WB, Uganda, licensing

A prospective business owner fills a form required to start a business in Uganda. PHOTO BY FAISWAL KASIRYE 

By MARTIN LUTHER OKETCH

In Summary

The World Bank study further reveals that while the job growth rate of smaller companies is twice the average of all companies, smaller companies are more likely to go out of business.

Uganda can make a 25 per cent reduction in licensing costs estimated at Shs180 billion, if it implements all the recommendations by the Business Licensing Committee (BLC) appointed by the minister of Finance, Planning and Economic Development.

 

To reduce the cost of doing business and length of time investors take in acquiring licences, the license committee submitted a report that identified 780 licences across all sectors, raising significant costs of doing business.

This was pegged on the reason that these licences are too many for an investor to acquire for the same investment.

Licences to be eliminated
The BLC in Uganda in its report to the Minister proposed the elimination of 47 licenses, simplification of 305 others, reclassification of seven, amalgamation of 13 into six, and the retention of 408 licences across various sectors.

To commence the implementation of these reforms, Finance Minister Maria Kiwanuka, in this financial year’s Budget speech proposed the elimination of 27 licences and simplification of the trade licence from 60 to four days, but the challenge remains to carry forward the balance of the BLC’s recommendations.

Speaking at the Annual Small and Medium Enterprises Event 2013 at Private Sector Foundation Uganda, Mr Peter Ladegaard, the head of Investment Climate for East and Southern Africa of the International Finance Corporation (IFC), said: “The elimination of the 47 licences alone would save investors Shs66.8 billion.”

Uganda’s case
In Uganda, the IFC’s Investment Climate Programme is supporting the government to implement business reforms that will promote SME development and private sector growth.

Mr Ladegaard said IFC is committed to improving the business environment which will offer private sector a conducive environment; thus, allowing the private sector to create jobs.

“SMEs are still constrained in their development by heavy regulation, red tape and excessive operating costs, yet nine out of 10 jobs are created by the private sector in the developing world,” he said.

Challenges

Mr Ladegaard also presented findings of a recent job study by the World Bank Group which revealed that jobs currently faced a dual challenge in terms of quantity - 200 million unemployed globally and 600 million additional jobs are needed by 2020.

About 50 per cent of jobs are informal and 30 per cent of workers are poor worldwide.

SMEs




The World Bank study further reveals that while the job growth rate of smaller companies is twice the average of all companies, smaller companies are more likely to go out of business.

“Inadequate infrastructure, outdated, cumbersome regulatory barriers, corruption, access to finance, especially for SMEs, weak private sector capacity or business development skills and a large informal sector are some of the key constraints, making up for 46 per cent of the most pressing issues for businesses in Uganda, and in the region,” he noted.