OHADA, the French acronym for “Organisation pour l’Harmonisation en Afrique du Droit des Affaires”, is a system of business laws and implementing institutions adopted by 16 West and Central African nations, founded in Mauritius in 1993. Member countries include Benin, Burkina Faso, Cameroon, Central African Republic, Chad, the Comoros, Republic of Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
A new report from IFC and the World Bank and the International Finance Corporation (IFC) finds that not all member states of the Organization for the Harmonization of Business Law in Africa (OHADA) have increased the pace of reform in making it easier for local firms to do business. There still remain a lot of bottle necks in starting a business in some of these member states.
The report, Doing Business in the OHADA Member States 2012, draws inspiration on data from the annual global Doing Business study and takes a detailed look at business regulations in member countries.
Doing Business in OHADA Member States 2012 was prepared as part of the OHADA Business Law Reform Program of the Investment Climate Advisory Services of the World Bank Group. The program includes support to the OHADA member states and the OHADA Permanent Secretariat in reforming and implementing the common set of laws. According to the report, the 16 OHADA member states could benefit from sharing good practices in business regulation as measured by Doing Business.
The average ranking of the OHADA member states is 166 out of the 183 economies measured in the global Doing Business 2012 report. Mali, with a global rank of 146, happens to be the easiest place among OHADA member states for an entrepreneur to do business, followed by Burkina Faso (150) and Senegal (154). Doing business in Cameroon is still a hurdle. In the past six years, all 16 OHADA member states made it easier to do business. Across the region, the average cost of starting a business reduced from 338 percent to 110 percent of the average per capita income. The average time required to register property also reduced by 28 percent.
No single economy outperformed the others across the board. But in some of the categories that were measured, the region’s economies are comparable to the world’s best performers. Senegal, for example, has reduced the time needed to set up a business to only five days through its one-stop shop system compared to the same amount of time to do as in Canada. After four years of successive reforms, dealing with construction permits in Burkina Faso takes only 98 days three months faster than the European Union average.
The Permanent Secretary of OHADA, Dorothé Sossa is of the view that, competitive economies like Cameroon cannot ignore what their neighbours are doing. Mrs Sossa adds that pooling, as is the case with OHADA, and sharing reform experiences across the board is an opportunity to better national and regional competitiveness.
One of the top priorities of OHADAs is to establish a uniform legal framework to govern business activities in the region’s economies. The first revision of the body of commercial laws in the region simplified business entry in eight member states and strengthened secured transaction laws in all 16 member states.
According to Pierre Guislain, Director of Investment Climate Advisory Services of the World Bank Group, the refurbishment of the common business legislation addressed two of the top constraints to enterprise development and investment in Africa: access to finance and the quality of the legal framework.
Owing to the fact that business happens to be a panacea in the attainment of the Millennium Development Goals in Africa and in OHADA member states in particular, it is high time for countries to curb barriers to starting a business. These countries need to revisit their finance laws especially taxation laws. One of the cankerworms killing local businesses on the continent of Africa is exorbitant taxes. These exorbitant taxes which are collected with the aim of development, have instead made some top government officials wealthier and a majority of the population poorer. If OHADA countries want to benefit from business opportunities, then it is time to strengthen opportunities for local businesses to come on board in member countries.
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