Creating

9
Starting a business
Who is reforming?
What to reform?
Why reform?
Afghanistan may lack reliable electricity and paved
roads, but there is one problem that entrepreneurs no
longer face: it is now easier to start a new business. Reforms
in 2004 cut the number of necessary procedures
from 28 to 1, and the time to complete the process from
90 days to 7. This makes Afghanistan the top reformer
on business entry in 2004.
Because reforms to make business start-up cheaper
and faster are often simple, they have attracted a lot
of attention. 1 In 2004 Eastern Europe eased entry the
most—Latvia, Romania, Serbia and Montenegro and
(for the second year in a row) Slovakia were all among
the top 10 reformers. Among the other top reformers,
Germany set the registration fee to a nominal amount,
reducing costs by 19%. El Salvador slashed the time
required from 115 days to 40. Cambodia cut registration
fees and requirements and reduced the minimum
required capital. Jamaica saved 22 days thanks to a new
company law and improved social security and tax registration.
And Egypt established a single access point with
standardized application forms.
But much remains to be done. Reform in Africa has
hardly begun, yet 6 of the 10 countries where it is most
difficult to start a business are African (table 2.1). In the
Middle East and North Africa high capital requirements
make new entry unlikely. Antiquated rules abound: 74
countries require new businesses to publish a registration
notice in the newspapers. Doing so costs $424 in the
Republic of Congo and $314 in Greece. The alleged benefit
is the ability of prospective customers to check the
identity of a business. But if a business wanted to verify
the information on a prospective partner, an easier way
is to consult the public register.
There is no reason to delay reform. Few people
would argue that having burdensome business start-up is
a good thing. The cost of reform to ease business entry is
minor. Often it is done by the stroke of a minister’s pen.
Even entirely new business registries cost only about $1
million in small countries and $2 million in larger ones. 2
The benefits are enormous. So are the costs of waiting.
TABLE 2.1
Where is starting a business easy—and where not?
Easiest
Canada
Australia
United States
New Zealand
Singapore
Hong Kong, China
Puerto Rico
Romania
United Kingdom
Jamaica
Most difficult
Mauritania
Saudi Arabia
Togo
Haiti
Eritrea
Yemen
West Bank and Gaza
Congo, Dem. Rep.
Chad
Angola
Note: Rankings on the ease of business start-up are the average of the country rankings
on the procedures, time, cost and paid-up minimum capital for starting a business.
See the Data notes for details.
Source: Doing Business database.