PRESENTED BY Mr.

Penias Chabwela Programme Officer

Private Sector Development Reform Programme (PSDRP) Ministry of Commerce Trade and Industry May 30 2012

 Background

and Reform Context Nature of reforms Business Licensing Reform Findings and recommendations of Business Licensing Reform Report Achievements, Lessons and Challenges

the

PSDRP is a framework for the Government of Zambia, created to reflect its commitment to improving the business environment and to reduce the cost of doing business. GRZ launched PSD Reform Programme (PSDRP) in 2004 incorporating licensing reform 2008, GRZ renewed mandate for licensing reform Five priority areas:

Doing Business Reforms Business Licensing Reforms Trading Across Borders Reforms Labour Reforms MSME Development Reforms

KEEPING THE BIGGER PICTURE IN VIEW Contributes towards attainment of Zambias 2030 vision Middle prosperous income Nation by 2030 A good and healthy business environment facilitates growth and reduces poverty. A means to addressing inappropriate regulations, laws, policies, institutions that govern business activities in one way or another

 Substantially

reduce the number of unnecessary licensing requirements in Zambia

the licensing regimes simpler, transparent and easy to comply with
licensing is focused on legitimate regulatory purposes GRZ, stakeholder attention on business regulation, not revenue generation, as the primary purpose of business licensing

Make

Ensure

Focus

Licenses should fulfil legitimate regulatory purposes There are only two main rationales for licensingto safeguard the public interest and to manage limited natural resources.

Certain activities must be regulated to guarantee the health, safety or security of consumers and to protect the natural environment.

(A) Taking Stock of all Business Licenses:

Identification of all business licenses, permits and certifications in Zambia, both on & off the books Process was comprehensive, orderly and transparent

(B) Reviewing licenses & making recommendations:

Rapid review by Business License Reform Committee (BLRC) of all licenses against clearly agreed criteria Is it legal? Does it serve an essentially regulatory purpose or is it necessary from an environmental, public safety /health perspective? Is it business friendly?

Licenses not complying with these criteria were put forward for elimination

(B) Reviewing licenses & make recommendations (contd)

Burden of proof to justify licensing placed on regulators More stringent filter criteria applied as a second step Can the target groups be reduced? Can the license be converted into a notification? Can the frequency with which licenses are renewed be reduced? Can the license be amalgamated with other licenses? Can time-limits be established for government responses? Can the silence-is-consent (or denial) rule be applied? Can information requested in licenses be obtained from other authorities? Any license that is needed but is not business friendly will be simplified

(C) Make recommendations to GRZ on reform requirements

Zambia has too many business licenses and regulations which makes the business environment un-conducive and the cost of doing business in Zambia high The regulatory and licensing framework encompasses 86 Acts of Parliament, in addition to numerous pieces of regulations, rules and By-laws. 517 business licenses identified

These licenses are administered by 18 Ministries, 72 Local Authorities and 33 regulatory agencies and apply at national, provincial and local government levels.

Total compliance cost incurred by Businesses is K2.2 trillion Excessive duplication in terms of information requirements when business apply or renew their licenses. Limited systems networking among licensing authorities and most regulators operate as stand alone licensing platforms. The number of steps required to obtain a license are no less than an average of 6 per license.

Out of the 517 licenses identified by the BLRC:

290 Licenses were recommended for Retention they served a legitimate regulatory purpose. 170 Licenses were recommended for elimination The were either illegal or redundant 57 Licenses were recommended for reclassification into levies, reports or notifications. 99 Licenses were to be merged into 21 licenses 36 local government business permits were to be converted into a single business levy payable by businesses across the counter at each local authority concerned.

Reducing Administrative Cost of Compliance by at least 30% Business Licenses for Efficient Regulation not Revenue Raising Bundling Comprehensive Licensing Reforms through the Decision-Making Process

Expediting Implementation of E-Governance Bundling Comprehensive Licensing Reforms through the Decision-Making Process

approve the recommendations in the Report as a single package.

Establishing an Electronic Registry to Secure Licensing Reforms Assure Quality of all new Licenses: Establish of a permanent unit responsible for the quality review of all new licenses

 Enactment

of new laws regulating the licensing and regulatory framework; A streamlined and simplified licensing and regulatory processes and procedures; Enhanced tax compliance and growth of the Consolidated Fund; Increased investment and economic growth; Improved service delivery; and; Improved ranking in the ease of doing business.

Approval of BLR report Inventory of licenses and their associated costs Revenue Impact Assessment undertaken 48 Acts reviewed & enacted E Registry (database)for business licenses set up 183 licenses have uploaded onto the e-registry (63%). 113 licenses eliminated (66%) 70 licenses were amalgamated 18 licenses were reclassified as levies Introduction of Single Business Levy

Limited ownership of reforms Slow pace of implementation Reforming a licensing regime geared towards revenue maximization Lack of convergence from PSD stakeholders Slow pace of implementation Weak dialogue structure (s) Poor coordination among government institutions Sustaining the reforms amid conflicting priorities

DB indicators a rallying point and basis for reform momentum Sustained political and technical leadership key Need to guard against the dangers of re-regulation Potential for institutional: resistance early in process Benefits of wider reform effort and a growing economy Benchmarking and learning from other countries especially in the region (The Kenya experience provided valuable lessons) Implementation of reform actions is greatly assisted when lead institutions are headed by reform champions

THANK YOU FOR YOUR ATTENTION!