REFORMING BUSINESS REGISTRATION IN OHADA

COUNTRIES

Business Registration Reform in AfricaPractitioners Workshop, Cape Town30 March 2009

Xavier Forneris

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Regional (Legal) Integration

16 Countries: West, Central Africa, and Indian Ocean

A Treaty - 4 Institutions – 8 Uniform Acts

BACKGROUND

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OHADA REGION : DIFFICULT BUSINESS ENVIRONMENT

OHADA represented progress but countries’ performance in international indicators of business climate is poor:

Most international indicators suggest that the business climate in the region is not favorable to PSD

WB Doing Business confirms this: OHADA countries rank in the bottom 20%

Best OHADA performers: Burkina at 148 for overall ease of doing business and Senegal at 95 for Starting a business (out of 181)

Challenge but also opportunity

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OHADA COUNTRIES’ PERFORMANCE IN BUSINESS START UP:

DB “Starting a Business”: considerable variation among OHADA Countries

Best: Senegal 4 procedures, 8 days, cost 73% of GNI/cap

Worst: Guinea Bissau 17 procedures, 233 days, 257% of GNI/cap

But they all belong to OHADA !

Conclusions:

Everything is not in OHADA legislation

Much remains governed by national regulation

Local implementation can affect time even if rules are same

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Business Entry Reform is possible at each OHADA country - level : Example of Burkina Faso (FY08 Reform)

Measures:

1) Requirement to register articles of incorporation at the tax administration has been eliminated

Effect:

Cut 1 procedure; Cut time by 2 days; Fee to register articles of incorporation [FCFA 6,000 (fixed fee) + FCFA 400 per page] has been eliminated

2) The online publication of companies’ registration has been authorized

Time reduced from 4 days to 1 day, Fees for the publication of a notice of incorporations moved down from 45,000 F CFA to 10,000 FCFA

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RESULTS…

Burkina Faso: program of business entry reforms implemented in 2007-2008, with IFC assistance had following results:

2007 2008 2009

Ranking 131 105 113

Procedures 8 6 5

Time (days) 34 18 16

Cost (% of GNI/cap) 121 82 62

As a result of this and other DB reforms, Burkina Faso became one of the fastest reforming countries in Africa…

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Entry Reform at OHADA country-level : Example of Senegal (July 2007)

Measures:

Senegal implemented the one-stop shop (OSS) and merged 7 procedures into one

Effects:

Start-up time fell from 58 days to 8 days

RESULTS: Thanks to this and previous reforms, Senegal now ranks 95th globally on the ease of starting a business indicator.

Registration increased dramatically.

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Limitations of National-level Reform

Burkina and Senegal reformed purely “domestic” rules and institutions, without reforming OHADA law (requires participation of the 16 countries).

This raises two sets of issues:

1st issue: the legality of certain measures could be questioned (if in direct conflict with an OHADA rule).

2nd issue: Senegal & Burkina have reached a “plateau” for what they can do alone, outside the regional framework further progress on business registration requires reforming OHADA legislation.

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A program to reform OHADA law is underway with IFC’s assistance

OHADA launched a program to review and modernize all OHADA laws, including Company Law, SL, and General Commercial Law (Registry)

IFC-FIAS provides support – 3 year TA

Endorsed by OHADA Council of Ministers

Resting on well-known independent experts

Strong national participation (private sector, CNO)

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OHADA REGISTRY – Features and Issues

Combines registration of companies and security interests on movables (no dispossession)

Two Levels: Regional (OHADA Court, Abidjan ) and National (national includes sub-national)

Not operational: 1) lack of computerization and 2) lack of appropriate legal instruments.

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REFORMING OHADA REGISTRATION

Legal Changes to consider:

Reduce Minimum Capital (in Burkina 459% of per capita income and in Guinea Bissau over 1000% of pci…)

Organize access to information by third parties (“paper” and on-line)

Allow electronic signature and data interchange

Simplify and unify the Registration Forms

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REFORMING OHADA REGISTRATION

IT changes to consider:

Adopt a common approach including using the same software, simple, with open source, adaptable by each country

Ideal would be a web-based system

Around a central country database

Need to computerize Registries (local, national and OHADA)

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Conclusions and Way Forward

We believe that a sound approach should be:

Regional : to help all OHADA countries improve their system and become more attractive (above and beyond national reform efforts)

Holistic : combining reforms (legal + IT), training, infrastructure…

Making greater use of Public - Private dialogue to identify regulatory obstacles to business formation and development.

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THANK YOU

For additional information please contact the

IFC -OHADA team :

Xavier Forneris, Program Manager (DC): xforneris@ifc.org

Andre-Franck Ayoho, Liaison Officer (OHADA Secretariat, Cameroon): andreahoyo@gmail.com

Lionel Yondo, Sr Liaison Officer (DC): lyondo@worldbank.org

Julien Levis, PSD officer (Dakar): jlevis@ifc.org

Babacar Faye, Legal Counsel (Johannesburg): bfaye@ifc.org

Theodore Anthonioz, Legal Project Assistant (DC): tanthonioz@ifc.org