ibc swaziland - doing business reforms - critical factors 29052012

7/31/2019 IBC SWAZILAND - Doing Business Reforms - Critical Factors 29052012

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Critical Success Factors for undertakingDoing Business reforms

Cemile Hacibeyoglu


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Doing Business identifies opportunities for reform

Annual publication measuringbusiness regulations in 10 keyareas

Focus on regulations relevant to the

life cycle of a small to medium-sized domestic business.

Covers 183 economies worldwide

Updated each year, tracks and

measures reforms

Identifies best practices globally

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Doing BusinessMeasuring 10 areas of businessregulation

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Global top 10 Sub-Saharan Africatop 10

1. Singapore 1. Mauritius

2. Hong Kong SAR,China

2. South Africa

3. New Zealand 3. Rwanda

4. United States 4. Botswana5. Denmark 5. Ghana

6. Norway 6. Namibia

7. United Kingdom 7. Zambia

8. Korea, Rep. 8. Seychelles9. Iceland 9. Kenya

10. Ireland 10. Ethiopia

124. Swaziland 13. Swaziland

Top 10 economies for the ease of doing businessin 2010/11

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Change in

ranking DB11

to DB12

Starting a

Business

Dealing with

construction

permits

Getting

electricity

Registering

property

Getting

credit

Protecting

investors

Paying

taxes

Trading

across

borders

Enforcing

contracts

Resolving

insolvency

Morocco 11594 (-21)

Moldova 9981 (-18)

Macedonia, FYR 3422 (-12)

So Tom and

Principe

174163

(-11)

Latvia 3121 (-10)

Cape Verde129119

(-10)

Sierra Leone 150141 (-9)

Burundi 177169 (-8)

Solomon islands 8174 (-7)

Korea, Rep. 158 (-7)

Armenia 6155 (-6)

Colombia 4742 (-5)

4 of the economies improving the most in the ease ofdoing business in 2010/11 are from Sub-Saharan Africa


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30

778793

95

117

137

114112

151

170

Eastern Europe & Central

OECD high income

Sub-Saharan Africa

Latin America & Caribbean

East Asia & Pacific

South Asia

Middle East & North Africa

Economic Community of CentralAfrican States:

Angola, Burundi, Cameroon, Central African Republic,Chad, the Democratic Republic of Congo, the Republicof Congo, Equatorial Guinea, Gabon, So Tom and

Prncipe

East African Community:Burundi, Kenya, Rwanda, Tanzania, Uganda

Economic community of WestAfrican States:

Benin, Burkina Faso, Cape Verde, Cte dIvoire,

The Gambia, Ghana, Guinea, Guinea-Bissau,Liberia, Mali, Niger, Nigeria, Senegal, Sierra

Leone, Togo

Southern African DevelopmentCommunity:

Angola, Botswana, the Democratic Republic of Congo,Lesotho, Madagascar, Malawi, Mauritius, Mozambique,

Namibia, Seychelles, South Africa, Swaziland, Tanzania,Zambia, Zimbabwe

East and Southern African economies rank on average higherthan the regional average on the ease of doing business

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0

20

40

60

80

100

120

140

160

180

Seychelles

Rwanda

Madagascar

Swaziland

SierraLeone

Malawi

SouthAfrica

Kenya

Mauritania

Namibia

Zambia

Eritrea

CapeVerde

Equatorial

Nigeria

Botswana

Gambia,the

Ethiopia

Senegal

Liberia

Burundi

Comoros

Tanzania

Mozambique

Cameroon

Sudan

SoTom

Ghana

Cted'Ivoire

Uganda

Lesotho

Togo

Angola

Chad

Congo,Rep.

