B.E. Assessment

Company Registration in Ethiopia, Ethiopia PSD Hub, 2005

    Description

    This publication provides an in-depth review of company registration processes in Ethiopia, building on both primary and secondary research. The study analyses the following issues:

    • Review of the company registration system in Ethiopia

    • Legislation at national and regional levels

    • Company registration at federal level

    • Company registration in Addis Ababa and the Sub-cities

    • Company registration process at regional level

    • A Comparison of the federal, Addis Ababa and regional Processes

    • Views of other stakeholders regarding company registration

    • Comparison of company registration processes across countries

    Summary of results

    Ethiopia’s legal system is rooted in a tradition of heavy regulation. The report finds, however, that “heritage is not destiny”. Ethiopia is said to have made substantial progress and improvements to its company registration process between 2003 and 2005. Streamlining procedures and computerisation in Addis Ababa were among the main achievements. Nonetheless, the reports makes the following recommendations:

    • The company-registration system should be driven with business-to-business inquiries in mind.

    • Post-registration support from the Ministry of Trade and Industry is needed

    • The business license renewal process should be streamlined to reduce the number of different institutions and officials that businesspersons have to see. Tax collection and company registration should be handled by a virtual one-stop shop

    • Address the variation in the pricing strategies of the registrar offices throughout Ethiopia

    • High late-business-renewal-penalty fees should be reduced. It is better to have businesspeople get their business licenses renewed late rather than forcing them to close their businesses

    • Harmonise overall procedures across regions, in order to make it easy to put in place an integrated computerised registration system throughout Ethiopia, strengthen market information, reduce duplicate files and raise overall volumes of company registration.

    • Develop a strategy for a single online integrated system, using the woreda.net infrastructure in such a way that it is accessible to all the registrar centres in the country

    • Improve the security measures that are currently in place to identify registered businesspersons—that is, scan the original document and introduce the use of digital images and signatures.
    • Greater use of e-governance in the company registration process. More specifically:

    o Create an integrated online system whereby the business community and third-party agencies can access different kinds of secure information. The company-registration system could also provide this service for the banks, insurance companies, etc., and generate some revenues for itself
    o Integrate the payment module so that statistical and audit reports can easily be generated
    o The system should have a number of reporting and data-mining tools, to generate reports that would allow management to make quick decisions.
    o The system should easily be configurable, so that different registrar centres can use it for their specific requirements, including language requirements
    o The system-development team needs to give a longer warranty and a support/maintenance contract, as it is an important part of the company-registration process; and all the appropriate documents need to be passed on to MoTI (Appendix 3 gives an outline of the general software development points to consider before trying to implement this sort of project.