Companies Bill: reversing the slump

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IN last week’s issue of the Lesotho Times Mpeshe Selebalo reported that Lesotho had slumped in the World Bank’s Doing Business indicators.

What he says is true, but it is not the whole story.

The government of Lesotho has embarked on an ambitious programme to reform the admittedly lengthy procedures associated with starting a business.

A new Companies Bill, to replace the existing 1967 Act, is in the final stages of the parliamentary process.

As from April next year, there will be a new Companies Registry, located at the One-Stop Business Facilitation Centre. 

Computerisation of processes and effective sharing of information will mean that it will no longer be necessary for a company to register separately for tax or to obtain a trading licence.

It will no longer be essential to engage a lawyer to form a company, the time taken to deal with start-up formalities will fall from the unacceptable 40 days to less than a week and the costs involved will be only half what they are now.

This is good news for people planning to start a company.

It is also good news for those who deal with companies, that is, everybody. 

Information about companies will be far more accessible than it is now with details being available from a web site.

Based on the experience of other countries which have reformed business registration, Lesotho can expect a substantial increase in the number of companies registered once the procedures are simplified. 

Registered companies grow much more than informal businesses and they create jobs as well as generate wealth.

The World Bank has actively worked with the government in supporting this initiative, which will see Lesotho rise dramatically in the Starting a Business rankings when next year’s figures are published.

Even so, starting a business is only the beginning and there are other obstacles to business development in Lesotho. 

A project team is working with the government to reform licensing procedures, whether for major industrial projects or sole traders. 

The licensing system should provide protection against unnecessary risks with health and safety or activities which are contrary to public policy, but should not be a barrier to good business. 

A new Industrial Licensing Bill will shortly be presented to parliament and changes are proposed to the Trading Enterprises Regulations, in each case with the aim of eliminating steps which are not essential to the licensing process, so reducing delays and making the whole procedure transparent.

Border problems were highlighted in last week’s article but are already familiar to many individuals and businesses. 

The Ministry of Home Affairs is engaged in immigration and passport services reform and has launched a project to streamline and simplify the procedures to issue basic documents, such as visas, work permits and residence permits.

These initiatives should overcome the recent passport problems and at the same time offer improved security at border points.

Work permits are of course the responsibility of the Ministry of Labour and Employment but work is going ahead to explore the feasibility of combining applications for work and residence permits, which already involve a substantial amount of the same information, and to use technology to share the information between the two ministries. 

It is important for the economy and the country as a whole that the private sector becomes more competitive and seizes opportunities.

To allow this to happen, there is a need to remove administrative obstacles to business development.

In other words, the public sector must also become more “competitive”, aspiring to the standards set by the most efficient organisations in other countries across the world. 

Lesotho may have been slow to reform, but the reform initiative is now well under way.   

*** Chaba Mokuku is a project manager for the Private Sector Competitiveness and Economic Diversification Project, an initiative of the government of Lesotho, supported by the World Bank.

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