Burkina

Guinea-

Zimbabwe

Mauritius

Central

Niger

Gabon

Congo,

Guinea

Mali

Benin

AverageR

ankAcrossDBTopics

Most Sub-Saharan African countries have a high degree ofvariability among the different areas of regulation

South Africa BOTTOM 3 rankings:

Enforcing contracts:81Getting electricity:124Trading across borders:144

The average rank in 10 areas ofbusiness regulation in South Africais 63, but in fact performance variessignificantly across indicators

South Africa TOP 3 rankings

Getting credit:1Protecting investors:10Dealing with construction permits:31


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Swazilands performance on the ease of Doing Business

Swazilands overall ranking in DB12: 124

3554

63

109124 127

133 139

171 178

Ease of Doing Business ranking (1-183)

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Swazilands performance varies across topics

Indicator Regions best performer Swaziland

Dealing with constructionpermits

South Africa 47

Getting credit South Africa 48

Paying taxes Mauritius 60

Resolving insolvency Botswana 69

Protecting investors South Africa 122

Registering property Ghana 128

Trading across borders Mauritius 148

Getting electricity Mauritius 158

Starting a business Rwanda 161

Enforcing contracts Tanzania 171

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DB 2012 Registering property

Swaziland made transferring property quicker by streamlining theprocess at the land registry.

DB 2011 Protecting investors

Swaziland strengthened investor protections by requiring greater

corporate disclosure, higher standards of accountability for company

directors and greater access to corporate information for minority

investors.

Trading across borders

Swaziland reduced the time to import by implementing an electronic data

interchange system for customs at its border posts.

Resolving insolvency

In April 2010, the new companies act of Swaziland entered into force. It

establishes a more streamlined winding up procedure. The effect of the

new law has not been felt in practice yet.

Swazilands recent reforms reflected in Doing Business

reports

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36 out of 46 governments in the region improved their economys

regulatory environment for domestic businesses in 2010/11

A record number of economies in Sub-Saharan Africareformed business regulations in 2010/11

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0

10

20

30

40

50

60

70

8090

100

15

77 7

4 5 6

1 6 17 1

Number of reforms DB2005-DB2011

Number of reforms DB2012

Since Doing Business 2005Sub-Saharan African countrieshave implemented 373 reforms 76 in DB 2012

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0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2005 2006 2007 2008 2009 2010 2011

Rwanda

BurkinaFaso

Mali

Madagascar

Ghana

SouthAfrica

NarrowingtheDistancetotheFrontie

rfrom2

005to

2011(percentagepoints

)

South Africa improves steadily and remains the closest to the frontier, butnumerous African economies are catching up through sustained reforms

DBreforms

25

20

15

13

12

9

South Africa and the 5 economies in Sub-Saharan Africa most closing the gap tothe frontier


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In 2010/11, South Africa made improvements in 3areas of business regulations for the first time in DB

Starting a business The Companies Act 2008 (Act

No 71 of 2008) came into forceon May 01, 2011. Therequirement to reserve a companyname was removed.

The new Act introduces fewerstatutory forms to incorporate acompany.

The costs of incorporation havebeen reduced to a flat fee of onlyR175 and there is no longer theneed to obtain a Certificate tocommence a business.

Registeringproperty On April 4, 2011, South Africa

implemented a new law onTransfer duty.

The e-filing system for submissionof Transfer Duty declarations andpayments is now operational andit is mandatory to file for TransferDuty electronically.

A new sliding scale wasintroduced for the Transfer Dutyrate. Previously, a company

selling a property was taxed afixed rate of 8% of the declaredproperty value.

Resolvinginsolvency South Africa amended its

Companies Act in May 2011.

The amendments introduced anew reorganization regime(business rescue) to facilitate therehabilitation of a company that isfinancially distressed and haveentrusted this procedure to a newcategory of professionals - thebusiness rescue specialists.

Reorganization proceedings may

be initiated by the management ofthe company, creditors andemployees.

Impact:-1 procedure,-3 days, overall costcut from 6% to 0.3%of GNI per capita

Impact:-1 day, cost oftransfer duty taxdropped by 8% to4.6% of property price

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Through the years, Rwanda has adopted a broadapproach to make regulations more business-friendly

Starting a business: Reductionof the business registration feesfrom FRW 25,000 to FRW 15,000.

