Thanks to the World Bank's Doing Business in Africa 2008 report, I thought it might be interesting to do a little comparison on establishing a business in Mali vs. Australia. A direct comparison is unfair because Australia has 100+ years experience, stronger administrative capacity, technological expertise and infrastructure and domestic/external pressure of investors to ensure red tape is minimized. Nonetheless, the comparison is quite a revelation for those, including this author, that believe African countries must reduce economic dependance on the West through the creation of a vibrant private sector. However, for industry to grow and create jobs it is crucial that the government creates an efficient operating environment. Let's take a closer look:
In Mali, it takes a minimum of 28 days to set-up a business at a cost of AU $706.00. Now, one should remember that for the majority of Malians $706.00 is twice what they would earn in a one year period. During these 28+ days, the entrepreneur must progress through a number of stages therefore subjecting their operations to the potenital for numerous delays (1) Deposit initial capital with a bank or notary and obtain certification, (2) Obtain a certificate of criminal record, (3) Notarize by-laws and pay the registration fee at the notary, (4) Purchase legal stamps at the Tresor for the Authorization to operate, complete an application for taxes, an application for the Tribunal de Commerce, an application for the statistical office and provide proof of payment for the patent, (5) Obtain forms and verify contents of application package at the centre for formal enterprises and chamber of commerce, (6) apply for a publication of notice of the formation of the company, (7) Apply for an identification number at the National Statistics office, (8) Purchase legal stamps at the Tresor for the registration certificate, any certificate from the tax office, the business number and employee identification numbers, (9) File article of incorporation for the company and for each worker file also a letter of agreement with the 'Institut National de Prevoyance Sociale (INPS), (10) Notify Division of Health and Worker's Assessment about commencement of operation and finally, (11) File with the National Worker's Board a contract with every employee. Whew!
Now let us compare the laborious and agonizing process outlined above with what it takes to establish a business in Australia:
In Australia, it takes 2 days to set-up a business at a cost of AU $400.00. Please note that $400 is less than what an Australian working at minimum wage earns in one week. Day (1) the entrepreneur must launch an Australian Securities and Investment Commission form, obtain a certificate of incorporation and an Australian Company Number. Day (2) Launch an application online for an Australian Business Number (ABN) with the Australian Tax Office (ATO). The ATO provides the ABN at the end of the Internet session and a hard-copy of the ABN arrives in the mail within 28 days.
2 comments:
Not to be too cynical, but who is advising Mali on these procedures? It sounds like something the world bank might insist on as a criteria for loans.
Not sure I follow - why would the WB 'advise' on so many layers of bureaucracy? Surely they would insist that less bureacracy and not more is the answer to greater productivity? I have seen this institutional guidance applied correctly in the SE Asian countries. Some bureaucracy is of course necessary in order to secure loans + ensure an efficient regulatory environment, but this article has pointed out the need to streamline regulatory measures!
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