Doing Business Reforms
REMOVING OBSTACLES TO STARTING A BUSINESS
Entrepreneurs in many economies continue to face significant barriers to entry when starting a business. Burdensome and costly regulation can prevent entrepreneurs from entering the formal economy, negatively impacting both the public and private sectors. Formalization allows entrepreneurs and employees to access the legal and financial services available to registered companies (such as obtaining loans and social security benefits). There is clear evidence that streamlining regulatory procedures can encourage business entry, business growth, job creation and rising national incomes.
Thirty-eight economies made starting a business easier in 2016/17 by reducing the procedures, time or cost associated with the process. Two-thirds of these economies simplified registration formalities by, for example, abolishing requirements to obtain various approvals or consolidating several registration processes into one. Others streamlined post-registration procedures by eliminating the need to obtain a general business license or company seal. And still others set up or improved one-stop shops, reduced or eliminated minimum capital requirements and set up online platforms for entrepreneurs. Of the 38 economies that reformed in this area, 12 implemented complex improvements associated with two or more types of reforms.
Equatorial Guinea advanced the most toward the frontier in starting a business in 2016/17. It did this by abolishing the requirement to obtain an authorization of establishment from the Office of the Prime Minister to start a business. Previously, it took four months on average for each new business to obtain this authorization.
Niger, another economy that notably improved the ease of starting a business, reduced its minimum capital requirement, allocated more personnel to its one-stop shop—resulting in a reduction in the time required to register a company—and allowed for the publication of the notice of company incorporation online free of charge. Since its inception, Doing Business has captured at least one reform making it easier to start a business in almost 95% of economies. These reforms have made it faster and easier for firms to launch and formally operate. Fifteen years ago, it took entrepreneurs worldwide 52 days on average to start and formally operate a firm. Today, it takes 20 days.
Simplifying registration requirements can range from merging registration procedures to eliminating redundant processes. Several economies in Sub- Saharan Africa took steps to streamline these formalities in 2016/17 (figure 3.1). By eliminating the requirement that a woman must obtain her husband’s permission to operate a business, the Democratic Republic of Congo made it easier for women to register firms. And by combining multiple business registration procedures, the Democratic Republic of Congo also reduced the time required to start a business by nearly a business week.
STARTING A BUSINESS REFORMS BY ECONOMY DB2008-DB2018