11 May 2019

Ethiopia: Ease of Doing Business Steering Committee Fine-Tunes Reform Targets

In an effort to improve Ethiopia's raking in the Ease of Doing Business report, an index published by the World Bank Group (WBG) every year, a high level ministerial initiative, which Prime Minister Abiy Ahmed (PhD) is leading, has tabled major reform outcomes to the business community on Friday.

Abebe Abebayehu, Commissioner of Ethiopian Investment Commission (EIC), a public agency mandated to facilitate the initiative, told reporters that the renewed "doing business" reforms have seen major cross sectoral progresses within the past five months. The primer has set out a steering committee that solely works towards achieving successful results. The monthly meeting chaired by PM Abiy tries to review the "doing business" reforms to incorporate new challenges of doing business in Ethiopia.

Some of the underlying measures include trade registration, business solvency and liquidation; and high level government officials have briefed the business community about the proposed reforms.

Yinager Dessie (PhD) governor of the National Bank of Ethiopia (NBE) has outlined three core undertakings with regards to ease of doing business initiative. He mentioned that one of the requirements to improve in the doing business ranking is improvement of the credit system. Hence, a new directive on credit information system and a draft proclamation on "Movable Properties Security Rights" are the two notable undertakings NBE has undertaken over the course of the past two months, Yinager said.

NBE's credit registry database covered only 0.4 percent of the total adult population of Ethiopia until very recently, Yinager admitted; however, the three million microfinance customers who have been added to the database system helping it expand to six percent. According to the governor, the banking system was only able to extend credits to 222,000 borrowers, to date, while microfinances were doing relatively much better reaching 5.3 million customers. In addition, lease capital financing has availed credits to some 3,000 clients in general. In terms of the total credit facility and accessibility ranking, Ethiopia's performance is highly dismissible when looked at from the perspective of Ethiopia's adult population.

As it stands at the moment, out of a population of 100 million, the financial institutions are only able to avail credits to six million people in Ethiopia. Changing that poor outreach is one of the targets NBE has considered vital, Yinager said.

Considering the introduction of movable properties as credit collaterals, NBE says, the new proclamation will provide opportunities to the unbanked farmers, pastoralist communities, for startup businesses, intellectual property owners and the likes are about to be introduce to the banking industry so that it will help businesses to grow and create more jobs.

With regards to reforms in business registration and licensing, Eshete Asfaw, State Minister of Trade and Industry, said that three major reforms have so far been conducted to ease doing business in the country. A mandatory requirement to have a proof of lease or rental agreement for physical business address to acquire a registration and business licensing has been removed from the trade and registration law. Publication of company names via newspapers and a 15-day waiting period for approval has been eliminated as found to be hindering factor for business registration.

Previously, it takes 32 days to acquire a business license in Ethiopia, where as it takes only four days in Rwanda or 11 days in Kenya, the state minister said. Ethiopia is gearing to achieve similar outcomes, he said.

Ease of doing business reforms in Ethiopia are looking to smoothen and simplify the requirements in the areas of trading across borders, paying taxes, dealing with construction permits, registering properties, enforcing contracts, getting electricity and the likes the WBG stipulated in its annual rankings of countries for doing business. Currently, Ethiopia's overall ranking stood at 159th out of 199 countries. To change that, according Abebe, the newly reinitiated reforms are staged to place the country in the top 100 lists of countries. That will be achieved in the coming three years, he said.

In fact, during the time of the former Prime Minister Hailemariam Dessalegn, a similar doing business reform was mainstreamed with a view of placing Ethiopia in the top 50 groups. That according to Abebe was unrealistically drafted targets and needed to be recalibrated to more attainable targets, he said.

Ethiopia

After a Bloody Saturday of 22 June Ethiopia Needs a New National Consensus, Urgently

Like millions of my fellow country women and men, I am shocked and saddened by the events of Ethiopia's bloody Saturday.… Read more »

See What Everyone is Watching

Copyright © 2019 The Reporter. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.