An Online business registration service has been officially
launched in Rwanda reducing time it takes to register a company from a
day to just one hour.
Here is more. Hat tip goes to the essential (and malaria-plagued) Rachel Strohm.
Rwanda fact of the day
Previous post: Christopher Hitchens markets in everything test
Next post: My favorite things *Modern Principles* (Cowen and Tabarrok)
Tyler, in many countries governments are rushing to register companies in just one minute. The cost of entering into an activity is a lot of work over some period of time plus payments for “protection” services to government officials and private mafiosos (I’m not including the investment in the new company as part of the cost of entry). Unfortunately the time of each supplier of “protection” services is “fungible”, that is, they can shift extortions from one type to another one, and also competition in supplying “protection” services imply that if one provider quits the others will applaud. If governments want to reduce the entry cost, they will have to dismantle the “industry” of protection services and prevent its future re-emergence disguised who knows how.
Tyler, this new paper may be quite relevant to the issue of doing business in Africa:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1616479
Why are governments around the world obsessed with reducing time for business registration? Because there is a league table and investors use it as a measure of a country’s attractiveness as a place to do business:
http://www.nationmaster.com/graph/gov_tim_req_to_sta_a_bus_day-time-required-start-business-days
One important note, it isn’t clear if this web site actually allows you to get all necessary business licenses in an hour, or just apply for them.
Speeding up business licenses in developing countries is important:
Rwanda: 2 procedures, 3 days, 10% per capita GDP to license a business
Dem. Rep. Congo: 13 procedures, 149 days, 391% per capita GDP
[Source: World Bank "Doing Business In..."]
There are many barriers to starting a business involving multiple steps, outlays of cash, and months, perhaps years, of time to start a business. 1-2 weeks would be heaven for these places.
Comments on this entry are closed.