The World Bank has published it’s “Doing Business 2009″ report on Eritrea. Since 2006 the World Bank is publishing a report every year on the conditions for starting up a business in 181 countries. In the 2009 World Bank analysis, Eritrea is rated based on 10 quantitative indicators, which measure the climate for opening a business in Eritrea in comparison to other economies.
The indicators are;
- starting a business
- dealing with construction permits
- employing workers
- registering property
- getting credit
- protecting investors
- paying taxes
- rading across borders
- enforcing contracts
- closing a business
From the 10 indicators above the following outline is going to focus solely on starting a business and protecting investors. At the bottom of this article a summary of the “Ease of Doing Business” result for Eritrea will be given.
The business we are looking to start up is a limited liability company, which is comparable across economies, in the biggest city of Eritrea (Asmara). The company is 100% domestically owned, does not own real estate or is receiving special benefits and does employ between 10 to 50 employees. The start up capital is 10 times income per capita.
Starting a Business
According to the latest World Bank Report for 2009 it would require 13 procedures and take 84 days and cost 102.22% GNI per capita to start a the business in Eritrea. In the world ranking 2009 amongst all the countries, Eritrea gets number 178 for starting a business (see report attched).
The procedures required are; a) deposit initial capital in Bank account, b) search for company name, c) notarize company status, d) register with the commercial registry, e) incorporation notice published in official journal, f) apply for tax identification number at the Inland Revenue Department, g) obtain tax clearance from Inland Revenue Department, h) apply for business license at Ministry of Trade and Industry, i) receive license from Ministry of Trade and Industry, j) obtain approval from local municipality, k) notify Ministry of Labor and Human Welfare, l) make company seal, m) apply for tax receipts from Inland Revenue Department.
The graphs below show the Starting a Business indicators for Eritrea over the past 3 years in comparison to the average of Subsaharan Africa. Source (World Bank 2009
Protecting Investors
Protecting investors is important, because decision making about where to put your money depends often on how well the money will be protected in the possible investment. According to the World Bank investor protection explains 73% of the decision in what or where to invest.
The Protecting Investor index for Eritrea is 4.7 and remains in the average of the region and therefore can be regarded as not to bad. Eritrea is comparable with countries such as Egypt and Kenya in terms of how well Investor’s interests are represented in a specific country.
The graph below illustrates the Investor Protection index in Eritrea (4.7), the higher the index the better the protection. New Zealand is best practice. Source (World Bank 2009).
In the World Ranking on Investor Protection Eritrea ranks number 104 as shown in the next graph. Source (World Bank 2009)
Finally, Eritrea is ranking 173 out of 181 economies on the whole range of the 10 business indicators mentioned in the introduction of this article.
The individual rankings for each business indicator in Eritrea Source (World Bank 2009)
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Asmara
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