IFC Business Licensing Reform Project Reaps Rewards in Afghanistan
IFC has been instrumental in helping reform the way businesses are licensed in Afghanistan, dramatically reducing costly waiting times, tackling corruption, and giving a boost to entrepreneurs who were previously stifled by bureaucracy.
"Getting a business registration certificate in Afghanistan used to be a tedious job,” said Farshid Ghyasi, CEO of Netlinks, a growing web technology company. “But IFC is saving time for investors and business owners like me, and increases confidence in the abilities of the government."
IFC has trained about 150 Afghan civil servants as part of a wider effort to create a business environment that supports private enterprise. The project also designed a clear and predictable legal and regulatory framework to facilitate start-ups in Afghanistan.
The Afghanistan Business Licensing Reform Project set out to help the Afghan Ministry of Commerce and Industry to create a transparent and comprehensive licensing system. A review found that licensing processes were time consuming, costly, and often subject to the discretion of officials.
By merging two competing departments within the ministry and doing away with needless red tape, the project has succeeded in dramatically reducing waiting times for new licenses. With this IFC assistance the ministry was able to reduce the average wait for a new license by 60 percent.
More than 19,000 businesses have received new licenses under the new system and over 23,000 have renewed their licenses. It is anticipated that 33,000 companies will become licensed, and nearly 60,000 will renew their license in the next three years.
“Previously, the licensing requirements were unclear,” said Afghanistan’s Minister for Commerce and Industries, Anwarulhaq Ahadi. “By streamlining the process, with the help of IFC expertise, we are encouraging entrepreneurs who may have worked outside the formal sector to register, which boosts the economy.”
He said the new system also saves time and money for existing businesses, allowing them to concentrate on expanding and creating jobs.
“Small businesses and entrepreneurs are the lifeblood of any economy,” said Sherif Hamdy, IFC MENA Business Regulatory Reforms Program Manager. “But they are often the most susceptible to slow moving bureaucratic processes. This licensing reform project has already helped entrepreneurs to focus on growing their business and creating new jobs.”