Editor's Note: The following post was submitted jointly by Pilar Sanchez-Bella and Brice Richard both members of the Doing Business Team.
The Doing Business in Juba 2011 report was launched last May 16 in Juba, Southern Sudan. The city profile, which covers 9 Doing Business indicators, is one of the first assessments of business regulations in Juba, the current capital of Southern Sudan. Why is this report noteworthy? First, it helps fill the micro-level data gap in the country by providing baseline data.
According to the World Development Report on Conflict, Security and Development, the lack of available quantitative and qualitative data poses a great challenge in conflict-affected and fragile countries. This is true for Southern Sudan, for which the WBG has no comprehensive data set, not even GDPor national accounts (the Country Economic Memorandum was the first economic report for Sudan in a decade). Second, developing the private sector is especially important in Southern Sudan, a post-conflict economy. A population recovering from decades of war needs stable jobs, steady income, and the security of a business.
Doing Business in Juba 2011 shows the many improvements since the 2005 peace agreement, which were supported in part by the first phase of IFC’s Investment Climate in Southern Sudan. To put the improvements in context: compared to the 183 economies measured by Doing Business, Juba would rank 159th on the ease of doing business. Behind this ranking variations on a topic by topic basis can be found:
On starting a business, Juba would rank 123rd. Thanks to the success of the well-staffed and governed Business Registry set up in 2006, entrepreneurs can start a business in just 15 days. In fact, about 9,000 businesses have registered so far, showing that there has been some buy-in by the private sector. However, costs are high because of multiple fees to state and local authorities.
On protecting investors, getting credit, and closing a business, Juba would rank 173rd, 176th, 179th respectively, reflecting an incomplete legal framework. Although 19 laws guiding business registration, operation and exit have been drafted in the past 5 years, several are yet to be enacted.
It is harder to trade in Juba than any other of the 183 economies measured by Doing Business except Afghanistan and the Central African Republic. As in many landlocked economies around the world, distance makes trading costly and time consuming for entrepreneurs in Juba. But geography does not explain everything. A burdensome administrative process, multiple checkpoints, and transport infrastructure constraints also make trading in Juba difficult. Over half of the delay is due to paperwork.
While Southern Sudan has made strides, one thing is clear: its legal framework, institutional capacity and infrastructure need to be strengthened further. Several laws that are important for the private sector need to be enacted. Public authorities need more qualified staff to implement regulations. Key institutions need to be created, such as a new land registry, a credit information bureau, and a collateral registry. Roads, water and electricity delivery systems must be expanded.
As with any post-conflict economy, there are many challenges ahead. However, independence may provide a window of opportunity for Southern Sudan to undertake the comprehensive reforms that are needed.
One of the main accomplishments of the report is to provide micro-economic baseline data in the areas covered by "Doing Business". This is a challenge in any economy with security and access issues and/or low statistical capacity. "Getting credit" is one of these indicators. It measures the legal rights of borrowers and lenders with respect to secured transactions, as well as the sharing of credit information.
Experience in other countries and the literature show that it is never too early to start drawing a roadmap for private sector development with emphasis on early job creation. Access to credit is one potential obstacle to the development of a domestic private sector. As mentioned in the Rough Guide to Investment Climate Reform in Conflict Affected Countriespublished by the IFC,“expanding small businesses such as street-level entrepreneurs requires focusing investment climate reforms on the administrative barriers that most matter to them [such as] using movable assets as collateral.” Sierra Leone just passed a credit information sharing law and is establishing a credit bureau, initially at the Central Bank, in response to a growing rate of non-performing loans and the perception that some borrowers may have been getting loans from banks to pay existing loans.
Doing Business: http://www.doingbusiness.org/
Rough Guide to Investment Climate Reform in Conflict Affected Countries: http://www.ifc.org/ifcext/fias.nsf/AttachmentsByTitle/RoughGuideICRefor…
As the Doing Business authors *must* know, South Sudan has a very long list of needs and "musts" right now and can't do it all, so organizations like the World Bank should be careful about what they try to convince the government to add to that list. I would guess that some of the items on the Doing Business must-do list are generic recommendations that wouldn't have much practical impact in the near term in the South Sudan and thus could safely be moved towards the bottom of the priority list. Creation of a credit information bureau and a collateral registry, in particular, are unlikely to have much effect in a country with only a tiny banking system that only a very small minority of Sudanese can access. Kenya, a far more developed country, only very recently created a credit information bureau. Experiences from other post-conflict countries could be informative. Have other post-conflict countries, like Sierra Leone and the DRC, created credit information bureaus and collateral registries that have had any effect?