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Doing business becoming easier

Small and medium-sized enterprises in Egypt have had their businesses made easier as a result of recent regulative changes, reports Sherine Abdel-Razek on a new World Bank report

Sherine Abdel-Razek , Wednesday 30 Oct 2019
Doing business becoming easier
Doing business becoming easier
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Egypt ranked 114th among the 190 countries surveyed by the World Bank’s annual Doing Business Report this year, which is six places higher than last year. It is also among the 42 countries that introduced regulatory reforms that have facilitated doing business in three or more of the 10 topics included in the report compared to last year.

The report, launched in 2002, looks at small and medium-sized companies and measures the regulations applying to them through their life-cycle.

It provides indicators to examine the ease of starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

According to the report, which extends to May 2019, small and medium-sized enterprises in Egypt have enjoyed tangible improvements in four investment-related areas, starting a business, getting electricity, protecting minority rights, and ease of paying taxes, as compared to the previous report.

Starting a business in Egypt has been made easier by “abolishing the requirement to obtain a certificate of non-confusion and improving the one-stop shop”, the report says. It takes 5.5 procedures and 12 days to start a business in Egypt, compared to six and 19 on average for the Middle East and North Africa (MENA) region.

Smoother procedures to get electricity are another success for Egypt, as they have improved the reliability of the electricity supply by implementing automated systems to monitor and report power outages. On the sub-indicator of reliability of supply and transparency of tariff index, Egypt’s score is five compared to six for MENA.

Another reform where Egypt stands out is protecting the rights of minority investors by requiring a shareholder’s approval when listed companies issue new shares. The introduction of online tax-payment systems has improved Egypt’s ranking in the smoothness of paying corporate income tax and value-added tax.

However, Egypt still underperforms in the areas of trading across borders and resolving insolvency. Obtaining, preparing, processing, and submitting the needed documents cost $1,000 and take 265 hours in Egypt, compared to $262 and 72 hours in MENA. On bankruptcy, the average recovery rate is 23 cents in the dollar compared to 27 cents in the dollar in the region and 70 cents in the high-income countries.

Four of the MENA region’s economies are among the world’s 10 best reformers, with the aim of doing business within their borders smoother, said the report.

While the United Arab Emirates remains the strongest performer overall in the region, placing 16th (out of 190) on the rankings, Saudi Arabia, Jordan, Bahrain, and Kuwait together account for almost half the region’s reforms between them.

“It is a year of records for economies in the Middle East and North Africa region, and we are committed to continuing our support to all the countries in the region,” said Ferid Belhaj, World Bank vice-president for MENA. “The next generation of reforms should focus on transparency, fair competition and good governance to make MENA open for business and attract the investments needed to create jobs for youth and women,” he said.

In general, the MENA economies have focused their reforms on getting electricity and protecting minority investors, with 40 per cent of the countries in the region scoring higher in these areas.

According to a World Bank press release, the region performs best in the areas of paying taxes, getting electricity, and dealing with construction permits. “Obtaining a building permit takes on average 124 days, 28 days less than among the high-income economies. Similarly, entrepreneurs in the region need to complete 16.5 payments on average to comply with their fiscal requirement, compared to 23 globally.”

“Bahrain is the best performer globally in tax-compliance time, requiring just 22.5 hours per year to file and pay taxes,” the report said.

*A version of this article appears in print in the 31 October, 2019 edition of Al-Ahram Weekly.

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