COMPARING BUSINESS REGULATION IN JUBA AND 183 ECONOMIES 74677 Juba Juba COMPARING BUSINESS REGULATION IN JUBA AND 183 ECONOMIES A COPUBLICATION OF THE WORLD BANK AND THE INTERNATIONAL FINANCE CORPORATION ©2011 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved A copublication of the World Bank and the International Finance Corporation This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. 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Copies of the Doing Business 2011: Making a Difference for Entrepreneurs; Doing Business 2010: Reforming through Difficult Times; Doing Business 2009; Doing Business 2008; Doing Business 2007: How to Reform; Doing Business in 2006: Creating Jobs; Doing Business in 2005: Removing Obstacles to Growth; and Doing Business in 2004: Understanding Regulations, may be obtained at www.doingbusiness.org. Contents About Doing Business and Doing Business in Juba 2011 measures closing a business. The data in Doing Doing Business in Juba 2011 1 business regulations and their enforce- Business in Juba 2011 are current as of Executive summary 7 ment in Juba, Southern Sudan. It is the November 2010. Starting a business 11 first city profile in Southern Sudan. Com- The methodology has limitations. parisons with 183 other economies are Other areas important to business, such Dealing with construction permits 16 based on Doing Business 2011: Making a as the security of property from theft Registering property 20 Difference for Entrepreneurs, the eighth and looting, proximity to major mar- Getting credit 24 in a series of annual reports published kets, quality of infrastructure services, Protecting investors 27 by the World Bank and the International transparency of government procure- Paying taxes 31 Finance Corporation. The indicators in ment, macroeconomic conditions and Doing Business in Juba 2011 are also the quality of institutions are not studied Trading across borders 35 comparable with 346 cities in 38 econo- directly by Doing Business. To make the Enforcing contracts 39 mies benchmarked in other subnational data comparable across economies, the Closing a business 43 Doing Business studies. All data and re- indicators refer to a specific type of   ports are available at www.doingbusi- company—generally a limited liability Data notes 47 ness.org. company. Doing Business investigates the reg- Doing Business in Juba 2011 is part Doing Business indicators 63 ulations that enhance business activity of the IFC Sudan Investment Climate Indicator details 65 and those that constrain it. Doing Busi- Program. The program aims to reduce Annex: Employing workers 72 ness in Juba 2011 measures regulations administrative and regulatory barriers Acknowledgments 73 affecting 9 stages of the life of a small or to business, attract new investments in medium-size business: starting a busi- sectors such as agribusiness and hydro ness, dealing with construction permits, power, provide small and medium enter- registering property, getting credit, pro- prises with management training, and tecting investors, paying taxes, trading develop access to credit and leasing. across borders, enforcing contracts, and 1 About Doing 9 years ago, goes one step further. It looks at domestic small and medium-size com- indicators give a higher score for more regulation, such as stricter disclosure re- Business and panies and measures the regulations ap- plying to them through their life cycle. quirements in related-party transactions. Some give a higher score for a simplified Doing Business Doing Business and the standard cost way of implementing existing regulation, model initially developed and applied in such as completing business start-up in Juba 2011 the Netherlands are, for the present, the formalities in a one-stop shop. only standard tools used across a broad Doing Business in Juba 2011 encom- range of jurisdictions to measure the passes 2 types of data. The first come impact of government rule-making on from readings of laws and regulations. business activity.1 The second are time and motion indi- The first Doing Business report, pub- cators that measure the efficiency and lished in 2003, covered 5 indicator sets complexity in achieving a regulatory goal and 133 economies. This year’s report (such as granting the legal identity of a covers 11 indicator sets and 183 econo- business). Within the time and motion mies. Nine topics are included in the indicators, cost estimates are recorded Governments committed to the eco- aggregate ranking on the ease of doing from official fee schedules where ap- nomic health of their country and op- business. The project has benefited from plicable. Here, Doing Business builds on portunities for its citizens focus on more feedback from governments, academics, Hernando de Soto’s pioneering work in than macroeconomic conditions. They practitioners and reviewers.2 The initial applying the time and motion approach also pay attention to the laws, regula- goal remains: to provide an objective first used by Frederick Taylor to revolu- tions and institutional arrangements that basis for understanding and improving tionize the production of the Model T shape daily economic activity. the regulatory environment for business. Ford. De Soto used the approach in the The global financial crisis has re- 1980s to show the obstacles to setting newed interest in good rules and regu- WHAT DOING BUSINESS IN JUBA up a garment factory on the outskirts of lation. In times of recession, effective 2011 COVERS Lima, Peru.3 business regulation and institutions can support economic adjustment. Easy Doing Business in Juba 2011 provides a WHAT DOING BUSINESS IN JUBA entry and exit of firms, and flexibility quantitative measure of the national, and 2011 DOES NOT COVER in redeploying resources, make it easier local regulations for starting a business, to stop doing things for which demand dealing with construction permits, regis- Just as important as knowing what Doing has weakened and to start doing new tering property, getting credit, protecting Business in Juba 2011 does is to know things. Clarification of property rights investors, paying taxes, trading across what it does not do—to understand what and strengthening of market infrastruc- borders, enforcing contracts and closing limitations must be kept in mind in in- ture (such as credit information and a business—as they apply to domestic terpreting the data. collateral systems) can contribute to con- small and medium-size enterprises. fidence as investors and entrepreneurs A fundamental premise of Doing LIMITED IN SCOPE look to rebuild. Business is that economic activity re- Doing Business in Juba 2011 focuses on 9 Until recently, however, there were quires good rules. These include rules topics, with the specific aim of measur- no globally available indicator sets for that establish and clarify property rights ing the regulation and red tape relevant monitoring such microeconomic factors and reduce the costs of resolving dis- to the life cycle of a domestic small to and analyzing their relevance. The first putes, rules that increase the predictabil- medium-size firm. efforts, in the 1980s, drew on percep- ity of economic interactions and rules Accordingly: tions data from expert or business sur- that provide contractual partners with • Doing Business in Juba 2011 does not veys. Such surveys are useful gauges core protections against abuse. The ob- measure all aspects of the business of economic and policy conditions. But jective: regulations designed to be ef- environment that matter to firms or their reliance on perceptions and their ficient in their implementation, to be investors—or all factors that affect incomplete coverage of poor countries accessible to all who need to use them competitiveness. It does not, for ex- constrain their usefulness for analysis. and to be simple in their implementa- ample, measure security, macroeco- The Doing Business project, initiated tion. Accordingly, some Doing Business nomic stability, corruption, the labor 2 DOING BUSINESS IN JUBA 2011 skills of the population, the under- is in part empirical: private, limited li- will improve not only our cholesterol rat- lying strength of institutions or the ability companies are the most prevalent ing but also our overall health. quality of infrastructure. Nor does it business form in most economies around One way to test whether Doing Busi- focus on regulations specific to for- the world. The choice also reflects one ness serves as a proxy for the broader eign investment. focus of Doing Business: expanding op- business environment and for competi- • Doing Business in Juba 2011 does not portunities for entrepreneurship. Inves- tiveness is to look at correlations be- assess the strength of the financial tors are encouraged to venture into busi- tween the Doing Business rankings and system or market regulations, both ness when potential losses are limited to other major economic benchmarks. The important factors in understanding their capital participation. indicator set closest to Doing Business some of the underlying causes of the in what it measures is the Organization global financial crisis. FOCUSED ON THE FORMAL SECTOR for Economic Co-operation and Devel- • Doing Business in Juba 2011 does not In constructing the indicators, Doing opment’s indicators of product market cover all regulations, or all regulatory Business in Juba 2011 assumes that en- regulation; the correlation here is 0.72. goals, in any city. As economies and trepreneurs are knowledgeable about all The World Economic Forum’s Global technology advance, more areas of regulations in place and comply with Competitiveness Index and IMD’s World economic activity are being regulated. them. In practice, entrepreneurs may Competitiveness Yearbook are broader in For example, the European Union’s spend considerable time finding out scope, but these too are strongly corre- body of laws (acquis) has now grown where to go and what documents to sub- lated with Doing Business (0.79 and 0.64, to no fewer than 14,500 rule sets. mit. Or they may avoid legally required respectively).6 • Doing Business in Juba 2011 mea- procedures altogether—by not register- A bigger question is whether the sures just 9 phases of a company’s life ing for social security, for example. issues on which Doing Business focuses cycle, through 9 specific indicators. Where regulation is particularly matter for development and poverty re- The indicator sets also do not cover all onerous, levels of informality are higher. duction. The World Bank study Voices aspects of regulation in the particular Informality comes at a cost: firms in of the Poor asked 60,000 poor people area. For example, the indicators on the informal sector typically grow more around the world how they thought they starting a business do not cover all slowly, have poorer access to credit and might escape poverty.7 The answers were aspects of commercial legislation. employ fewer workers—and their work- unequivocal: women and men alike pin ers remain outside the protections of their hopes above all on income from BASED ON STANDARDIZED CASE labor law.4 Doing Business in Juba 2011 their own business or wages earned in SCENARIOS measures one set of factors that help employment. Enabling growth—and en- The indicators analyzed in Doing Busi- explain the occurrence of informality suring that poor people can participate ness in Juba 2011 are built on the basis of and give policy makers insights into po- in its benefits—requires an environment standardized case scenarios with specific tential areas of reform. Gaining a fuller where new entrants with drive and good assumptions, such as that the business is understanding of the broader business ideas, regardless of their gender or ethnic located in Juba measured in the report. environment, and a broader perspective origin, can get started in business and Economic indicators commonly make on policy challenges, requires combin- where good firms can invest and grow, limiting assumptions of this kind. Infla- ing insights from Doing Business in Juba generating more jobs. tion statistics, for example, are often 2011 with data from other sources, such Small and medium-size enterprises based on prices of consumer goods in a as the World Bank Enterprise Surveys.5 are key drivers of competition, growth few urban areas. Such assumptions allow and job creation, particularly in develop- global coverage and enhance compara- WHY THIS FOCUS  ing countries. But in these economies up bility, but they inevitably come at the to 80% of economic activity takes place expense of generality. Doing