Embed Size (px)
Citation preview
Hans Shrader, IFCJuly 2005
GTZ’s Shaping an Enabling Environment and Investment Climate
Creating Better Local Business and Investment Climates
Hans Shrader, IFCWed. July 27th, 2005
Why Simplify Municipal BusinessRegulations?
• Municipality is often the starting point for new businesses• SMEs are dealing more with municipal authorities rather than with
national state agencies• Ongoing contacts for operating businesses are with municipalities• Decentralization policy (a more common political initiative) gives even
more power to the sub-national level
Not a Zero-Sum Game
• Benefits for the private sector– Reduced cost to start and operate a business– Reduced time for complying with business regulations– More resources and opportunities to grow– Better protection from unfair behavior of
public officials• Benefits for the public sector (if done well…)
– Reduced administrative overhead forbusiness regulation
– Increased revenue collection– Better competitive position for the
country/region/municipality – More investment in the country/region/municipality
Bolivia 59, Canada 3...Unfortunately This Isn’t a Basketball Game....
Data from the World Bank, Doing Business 2003 – 2004, “The Regulation of Entry”
Country Number of Proced.
Number of days
Differences in time (No. of
visits)
Cost (% of GDP per capita)
Canada 2 3 1.0United States 5 5 1 0.6Chile 10 28 9 10.0Colombia 14 43 20 27.4Bolivia 15 59 22 175.5Argentina 15 32 23 15.7Nicaragua 9 45 24 170.1Honduras 13 72 27 73.3Ecuador 14 92 30 47.4Peru 10 98 33 36.4Venezuela 13 117 40 15.0Brazil 17 165 51 11.7LAC 13 73 68.2
Some Results...
• Increased number of registeredbusinesses by 20% increase in number of registered businesses
• Reduced average required visits from 6 to 2
• Increased transparency in municipal administration
• Designed support software for business registration & authorization procedures (www.ci-lapaz.gov.bo)
• Created new infrastructure for customer service
Results: Reduction in Official Time
Data from the “Tercer monitoreo externo de la Ventanilla Especializada” (CEB-FUNDES)
43
33
13
5 3 10
10
20
30
40
50
Electronic & on lineestablishments
Food & Alcoholic beverages General EconomicActivities
Tim
e in
day
s
Before ReformAfter Reform
End of Preview…
Bolivia 59, Canada 3...Unfortunately This Isn’t a Basketball Game....
Data from the World Bank, Doing Business 2003 – 2004, “The Regulation of Entry”
Country Number of Proced.
Number of days
Differences in time (No. of
visits)
Cost (% of GDP per capita)
Canada 2 3 1.0United States 5 5 1 0.6Chile 10 28 9 10.0Colombia 14 43 20 27.4Bolivia 15 59 22 175.5Argentina 15 32 23 15.7Nicaragua 9 45 24 170.1Honduras 13 72 27 73.3Ecuador 14 92 30 47.4Peru 10 98 33 36.4Venezuela 13 117 40 15.0Brazil 17 165 51 11.7LAC 13 73 68.2
Simple Mapping
10
• Legal paperwork• Local IRS (taxes)• Municipalities• Commercial registries• Labor, social security, and other permits
Formal..at last!!
Attorney
InternalTax Service
Municipality
FINISH
I want to be a formal
entrepreneur?
Ministry ofCommerce
Chamber ofCommerce
Other stateagencies
Starting point
11
• ICA1 indicated “Getting the Municipal License” was the most burdensome procedure in starting a business
• SMEs were particularly affected by these constraints (more costs and time), according to the same study
• Municipal License is a must for formal business operations
• Anyone interested in starting a business is obliged to register its business with the municipality
1 Bolivia: Microeconomic Constraints and Opportunities for Higher Growth, World Bank, 2001
Step by Step...