Paying taxes: Reduction of the

number of required VAT filings frommonthly to quarterly.

Getting credit: the private creditbureau started to collect anddistribute information from utility

companies and also started todistribute more than 2 years ofhistorical information, improving thecredit information system

REFORMS implemented in DB 12:


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More than 80 countries have requested technical assistance to improve thebusiness environment in the areas measured by Doing Business

The Doing Business Report is a catalyst forregulatory reforms

?


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Why investment climate reforms matter?Business entry: Key findings from the literature

One stop shop in Mexico

One stop shop in Colombia

Reduction of entry procedures in India

5%increase in registered firms, 2.8% employment

5.2% increase in firms registered

6% increase in firms registered

Cross-country studies confirm positive impact of simplification.

Quasi-experimental evaluations: positive impact of entry

simplification.

Reduction of entry cost from24.5% to 0.7% of income percapita

10-11% increase in firms registered

Reforms in several areas for bigger impact. Entry reforms in Indian states with

more flexible labor regulations.

17.8% increase in output gains,larger than in states with lessflexible regulations

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Trade: Key findings from the literature

Reduced time to export associated with greater trade and

productivity.

Reduction of time (throughsimplification of

documents /processes &automation, and areduction of fees by atleast 10%)

Increased Exports

Over 6% export increase in sub-Saharan Africa (1.8% in OECDcountries)

1 additional day in transit time isequivalent to a 70km increase indistance between trading partners

Increased Productivity

Reducing customs clearance time by

1 day generated over 7% increase inproductivity (value added per worker)for consumer goods production(China)


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Insolvency: Key findings from the literature

Bankruptcy reforms associated with increased repayment rate and

reduced cost of debtImprovedinsolvencyregimes

Increased the probability of timelyrepayments by 28%

Reduced cost of debt

Increased the aggregate level of creditby 39% (Brazil)

New mechanisms fordebt restructuringand reorganization

Reduce by 8.4% the failure rates ofsmall and medium enterprises

Reduce duration of reorganizationsfrom 34 to 12 months

Bankruptcy reforms associated with increased household creditReforms to individualbankruptcy laws in highincome countries

Increased household credit byas much as 12%


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Strategy for successful reform

Long-term vision and clear objectives

Leadership at the highest political level

Appropriate structure (steering committee,technical taskforce)

Clear definition of responsibilities among

implementing agencies

Broad but realistic program ofimprovement of the business environment

Coherent reform efforts, year after year:start small and build on demonstrable

effects Follow-up, communication strategy and

training

Key aspects of success in

the reform process

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Good practices to reform

the Starting a businessProcess


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Why does formal business registration matter?

- Legal entities can outlivetheir founders.

- Formally registeredcompanies have access to

services and institutionsfrom courts to banks aswell as to new markets.

- Employees can also

benefit from protectionsprovided by the law.

Simpler start-up procedures areassociated with a greater numberof legally registered companies

Simpler business registration associatedwith greater employment opportunitiesin the formal sector (e.g. Masatliogluand Rigolini, 2008)

Lower costs for business registration encourageentrepreneurship and enhance firm productivity(e.g. Klapper, Laeven and Rajan, 2006; Klapperand Love 2011; Barseghyan 2008)

For the companyFor the economy


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The Case Study Assumptions

Company type: SME in countrys largest

business city

Legal form: Limited Liability Company

100% domestically owned

Has a start- up capital of 10 times income percapita

Does not qualify for investment incentives

Has at least 10 and up to 50 workers

Performs general industrial or commercialactivities.


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What Starting a Businessmeasures

What are the time, cost, paid-in minimum capital and number ofprocedures to get a local limited liability company up and running?