Business in Juba 2011 functions in the informal sector. Firms may be pre- In areas where regulation is com- as a kind of cholesterol test for the regu- vented from entering the formal sector plex and highly differentiated, the stan- latory environment for domestic busi- by excessive bureaucracy and regulation. dardized case used to construct each nesses. A cholesterol test does not tell us Where regulation is burdensome Doing Business in Juba 2011 indicator everything about the state of our health. and competition limited, success tends needs to be carefully defined. Where But it does measure something impor- to depend more on whom you know relevant, the standardized case assumes tant for our health. And it puts us on than on what you can do. But where a limited liability company. This choice watch to change behaviors in ways that regulation is transparent, efficient and ABOUT DOING BUSINESS AND DOING BUSINESS IN JUBA 3 implemented in a simple way, it becomes DOING BUSINESS IN JUBA 2011 AS DOING BUSINESS— easier for any aspiring entrepreneurs, A BENCHMARKING EXERCISE A USER’S GUIDE regardless of their connections, to oper- ate within the rule of law and to benefit Doing Business in Juba 2011, in captur- Quantitative data and benchmarking can from the opportunities and protections ing some key dimensions of regulatory be useful in stimulating debate about that the law provides. regimes, can be useful for benchmark- policy, both by exposing potential chal- In this sense Doing Business values ing. Any benchmarking—for individu- lenges and by identifying where pol- good rules as a key to social inclusion. It als, firms or economies—is necessar- icy makers might look for lessons and also provides a basis for studying effects ily partial: it is valid and useful if it helps good practices. These data also provide of regulations and their application. For sharpen judgment, less so if it substitutes a basis for analyzing how different policy example, Doing Business 2004 found that for judgment. approaches—and different policy re- faster contract enforcement was associ- Doing Business in Juba 2011 pro- forms—contribute to desired outcomes ated with perceptions of greater judicial vides 2 takes on the data it collects: it such as competitiveness, growth and fairness—suggesting that justice delayed presents “absolute” indicators for Juba greater employment and incomes. is justice denied.8 for each of the 9 regulatory topics it ad- Eight years of Doing Business data In the context of the global crisis dresses, and it provides comparisons be- have enabled a growing body of research policymakers continue to face particular tween Juba and Khartoum, and between on how performance on Doing Busi- challenges. Both developed and develop- Juba and other economies in the region ness indicators—and reforms relevant ing economies are seeing the impact of both by indicator and in aggregate. Judg- to those indicators—relate to desired the financial crisis flowing through to the ment is required in interpreting these social and economic outcomes. Some real economy, with rising unemployment measures for any city and in determining 656 articles have been published in and income loss. The foremost chal- a sensible and politically feasible path for peer-reviewed academic journals, and lenge for many governments is to create reform. about 2,060 working papers are available new jobs and economic opportunities. Reviewing the Doing Business rank- through Google Scholar.9 Among the But many have limited fiscal space for ings in isolation may show unexpected findings: publicly funded activities such as infra- results. Some cities may rank unexpect- • Lower barriers to start-up are associ- structure investment or for the provision edly high on some indicators. And some ated with a smaller informal sector.10 of publicly funded safety nets and so- cities that have had rapid growth or • Lower costs of entry encourage entre- cial services. Reforms aimed at creating attracted a great deal of investment may preneurship, enhance firm productiv- a better investment climate, including rank lower than others that appear to be ity and reduce corruption.11 reforms of business regulation, can be less dynamic. • Simpler start-up translates into beneficial for several reasons. Flexible But for reform-minded local gov- greater employment opportunities.12 regulation and effective institutions, in- ernments, how much the regulatory cluding efficient processes for starting environment for local entrepreneurs The quality of a country’s contract- a business and efficient insolvency or improves matters more than their rel- ing environment is a source of com- bankruptcy systems, can facilitate real- ative ranking. As cities develop, they parative advantage in trade patterns. location of labor and capital. As busi- strengthen and add to regulations to Countries with good contract enforce- nesses rebuild and start to create new protect investor and property rights. ment specialize in industries where re- jobs, this helps to lay the groundwork for Meanwhile, they find more efficient ways lationship-specific investments are most countries’ economic recovery. And regu- to implement existing regulations and important.13 latory institutions and processes that are cut outdated ones. One finding of Doing Greater information sharing through streamlined and accessible can help en- Business: dynamic and growing econo- credit bureaus is associated with higher sure that, as businesses rebuild, barriers mies continually reform and update their bank profitability and lower bank risk.14 between the informal and formal sectors regulations and their way of implement- are lowered, creating more opportunities ing them, while many poor economies HOW DO GOVERNMENTS USE DOING for the poor. still work with regulatory systems dating BUSINESS? to the late 1800s. A common first reaction is to doubt the quality and relevance of the Doing Business data. Yet the debate typically proceeds to a deeper discussion explor- 4 DOING BUSINESS IN JUBA 2011 ing the relevance of the data to the to Doing Business topics were nested in INFORMATION SOURCES FOR THE DATA economy and areas where reform might broader programs of reform aimed at en- make sense. hancing economic competitiveness. The Most of the indicators are based on laws Most reformers start out by seeking same can be said at the subnational level. and regulations. In addition, most of the examples, and Doing Business helps in In structuring their reform pro- cost indicators are backed by official fee this (box 1.1). For example, Saudi Arabia grams, governments use multiple data schedules. Doing Business respondents used the company law of France as a sources and indicators. And reformers both answer surveys and provide refer- model for revising its own. Many coun- respond to many stakeholders and inter- ences to the relevant laws, regulations tries in Africa look to Mauritius—the est groups, all of whom bring important and fee schedules, aiding data checking region’s strongest performer on Doing issues and concerns into the reform de- and quality assurance. Business indicators—as a source of good bate. World Bank Group dialogue with For some indicators part of the practices for reform. In the words of governments on the investment climate cost component (where fee schedules Egypt’s former Minister of Investment, is designed to encourage critical use are lacking) and the time component Dr. Mahmoud Mohieldin: of the data, sharpening judgment and are based on actual practice rather than avoiding a narrow focus on improving the law on the books. This introduces a What I like about Doing Business... is Doing Business rankings and encourag- degree of subjectivity. The Doing Busi- that it creates a forum for exchanging ing broad-based reforms that enhance ness approach has therefore been to work knowledge. It’s no exaggeration to say that the investment climate. with legal practitioners or professionals we checked the top ten in every indicator who regularly undertake the transac- and we just asked them, “How did you do METHODOLOGY AND DATA tions involved. Following the standard it?” If there is any advantage to starting methodological approach for time and late in anything, it’s that you can learn Doing Business in Juba 2011 covers the motion studies, Doing Business breaks from others. city of Juba. The data are based on na- down each process or transaction, such tional and local laws and regulations as starting and legally operating a busi- Over the past 8 years there has been as well as administrative requirements. ness, into separate steps to ensure a bet- much activity by governments in reform- (For a detailed explanation of the Doing ter estimate of time. The time estimate ing the regulatory environment for do- Business in Juba 2011 methodology, see for each step is given by practitioners mestic businesses. Most reforms relating Data notes). with significant and routine experience in the transaction. BOX 1.1 The Doing Business approach to How economies have used Doing Business in regulatory reform programs data collection contrasts with that of To ensure coordination of efforts across agencies, such economies as Colombia, Rwanda and Sierra enterprise or firm surveys, which capture Leone have formed regulatory reform committees reporting directly to the president that use the often one-time perceptions and experi- Doing Business indicators as one input to inform their programs for improving the business environ- ences of businesses. A corporate lawyer ment. More than 20 other economies have formed such committees at the inter-ministerial level. registering 100–150 businesses a year These include India, Malaysia, Taiwan (China) and Vietnam in East and South Asia; the Arab Republic of will be more familiar with the process Egypt, Morocco, Saudi Arabia, the Syrian Arab Republic, the United Arab Emirates and the Republic of than an entrepreneur, who will register Yemen in the Middle East and North Africa; Georgia, Kazakhstan, the Kyrgyz Republic, Moldova and Ta- jikistan in Eastern Europe and Central Asia; Kenya, Liberia, Malawi and Zambia in Sub-Saharan Africa; a business only once or maybe twice. A and Guatemala, Mexico and Peru in Latin America. bankruptcy judge deciding dozens of cases a year will have more insight into Beyond the level of the economy, the Asia-Pacific Economic Cooperation (APEC) organization uses bankruptcy than a company that may Doing Business to identify potential areas of regulatory reform, to champion economies that can help undergo the process. others improve and to set measurable targets. In 2009 APEC launched the Ease of Doing Business Action Plan with the goal of making it 25% cheaper, faster and easier to do business in the region by 2015. Drawing on a firm survey, planners identified 5 priority areas: starting a business, getting credit, DEVELOPMENT OF THE METHODOLOGY enforcing contracts, trading across borders and dealing with permits. The next 2 steps: the APEC economies setting targets to measure results, and the champion economies selected, such as Japan, The methodology for calculating each New Zealand and the United States, developing programs to build capacity to carry out regulatory indicator is transparent, objective and reform in these areas.1 easily replicable. Leading academics col- 1. Muhamad Noor (executive director of APEC), speech delivered at ASEAN-NZ Combined Business Council breakfast meeting, Auck- laborate in the development of the indi- land, New Zealand, March 25, 2010, http://www.apec.org. cators, ensuring academic rigor. Eight of ABOUT DOING BUSINESS AND DOING BUSINESS IN JUBA 5 the background papers underlying the If errors are confirmed after a data veri- “Lobbying on Entry.” CEPR Discussion Paper 4519, Centre for Economic Policy indicators have been published in lead- fication process, they are expeditiously Research, London; Fisman, Raymond, ing economic journals. corrected. and Virginia Sarria-Allende. 2004. Doing Business uses a simple averag- “Regulation of Entry and the Distor- ing approach for weighting sub-indica- tion of Industrial Organization.” NBER Working Paper 10929, National Bureau tors and calculating rankings. Other ap- of Economic Research, Cambridge, MA; proaches were explored, including using 1. The standard cost model is a quantita- Antunes, Antonio, and Tiago Cavalcanti. tive methodology for determining the 2007. “Start Up Costs, Limited Enforce- principal components and unobserved administrative burdens that regulation ment, and the Hidden Economy.” Euro- components. The principal components imposes on businesses. The method can pean Economic Review 51 (1): 203–24; and unobserved components approaches be used to measure the effect of a single Djankov, Simeon, Caroline Freund and law or of selected areas of legislation or Cong S. Pham. 2010. “Trading on Time.” turn out to yield results nearly identical to perform a baseline measurement of all Review of Economics and Statistics 92 (1): to those of simple averaging. The tests legislation in a country. 