Regulatory Reforms in Africa, Eastern Europe and Latin America

Melissa Johns Investment Policy Specialist, World Bank

November 21, 2006

Doing Business 2007: How to reform

Poor countries regulate most

4

5

6

7

8

9

10

11

12

0 50 100 150 200

Doing Business Rank 2007

GN

I p

er C

apit

a

Sub-Saharan Africa is more difficult to do business in than any other region

OECD EastAsia

EastEurope

LatinAmerica

MiddleEast

SouthAsia

Africa

Average ease of Doing Business in 2007

…ICEIDA partner countries span the range

42

67

89

107

140

Namibia Nicaragua Sri Lanka Uganda Mozambique

Doing Business 2007 ranking

Reforms among ICEIDA partner countries

Nicaragua– Lowered the cost to register property– Private credit bureau opened– Faster customs clearance for exporting

Mozambique– Simplified processes to obtain the municipal license – Draft commercial code, labor code

Uganda– Moved new company registration out of the courts

Sri Lanka– Negative reform: new taxes levied, higher rates

Namibia– No reforms

Reform trends in Africa

11

4

1

14

1 1

8

5 5

1

Entry

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Reforms in 2005/06 by regulatory area

0

Reform trends in Latin America & the Caribbean

7

1

2

4

1

7

3

4 4 4

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Entry

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Reforms in 2005/06 by regulatory area

Iceland’s investment partners are reforming

Ranking on Doing Business indicators, number of reforms 2005/06

Georgia China India Ukraine Russia

37

6

96

128134

93

2245

Ukraine business start-up procedures 2005

1. Notarize company charter and execute premises (if needed)2. Open a temporary bank account for initial capital3. Transfer registration fee to the Registry's account4. Register at the Registration Office5. Register at the State Statistics Committee6. Register with the Pension Fund7. Register with the Employment Fund 8. Register with the Social Insurance Fund 9. Register with the Industrial Accidents Fund 10.Register at the Tax Police 11.Register for Profit Tax, VAT at Tax Authority, get VAT

number12.Approval of Ministry of Internal Affairs to prepare a company

seal13.Prepare a seal14.Open a permanent bank account15.Notify the District Tax Inspectorate of the opening of the

permanent bank account

Ukraine business start-up procedures 2006

1. Notarize company charter and execute premises (if needed)

2. Open a temporary bank account for initial capital3. Transfer registration fee to the Registry's account4. Register at the Registration Office5. Register at the State Statistics Committee6. Register for Profit Tax and VAT at Tax Authority, get a VAT

number7. Approval of Ministry of Internal Affairs to prepare a

company seal8. Prepare a seal9. Open a permanent bank account10.Notify the District Tax Inspectorate of the opening of the

permanent bank account

Reform trends in Eastern Europe

11

65 5 5

6

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14

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5 5

Entry

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Reforms in 2005/06 by regulatory area

48 reforms informed by Doing Business

• Simpler business entry in Brazil, Bulgaria, Burkina Faso, El Salvador, Ethiopia, Indonesia, Jordan, Madagascar, Peru, Serbia and Montenegro, Syria, Timor-Leste, Yemen

• Faster court enforcement in Jordan, Serbia and Montenegro, Poland

• Fewer licenses and approvals required in Poland, Niger, Netherlands

• Improved investor protections in Mexico

• Credit information improvements in Afghanistan, Georgia, Chengdu (China), Panama,

Eastern Europe ranks first, Africa third in reforms

89%82%

67%61% 58%

35%

25%

EastEurope

OECD Africa MiddleEast

LatinAmerica

EastAsia

SouthAsia

Percentage of countries with at least one reform, 2005/06

List of top worldwide reformers − 2005/06

CountryStarting

a business

Dealing with

licenses

Employing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across

borders

Enforcing contracts

Closing a business

Georgia √ √ √ √ √ √

Romania √ √ √ √ √ √

Mexico √ √ √

China √ √ √ √

Peru √ √ √ √ X

France √ √ √ √ √

Croatia √ √ √

Guatemala √ √ √

Ghana √ √ √

Tanzania √ √ √ √

Reforms affecting Doing Business indicators on:

Large improvements are possible - Africana is #12

The hypothetical country “Africana” has the ease of:

• Entry in Seychelles (#42)• Licensing (construction) in Swaziland (#16)• Employing workers in Uganda (#8)• Registering property in Sudan (#29)• Getting credit in Kenya (#33)• Protecting investors in South Africa (#9)• Paying taxes in Mauritius (#11)• Trade in Cape Verde (#20)• Enforcing contracts in Ghana (#50)• Closing a business in Botswana (#22)

South Africa: Africa’s top performer

2932

42

48

76

83 84

9497

South Africa Mauritius Namibia Botswana Swaziland Kenya Seychelles Ghana Ethiopia

Doing Business 2007 ranking

South Africa also leads other major developing countries

2329

43

93

121

Korea South Africa Mexico China Brazil

Doing Business 2007 ranking

South Africa was surpassed on reform intensity within the region

CountryStarting

a business

Dealing with

licenses

Employing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across

borders

Enforcing contracts

Closing a business

Tanzania √ √ √ √

Ghana √ √ √Nigeria √ √ √Rw anda √ √ √

Burundi √ √

Kenya √ √

Lesotho √ √

Mali √ √

Mauritius √ √

Niger √ √

South Africa √