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Number of reforms easing start-up since DB2005 (byregion)

0 20 40 60 80 100

Sub-Saharan Africa

Eastern Europe & Central

Asia

OECD high income

Latin America & Caribbean

Middle East & North Africa

East Asia & Pacific

South Asia

DB2005

DB2006

DB2007

DB2008

DB2009

DB2010

DB2011

DB2012

Sub-Saharan Africa, Eastern Europe & Central Asia mostactive in start-up reforms

80

72

55

51

41

38

12

Change in procedures time cost and paid in minimum


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Change in procedures, time, cost, and paid- in minimumcapital to start-up by region between DB2006 and DB2012


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Starting a business hasbecome easier across allregions of the world

Incorporation fees tend

to be lower in economieswhere fee schedules areeasily accessible

Globally, the average

time to start a business fellfrom 50 days to 31, andthe average cost from 89%of income per capita to36%.

Over the past 8 years Doing Businessrecorded 349 business registrationreforms in 146 economies

In 2010/11, 53 economies made it

easier to start a business, withstreamlining registration formalities themost common feature

Entrepreneurs in Sub-Saharan Africa

continue to face the highest cost andhighest paid-in minimum capital

What are the trends since DB2006

Where is starting a business easy?


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Where is starting a business easy?What do many have in common?

New Zealand

Australia

Canada

Singapore

Hong Kong SAR, China

Macedonia FYR

Georgia

Rwanda

Belarus

Armenia

Global good practices

Standardized forms

No courts involved

Fixed registration fee

No publication in legal journal required

3 procedures, 5 days, start-up fees

2.2% GNI pc ( on average)

Top 10 Performers

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Company start up is lengthy and cumbersome in
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Company start-up is lengthy and cumbersome inSwaziland

It takes 12 procedures, 56 days, costs 29.2% of income per capita andrequires paid-in minimum capital of 0.5% of income per capita to start

a business in Swaziland.

Requestingtrading

license takes30 days

Registrationwith thecompanyregistrar

takes 21 days

How does business start up process in Swaziland


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How does business start-up process in Swazilandcompare to regional and global best practices?

Time (calendar days) Procedures (number)

Cost to open a company in Swaziland is 29.2% of income per capita, below the regionalaverage of 81.2%, but above the OECD average of 4.7%.

12

5

8

12

Global bestperformer:

Canada

Regionalbest

performer:

Rwanda

OECDaverage

Regionalaverage:

Sub-Saharan

Africa

Swaziland

1 3

13

37

56


New Zealand

Regionalbest

performer:

Rwanda

OECDaverage

Regionalaverage :

Sub-Saharan

Africa

Swaziland

30


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Starting a business: successful reform examples

Reducing or eliminating the minimum capital requirement (82 economies including

Kenya, Madagascar, Portugal, Rwanda, United Arab Emirates, United Kingdom); Putting reservation of company names and registration procedures online (110

countries, including over 40, which offer full electronic registration (Mauritius, NewZealand);

Introducing single company/taxpayer identification number (Ghana, India, Mali,Singapore);

Unifying all company registration procedures at a virtual or physical single accesspoint to include registration for income tax, VAT and personal income tax by linkingvarious databases and creating a single form that satisfies requirements of allagencies involved in company registration ( 83 countries worldwide have one-stopshops including Liberia, Malaysia, Saudi Arabia, Taiwan, China; Thailand);

Making access to forms and fee schedules easy (cost to start a business averages18% of income per capita in economies where schedules are accessible, and 66%in economies where they are not).


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Best practices to reform the

Trading across BordersProcess


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Why does facilitating trading across borders matter?