166–73. show that each set of indicators provide 2. This has included a review by the World 12. For example, Freund, Caroline, and sufficiently broad coverage across topics. Bank Independent Evaluation Group Bineswaree Bolaky. 2008. “Trade, Regu- (2008) as well as ongoing input from the lations and Income.” Journal of Develop- Therefore, the simple averaging approach International Tax Dialogue. ment Economics 87: 309–21; Chang, is used. 3. De Soto, Hernando. 2000. The Mystery Roberto, Linda Kaltani and Norman of Capital: Why Capitalism Triumphs in Loayza. 2009. “Openness Can Be Good IMPROVEMENTS TO THE the West and Fails Everywhere Else. New for Growth: The Role of Policy Comple- METHODOLOGY AND DATA York: Basic Books. mentarities.” Journal of Development REVISIONS 4. Schneider, Friedrich. 2005. “The Infor- Economics 90: 33–49; Helpman, Elhanan, mal Sector in 145 Countries.” Depart- Marc Melitz and Yona Rubinstein. 2008. The methodology has undergone contin- ment of Economics, University Linz. “Estimating Trade Flows: Trading Part- ual improvement over the years. Changes ners and Trading Volumes.” Quarterly 5. http://www.enterprisesurveys.org Journal of Economics 123 (2): 441–87. have been made mainly in response to 6. The World Economic Forum’s Global 13. Nunn, Nathan. 2007. “Relationship- country suggestions. In accordance with Competitiveness Report uses part of Specificity, Incomplete Contracts, and the Doing Business methodology, these the Doing Business data sets on starting the Pattern of Trade.” Quarterly Journal business, employing workers, protecting of Economics 122 (2): 569–600. changes have been incorporated into the investors and getting credit (legal rights). Doing Business in Juba 2011. 14. Houston, Joel, Chen Lin, Ping Lin and 7. Narayan, Deepa, Robert Chambers, Yue Ma. 2010. “Creditor Rights, Informa- For starting a business, for example, Meer Kaul Shah and Patti Petesh. 2000. tion Sharing, and Bank Risk Taking.” the minimum capital requirement can be Voices of the Poor: Crying Out for Change. Journal of Financial Economics 96 (3): Washington, D.C.: World Bank. 485–512. an obstacle for potential entrepreneurs. 8. World Bank. 2003. Doing Business in Initially, Doing Business measured the 2004: Understanding Regulation. Wash- required minimum capital regardless of ington, D.C.: World Bank Group. whether it had to be paid up front or 9. http://scholar.google.com not. In many economies only part of the 10. For example, Masatlioglu, Yusufcan, minimum capital has to be paid up front. and Jamele Rigolini. 2008. “Informality Traps.” B.E. Journal of Economic Analysis To reflect the actual potential barrier to & Policy 8 (1); Kaplan, David, Eduardo entry, the paid-in minimum capital has Piedra and Enrique Seira. 2007. “Entry been used since 2004. Regulation and Business Start-Ups: Evidence from Mexico.” Policy Research All changes in methodology are ex- Working Paper 4322, World Bank, plained in the Data notes section of this Washington, D.C.; Ardagna, Silvia, and report as well as on the Doing Business Annamaria Lusardi. 2008. “Explaining International Differences in Entrepre- website. In addition, data time series neurship: The Role of Individual Char- for each indicator and city are available acteristics and Regulatory Constraints.” on the website. The website also makes NBER Working Paper 14012, National available all original data sets used for Bureau of Economic Research, Cam- bridge, MA. background papers. 11. For example, Alesina, Alberto, Silvia Information on data corrections is Ardagna, Giuseppe Nicoletti and Fabio provided in the Data notes and on the Schiantarelli. 2005. “Regulation and website. A transparent complaint proce- Investment.” Journal of the European Economic Association 3 (4): 791–825; dure allows anyone to challenge the data. Perotti, Enrico, and Paolo Volpin. 2004. 7 Executive based economic development, in order to bring peace dividends to its people. of Doing Business is that economic activ- ity requires good rules and institutions. summary The government, recognizing early on the importance of the private sector in This includes rules that establish and clarify property rights, reduce the cost reaching these goals, provided in the of resolving disputes, increase the pre- Interim Constitution for free enterprise dictability of economic outcomes, and and the protection of property rights. In provide contractual partners with core its draft Growth Strategy for 2010-2012, protections against abuse. The objective: the government also declared its com- regulations designed to be efficient, ac- mitment to private sector-led growth.3 cessible to all, and simple in their imple- For a population recovering from de- mentation. This is especially important cades of war, stable jobs, steady income, for the private sector in Africa, where, and the security of a business are indeed some development experts believe, “the more important than ever.4 most important determinant of perfor- Since 2005, 19 laws guiding business mance will be the business environment registration, operation, and exit have in which the firm operates.”8 In January 2011, Southern Sudan voted been drafted. Nine of them have been Until the publication of this study, to secede from Sudan by referendum, enacted by the Legislative Assembly of the city of Khartoum represented Sudan and is expected to become independent Southern Sudan, including the Registra- in the Doing Business report. Doing Busi- in July of the same year. De facto, Africa’s tion of Business Names Act of 2008, the ness in Juba 2011 expands the bench- newest country has been a semi-autono- Partnerships Act of 2008, the Taxation marking of 9 Doing Business topics be- mous region since 2005, when the Gov- Act of 2009, and the Land Act of 2009.5 yond Khartoum to Juba. This report is ernment of Sudan and the Sudan People’s Another 8 are yet to be submitted to the a useful tool for the Government of Liberation Army signed the Compre- Legislative Assembly—including a new Southern Sudan, the State Government hensive Peace Agreement that ended the Companies Bill, Labor Bill, and Insol- of Central Equatoria (the state where civil war. Following the agreement, the vency Bill.6 Two provisional orders—the Juba is located), and Juba Payam, Mu- Government of Southern Sudan and the Co-operatives Provisional Order and the nuki Payam and Kator Payam (Juba’s 3 Legislative Assembly of Southern Sudan Sale of Goods Provisional Order—have county level governments), in 4 respects. were established. In December 2005, the been submitted to the Assembly and First, it records what has been achieved Interim Constitution of Southern Sudan are awaiting legislative approval. A new since the peace agreement was signed was adopted, demarcating the compe- Business Registry was created in 2006, in 2005, and establishes a baseline to tences of the Government of Southern which delivered certificates of incorpo- record future improvements. Second, it Sudan, the State and Local Governments rations to about 9,000 businesses within identifies which areas offer opportunities (payam and bomas), the Legislative As- its first 5 years.7 In addition, commer- for further improvement, where proce- sembly, and the Judiciary. cial banks have been established. At the dures can be streamlined, laws clarified, Southern Sudan emerged from the same time, basic infrastructures—such and fundamental institutions created to war with substantial economic potential: as roads and bridges—are being reha- support the development of a domestic a territory larger than France, vast oil bilitated. However, much remains to be private sector. Third, it provides observa- reserves, and swathes of fertile agricul- done and the reform momentum must tions and recommendations that can po- tural land.1 Yet, it also faced daunting be maintained. tentially be used by other cities in South- economic challenges. Most of its infra- Benchmarking tools that create a ern Sudan to improve their own business structure and production capacity had baseline of the regulatory framework, environment. Fourth, it shows that—on been destroyed in the war, fundamental identify opportunities for improvement, the eve of formal independence—South- laws were missing, and key institutions point out challenges, and disseminate ern Sudan is open for business. remained to be created.2 lessons and good practices can assist The World Bank and United Na- these reform endeavors. Doing Business BENCHMARKING JUBA IN THE REGION AND THE WORLD tions’ Joint Assessment Mission—car- is one of these tools. Doing Business ried out in 2005—called for the Govern- studies business regulations from the The overall ranking of Doing Business ment of Southern Sudan to build the perspective of a small to medium-size in Juba 2011 is presented below (figure foundations of an inclusive and broad- domestic firm. A fundamental premise 1.1). Compared to the 183 economies 8 DOING BUSINESS IN JUBA 2011 FIGURE 1.1 the fact that compliance is low, as many no public or private credit bureau in How Juba compares globally and with selected African and Middle businesses still operate in the informal the region—Juba scores 2 of 10 on the Eastern economies on the ease sector and do not resort to courts to re- “strength of legal rights” index and 0 of of doing business solve commercial disputes. As for paying 6 on the “depth of credit information” Global ranking (1–183) taxes, a medium-size company spends index. Investor protections are also weak SINGAPORE EASIEST (1) 218 hours per year and 25.5% of com- in Juba. The Companies Act of 2003 mercial profits on 46 payments in Juba. requires directors to disclose conflicts of 20 On dealing with construction per- interest and allows shareholders hold- South Africa mits, starting a business and registering ing at least 10% of a company’s share 40 property, Juba would rank 49th, 123rd capital to appoint an inspector and seek 60 Rwanda and 124th respectively. In these three investigation of related-party transac- areas, cost is a major bottleneck. An tions. However, by law, no action can be 80 entrepreneur in Juba must spend 14.7% undertaken, no penalties imposed, and Egypt, Arab Rep. of property value to transfer a new plot no rescission is possible unless the trans- 100 Kenya under his name, 250.2% of income per action proves fraudulent. As for closing a 120 Uganda capita to start his own company and business, the Insolvency Bill of 2009 has 140 Nigeria 5,936% of income per capita to obtain all been drafted but not yet enacted, and no construction permits and utility connec- bankruptcy case has been reported since Sudan (Khartoum) 160 Juba (159) tions—more costly than most economies the signing of the peace agreement. measured by Doing Business. Why? For In trading across borders, Juba 183 Chad starting a business and registering prop- would rank 181st, just ahead of Afghani- Source: Doing Business database. erty, entrepreneurs must pay high fees to stan and the Central African Republic, different state and local authorities. For the indicator’s worst performers. Using measured by Doing Business, Juba would dealing with construction permits, since the port of Mombasa in Kenya, it takes rank 159th on the ease of doing busi- few entrepreneurs have access to water an entrepreneur in Juba 11 documents, ness. Although the rankings of Juba and pipes and power cuts are still frequent, 60 days, and US$ 9,420 to import a stan- Khartoum (154th) are close, they reflect entrepreneur must drill boreholes and dardized container cargo, and 9 docu- different realities. Khartoum needs to buy expensive generators to secure their ments, 52 days, and US$ 5,025 to export clarify existing laws, streamline existing water and electricity supply. it. It is slower and more expensive than procedures, and improve the efficiency It is relatively fast to start a busi- the regional average—not only because of existing institutions. While this is ness, deal with construction permits and of distances, but also because of the poor equally true for Juba, its ranking also register property. One of the reasons is quality of inland transport infrastructure, reveals that several fundamental laws low transaction volumes. The relevant the presence of multiple checkpoints on and institutions are still missing. This authorities simply do not have many ap- the road from Nimule to Juba, and the presents a challenge, but also a window plications to process, since enforcement complexity of the administrative pro- of opportunity for Southern Sudan to and compliance with regulations are low. cesses. For example, to obtain an import build the strong foundation necessary for But—in the case of starting a business— letter of credit, traders must first obtain a vibrant formal private sector to emerge. it is also because of business reforms. an approval from the Bank of Southern Behind the aggregate ranking, vari- The new Business Registry established Sudan to take money out of the coun- ations can be found on a topic-by-topic in 2006 is efficient, well staffed, and gov- try—adding 22 days to the whole process. basis (figure 1.2). On enforcing contracts erned by clear guidelines. and paying taxes, for example, Juba On the ease of protecting inves- IDENTIFYING KEY AREAS FOR IMPROVEMENT would rank 74th and 84th, respectively— tors, getting credit and closing a busi- ahead of countries like Kenya, Egypt, and ness, Juba would rank 173rd, 176th, and Ranking is not what matters most. It is Nigeria. Solving a commercial dispute in 183rd, respectively. These rankings reflect a starting point for the Government of Juba takes 111 days and costs 26% of the Southern Sudan’s lack of a strong legal Southern Sudan, State Government of value of the claim—faster but more ex- framework. When it comes to getting Central Equatoria, and Juba’s payams pensive than in Khartoum where it takes credit, since the Companies Act of 2003 to identify key areas for improvement. 