Financial & Private Sector Development David Bridgman Brice Richard Regional Product Manager, Investment Climate IFC Advisory Services Subnational Doing Business, Global Indicator and Analysis Department, World Bank

Financial & Private Sector Development Doing Business reports Measure 183 economies Focus on regulations relevant to the life cycle of a small to medium-sized domestic business in the largest business city Are based on standardized case scenarios The objective: efficient regulations, accessible to all, and simple to implement Doing Business DOES NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets. What does Doing Business measure?

Financial & Private Sector Development Property rights Investor protection Access to credit Entry Administrative burden Flexibility in hiring Recovery rate Reallocation of assets Doing Business indicators – 11 areas of business regulations (9 included in the ranking)

Financial & Private Sector Development Expands the DB indicators beyond the city measured by DB Includes rules and regulations at all levels of government Give specific locations an opportunity to tell their story Provides a tool for locations to compete globally Combines media appeal of DB with active participation of subnational governments in the reform process What do city profiles add?

Financial & Private Sector Development Doing Business in Juba 2011 measures national and local regulations in Juba as they apply to domestic small and medium-size enterprises. Data is as of November Covers 9 indicators Starting a business Dealing with construction permits Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business Includes global comparisons with183 economies and reform recommendations Doing Business in Juba 2011

Financial & Private Sector Development Doing Business in Juba 2011  This report is a useful tool for the Government of Southern Sudan, the Government of Central Equatoria and Juba’s Payams in 4 respects (1) It reflects what has been achieved since the peace agreement was signed, such as the creation of the Business Registry, and the drafting and enactment of laws guiding business registration, operation and exit. (2) It identifies which areas offer opportunities for improvement: The legal and regulatory framework remains incomplete The existing legal system can be confusing Some institutions are either absent or overlapping Institutional capacity and infrastructure must be strengthened (3) It offers recommendations for policymakers to improve the business environment. (4) It provides a benchmark for Southern Sudan, on the eve of formal independence

Financial & Private Sector Development Key findings Juba’s global rankings vary by indicator  Juba would rank 159 th out of 183 economies measured by DB on the ease of doing business

Financial & Private Sector Development  Starting a limited liability company in Juba takes 11 procedures, 15 days, and costs 250.2% of income per capita Starting a business is fast in Juba, thanks to the Business Registry

Financial & Private Sector Development  To obtain all permits to build a warehouse and connect it to utilities, it takes 10 procedures, 30 days, and costs 5,936% of income per capita Dealing with construction permits is expensive, due to connection to utilities

Financial & Private Sector Development  It takes an entrepreneur 7 procedures, 18 days and costs 14.7% of property value to register property in Juba Fast time does not indicate that the process is efficient – all operations are manual and paper based – but reflects the low volume of transactions. Cost is the major bottleneck. Entrepreneurs in Juba must pay 3 different fees to 3 different authorities. Registering property is expensive, survey and lease transfer fees are high

Financial & Private Sector Development  Juba scores 2 out of 10 on the strength of legal rights index and 0 out of 6 on the depth of credit information index No credit information registry or bureau.  On the depth of credit information index  On the strength of legal rights index No clear framework for secured transactions. No unified functioning registry for collateral. Getting credit is difficult, related legal rights and credit information are scarce

Financial & Private Sector Development  Juba scores 2.7 out of 10 on the overall strength of investor protection index 3 out of 10 on the extent of disclosure index 0 out of 10 on the director liability index 5 out of 10 on the ease of shareholder suits index The laws protecting investors offer limited protection to minority shareholders

Financial & Private Sector Development Taxation Act in 2009 has been passed, setting broad provisions, but provisions are needed on which taxes are in effect, and which authorities can collect which taxes. In Juba, companies with revenue under SDG 10 million are considered small companies and taxed accordingly at a lower rate.  A company spends 218 hours per year making 46 tax payments, and pays 25.5% of its profits paying taxes Entrepreneurs need details on paying taxes, such as which taxes to pay, and to whom

Financial & Private Sector Development  To import: submit11 documents, wait 60 days, and spend US$ 9,420  To export: submit 9 documents, wait 52 days, and spend US$5,025 Trading across borders is slow and expensive, for 3 main reasons Multiple checkpoints Complexity of the administrative processes Poor quality of inland transport infrastructure Trading across borders to and from Juba is cumbersome and costly Importers in Juba spend over half of total time on paperwork, and most of the cost on inland transportation

Financial & Private Sector Development If the claim is above SDG 1,000 (US$ 453), the claim falls under the jurisdiction of a first grade judge at the county court. The time to enforce a contract comprises 21 days for the filing and service period, 60 days for the judgment period and 30 days for the enforcement period. The legal system can be confusing as it relies on 3 distinct frameworks. There is also need for more legal professionals, especially advocates and judges specialized in commercial law.  Enforcing contracts takes 46 procedures, 111 days and 26% of the value of the claim Enforcing contracts is fast, but there is a need for more specialized legal professionals

Financial & Private Sector Development No cases of winding ups since Doing Business methodology requires at least 5 cases a year during the last 5 years. Juba is classified as a “no practice economy”. Enacting the Insolvency Bill would be a step in the right direction.  Formal bankruptcy procedures are never or rarely used in Juba Closing a business – no practice in formal bankruptcy

Financial & Private Sector Development Why does it matter? Improving business start up is associated with an increase in economic growth and investment rate. Lowering barriers to entry correlates to less perceived corruption and a smaller informal sector. Removing barriers also gives opportunities of inclusion to youth and women. Efficient property registration can make it easier to transfer property and can help boost the number of property registration.

Financial & Private Sector Development Thank you ! /juba