IFC coordinator P. Ladegaard and the proceeds of the Mombasa meeting of the Network of Reformers (already summarized on this blog).

Kenya launches new batch of RR measures

On May 5, according to press reports such as KBC news item, the Kenyan government announced several initiatives to improve the business regulatory environment, with the support of the World Bank Group. Based on findings of a three-day workshop, the measures seek to improve the ease of doing businesses on four indicators which include starting businesses, dealing with construction permits, registering property and enforcing contracts. They also address discrepancies in implementation of regulations across counties, and pursue an efficiency drive for inspections. Further background is provided by All Africa article, especially on the local dimension, which is supported by the UK LBRO: counties are encouraged to compete for investments and that those that are well managed with less cost of doing business will be more attractive for investment. Licensing reforms were also being carried with plans to operationalise e-registry. These recent improvement build on preceding RR efforts such as the application of the Regulatory Guillotine™ strategy which has supported the radical licensing reform in Kenya since 2006.

BR supports EAC regional integration

Your blogger attended a P2P learning event in Mombasa last week where the five countries of the East African Community, joined by neighbouring states (Zambia, RDC) and OHADA, shared ideas and exchanged best practices about building the Common Market launched in 2009 between Kenya, Uganda, Tanzania, Rwanda and Burundi. The Investment Climate Advisory Services of the World Bank Group, organiser in partnership with Kenya and donors, had placed the event under the banner of Regulatory Reform and invited experts from the EU and ASEAN to draw lessons from these more integrated groups on how to apply RR principles to manage regulation, harmonize national commercial laws, monitor implementation of reform by the use of scorecards and efficiently inspect enforcement.

All material will soon be online (URL so be communicated here), following the two previous events in Arusha 2008 (on cutting red tape) and Kampala 2010 (multi-level). Participants also gave updates about their respective RR projects and results and called for the development of a regional set of regulatory quality standards similar to the OECD ones. See also press report.

Uganda launches regulatory reform

Last week, Uganda launched a regulatory reform programme with World Bank support. According to the press release, the reform program will focus on reducing regulatory costs and risks associated with obtaining business licenses, and on simplifying and reducing taxes for small and medium enterprises. Uganda’s legal and regulatory regime is cited as one of the biggest challenges constraining the country’s private sector. A recent World Bank Group study of Uganda’s business licensing regime puts the annual private sector regulatory compliance costs at $175 million per year, which represents 1.3 percent of the country’s GDP.

Uganda is not alone in this venture: regulatory reforms are pursued across the region and are boosted by the adoption in November 2009 of the Common Market Protocol, which should lead to measures to ease doing business and harmonised laws that guarantee the region's competitiveness to help its economies are to surpass the current level of investments.

In a follow up to last year's peer-to-peer reformers meeting in Arusha, the World Bank Group convened another meeting in Kampala recently to assess progress and how much ease has been created for businesses to operate in the region.

The Bank's experts say the region now requires more business-friendly regulation and faster legislation of business laws, preferably handled by the region's parliament. Reforms are also needed in tax payment systems, land registration and business licensing.

This work is supported by the Investment Climate Advisory Services of the World Bank Group which helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over fifteen donor partners working through the multi-donor FIAS platform