810 days and costs 19.8% of the value only contains a few provisions regulat- Doing Business in Juba 2011 draws 4 of the claim. This may be partly due to ing secured transactions—and there is general observations, as outlined below. EXECUTIVE SUMMARY 9 FIGURE 1.2 Global ranking on Doing Business topics – Juba, Khartoum and Sub-Saharan Africa’s average compared Ranking NEW HONG KONG SAUDI NEW SINGAPORE ZEALAND SAR, CHINA ARABIA MALAYSIA ZEALAND MALDIVES SINGAPORE LUXEMBOURG JAPAN EASIEST (1) 40 49 74 SUB-SAHARAN 84 AFRICA AVERAGE 94 KHARTOUM 121 124 123 JUBA 139 138 143 146 154 154 159 183 Most difficult 176 173 181 183 (183) Ease of Starting a Dealing with Registering Getting Protecting Paying Trading Enforcing Closing a doing business construction property credit investors taxes across contracts business business permits borders Source: Doing Business database. First, 5 years after the peace agree- add to the confusion, laws and regula- dle commercial cases. Currently, half of ment, Southern Sudan’s legal and regu- tions are not sufficiently publicized to the the civil servants do not have primary latory framework remains incomplete. general public—which limits compliance education.11 Access to credit is also lim- Several laws important for the private overall. Most Southern Sudanese resort ited. Without a public credit registry or sector—such as the Labor Bill and the instead to customary law—traditional private credit bureau in Juba, creditors new Companies Bill—have been drafted justice applied by the chiefs and built cannot obtain reliable information on but not enacted yet. upon custom and tradition. In fact, cus- debtors. Without a collateral registry, en- Second, Southern Sudan’s existing tomary law was used to solve over 90% trepreneurs have a hard time using their legal system can be confusing. South- of disputes in Southern Sudan in 2004.9 assets as guarantees for loans. Although ern Sudan operates under 3 distinct Third, some of the institutions that a small private sector has emerged— and overlapping legal frameworks: 1) regulate Juba’s private sector are either cell phone booths, motorbike taxis, res- the Laws of Sudan, passed by the Na- absent or overlapping. Even though key taurants and shops selling construction tional Assembly in Khartoum; 2) the ministries and authorities are starting to material—almost all bigger companies Laws of the “New Sudan”—enacted by take shape, other institutions—such as remain foreign-owned, as many South- the Sudan People Liberation Movement the new Land Registry—exist “mainly ern Sudanese still lack the capital to start before 2005; 3) the Laws of Southern on organization charts”.10 Furthermore, larger businesses.12 Sudan—enacted by the Legislative As- the competences and authorities of the sembly of Southern Sudan after 2005. different levels of governments overlap in WHAT GETS MEASURED GETS DONE In 2007, Southern Sudan’s Chief Justice several cases. There is confusion between Benchmarking exercises like Doing Busi- established a basic principle intended federal, state, and payam (county) juris- ness identify potential challenges and to clarify which legislation applies in diction over business licensing, taxes, areas for improvement and inspire gov- which case. The principle stipulates that customs, and land administration. As a ernments to reform. National govern- the laws of the Legislative Assembly of result, overlapping authorities do not co- ments can also use Doing Business data Southern Sudan and the laws of the ordinate, and entrepreneurs need to deal to monitor how local branches of their “New Sudan” apply if the cause of action with each level of government separately. agencies implement national regulations arose within territory under control of Finally, Juba’s institutional capac- and administrative practices. Compari- the Sudan Peoples’ Liberation Movement ity and infrastructure remain underde- sons among cities within a country or a before 2005 or within Southern Sudan veloped. Most roads are unpaved, few region can be even stronger drivers for afterwards. Otherwise, judges should residents have access to running water, improvement. That was the case in Mex- apply the Laws of Sudan. However, laws and power cuts are recurrent. Public ico where a subnational report covered are still enforced inconsistently. For ex- authorities lack the qualified staff needed 12 states and the Federal District in 2005. ample, to solve a commercial dispute, to implement regulations—namely, civil The study generated competition to re- some judges apply Khartoum’s Compa- engineers to inspect construction sites, form as different local governing bodies nies Act of 1925 while others apply the auditors to ensure tax compliance, and had a difficult time explaining why it “New Sudan” Companies Act of 2003. To specialized legal professionals to han- took longer or cost more to do busi- 10 DOING BUSINESS IN JUBA 2011 ness in their city. The second and third a one-stop shop for business start up, 4. World Bank. 2010. Sudan Investment Cli- mate Assessment. Washington, D.C.: The benchmarking exercises expanded the and strengthened protection of minority World Bank Group. analysis to all 31 states and updated the shareholders in its civil procedure code. 5. Also enacted are the Investment Promo- indicators for the first 12, showing that The Government of Southern tion Act (2009), the Limited Partnerships 9 out of the 12 states had implemented Sudan, Government of Central Equatoria Act (2009), the Agency Act (2009), the reforms related to Doing Business areas State, and Juba’s 3 payams can follow the Contract Act (2009), and the Local Gov- ernment Act (2009). in the second round13 and 28 out of the example of consistent reformers in the 6. Also awaiting enactment or promulga- 31 states measured subsequently had region and globally. These committed tion are the Documents Bill, the Stan- implemented such reforms in the third reformers follow a long-term agenda and dards Bill, the Weights and Measures round of the study.14 continuously push forward. They include Bill, the Consumer Protection Bill, and the Regulation of Imports and Exports Similarly, Doing Business in Nigeria all relevant stakeholders in the process, Bill. 2010 showed that 8 out of the 11 cities set specific goals, institutionalize the re- 7. Numbers provided by the Business benchmarked for the second time had form effort, and regularly monitor the Registry. As of December 2010, 10,746 introduced at least one reform in the progress thereafter. The reforms are com- businesses had been registered, of which 8,983 had obtained a certificate of incor- areas measured by Doing Business. In prehensive, thus increasing the chances poration. total, 14 positive reforms were recorded, of impact and success. 8. Ramachandran, V., A. Gelb, and M. of which 11 focused on construction The payoffs of business reforms can Shah. 2008. Africa’s Private Sector: What’s permits and property registrations. The be large. Higher rankings on the ease of Wrong With the Business Environment and What to Do About It. Washington, city of Kano is one telling example. Kano doing business are associated with more D.C.: Center for Global Development. introduced reforms in 3 areas. Enforc- growth, more jobs, and a smaller infor- 9. Jok, Aleu Akechak, Robert A. Leitch, ing a statutory time limit halved the mal sector.16 Business reforms expand Carrie Vandewint. “A Study of Custo- time it took to obtain a building permit the reach of regulation by bringing firms mary Law in Contemporary Southern Sudan.” World Vision International and in Kano to just 14 days. Delegating the and employees into the formal sector. South Sudan Secretariat of Legal and governor’s power to consent on property There, workers can have health insur- Constitutional Affairs. March 2004. transfers to both the Commissioner and ance and pension benefits. Businesses Also: Leonardi, Cherry, Leben Nelson the Permanent Secretary for Lands has pay taxes. Products are subject to quality Moro, Martina Santschi, and Deborah H. Isser. “Local Justice in Southern Sudan.” also reduced waiting times. In addition, standards. In addition, formal firms have United States Institute of Peace and Rift efforts have been made to broaden ac- greater access to bank credit to fund ex- Valley Institute: http://www.usip.org/ cess to justice and speed up proceedings pansions and courts to resolve disputes. publications/local-justice-in-southern- sudan. by setting up new Magistrates Courts. Business reforms that reduce informal- 10. The Economist. 2011. “Now for the Hard The new courts and an increase in the ity and enforce property rights benefit Part.” Print edition, February 3, 2011. number of magistrates have resulted in women especially, because they make up 11. Ibid. a decrease in the time needed to enforce a large share of the informal sector. 12. Ibid. a contract by 3 months.15 Thanks to this, 13. World Bank. 2006. Doing Business in the city of Kano was the top reformer in Mexico 2007. Washington, D.C.: The Doing Business in Nigeria 2010. World Bank Group. Overall, 27 of 46 Sub-Saharan econ- 1. World Bank. 2009. Sudan: The Road 14. World Bank. 2008. Doing Business in Toward Sustainable and Broad-Based Mexico 2009. Washington, D.C.: The omies implemented reforms according Growth. Country Economic Memoran- World Bank Group. to Doing Business 2011. They made 49 dum, Washington, D.C.: The World Bank 15. World Bank. 2009. Doing Business in Ni- reforms in all, 9 of which involved trade Group. geria 2010. Washington, D.C.: The World facilitation. Rwanda was identified as 2. FIAS. 2006. Southern Sudan: Mini-Diag- Bank Group. nostic Analysis of the Investment Climate. 16. Djankov, Simeon, Caralee McLiesh, and one of the top 10 improvers globally. Washington, D.C.: World Bank Group. Rita Ramalho. 