BizCLIR

The World Bank’s Doing Business ranking for Starting a Business focuses on the time and cost of business registration. However, there is much more to starting a successful business than getting it registered. If an entrepreneur can register a business successfully but cannot effectively compete or sustain that business, registration will be meaningless. Strong influence and control of the government within the business community or uncompetitive practices by dominant private companies can both pose insurmountable obstacles to entrepreneurs trying to make a living. Because of the important challenges these issues can create, both privatization and competition are also discussed in this chapter.

Burundi’s Starting a Business ranking is very low and appears to be worsening. However, among the business community, business registration was not a significant concern. Most private sector representatives indicated that it is actually quite quick, and the several required steps listed in the Doing Business report were not raised by anyone interviewed within the public or private sectors.

The primary challenge with business registration is not the required steps, but rather figuring out what the required steps are. If one knows what to do, there may be some delay in receiving certain materials, but the steps themselves are simple. If one does not know what to do, and does not fortuitously stumble upon the business registration section at the Commercial Tribunal, finding answers can be a serious challenge. The laws and procedures are not readily available, and several private sector representatives shared tales of frustration of traveling from ministry to ministry, and office to office, simply seeking some direction of where and how to apply. As reflected in the indicator graph below, the biggest fix is needed in the activities of the implementing institutions and their ability to facilitate this process for all stakeholders – not just a select few who are in the know.

The most serious challenges to starting a successful business come both before and after business registration. The initial constraint is that private sector Burundians are not historically drawn to business. The entrepreneurial spirit is weak. Steady jobs, particularly with the government, are considered the best working opportunities. As a result, few Burundians pursue innovative business ideas, and most entrepreneurs do not expand beyond a subsistence business level.

Constraints to sustaining business that fall after registration include the very slow pace of privatization, which effectively restricts the business sectors that are open to the private sector, and the role of corruption and informal fees in complicating the ability of entrepreneurs to predictably assess and evaluate business costs. Through connections or corruption, some businesses are able to avoid the formal costs of doing business and can, thus, undercut the prices of those playing by the rules. Both of these aspects result in an unequal playing field for entrepreneurs and business people in Burundi, reducing the appeal and profitability of entry into business.

By pushing forward reform efforts, such as privatization and the new draft commercial laws being developed, and by implementing laws and processes to ensure standardization of processes for the business community, this field can be leveled, giving everyone a fair chance for business success.