Billions lost in business licensing: World Bank
KAMPALA: Uganda loses at least Shs394 billion in collecting license fees from starting businesses in the country, a new World Bank study shows. "Our study indicates that Uganda's licensing regime costs $175 million per year, which represents 1.3 per cent of the Gross Domestic Product," Mr Fred Zake, an investment climate expert at the World Bank Group told journalists in Kampala.
Uganda's GDP, put simply as the annual national income from the sale of goods and services, is about $16 billion (Shs36 trillion) - five times the current national budget.
Mr Zake said a third of the money is lost as government agencies attempt to collect license fees from the issuance of at least 267 authorisations and licenses to investors in the country. The numerous licenses form part of the core problems of doing business in Uganda including; corruption, high energy and transport costs.
As a result, Uganda has continued to rank poorly on the global doing business index compared to nations like New Zealand and Singapore. The 2011 Doing Business Report by the World Bank ranked Uganda in the 122 position out of 181 countries and yet that is an improvement from the 129th position in 2009.
To improve the investment climate and cutback on the cost of licensing, the government in partnership with the World Bank have teamed up under the newly launched Investment Reform Programme. Mr Zake said through the progamme, the partners are set to cut back on costs of licensing by about Shs100 billion. "We are going to cost all these licenses, and the cost of licensing will reduce by 25 per cent," he said. Under the four-year programme the Ministry of Finance will pursue major reforms in the taxation and licensing regimes of the country. -PB News