The Importance of Business Registration and

Business registration and licensing is an important conduit to creating a thriving and robust business sector. It enables businesses, particularly small ones, to gain access to funding and to certain protections by the law. It also helps formalize the economy as registered businesses pay tax and deliver other important benefits to the economy, like job creation.

The International Finance Corporation (IFC) noted in its Reforming Business Registration report published in 2013 that: “The private sector, through investment and job creation, plays a crucial role in a country’s fight against poverty. Where an effective private sector is lacking, business registration reform has been shown to be one of the essential first steps toward fostering private-sector growth. The easier, faster, and cheaper the business registration process becomes, the higher the number of businesses in an economy.”

 

The reality is that business registration and licensing processes in many African countries use outdated, paper-based systems that require too many procedures to complete. This creates a lot of bureaucracy and delays and makes the process costly and time-consuming for businesses. Cumbersome systems also pose the danger of discouraging smaller entrepreneurs and micro-enterprises from registering and therefore legalizing, their activities.

In its report, the IFC highlights the need for countries to use one-stop shops, which is a single point for processing business registration, as well as the use of technology in modernizing and streamlining business registration processes. “Formation of one-stop shops has proven to be a successful way of facilitating business startups and cutting both bureaucracy and costs. The leveraging of modern technology, such as the introduction of online systems, has also allowed many countries to improve the efficiency of firm incorporation,” the IFC’s report states.

For the past nine years, ICF has been helping African countries to improve their business registration and licensing systems. This work has centered around the introduction of new technologies to help automate, streamline and speed up the processes and procedures related to business registration and licensing. The aim of ICF’s interventions is to help reduce the costs and time that a business person spends registering their business or obtaining necessary licenses. Through this support, business registration and licensing processes that used to take, in some cases, months, now take a matter of days or hours to complete.

In our next blog we will unpack the various successes ICF projects have achieved in the business registration and licensing field and highlight the work that we are doing, together with our partners, across the African continent.

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