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Business News of Tuesday, 22 March 2016

Source: B&FT Online

Too much bureaucracy harming African businesses – Kofi Annan

Former United Nations Secretary General, Kofi Annan Former United Nations Secretary General, Kofi Annan

The Former United Nations Secretary General, Kofi Annan, has bemoaned the perennial frustratingly long processes that African businesses go through before getting permits and licences to engage in economic activities, which he believes encourages corruption.

According to Mr. Kofi Annan, who was speaking on the sidelines of a conference that was held in Accra dubbed ‘Forest for future, new forests for Africa’, said African governments can learn from countries like Rwanda that have simplified processes to provide convenience and ease in doing business within the country.

“Today there is too much bureaucracy, too much red-tape in Africa – which also encourages corruption. Each time you need to get a permit for something, a hand comes out. “There are simple ways of doing business and African countries can do it. Rwanda is very high up the list of countries where it is easy to do business. They transformed themselves — and other African countries can do that and set up structures and reduce bureaucracies in the system,” he said.

The former head of the United Nations opined that African governments must develop the needed political will in order to surmount this hurdle.

“We have also seen incredible reforms in Ethiopia in the area of agriculture…so there are a couple of examples of African countries that demonstrate it can be done. It is a matter of political will and determination, and cleaning up the social environment that can enable people to do business simply, honestly and straightforward,” he said.

The World Bank’s Doing Business report shows that Ghana is placed 112th out of 118 economies in countries that have systems which facilitate ease of doing business in the world.

The report further reveals that registering a business takes as long as 48 days, while dealing with construction permits takes as many as 237 days — a further confirmation that doing business in Ghana is very complex and inconvenient.

Mr. Kofi Annan is not the only person who has realised this problem — as a recent study by the Trades Union Congress (TUC) and the Friedrich Ebert Stiftung (FES), a German not-for-profit organisation, which surveyed 3,000 households across the country reveals that frustrating business registration processes, and difficulties with administrative procedures in trying to adjust to the country and its systems, are key factors making the country unattractive for returnees.

A publication authored by Fred Atogiyire and Abdul Haki Bashiru-Dine, published in the B&FT, further adds to the assertion that doing business in the country is problematic. The article reveals that the country’s ports are full of both legal and illegal processes that have contributed to high cost of doing business in the country.

“A number of factors have been noted as contributing to the high cost of doing business at the country’s ports and borders. These include illegitimate and indiscriminate charges by service shipping providers: such as charges of shipping agents, charges of clearing agents, charges of freight forwarders, and charges of consolidators among others.

“Other factors include cumbersome Customs-clearance procedures, delay by shipping lines/agents in processing and releasing cargo documents, cumbersome processes involved in obtaining the necessary licences and permits from Statutory bodies, delays in obtaining Final Classification and Valuation Reports from Destination Inspection Companies, and cost of securing adequate infrastructure at the ports,” the article stated.

“Studies carried out by the Ghana Shippers Authority estimate the yearly payment to shipping lines for demurrage charges by shippers at US$40million and payment of US$20million in rent charges, as a result of delays in the clearance of their cargoes,” the article added.

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