Ethiopia hopes for top 100 business ranking

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A committee designed to make doing business easier has announced Ethiopia may not see a significant ranking change on the World Bank Doing Business annual report which is going to be published in the coming October.
The committee, formed about six months ago, and chaired by Prime Minister Abiy Ahmed met on Tuesday July 23 to evaluate activity so far and look at improvements on the procedural, administrative and issue of new laws. They plan to develop a short, medium and long term strategy.
Abebe Abebayehu, head of the Ethiopian Investment Commission (EIC), said that World Bank has collected the required data or documents to be used as inputs for the doing business annual ranking through April.
According to the commissioner reforms had to be fully implemented to impact the Doing Business Ranking.
“The medium term moves shall change our ranking, while most of the laws that were ratified have been run after the World Bank deadline,” he added.
Abebe who presented the medium term reform roadmap, reminded people that within five months of the short term reform period 8 new laws, 40 procedural and administrative reforms were enacted.
“The short terms reforms focused on laying the ground for more ambitious medium and long terms reforms,” he said.
Regarding the new laws, the amendment of the National Bank of Ethiopia loan and advance law that would allow movable assets to be considered as collateral; and using software instead of cash register machines were also amended under Ministry of Revenue proclamation; the other new law by the Ministry of Trade and Industry is amending the business license registration that annulled mandatory office renting.
Publishing trade names in the newspaper has also been suspended and replaced by an online process.
Abebe said that the regulation for the implementation of business license and registration proclamation has been tabled to the Council of Ministers.
Construction permit applications at the Addis Ababa City have also been changed and replaced by an online process, the planning and consultant period has been reduced to 45 minutes from 3 days, and the approval of plan date was also reduced from three weeks to three days.
The city administration is also working to digitize land deeds, and the land disputes can be processed online.
“The city administration changes are also an example for other cities so this new system is crucial,” he said.
The credit information system coverage was expanded from 0.4 percent to over 5 percent of the adult population. Currently the small scale loan approval is aggressively taken by micro finance institutions.
The online customs clearance system, electronic single window process, also has a pilot stage and after December it will be fully operating. Some other customs activities like pre arrival clearance is being undertaken, besides several cuts in the process at customs on imports and exports.
Regarding tax e-filing and e-payment the ministry has improved its operation and currently the tax payment is undertaken via banks.
Regarding enforcement of contracts improvements commercial bench increases and changing practices at the Federal Supreme Court has added two commercial benches.
The commercial code, 60 year old law that has been revised for about two decades will be replaced by December 2019.
In the midterm reforms that ends in December the coverage of e-filling and e-payments is expected to be 100 percent on medium tax payers in Addis Ababa for all type taxes, introducing mobile payments and covering 30 percent of small tax payers for all types of taxes.
Reducing VAT refund time from the current 48.7 weeks by 90 percent is also expected.
Eliminating mandatory hiring of clearing agents for all exporters and reducing physical and documentary inspection for import and export has been recommended.
Another recommendation is that midterm imports (spare parts considered as a benchmark for import by the World Bank) physical and documentary inspection to reduce the red from 33.6 percent to 15 percent. For export (coffee is the World Bank benchmark) to reduce the yellow from current 100 percent to 25 percent.
In the long term that is from January to May 2020 it has been advised that the export bank permit procedures to remove major exports. Coffee would be used as a pilot program for this.
Regarding the import export corridor to Djibouti the number of check points recommended to be reduced to one from the current three.
Abiy finally assigned the Ministry of Trade and Industry to lead the medium reforms which were managed by EIC in the short term and advised the ministry to share the experience of Rwanda, a benchmark for Ethiopia to dramatically improve their World Bank rank. The committee’s vision is for Ethiopia to be in the top 100 doing business ranking by 2021.