This article is part of GEN's Global Entrepreneurship Week thought leadership series putting a spotlight on policies designed to help entrepreneurs start and scale, and the crucial role policymakers play in building a strong entrepreneurship ecosystem.
Governments have an important role to play in supporting companies, both at the startup stage and along the way. But too often they are the obstacle on the road.
Entrepreneurs report frustration at unnecessary, lengthy and sometimes incomprehensible bureaucratic procedures to simply register a business, get a trading licence or deal with customs. Unsurprisingly, many give up, hurting economic development and the entrepreneurial ecosystems so critical for growth.
The UN has calculated that reaching the Sustainable Development Goals by 2030 will require four trillion dollars of private investment each year. Therefore governments, tied as they are for money, need the private sector to invest, build businesses, employ people and pay taxes.
So why then do they continue to make life for entrepreneurs so darn difficult?
“We’ve Always Done It This Way”
Ask a civil servant why it takes 54 steps and several office visits, 58 different documents and up to 363 days to get a construction permit (as it did in one country we encountered), and you’ll be told “that’s how it’s always been”.
Governments are depleting precious funds to pay officers to act like a rubber stamp with a body attached to it, rather than as trouble-shooters and advisers-true civil servants.
Yet if in these same countries you can order a taxi or pizza from a mobile phone, why can’t you register your company or pay your taxes in the same way?
That’s the question we asked ourselves and set out to solve. And it turns out that with a fresh mindset and approach, it’s not that difficult.
Keeping It Simple
UNCTAD created a ready-to-use digital government online platform called “eregistrations”,which government officers can easily customise and operate with minimal training and no prior IT knowledge. A prototype can be up and running within weeks, even when a procedure involves approvals from officers in several ministries. It’s a step change for governments who see the value in making life better for their entrepreneurial citizens.
Using this platform we have now helped 11 countries in four regions of the world simplify and automate their administrative procedures, with more in the pipeline.
Snip Snip Goes the Red Tape
A joint UNCTAD and Global Entrepreneurship Network project with Iraq saw the creation of an online single window for company registration in Baghdad.
It trimmed a lengthy, in-person 35-step process down to only 5 online steps and fewer in-person moments, without needing to change current laws and regulations.
It also changed the way civil servants perceive public service. After recognising the unusual complexity in the business registration process, and understanding the pain of the user, Iraqi government employees willingly removed unnecessary steps and requirements.
Based on positive reactions from the private sector and the lawyers association, the Iraq Council of Ministers now wants to automate over 50 services and include all 14 Iraqi provinces.
The World’s Poorest Countries in the Lead
Similarly in Bhutan, where small, micro enterprises make up 95 percent of industries ,automation is helping entrepreneurs open businesses in less than a minute and secure trading licences, all online or on a mobile phone, without having to make the days-long trek through the Himalayas to a physical office.
Users fill an online form and immediately receive their licenses by email.
The first person to register with the new system was Rajini Tamang, who makes childrens toys. While her business was previously informal, she told us that having a certificate of incorporation means she can now access loans, employ more qualified personnel and export, all the while contributing taxes and social security.
Before being overtaken by Bhutan, Benin was the fastest place in the world to open a business; it cut the time from five days to two hours. The online system doubled the number of businesses registered per year.
Yes, read that again. Developing nations are embracing automation in government administration because of its transformative impact.
The UN recently noted that most of the world's best online single windows are now developing countries. Others can follow suit.
Women Are the Winners
But while all entrepreneurs benefit, women, who may otherwise be juggling multiple commitments, are the biggest winners of fast, online services. No more sacrificing familial obligations and stopping household work to also realise business ambitions.
In Bhutan, women now make up 52 percent of those applying to register their companies.
In Lesotho, business permits delivered to women increased from 26 percent to 34 percent with online registration. In El Salvador, 56 percent of business owners registering online are women.
You Can Make a Difference
The World Trade Organisation has recognised the importance of using digital administration to support new businesses, under the UN-coined term of “investment facilitation”.
Diplomats in Geneva are currently hammering out an international agreement that will encourage all governments to go online. A similar agreement was recently reached in Jakarta for ASEAN countries and the same is being discussed in Addis Ababa at African Union headquarters.
This is encouraging. But you, the private sector, need to push from your side too. As members of GEN you can make the case to your political leaders about how digital government helps businesses like yours and how it can help grow economies.
Digitalisation is within reach for all governments. And with clear results and low costs there’s no reason not to do it. It’s in your hands.