2006. “Regulation and Improving its business environment was 3. The draft Growth Strategy states that one Growth.” Economics Letters 92(3): 395- not a one-time effort. Since 2005 Rwanda of the principles of the Government of 401. has implemented 22 business regula- Southern Sudan’s approach to growth is tion reforms in the areas measured by that “Economic growth is driven by the private sector, with GOSS (at all levels) Doing Business. Other countries in the limiting its role to: creating an enabling region have followed suit. Ghana has environment, addressing constraints to implemented measures in 6 areas, while investment, and providing public goods.” Mali reformed its customs, established Starting a FIGURE 2.1 What are the time, cost, paid-in minimum capital and number of procedures to get a local, limited liability company up and running? business COST (% of income per capita) Formal operation NUMBER OF PROCEDURES $ Paid-in minimum capital Entrepreneur TIME (days) Preincorporation Registration, incorporation Postincorporation Awut Deng plans to open a hair salon increase, cutting into businesses’ profits, tioning registry, so no new companies in Juba. When investigating the require- discouraging entrepreneurs, and ham- could be registered in Southern Sudan ments to do so, she realizes that the pering job creation.7 for over a year.8 But the government set cost is exorbitant—more than twice her Doing Business measures the proce- up its new Business Registry in 2006 and yearly income.1 She cannot afford it. dures, time and cost for a small to me- reopened registrations: approximately Awut Deng’s story is common in South- dium-size enterprise to start up and op- 9,000 businesses have obtained their ern Sudan, where decades of conflict erate formally (figure 2.1). The number certificate of incorporation since (figure have limited the development of a formal of procedures shows how many separate 2.3).9 In 2008, registrations boomed as private sector. Although Sudan’s econ- interactions an entrepreneur is required companies prepared to bid for govern- omy grew by 9% on average from 2005 to to have with third parties. Business entry ment contracts which, as a result of high 2007, the formalization of businesses re- requirements go beyond simple incor- FIGURE 2.2 mains a major challenge.2 Eighty percent poration to include the registration of a How Juba compares globally and of the workforce in Sudan operates in business name, tax registration, registra- with selected African and Middle Eastern economies on the ease the informal sector—and the number is tion with statistical, social security and of starting a business deemed to be higher in Southern Sudan.3 pension administrations, and registra- Global ranking (1–183) Entrepreneurs mention 2 main reasons tion with local authorities. NEW for remaining informal: lack of informa- Starting a limited liability company ZEALAND EASIEST (1) tion about the legal requirements and in Juba takes 11 procedures, 15 days, Rwanda Egypt, Arab Rep. high startup costs.4 and costs 250.2% of income per capita. 20 New firms create jobs and foster No minimum capital is required by law. 40 economic development. Formally reg- The process in Juba is faster but more United Arab Emirates istered businesses grow larger and are costly than it is in Khartoum, where an 60 more productive than informal ones.5 entrepreneur spends 36 days and 33.6% 80 South Africa They have access to credit, insurance, of income per capita to start a business. and courts. They can also serve larger Juba would rank 123rd of 183 economies 100 Nigeria customers and avoid harassment from on the ease of starting a business as mea- Sudan (Khartoum) 120 Juba (123) inspectors and the police. Furthermore, sured by Doing Business 2011, ahead of Kenya formal enterprises pay taxes, adding to Kenya (125th), but behind Rwanda (9th) 140 Uganda government revenues. A recent study and South Africa (75th) (figure 2.2). 160 finds that higher entry costs are associ- After the peace agreement was ated with a larger informal sector and signed in 2005, the Government of South- 183 Guinea-Bissau a smaller number of legally registered ern Sudan no longer recognized business Note: The ease of starting a business is based on a simple average of the economy’s percentile ranking on the number of procedures, firms.6 When regulation is too cum- registrations completed at Khartoum’s time, cost and paid in minimum capital required to start a business. bersome, compliance and start-up costs Companies Registrar. Juba had no func- See Data notes for details. Source: Doing Business database. 12 DOING BUSINESS IN JUBA 2011 FIGURE 2.3 might resolve the controversy. New companies registered with the Business Registry since 2006 Today, an entrepreneur in Juba needs to complete 11 procedures to Number of 1,610 companies registered start a business—close to the average during the year in Sub-Saharan Africa (9 procedures) but more than in Rwanda where only 2,505 2 procedures are required (figure 2.4). The first 4 procedures relate to the in- corporation and registration with the N 3,221 o Business Registry. Entrepreneurs reserve t the company name, prepare the articles S S 1,176 and memorandum of association with 471 an advocate11, and apply for registration. 2006 2007 2008 2009 2010 After the legal counsel has checked and Source: Business Registry, Ministry of Legal Affairs and Constitutional Development, Government of Southern Sudan. Data as of Dec. 2010. approved the application, the entrepre- neur pays the fees and the Chief Regis- oil prices, had multiplied. Fewer compa- nerships Act of 2008. In 2003, a Com- trar signs the certificate of incorporation. nies registered in 2009 and 2010, as oil panies Act was also enacted, replacing These procedures are straightforward, as prices fell and uncertainty grew as to the the Companies Act of 1925. However, they obey a set of clear guidelines estab- outcome of the national elections and the there is lack of consensus as to whether lished, enforced, and publicized by one referendum of January 2011. it should apply, since it was enacted by single authority: the Business Registry. In addition, the Government of the Sudan People’s Liberation Movement The following 5 procedures involve Southern Sudan enacted essential new before the 2005 peace agreement. The interactions with different government regulations to govern business start-up: Chief Justice of Southern Sudan’s Su- agencies: entrepreneurs obtain an oper- the Registration of Business Names Act preme Court established in 2007 that it ating license from the State Government of 2008, which further develops the op- should, yet many judges are reluctant to of Central Equatoria, obtain a trading erations of the Registry; the Limited do so.10 A new Companies Bill is in draft license from the payam, register to pay Partnerships Act of 2008; and the Part- form and under promulgation, which taxes with the State Revenue Authority FIGURE 2.4 and—since 2009—with the Government Starting a business in selected African and Middle Eastern economies: of Southern Sudan, and then register Juba is fast, but expensive with the Ministry of Labor. Additionally, Procedures Time Cost entrepreneurs must open a separate bank (number) (days) (% of income per capita) account to deposit social security pay- 20 50 ments for their employees until South- Uganda SSA Average 250 Juba (250.2) ern Sudan establishes a social security fund.12 Finally, entrepreneurs purchase 40 a company seal. There are many post- 15 Sudan (Khartoum) 200 registration procedures due to the lack Kenya of clear regulations as well as the lack of Nigeria 30 coordination between county, state, and Juba (11) Kenya 150 Government of Southern Sudan authori- 10 Sudan (Khartoum) Uganda SSA Average South Africa ties (figure 2.5). Nigeria SSA Average United Arab Emirates 20 Uganda At 15 days, starting a business 100 Egypt, Arab Rep. Juba (15) Nigeria in Juba is almost as fast as the OECD United Arab Emirates Kenya 5 South Africa average (14 days) and faster than the Sudan (Khartoum) 10 Rwanda Sub-Saharan Africa average of 45 days. 50 Egypt, Arab Rep. United Arab Emirates One important reason is that the Busi- Rwanda Egypt, Arab Rep. Rwanda ness Registry is well-staffed, governed South Africa 0 0 0 by clear guidelines, and has introduced Note: SSA denotes the Sub-Saharan Africa region. computers in 2008 to search and reserve Source: Doing Business database. STARTING A BUSINESS 13 FIGURE 2.5 Entrepreneurs need to complete many procedures with different government agencies Procedures 1. Reserve the company name at the Business Registry Cost (% of income per capita) and pay the fee. Time (days) 2.* Prepare the company documents before an advocate. 15 250 3. Apply for approval of the company registration at the Cost Business Registry and pay the fee. 12 200 4. Pay the registration fees and obtain the Certificate of Time Incorporation from the Business Registry. 5. Obtain an Operating License from the Directorate of 9 150 Trade and Supplies of Central Equatoria. 6. Obtain a Trading License from the payam (county authority). 6 100 7. Obtain a Tax ID Card and a Tax Clearance Certificate from the Revenue Authority of Central Equatoria. 3 50 8.* Register with the Ministry of Finance and obtain a Tax Identification Number (TIN). 9.* Register with the Ministry of Labor. 0 Procedures 0 10.* Open separate bank account for social security 1 2 3 4 5 6 7 8 9 10 11 payments. 11.* Obtain a company seal. Preincorporation Registration, Postincorporation incorporation * Procedure is simultaneous with a previous procedure. Source: Doing Business database. business names—while it processes reg- (US$ 475) for tax registration to the includes the Ministry of Legal Affairs istrations, files and archives manually on State Government of Central Equatoria, and Constitutional Development, the paper. However, there are potential risks and SDG 300 (US$ 136) for the trad- Ministry of Commerce and Industry, of delays at the Registry if the volume ing license to the payam (figure 2.6). In the Ministry of Investment, the Minis- picks up. Although the Registration of Khartoum, the total cost is less than a try of Finance and Economic Planning, Business Names Act entitles the Chief fifth of the cost in Juba because no state the Central Equatoria State Director- Registrar to delegate authority to his or county licenses are levied, tax regis- ate of Trade, the Southern Sudan Busi- deputies and assistants, it does not hap- tration only costs SDG 60 (US$ 27), and ness Forum, and the Southern Sudan pen in practice. If the Chief Registrar is notaries only charge SDG 350 (US$ 158) . Chamber of Commerce, Industry and away, the entrepreneur has to wait. With The Government of Southern Sudan Agriculture. One outcome of the public- proper delegation, the Registrar can pre- has undertaken important efforts to im- private dialogue of the task-force was vent delays in the future. prove the ease of starting a business. In that Central Equatoria State Directorate The biggest barrier to business entry 2009, the Ministry of Legal Affairs and of Trade agreed to stop requiring sepa- in Juba is cost: SDG 6,801 (US$ 3,077), Constitutional Development established rate registration—a procedure that pre- equal to 250.2% of income per capita. a task-force to coordinate issues per- viously duplicated registration with the Compared to the 183 economies mea- taining to business entry. The task-force Business Registry.14 More issues are cur- sured by Doing Business, Juba is the FIGURE 2.6 second most expensive city to start up a Entrepreneurs spend two thirds of total cost on advocate fee and the State operating license business, only ahead of Kinshasa of the (% of total cost) Democratic Republic of Congo. Why? Payam First, the Registry requires the use of trading license Business Registry 4.4% 12.7% an advocate—which represents 37% of Company seal the total cost—even though the Com- 1.3% panies Act does not explicitly mandate State operating it.13 Second, starting a business in Juba license is subject to a number of incorporation 29.4% and license fees charged by the Govern- ment of Southern Sudan, and the state and county governments. An entrepre- Advocate fee 36.8% neur has to pay SDG 861 (US$ 390) for Tax registration company registration to the Government 15.4% of Southern Sudan, SDG 2,000 (US$ 905) for the operating license and SDG 1,050 Source: Doing Business database. 