Guinea-Bissau's newly established Center for the Formalization of Enterprises or CFE, created with the support of the World Bank and IFC, is rapidly changing the way business is done in Guinea-Bissau.
The CFE opened its doors in May 2011 and has had a major impact in easing the process of creating a business. According to the recently published Doing Business 2012 report, the number of procedures to start a business in Bissau dropped from 17 last year to 9, and the time from 216 days to 9 days. Doing Business' methodology assumes that the minimum time for each procedure is one day; however, in practice most companies are able to complete the process at the CFE in just two days. The cost to start a business has fallen from 183.3 percent of GNI per capita to 49.8 percent. As a result of these improvements, Guinea-Bissau has advanced 44 places in the ease of starting a business ranking, from last in the world at 183, to 149.
The CFE's one-stop shop combines all essential services needed to create a business under one roof, including notarizing the company statutes, registering at the Commercial Registry, obtaining the tax identification number, obtaining work permits for foreign investors and receiving commercial, industrial and tourism licenses and local business inspections. Licensing requirements were eased by eliminating the requirement for prior authorization for low-risk commercial activities. In addition, the implementation of the revised General Commercial Law of the Organization for the Harmonization of Business Law in Africa (OHADA), of which Guinea-Bissau is a member, replaces the requirement to submit the criminal records of the company founders at the time of registration with a sworn declaration.
"The Center for Business Formalization we are inaugurating today is part of the new generation of policies to attract investment and simplify the formalities in setting up businesses," Minister of Economy H.E. Helena N. Embalo' said at the center's inauguration. "[The CFE Center] will remove obstacles to the development of economic activities, thus facilitating trade, investment, competitiveness and the consequent creation of wealth."
The government also expects the CFE to contribute to the formalization of the informal sector - which represents about 80 percent of the economy. "Indeed, the wealth produced by this sector is not recorded in the official accounts and is not even taxed, which explains our low tax revenue," Minister Embalo said.
The CFE was possible thanks to the coordinated support of the World Bank, which led the technical assistance for its creation, the International Finance Corporation (IFC) Advisory Services, United Nations Development Program (UNDP), European Union (EU) and the African Development Bank (AfDB).
The CFE is a major first step in the Government of Guinea Bissau's reform agenda to strengthen the business environment in the country. It serves as an example of donor coordination and political championing by a reform-oriented Ministry of Economy. The World Bank Group has provided just in time technical assistance throughout the process of establishing the CFE.
The project was led by Africa's Financial and Private Sector Development team and received technical inputs from the IFC's Investment Climate Advisory Services for Africa. Additional support for the reforms came from the World Bank's International Development Association with valuable learning from neighboring Cape Verde through the South-South Experience Exchange Facility. World Bank Group collaboration to support a better business environment in Guinea Bissau continues with an integrated program, which is in the process of being designed by a joint WB and IFC team.