Kampala. Businesses and investors who are operating or seeking to open shop in the country are losing about Shs725 billion every year because of the tiresome regulatory requirements in government ministries, departments and agencies (MDAs).
According to the private sector players, the estimate that is slightly less than the total budget allocated to the ministry of Agriculture, not only acts as a barrier to trade, but also adds to the already high cost of doing business in Uganda.
The national coordinator, Competitiveness and Investment Climate Strategy Secretariat, Dr Peter Ngategize, said MDAs, that are the overseers of this painstaking process, have a responsibility of getting rid of the regulatory burdens, most of which are unwarranted, before the economy bleeds.
Speaking at the recent Business Licensing Reform Workshop in Kampala, Dr Ngategize said: “The total annual cost incurred by businesses in complying with licensing requirements is estimated at Shs725 billion. This does not make a good reading and we must reduce it.”
“We do not need a budget to do this. This is something that can be dealt with administratively. MDAs only need to cooperate more. And where resources are needed then you (MDAs) will have to make a case for it during the budget process,” he added.
Daily Monitor understands that nearly 60 per cent of the shs725 billion constitutes the actual licence fees and the remaining percentage are the administrative costs of obtaining these licences.
In her presentation, the regulatory reform analyst, Ms Anna Nambooze, said the findings of the Business Licence Reform Committee (BLRC) exercise identified a total of 766 licences issued by both central and local government agencies country-wide about 540 of which are issued by 65 MDAs, while 226 are issued by local governments. The identified licences are issued under 87 laws and 174 regulations, with half of which enacted before liberalisation was officially embraced in 1991.
Agriculture, trade (import and export), transport and logistics and tourism are the most burdened sectors in terms of compliance costs.
According to Ms Nambooze, the trading licence is used as a tool for revenue generation at the local government level, rather than protecting safety, health and the environment. And for that, the trading licence is a major cost driver of the high cost of private sector compliance to business licensing.
She said several businesses require licensing approval from more than one central government agency for the same business activity and are further subjected to licensing requirements by the local governments where they operate. This is worsened by the lack of coordination between government agencies and insufficient ICT solutions to integrate and streamline administrative processes. These processes also involve too many unnecessary administrative steps and often require multiple interfaces with government officials. This is normally a recipe for corruption.
A recommendation was also made to streamline nearly 300 licences, eliminate 41, retain nearly 420 in their original forms, amalgamate eight of them to four and reclassify five.