14 DOING BUSINESS IN JUBA 2011 rently being addressed by the task force, Registry requires it. This practice should such as the registration of large firms, the stop. The Business Registry should en- revision of the annual tax return form, courage small and less complex busi- 1. Based on the World Development Indi- cator of the World Bank, the GNI per the elaboration of a business survey, and nesses to register without an advocate if capita for Sudan as of 2010 is estimated the implementation of inspections. they choose to, relying instead on stan- as US$ 1,230. No separate GNI is cur- dardized formats for the memorandum rently available for Southern Sudan. WHAT TO REFORM? and articles of association contained in 2. World Bank. 2008. Revitalizing Sudan’s Non-Oil Exports: A Diagnostic Trade the law. Integration Study (DTIS) Prepared for the IMPROVE ACCESS TO INFORMATION Integrated Framework Program. Wash- AND PUBLICIZE REGULATION ington, D.C.: The World Bank Group. STREAMLINE PROCEDURES Finding out about start up requirements 3. World Bank. 2009. Sudan: The Road Toward Sustainable and Broad-Based can be a daunting task for entrepreneurs The Business Registry works as a single Growth. Country Economic Memoran- in Juba who may have to figure out the window for business incorporation, but dum. Washington, D.C.: The World Bank system through trial and error. Most entrepreneurs still have to pay 3 visits to Group.; and International Labor Organi- zation country description: http://www. procedures set up in recent years have the Business Registry in order to reserve il.org/public/english/region/afpro/cairo/ not been publicized widely to the general a name, seek pre-approval, and then countries/sudan.htm. public. Except for the Business Regis- register. These steps could be further 4. World Bank. 2010. Sudan Investment Cli- try, fee schedules are not available to streamlined. The registry could also take mate Assessment. Washington, D.C.: The the public. The Government of Southern responsibility for registering the com- World Bank Group. Sudan, together with state and county pany with the tax authorities. Jordan and 5. Barseghyan, Levon, and Riccardo DiCe- cio. 2009. “Entry Costs, Industry Struc- government agencies, should make in- Egypt put tax registration into the hands ture and Cross-Country Income and TFP formation on cost and procedures neces- of the registrar, speeding up the process, Differences.” Working Paper 2009-005C, sary to start a business available to all and allowing entrepreneurs to focus on Federal Reserve Bank of St. Louis. potential entrepreneurs. their business. Eventually, the govern- 6. Dabla-Norris, Era, and Gabriela Inchauste. 2008. “Informality and Fee schedules could be made avail- ment could establish a one-stop shop for Regulations: What Drives the Growth of able not only at government agencies, all pre- and post-registration procedures. Firms?” IMF Staff Papers 5 (1): 50–82. but also in banks, professional asso- One-stop shops for business regis- 7. Fonseca, Raquel, Paloma Lopez-Garcia ciations, and online. Registration guides, tration serve as a mechanism of coordi- and Christopher Pissarides. 2001. “En- trepreneurship, Start-Up Costs and Em- forms, standard memorandum and ar- nation between agencies that eliminate ployment.” European Economic Review ticles of association, and relevant regula- the need for entrepreneurs to visit each 45 (4–6): 692–705. tions could be made available in various agency separately. Not surprisingly, it has 8. Masinde, Catherine, and Kobina Daniel. agencies and through the internet. been a popular reform—over 70 econo- 2008. “Building a Business Enabling En- vironment in Southern Sudan. Securing mies established or enhanced one in Business Registration Early in the Tran- REDUCE THE COST OF STARTING A the past 7 years. They do not necessarily sition from War to Peace.” IFC Smartles- BUSINESS require legal changes and bring relatively son, Washington, D.C.: The World Bank Group. Entrepreneurs spend more than half of quick results.15 9. Numbers provided by the Business the cost of starting a business on fees to Registry. As of December 2010, 10,746 different authorities (155% of income ENCOURAGE DELEGATION AT THE BUSINESS REGISTRY businesses had been registered, of which per capita). Although the fees obtained 8,983 had obtained a certificate of incor- from business permits are a source of The incorporation process at the Busi- poration. revenue for local governments, high fees ness Registry is fast, but as the volume 10. Circular No. 1/2007. Judiciary of South- ern Sudan. may hinder formal economic activity. of registrations increases, delays might 11. In Doing Business in Juba 2011, the term The best practice is for fees to cover the occur. It is the mandate of the Chief Reg- "advocate" refers to registered lawyers. administrative costs of government ser- istrar to sign incorporation certificates, 12. Circular J/5/21. March 22, 2010. Min- vices. Southern Sudan authorities could but the Registration of Business Names istry of Public Labour, Public Service & consider cutting fees for the certificates Act entitles him to delegate authority to Human Resource Development, Govern- ment of Southern Sudan. and licenses required to start a business. his deputies. Doing so would increase Advocate fees are the other source the capacity of the registry to issue cer- of high costs in Juba. The use of an advo- tificates on time. cate is optional by law, but the Business STARTING A BUSINESS 15 13. The use of an advocate is not manda- tory by law. However, Article 17.2 of the Companies Act 2003 requires a statutory declaration regarding the particulars of the company by an advocate or the direc- tor or the secretary of the company. The Business Registry in practice requires it to be done by an advocate. 14. Minutes of the meeting of the busi- ness registration campaign task-force. Wednesday August 4, 2010. Section 4.c, “Issuing of business certificates by Cen- tral Equatoria”. 15. Walke, David and Dobromir Christow, How Many Stops in a One-Stop Shop?. Global Paper. Washington, D.C.: The World Bank Group. 16 DOING BUSINESS IN JUBA 2011 Dealing with FIGURE 3.1 What are the time, cost and number of procedures to comply with formalities to build a warehouse? construction COST permits (% of income per capita) Completed warehouse NUMBER OF PROCEDURES A business in the construction industry TIME (days) Pre-construction Construction Post-construction and utilities Following the signing of the peace agree- cedures, time and cost for a small to the permit process is efficient in Juba, ment, 2 million Southern Sudanese dis- medium-size business to obtain all the but that basic regulations are missing. placed by the war have returned to their necessary approvals to build a simple Of the 10 procedures recorded, only 4 homeland.1 Many settled in Juba, whose commercial warehouse and connect it to involve permits and verifications before population skyrocketed from 163,000 in basic utility services (figure 3.1). Such in- construction and only 1 involves an in- 2005 to an estimated 250,000 in 2006.2 dicators can be telling. A recent competi- spection during construction. Notably, Rapid population growth, along with tiveness report by KPMG indicated that 4 of these procedures relate to utility rising public sector demand fueled by construction costs and the permitting connections. oil revenues, has made the construction process were among the top 20 factors Construction is governed only by industry the fastest growing sector in determining the location of a start-up in a few poorly enforced building regula- Southern Sudan.3 But it has also tested the United States.5 FIGURE 3.2 Juba’s nascent infrastructure by causing A construction company wishing How Juba compares globally and traffic congestion, pollution, and informal to build a warehouse in Juba spends 30 with selected African and Middle Eastern economies on the ease settlements. Although the government days on 10 procedures to obtain build- of dealing with construction permits took action by demolishing illegal con- ing approvals and utility connections, at Global ranking (1–183) structions in 2009, most buildings in Juba a cost of 5,936% of income per capita. HONG KONG continue to be erected without permit. In Khartoum, the same process is more SAR, CHINA EASIEST (1) Building regulations are essential complex—19 procedures—and takes 9 tools to ensure sustainable urban de- times longer. On the other hand, it is 20 United Arab Emirates velopment. However, striking the right much cheaper—costing 192% of income Kenya 40 balance between safety and efficiency is per capita. Compared globally, Juba Juba (49) challenging. Good regulations protect would rank 49th out of 183 economies 60 South Africa public safety while remaining efficient on the ease of dealing with construction 80 Rwanda and affordable—for both the entrepre- permits as measured by Doing Business neur and the regulating authority. Sixty 2011—behind Kenya (35th) but ahead 100 to eighty percent of construction projects of South Africa (52nd), Rwanda (82nd), 120 in developing economies are undertaken Uganda (133rd), and Egypt (154th). In Uganda without a permit because the approval Hong Kong, the best performer for 140 Sudan (Khartoum) process is too complex or the oversight this indicator, a construction company Egypt, Arab Rep. 160 too lax.4 Juba is no exception. “Nobody spends 67 days and 19.4% of income per Nigeria bothers with authorizations around capita on 7 procedures (figure 3.2). 183 Eritrea here,” explains Luka, a construction en- With just 10 required procedures, Note: The ease of dealing with construction permits is based on a gineer in Juba. Juba requires fewer steps than the global simple average of the economy’s percentile ranking on the number of procedures, time and cost required to comply with formalities Doing Business measures the pro- average (18). This is not a sign that to build a warehouse. See Data notes for details. Source: Doing Business database. DEALING WITH CONSTRUC TION PERMITS 17 FIGURE 3.3 Dealing with construction permits in Juba requires few procedures Procedures Cost (% of income per capita) 1. Obtain a croquis (site map) from the Survey Time (days) Department 30 6,000 2. Obtain a plan approval from the Ministry of Physical Infrastructure 3. Obtain a construction permit from the payam 4. Request a pegging of the plot from the Survey 20 4,000 Department Time 5. Receive an inspection during construction by the payam 6. Receive a certificate of completion from the payam 10 2,000 7. Obtain a permanent satellite phone connection 8.* Obtain a borehole permit from the Ministry of Water Cost and Irrigation 9. Dig a borehole to obtain water 0 0 10.* Buy a generator to obtain electricity 1 2 3 4 5 6 7 8 9 10 * Procedure is simultaneous with a previous procedure. Pre-construction During and post- Utility connections construction Procedures Source: Doing Business database. tions issued by the State Government 3.3), though it rarely happens in practice. qualified engineers capable of checking of Central Equatoria and Juba’s payams. Few companies comply with building the permit applications and conducting Before construction begins, companies requirements, for 2 reasons. inspections of construction sites.7 “They must obtain a site map from the survey First, many entrepreneurs are un- come only if the ceiling falls on your department, a building plan approval aware of the regulations. Illiteracy rates head,” remarks a local property devel- from the state’s Ministry of Physical In- are high in Southern Sudan,6 and only oper. The quality of private construc- frastructure, and a construction permit a few copies of the fee schedules and tion projects hence depends entirely on from the payam. A payam engineer may regulations in place are available to the the competence of the architects hired inspect the site once during construc- public. Second, local authorities scarcely by construction companies. By law, all tion and issue a certificate of completion enforce the regulations they themselves practicing architects and engineers must when the building is finished (figure established, since they have only a few be licensed by Khartoum’s Council of En- gineers, but in practice, few of them are. FIGURE 3.4 Dealing with construction permits in selected African and Middle Eastern economies: With Juba’s real estate boom, the demand Juba is fast, but very expensive for construction experts has exceeded Procedures Time Cost the supply, and many unlicensed “con- (number) (days) (% of income per capita) sultants” from neighboring countries are 300 now filling the gap. 25 Egypt, Arab Rep. Sudan (Khartoum) 6,000 Low compliance means that local au- 270 Juba (5,936) thorities have few applications to process. Sudan (Khartoum) 240 SSA Average In 2010, Juba Payam expected no more 5,000 20 than 20 applications for construction per- SSA Average 210 Uganda Rwanda mits.8 As a result, state and county gov- United Arab Emirates 180 South Africa 4,000 ernments issue building plan approvals 15 Uganda and construction permits fast—4 days for Rwanda 150 3,000 each, a world record. Securing water sup- Kenya 120 Kenya ply can also be done quickly. Since water 10 Juba (10) is close to the surface, drilling a borehole 90 2,000 SSA Average takes only 4 days. 60 United Arab Emirates Uganda It is the cost that constitutes the big- 5 1,000 Nigeria gest hurdle for local construction compa- Rwanda 30 Juba (30) Sudan (Khartoum) nies (figure 3.4). Dealing with construc- Kenya tion permits is 30 times more expensive 0 0 0 United Arab Emirate Note: SSA denotes the Sub-Saharan Africa region. in Juba (5,936% of income per capita) Source: Doing Business database. 