World Bank and USAID: Zurab Nogaideli, Prime Minister of Georgia, Recognized as Top Reformer of the Year
Washington, D.C. - The World Bank Group and the U.S. Agency for International Development has honored Zurab Nogaideli, Prime Minister of Georgia, as top business environment reformer of the year. The Prime Minister has led reforms which have catapulted Georgia from a ranking of 112 to 37th place in the World Bank Group’s 2007 global rankings on the regulatory ease of doing business.
Other reformers honored for initiating and implementing reforms are:
Agustín Carstens, Secretary of Finance, Mexico
Mahmoud Mohieldin, Minister of Investment, Egypt
Hugo Eduardo Beteta Méndez-Ruiz, Minister of Finance, Guatemala
Donald Kaberuka, President of the African Development Bank and former Minister of Finance, Rwanda
Vincent Van Quickenborne, Secretary of State for Regulatory Simplification, Belgium
Charles Mutalemwa, Permanent Secretary, Ministry of Planning, Tanzania
To celebrate the success of these reform efforts, the World Bank Group and USAID are establishing an annual Reformers’ Club event to honor the top reformers worldwide. The reformers are the initial inductees into the club.
“We recognize global champions of reform, leaders who have fostered a better environment for entrepreneurs in their countries. The members of this Reformers’ Club have demonstrated that straightforward measures can be a catalyst for more jobs, a stronger private sector, and higher economic growth,” said Paul Wolfowitz, President of the World Bank Group.
“USAID is honored to be a cosponsor of the inaugural Reformers’ Club,” said Randall L. Tobias, Director of U.S. Foreign Assistance and USAID Administrator. “Our goal is to recognize leaders who have the vision and courage to undertake the often difficult reforms necessary to create a vibrant private sector that is not constrained by excessive regulatory burdens.”
According to Doing Business 2007: How to Reform, a recent report by the World Bank and IFC, the World Bank Group’s private sector arm, in 2005-2006, some 213 regulatory reforms in 112 economies reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. Doing Business presents annually updated quantitative indicators on business regulations and the protection of property rights. The data can be compared across 175 countries.
Creating new jobs is the best way to reduce poverty, and reforms that make it easier to do business help achieve that goal. In Georgia, the top Doing Business reformer of the year, 85,000 new jobs were created in the private sector during 2006 alone. In Guatemala, another top reformer, reforms in property registration resulted in a 40 percent increase in the construction of private housing. Rwanda and Tanzania, the top reformers in Africa, have grown at 6 and 6.5 percent a year, respectively, since 2000.
“Africa is speeding the pace of reform, with Rwanda and Tanzania showing the way, and this is a very positive development,” said Michael Klein, World Bank/IFC Vice President for Financial and Private Sector Development and IFC Chief Economist. ”Big improvements are possible. Africa still has the most complex business regulations in the world. But if an African country adopts the region’s best practices in the 10 areas covered by Doing Business, it would rank 11th globally. African countries would greatly benefit from new enterprises and jobs, which can come with a more business-friendly environment.”
Some examples of improvements in the business environment that the top reformers have made possible:
In 2005-2006, Georgia reduced the minimum capital required to start a new business from 2,000 to 200 lari ($85). Business registrations rose by 55 percent. Reforms in customs and the border police simplified border procedures. Where it took 54 days to meet all the administrative requirements to export in 2004, it now takes 13. Georgia also amended its procedural code for the courts, introducing specialized commercial sections and reforming the appeals process. The time to resolve simple commercial disputes fell from 375 days to 285.
Mexico, the top reformer in the Americas over the last year, strengthened investor protections with a new securities law that increases the protection of small shareholders. It also cut the time to start a business from 58 days to 27 and lowered corporate income taxes from 33 percent in 2004 to 30 percent in 2005 and 29 percent in 2006.
Egypt reformed its company start-up and tax administration procedures. It cut registration fees for new businesses, reducing the cost by 40 percent, and implemented a flat 20 percent corporate income tax rate. In 2007, Egypt reduced the minimum capital requirement from 50,000 pounds to 1,000 and the time to start a business by 12 days.
Guatemala launched a fast-track business registration service and set time limits on obtaining building permits. Electronic property registration reduced delays by a month.
Rwanda introduced a specialized commercial division in the high court and increased the number of authorized notaries from one to over 50. As a result, the time to register a new business fell from 21 days to 16 days. Rwanda also decreased its corporate income tax rate from 35 to 30 percent.
Tanzania reduced the cost to register new businesses by 40 percent. Customs clearance times dropped from 51 to 39 days for imports and from 30 to 24 days for exports. Tanzania also cut fees associated with transferring property by 3 percent and revised its company law to better protect small investors.
Belgium has developed the European Union’s most innovative communication program for cutting red tape. One result is a reduction in the days to start a business, from 56 in 2003 to less than a week now. The government has established a Cutting Red Tape Brigade that solicits complaints from businesses and helps resolve them.
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