• Identify a Municipality with minimum conditionsfor intervention:– Important economic activity – Bureaucratic barriers– Political will– Institutional capacity
• Reach consensus for the design and strategy implementation
• Develop joint ventures with municipalities to generate positive experiences
• Broaden impact by replicating results in otherimportant municipalities– Foster a local culture of red tape reduction
La Paz: The Right Stuff
• Economic Activity: 33% of theBolivia’s private sector is located in La Paz
• Bureaucratic Barriers: A field studyrevealed a high degree ofbureaucracy in both La Paz
• Political Will: Business simplification was included in the Municipal Development Plan
• Institutional Capacity: Support fromboth the local General Secretariatand the national Ministry of EconomicDevelopment(c) FUNDES Internacional. “Indicadores de la pequeña y la mediana empresa en los países FUNDES”. Febrero de 2002
Subnational Analysis I
14
• 170.000 petitions per year, on average, with 10% annual growth
• 700 petitions, on average, every day
• 3000 people waiting, on average, every day
• 8 visits, on average, per person to have the issues solved
Subnational Analysis II
15
• Numerous visits necessary to find out about the status of petitions
• Unnecessary requirements• High arbitrariness
• Deficient physical infrastructure• Controls and registries were manual• Poor customer service
• Untrained and unmotivated workforce• Total absence of public information about procedures, requirements, times and steps
All for One and One for All...• Inter-Institutional Agreement formalizing
commitment to project• Main actors and key roles
– Municipality of La Paz: Beneficiary & Institutional Support
– IFC: Technical Assistance & Monitoring– FUNDES: Executing Agency– Min. of Economic Developmemt:
Institutional Support • Advisory Council created from key stakeholders
– Promote the implementation– Supervise ìmplementation and
monitor results– Recommend further improvements– Disseminate results
The Process
• Diagnosis– Analyze main bureaucratic barriers– Quantify requirements, times and costs. – Analyze procedure-related documentation
and support systems• Proposal & Design
– Re-engineer administrative processes– Reduce requirements, costs and times– Develop legal foundation to support
business simplification– Design one-stop shop– Acquire approval from principal municipal
authorities
The Process
• Implementation– Train municipal employees– Carry out workshops to detect and resolve
possible operational problems– Approve legal framework– Launch new Procedures Manual– Design new forms– Create dissemination mechanisms “new
procedures guide”
• Monitoring and Improvement– Monitor application of new procedures– On-going training for municipal
employees – Constant correction of problems detected
during implementation phase
Results: Reduction in Official Time
Data from the “Tercer monitoreo externo de la Ventanilla Especializada” (CEB-FUNDES)
43
33
13
5 3 10
10
20
30
40
50
Electronic & on lineestablishments
Food & Alcoholic beverages General EconomicActivities
Tim
e in
day
s
Before ReformAfter Reform
Results: Reduction of Steps....
Data from the “Tercer monitoreo externo de la Ventanilla Especializada” (CEB-FUNDES)
50
3833
22 22
13
0
10
20
30
40
50
60
Electronic & on lineestablishments
Food & Alcoholic beverages General Economic Activities
Tim
e in
day
s
Before ReformAfter Reform
More Results...
• Increased number of registeredbusinesses by 20% increase in number of registered businesses
• Reduced average required visits from 6 to 2
• Increased transparency in municipal administration
• Designed support software for business registration & authorization procedures (www.ci-lapaz.gov.bo)
• Created new infrastructure for customer service
Business Simplification...in 10 Easy Steps
1. Identify and build up the client commitment to reforms2. Make diagnostics of the current situation and define
bottlenecks3. Design the simplification program4. Develop needed regulations and procedures5. Train municipal officials6. Conduct information campaign for private sector7. Launch new simplified business regulations8. Adjust the system based on the feedback from users –
businesses and public officers9. Evaluate impact10. Continuous improvement
11 Basic Principles• Design of the one-stop shop for entry business
simplification• Elimination of unnecessary requisites and
formalities.• Good faith.• Creation of forms and unique files.• Establishment of maximum waiting terms.• Decentralization of decision-making. • Public information on the requisites and
procedures.• Training and sensitization of employees.• Setting up new legal framework.• Monitoring and supervision• Accountability
Jansson, Tor. “Soportando el acoso de las formalidades”. Microempresa. BID. Verano 2000. Vol 3. No. 1FUNDES Internacional. “Resumen Técnico del Proyecto de Simplificación de Trámites del Municipio de La Paz”. Marzo de 2003
Final Considerations
Is There a Secret Recipe for Success?
• Political will• Reform process should not be
imposed• Institutional support• Internal and external sensitization • Institutional agreements (acting
together)• Adequate strategy for
implementation • Hands-on approach (not just
proposals)
Never Promised a Rose Garden....
• Difficult to quantify the results– Lack of information
• Additional yearly data needed forbetter evaluation
• Limited dissemination of the experience
• National laws and other legal framework should support the municipal reform
Still a lot to do ....
• Weak legal foundation– Only a Municipal Resolution has been
approved to support the procedures manual
• Personnel issues– Lack of awareness– No clear definition of assigned duties or
qualifications– High turn-over– Lack of a contingency plan for staff
absences• Incomplete advising in certain aspects of
the process • Inability to comply with the time frames
forecast in the design