18 DOING BUSINESS IN JUBA 2011 than it is in Khartoum (192% of income The initiative includes infrastructure im- FIGURE 3.5 Connections to utilities account for per capita). Among the 183 economies provements projects on water, sanitation, 94% of the total cost measured by Doing Business, only Liberia roads, and power supply. The construc- Permit and Afghanistan—2 other war-stricken tion contracts were awarded in 2006 and fees 6% Telephone connection countries—are more expensive. Only a are currently in progress. 10% small portion of the total cost comes The Government of Southern Sudan from administrative fees, mostly charged has also recently taken important steps Water 22% connection by local authorities to issue the building to reinforce and clarify the construction plan approval (SDG 3,000 / US$ 1,357) permit process. A Ministry of Housing 62% and the construction permit (SDG 7,100 and Physical Planning at the Govern- Electricity Utility connection connections / US$ 3,213). The rest, 94% of the cost, ment of Southern Sudan has been es- Source: Doing Business database. is spent on connecting the warehouse to tablished, and is currently drafting a utilities (figure 3.5). Housing Policy. The policy will set a Entrepreneurs pay the price for vision for housing and construction in a good practice building code and in Juba’s lack of infrastructure, which was Southern Sudan, and priority areas for the drafting of the checklists. Such par- destroyed by war and neglect. Although improvement: facilitating access to hous- ticipation can increase the relevance of the city’s water treatment plant has been ing, drafting building codes to regulate future building standards to the local rehabilitated, only about 20,000 of Ju- construction practices and materials, technical constraints, existing materials ba’s inhabitants are serviced by water and vetting all construction contractors and systems used by contractors, and pipes,9 forcing most companies to drill in activity in Juba. After a round of con- the building traditions that prevail in boreholes. Electricity delivery has im- sultations with the states, the draft is to Southern Sudan. Information about new proved—thanks to oil-fueled generators be presented to the Legislative Assembly regulations should then be extensively installed by the river Nile—but 2 of the of Southern Sudan. However, much re- publicized. 3 power stations are currently out of mains to be done. service, causing frequent power cuts. ESTABLISH A SIMPLE AND EFFICIENT According to the World Bank’s Invest- WHAT TO REFORM? CONSTRUCTION PERMIT PROCESS ment Climate Assessment, 87% of the Strong guidelines do not imply complex firms interviewed in Juba identified the SET THE FOUNDATIONS OF A procedures. International best practices BUILDING CODE lack of electricity as a major impedi- show that public safety is best protected ment for their business, and 93% of Although county authorities issue build- by simple and efficient building regula- power consumption came from gener- ing permits, Juba lacks a comprehen- tions. While local authorities in Mum- ators.10 Boreholes and generators are sive set of construction regulations. As bai require entrepreneurs to obtain pre- particularly expensive in Juba. The con- a result, entrepreneurs do not know construction permits from 9 different struction boom has raised the demand which rules to follow. Drafting an entire agencies (e.g., a tree authority, sewerage for construction services and equipment building code is a daunting task, yet department, and an electricity depart- which, due to the lack of local supply, the Government of Southern Sudan can ment), all pre-construction requirements must be imported at high costs from already take the first steps by identify- in Auckland have been consolidated into neighboring countries. As a result, an ing from well established building codes one single procedure. This is not to say entrepreneur in Juba must spend SDG a checklist of priorities—such as fire that buildings in India are safer than 99,450 (US$ 45,000) to obtain electricity safety, sanitation, and quality of con- those in New Zealand. and SDG 33,750 (US$ 15,270) to obtain struction materials. These priorities can After establishing core construction water. Meanwhile, in Khartoum, where form the core of Southern Sudan’s future guidelines, the central and state govern- electricity and water can be obtained building regulations, while being more ments in Southern Sudan should develop through public agencies, an entrepreneur easily understood and enforced by local a simple-yet-efficient construction per- would only have to spend SDG 2,500 authorities in the short term. Yemen fol- mit process focused on ensuring that (US$ 1,130) on electricity and SDG 1,200 lowed that route, by using the building minimal technical requirements are met. (US$ 543) on water and sewerage. code of the Arab League to establish, in Construction authorities should also lay In 2005, the Government of South- 2008, a list of essential technical norms. out and enforce a master plan to steer ern Sudan launched an urban develop- Private architects and engineers Juba’s urban development according to ment initiative for the 10 state capitals. should be involved in the selection of clearly-defined zones and usage. Con- DEALING WITH CONSTRUC TION PERMITS 19 structions should abide by the spatial IMPROVE ELECTRICITY AND WATER INFRASTRUCTURE constraints laid out in the master plan, in order to prevent disorganized and The war destroyed basic infrastructure 1. As estimated by Refugees International: http://www.refugeesinternational.org/ informal settlements which could ham- and disrupted maintenance in Juba. Only where-we-work/africa/sudan. per future infrastructure development a minor portion of the city has access to 2. As estimated by USAID in 2006. http:// projects. water pipes and, even though access to www.usaid.gov/locations/sub-saharan_ In the long term, Juba could follow the power grid has improved, blackouts africa/countries/sudan/. Auckland’s example by establishing a are still frequent. As a result, the major- 3. World Bank. 2008. Revitalizing Sudan’s Non-Oil Exports: A Diagnostic Trade In- building permit one-stop shop where ity of companies drill boreholes and buy tegration Study (DTIS) Prepared for the construction safety, land ownership, zon- generators for their water and electricity. Integrated Framework Program. Wash- ing requirements, and environmental All construction equipment in Juba is ington, D.C.: The World Bank Group. impacts could be verified jointly by the imported, and as transportation is ex- 4. Moullier, Thomas. 2009. Reforming Building Permits: Why Is It Important relevant authorities. This would ensure pensive due to the poor quality of roads, And What Can IFC Really Do? IFC Ad- that the requirements stated in the build- the cost of utility connections is high. visory Services. Washington, D.C.: The ing code are met, while minimizing the The Government of Southern Sudan World Bank Group. compliance burden on entrepreneurs. and State Government of Central Equa- 5. KPMG. 2009. “Competitive Alternatives: KPMG’s Guide to International Business toria should invest in Juba’s infrastruc- Location.” http://www.competitivealter- BUILD THE CAPACITY OF LOCAL ture development in order to extend natives.com. AUTHORITIES AND ASSOCIATION OF the water pipe network, improve the CONSTRUCTION PROFESSIONALS 6. Alternative Education Systems Unit in TO ENFORCE CONSTRUCTION reliability of the electricity delivery sys- the Ministry of Education, UNESCO REGULATIONS tem, and build roads so as to reduce 2008. State and county authorities in Juba transportation costs. Plans have been 7. This observation has been corroborated by all private construction companies do not have an adequate number of made to build 2 water treatment facili- interviewed, as well as the Ministry of qualified engineers to check on build- ties (in the south and west of Juba) and Housing and Physical Planning at the ing permit applications and conduct to electrify 70 to 80% of Southern Sudan Government of Southern Sudan. inspections. Since enforcement is low, by 2020 by linking isolated diesel power 8. Juba Payam, Resources Envelope for Fiscal Year 2010 Budget. Internal docu- entrepreneurs do not bother to comply stations to form larger grids.12 Public ment. with regulations. Private Partnerships with private water 9. As estimated by the Ministry of Rural The Government of Southern Sudan companies could also potentially help the Irrigation and Water Resources, Govern- and state authorities should encourage government exploit Juba’s low water table ment of Southern Sudan. Information collected during the interviews con- the training of local engineers and archi- and fast-track access to and delivery of ducted in October 2010 in Juba with tects. The University of Juba (which had water, within the framework of the Nile construction authorities. relocated to Khartoum in 1989) recently Basin Initiative. 10. World Bank. 2010. Sudan Investment reopened its College of Engineering and Climate Assessment. Washington, D.C.: The World Bank Group. Architecture back in Juba,11 but it still 11. Management Systems International. produces too few graduates to meet the 2009. Government of Southern Sudan: staffing needs of local authorities, or the Functional Capacity Prioritization Study. construction needs of the private sector. Washington, D.C.: United States Agency for International Development. Even with the presence of licensed engi- 12. Peace Security and Development Net- neers from Khartoum and abroad, many work. 2009. Country report: Southern projects are undertaken by unlicensed Sudan. http://www.psdnetwork.nl/. contractors. To limit the use of unlicensed con- tractors, the government should sup- port the creation of an association of engineers in Juba, similar to Khartoum’s. The association could set qualification requirements for building professionals and assist the authorities in conducting building inspections. 20 DOING BUSINESS IN JUBA 2011 Registering FIGURE 4.1 What are the time, cost and number of procedures required to transfer a property between 2 local companies? property COST (% of property value) Buyer can use the property, resell it or use it as collateral PROCEDURES Land & 2-story warehouse Seller with property registered and no title disputes TIME Post-registration (days) Pre-registration Registration Nyanath is the owner of a profitable able to third parties and the purchasing Comprehensive Peace Agreement and hotel in downtown Juba. He wants to buy company can use the property as collat- Interim Constitution provided that all the adjoining plot to build a restaurant eral for new loans or, if necessary, sell it unregistered land belonged to the com- and use the plot as guarantee for a loan. to another business (figure 4.1). munities. However, transferring the new property To register a property in Juba, an The Land Regulation and Settlement under his name would cost him SDG entrepreneur must spend 18 days on 7 Act divides the lease-transferring process 19,934 (US$ 9,034) in administrative procedures that cost 14.7% of property between the state government (the State fees—a sum that Nyanath cannot afford. value. The same process in Khartoum Government of Central Equatoria for Consequently, he has no choice but to requires fewer procedures (6), takes Juba), which is in charge of authorizing postpone his plans. less time (9 days) and is significantly the transfer, and the judiciary, which is in Nyanath is not alone in Juba, where cheaper (3% of property value). Com- FIGURE 4.2 65% of companies surveyed by the World pared globally, Juba would rank 124th of How Juba compares globally and Bank’s Investment Climate Assessment 183 economies on the ease of registering with selected African and Middle Eastern economies on the ease cite access to land as a major constraint.1 property as measured by Doing Busi- of registering property Yet, affordable, efficient and reliable ness 2011—ahead of Uganda (150th) and Global ranking (1–183) property registration systems foster eco- Kenya (129th) but behind Rwanda (41st) SAUDI nomic growth. They protect property and Egypt (93rd). In Saudi Arabia, the ARABIA EASIEST (1) rights, facilitate land transactions, and global best performer, property can be enable entrepreneurs to use land as col- registered in 2 procedures and 2 days at 20 lateral to obtain credit. Indeed, banks no cost (figure 4.2). 