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The Ministry of Industry, Trade and Private Sector Development is framing up a new set of guidelines regarding business licencing which are expected to be gazetted by the end of this month.
Industry, Trade and Private Sector Development Minister Ken Lipenga confirmed the development in an interview on Tuesday.
He said the ministry has hired consultant Dye Mawindo to look at the existing set of rules and recommend the necessary areas that need to be amended.
“We hope that by end February we should have a new set of rules regarding business licencing. We are confident the new set of rules will facilitate speedy processing of business licencing which should make Malawi the best investment destination in the region,” said Lipenga.
He could, however, not shed more light on the process arguing that the consultant himself is better placed to give highlights of the process.
In its ‘Doing Business 2007 Report’ released late last year, the World Bank ranked Malawi on position 110 out of 175 countries in the world, down from 96, due to, among other things, the country’s red tape in as far as starting up a business is concerned.
On average one has to go through 10 steps to register a business, which takes an average of 37 days, according to business analysts.
However the most critical disincentive in this process is the cost of the whole process which is 134.7 percent of the country’s per capita income (which is US$160).
“This means that the process of starting a business costs nearly US$216. An average Malawian would have to work for one year and four months to raise enough money to register a business.
“This is one of the reasons why Malawi’s population of formal businesses is extremely low and the informal economy, comprising of businesses that are not registered, accounts for 40 percent of Malawi’s Gross Domestic Product (GDP),” said Malawi Confederation of Chambers of Commerce and Industry chief executive officer Chancellor Kaferapanjira.
In his presentation during a high level government and private sector meeting held in Blantyre two weeks ago, MCCCI president Harrison Kalua urged president Bingu wa Mutharika to consider instituting necessary reforms that will reduce the number of procedures one has to go through before starting a business here.
He argued that the country’s economy stands to benefit a lot if the large chunk of operators in the informal sector were formalised through pensionable jobs and healthcare, among others.
“However these businesses are not in the informal sector by choice but because of too strict registration procedures, too many licences and high cost of registration.
“Although the original objective of registration was to screen out the ‘unwanted’ and therefore more relevant in a one party state, the current system is not serving the country well and therefore needs a complete reform,” said Kalua.
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