- September 13, 2023
- Posted by: AITCR 3
- Categories: News, Blog
WEEKLY TRADE POLL FOR AFRICAN COUNTRIES
September 2023
The modern market economy depends on entrepreneurship to remain dynamic, and reducing the cost of business formalization can promote competition and innovation.[1] A number of countries are concentrating on streamlining the procedure for business registration in an effort to cut down on the expenses and formalities necessary to officially register a firm, with the goal of fostering the growth of the private sector. One important question is whether there are co-relations between the actual number of new businesses that register each year and the fees and procedures involved in starting a business.
The cost of registering a firm will depend on the type of business entity and where you plan to operate. Not all business structures need to register with the government. States that do require registration will have different pricing systems. Typically, general partnerships and sole proprietorships are not required to register as legal entities in specific states, except for obtaining business names and other necessary certifications for business operations. However, there can be local and state requirements to register for sales tax, apply for a retail license, or get a professional license for those in the medical, legal, or other state-regulated fields.[2]
To develop effective policies that support entrepreneurship in many African countries, it is important to understand the regulatory environment that facilitates entrepreneurship. The analysis conducted on the Africa International Trade and Commerce Research (AITCR) weekly trade poll data was on the cost of business registration in African countries. The results of the poll are illustrated in Figure 1 below.:
WEEKLY TRADE POLLS (FIRST WEEK OF SEPTEMBER 2023)
Figure 1: The Cost of Business Registration
Data from the Africa International Trade and Commerce Research (AITCR) weekly poll for African countries assessed public opinion on how costly business registration is in African countries. Findings from the polls show that 30 percent of the respondents assert that the price of business registration in African countries is “very costly”; 15 percent opine that the price of business registration in African countries is “moderate”; 15 percent of the respondents assert that the price of business registration in African countries is “very affordable” and 40 percent posit that the price of business registration in African countries is “costly”. Therefore, the poll found that the price of business registration in African countries is very costly.
The research from Africa International Trade and Commerce indicates that the costs and procedures for registering a business significantly impact the establishment of new firms over time. The study suggests that countries with high initial business registration costs need extensive reforms to see an increase in newly registered businesses. Importantly, this research provides regulatory bodies and lawmakers with valuable insights into how business regulation policies and reform processes influence the establishment of new firms. Finally, findings from the poll suggests that the development of formal sector entrepreneurship on the African continent depends on having a fast, easy, and affordable business registration process.
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[1] Klapper, L., Laeven, L., Rajan, R., 2006. “Entry Regulation as a Barrier to Entrepreneurship”. Journal of Financial Economics 82, 591-629.
[2] What Is the Cost to Register a Business? (chron.com)
