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According to the World Bank 2020 assessment of doing business, procedure, time, and cost are the key indicators used to measure for starting a business as a limited liability company. It is clear that lengthy requirements and costly processes to start-up affect the number and size of firms willing to enter into the market. In this regard, World Bank’s doing business 2020 report documented that registration procedures take nearly six times longer on average to start a business in the economies ranked in the bottom 50 than it does in the top 20. In Ethiopia, to start a standardized company business, it takes about 32 days and pass through 11 procedures (World Bank, 2020). This indicates that starting a business in Ethiopia takes the longest procedure, highest number of days and costs as compared to average Sub-Saharan Africa and OECD high-income countries (Figure 1).

Figure 1: Comparison of starting a business based on average score of indicators

Source: World Bank (2020)[1]

To address existing challenges and gaps in the business environment, the government of Ethiopia is working with the Investment Climate Department of the World Bank Group’s International Finance Corporation (WBG/IFC) to improve the country’s business environment[2]. The World Bank Group/IFC seeks to obtain evidence-based information and has commissioned Frontieri Consult to conduct a study aimed at analyzing the ‘as-is’ and ‘to-be’ processes of business and investment registration and licensing procedures in Amhara and Oromia Regional States of Ethiopia.

More specifically, the specific objectives of the project include, inter alia:
1. Prepare the description and number of processes in ‘as-is’ and ‘to-be’ process map;
2. Review other regulatory practices connected with business, investment registration and licensing procedures;
3. Estimate the cost of Business and investment registration and licensing; and
4. Recommend specific reforms which need to be implemented to move towards a simplified business and investment registration and licensing processing regime (from the ‘As-Is’ to the ‘To-be’).

 

[1] Economy profile of Ethiopia, Doing business 2020 https://www.doingbusiness.org/content/dam/doingBusiness/country/e/ethiopia/ETH.pdf

[2] World Bank, (2019). Creating markets in Ethiopia: Country private sector diagnostic-sustaining progress towards industrialization, 2019