Competitiveness: in a globalised world, making the ability to compete in

the global markets, and to become a part of global supply chains isimportant

Grounded in economics literature:

More effective than tariff reduction - 10% reduction in exporting costs

increases exports by 4.7% (study on sub-Saharan Africa)

Good for SMEscutting the days to clear exports by half couldenable its share of exports in total sales to increase from 1.6% to4.5% (study on APEC)

Outdated regulations, inefficient customs administration,excessive document requirements, inadequateinfrastructure, cumbersome port procedures, lack ofcoordination at border posts all hinder a firms ability

to trade with the world

What trading across borders measures: documents


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What trading across borders measures: documents,time and cost


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Documentpreparation

TransportationCustoms andother border

agency

Ports andterminalhandling

EXPORTING

Letter of

CreditOtherdocuments(customsdeclarationforms, etc)

Customs

Inspections

Technical/health

Security

Arranging for

transport

Transport

Loading andunloadinggoods

Waiting for vessel

to berth/departLoading andunloading thecontainer

Terminal handling

Documentpreparation Transportation

Customs andother border

agency

Ports andterminalhandling

IMPORTING

Four major steps in the trading process

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The Case Study Assumptions

Exporting and importing from the most populous city in the country

to/from the countrys largest overseas trade partner

via ocean transport using the primary seaport used for that city

in a dry cargo 20-ft full container load (FCL), weighs 10 tons and is valuedat US$20,000.

Product is one of the countrys leading export and import products, and is

o not hazardouso not include military itemso not require refrigeration or any other special environmento not require special phytosanitary or environmental safety standards

Payment is through a Letter of Credit

Company does not operate within an export processing zone or otherspecial export/import privileges.

On average document requirements and delays are


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On average, document requirements and delays arehighest in South Asia and Sub-Saharan Africa

Consistent pace of reforms in the area of trading across


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- The 46 economies of theSub-Saharan Africa areaimplemented a total of 52trade reforms since 2005

- In areas such as:

Electronic systemsfor customsSingle windows fortradeBorder cooperation

agreementsRisk-basedinspections

Consistent pace of reforms in the area of trading acrossborders has reduced delays in Sub-Saharan Africa

T d i S il d f hi h t d d l


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Traders in Swaziland face high costs and delays

450

690

1,032

1,855

435577

1,085

2,030


Malaysia

Regional bestperformer -

Sub-SaharanAfrica: SaoTome andPrincipe

OECDaverage

Swaziland

Export

Import

39

5

11 11

18

4

1311

27Export

Import

Global best

performer:Singapore/Hong Kong

Regional bestperformer Sub-Saharan Africa :Mauritius/Senegal

OECD

average

Cost (USD per container) Time (days)

Swaziland

Where is it easiest to trade?


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Singapore

Hong Kong SAR, China

Estonia

Korea, Rep.

United Arab Emirates

Finland

Denmark

Sweden

Norway

Israel

Paper-free electronic datainterchange (EDI) system.

Pre-arrival submission of customsdeclaration and manifest.

Less than 10% of containers arephysically controlled, using risk basedinspection systems.

Single Window for obtaining trade

documents and approvals

Efficient ports and transportationinfrastructure

Where is it easiest to trade?What do they have in common?

Global good practicesTop 10 Performers

T di b d f l f l


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Trading across borders: successful reform examples

Streamlined documents for exporting and importing (Angola; China; Djibouti;Mali; United Arab Emirates);

Transparent inventory of all fee schedules in the trading process (Israel);

Mapping exercise of the import and export procedures at the port to identifybottlenecks (Zambia, Malawi, Kenya, Sao Tome and Principe);

Electronic submission and processing of all trade documents (130 economiesincluding Chile; Estonia; Turkey);

Single window system for trade-related transactions (49 economies includingColombia; Ghana; Korea; Singapore);

Improved procedures at ports (Djibouti; Senegal; Vanuatu).

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Th k !


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Thank you for your attention!

Contact: Ms. Cemile [email protected]

Thank you!

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Annex
mailto:[email protected]:[email protected]


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Annex

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Economies in Sub Saharan Africa on average have weaker legal


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Economies in Sub-Saharan Africa on average have weaker legalinstitutions and more expensive regulatory processes than other regions

ibc swaziland - doing business reforms - critical factors 29052012

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