40 Sudan (Khartoum) prefer land titles as collateral since land As of November 2010, land regis- Rwanda is difficult to move or hide. In addition, tration in Juba is governed by the Land 60 with a formal title, entrepreneurs have Regulation and Settlement Act of 1925. 80 an incentive to invest in and improve Although the Act allows for property South Africa their property. Property registration also to be held through both freehold and 100 Egypt, Arab Rep. benefits governments, as more property leasehold, most land in Southern Sudan Juba (124) 120 Kenya registered can translate into higher prop- is leasehold.2 The reason lays in the Uganda erty taxes revenues. Unregistered Land Act of 1970 and Civil 140 Doing Business records the full se- Transaction Act of 1984, which decreed 160 Senegal quence of procedures necessary for a that all land unregistered as of 1972 Nigeria business to purchase a property from was presumed to be government land 183 Timor-Leste another business and transfer the title and subjected to leasehold only.3 At that Note: The ease of registering property is based on a simple average to the buyer’s name. The transaction is time, Southern Sudan had almost no reg- of the economy’s percentile ranking on the number of procedures, time and cost required for a business to transfer property from considered complete when it is oppos- istered land. Subsequently, in 2005, the another business. See the Data notes for details. Source: Doing Business database. REGISTERING PROPERT Y 21 FIGURE 4.3 Registering property in Juba involves interactions with both the State Government and the High Court Cost Procedures Time (days) (% of property value) 1. Visit the plot with the Survey Department 20 16 2. Obtain Search Certificate for sale from the High Court 3. Draft the deed of transfer with a lawyer State procedure 4. Obtain form 31A from the High Court 15 12 5. Obtain lease document from the Ministry of Physical High Court procedure Infrastructure Private procedure 6. Register the lease transfer at the High Court 7. Obtain a croquis (site map) from the Survey 10 8 Department 5 4 Time Cost 0 0 1 2 3 4 5 6 7 Source: Doing Business database. Procedures charge of maintaining the land records. of Real Estate), it takes only 4 procedures back to the High Court to obtain a form This division between the executive and to transfer property. In Juba, it takes 7 to be submitted to the Ministry of Physi- the judiciary aims to provide a system steps to do the same. cal Infrastructure in exchange for the of checks and balances for land owner- The 7 steps are as follows: First, both new lease document. Finally, the buyer ship. However, it places an additional seller and buyer inspect the land with a goes back to the High Court to obtain a burden on entrepreneurs in Juba, who representative of the state government’s Search Certificate for Sale and receives must interact several times with both Survey Department. Then, the buyer re- an inspection and a croquis (site map) the Ministry of Physical Infrastructure quests a search certificate from the Land from the Survey Department (figure 4.3). (State Government of Central Equatoria) Registry of the High Court to confirm It takes an entrepreneur only 18 and the High Court to register property. the validity of the seller’s ownership. days to go through these procedures in In Rwanda, where entrepreneurs interact With the certificate, the buyer hires an Juba—as fast as in Spain and 3 times with one single authority (the Registrar advocate to draft a deed and then goes faster than the regional average of 68 days (figure 4.4). The Ministry of Physi- FIGURE 4.4 cal Infrastructure issues the new lease Registering property in selected African and Middle Eastern economies: Juba is very fast, but very expensive in just 7 days, and the High Court takes only 2 days to register it. However, the Procedures Time Cost (number) (days) (% of property value) quick delivery does not indicate that the process is efficient in Juba— all op- 80 Uganda Uganda 15 Juba (14.7) erations are manual, paper-based and 12 70 Egypt, Arab Rep. handled by a few staff. The speed better SSA Average reflects the low volume of land transac- Kenya 12 tions these offices must process annually. 60 9 Kenya Rwanda The fact remains that few people register 50 SSA Average land formally in Juba. Most deals in- 9 South Africa Juba (7) volve community-owned land, which is SSA Average 40 acquired informally by negotiating the 6 South Africa Sudan (Khartoum) lease directly with the tribe elders.4 30 6 Cost is the major bottleneck for Rwanda South Africa Kenya property registration in Juba. Only 8 20 3 Juba (18) Uganda economies out of the 183 measured by 3 Sudan (Khartoum) Saudi Arabia 10 Sudan (Khartoum) Doing Business 2011 are more expensive. Entrepreneurs in Juba must pay 3 dif- Saudi Arabia Rwanda 0 0 0 Saudi Arabia ferent fees to 3 different authorities: a Note: SSA denotes the Sub-Saharan Africa region. survey fee (2% of property value) to the Source: Doing Business database. 22 DOING BUSINESS IN JUBA 2011 Survey Department, a lease transfer fee October 2010. It was decided at the meet- istrations can compensate the financial (10% of property value) to the Ministry ing that the judiciary would resume its loss caused by the tax cut. In the last 6 of Physical Infrastructure, and a regis- property registration responsibilities for years, 52 economies have reduced trans- tration fee (2.5% of property value) to another year, pending the adoption of fer taxes and government fees—among the Land Registry at the High Court. In attending regulations and the transfer of them, 22 countries in Sub-Saharan Af- Khartoum, where the registration pro- the registry to a new authority. rica. Rwanda cut the cost of registering cess falls under the sole authority of the property by 8.8% of property value.7 Land Registry, entrepreneurs simply pay WHAT TO REFORM? a registration fee—2.5% of the property CLARIFY THE PROCESS FOR value, the same as in Juba—to transfer COMPLETE THE TRANSFER OF THE LAND TRANSACTIONS BETWEEN LAND REGISTRY TO THE EXECUTIVE COMMUNITIES AND ENTREPRENEURS property. Neither survey fees nor lease BRANCH transfer fees are levied in Khartoum In Juba, large swathes of land are owned (figure 4.5). Currently, an entrepreneur wishing to by the communities—both inside and The Government of Southern Sudan register property in Juba must interact outside the city limits. Legally, commu- has recently taken steps to define a land repeatedly with and pay fees to both nity land can be acquired by investors, policy and improve property registra- executive and judiciary authorities. The but the process is governed by com- tion. In 2006, the Southern Sudan Land Land Act of 2009, which establishes a de- munity-specific customary laws and the Commission was established by presi- centralized property registration system cost is determined by negotiations with dential decree to define the policies and under one authority, has not yet been community elders. As a result, it can framework for allocation of land (ad- put into force. The registries and quali- be difficult for entrepreneurs to antici- ministration, arbitration, and resolution) fied personnel should be transferred as pate the cost of an operation, verify the in line with the Comprehensive Peace soon as possible under the authority of ownership of the land (since no records Agreement and the Interim Constitution. the Ministry of Housing, Physical Plan- are kept), and mortgage land (since no In addition, a Land Act was passed ning, and Environment in the Govern- formal title is given). in 2009 that detailed ownership rights ment of Southern Sudan, in coordination The Government of Southern Sudan to land and established a decentralized with the State Government of Central should ensure that land transactions be- system of land registry under the author- Equatoria, as stated in the Land Act.6 In tween investors and entrepreneurs fol- ity of the Ministry of Housing, Physical addition, information about the effec- low the Chapter XI of the Land Act of Planning, and Environment in the Gov- tive transfer of responsibilities—and the 2009, which provides important guide- ernment of Southern Sudan. However, procedural changes it entails—should be FIGURE 4.5 the structures, regulations, and person- communicated to the general public. The lease transfer fee is driving costs nel necessary to carry out the registra- Cost (% of property value) tion activities mandated by law have REDUCE PROPERTY REGISTRATION yet to be created. Indeed, disagreements FEES OR REPLACE THEM WITH A Juba LOWER FIXED FEE Other 14.7% have subsisted between the Government of Southern Sudan, the State Govern- To transfer property, entrepreneurs in Survey fee (Survey Department) 2.0 ment of Central Equatoria, and the High Juba must pay 3 different fees to 3 dif- Court as to which authority should ulti- ferent authorities: a survey fee, a lease mately be responsible for the new Land transfer fee, and a registration fee. High Registry.5 As a result, although the judi- property registration fees encourage en- Lease transfer fee ciary suspended its registration activities trepreneurs to undervalue their prop- (Ministry of Physical following the passage of the Land Act erty or just evade registration altogether. Infrastructure) 10.0 of 2009, no structure had been set to Transferring the property registration carry out the judiciary’s former responsi- process under one single authority would bilities, and so land transactions were de reduce the number of fees entrepreneurs Khartoum 3% facto suspended for several months. need to pay to register property. To resolve the issue, the Ministry Because reducing fees—or replac- Registration fee (Land Registry) 2.5 2.5 of Housing, Physical Planning, and En- ing them with a lower fixed fee—encour- vironment (Government of Southern ages entrepreneurs to formally register Sudan) and the judiciary gathered in their property, the higher volume of reg- Source: Doing Business database. REGISTERING PROPERT Y 23 lines for the acquisition of community land for investment purposes. The Land Act facilitates transactions of commu- nity land, while respecting the customary land rights enshrined in the Interim Con- stitution of Southern Sudan. It notably guarantees that any land zoning system and acquisition of land must be done in consultation with the community, after compensation, for projects that “shall con- tribute economically and socially to the development of the local community.”8 1. World Bank. 2010. Sudan Investment Climate Assessment. Washington, D.C.: The World Bank Group. 2. Land can be leased for a period of up to 99 years. 3. Pantuliano, Sara. 2007. “The Land Ques- tion: Sudan’s Peace Nemesis”. Humanitar- ian Policy Groups, Overseas Develop- ment Institute. 4. The Interim Constitution of Southern Sudan recognizes and protects the cus- tomary land rights of the local commu- nities, and the Land Act of 2009 provides important guidelines as to acquisition of community land for investment pur- poses. The Act notably guarantees that any land zoning system and acquisition of land must be done in consultation with the community, after compensation, and for projects that “shall contribute economically and socially to the develop- ment of the local community” (The Land Act, 2009, Art. 62.). 5. Article 54 of the Land Act of 2009 leaves room for interpretation in the matter: “The Land Registry shall be established within the Ministry of Housing, Physical Planning and Environment in the Gov- ernment of Southern Sudan and shall be decentralized throughout Southern Sudan. At the State Level, the Concerned Ministry shall keep the Land Registry in coordination with the Ministry of Hous- ing, Physical Planning and Environment in the Government of Southern Sudan.” 6. Article 54, the Land Act of 2009. 7. World Bank. 2010. Doing Business 2011: Making a Difference for Entrepreneurs. Washington, D.C.: The World Bank Group. 8. Article 62, the Land Act of 2009. 24 DOING BUSINESS IN JUBA 2011 Getting credit FIGURE 5.1 Do lenders have credit information on entrepreneurs seeking credit? Is the law favorable to borrowers and lenders using movable assets as collateral? Credit information Potential Can movable assets be borrower used as collateral? MOVABLE Collateral Credit registries Lender ASSET registry and credit bureaus Can lenders access credit information What types on borrowers? can be used as collateral? Achak recently opened an Italian restau- it. They also benefit from repayment 1% of the potential market in Southern rant and needed a loan to buy a brick periods 11 times as long and interest Sudan.4 oven. Since his business is new and the rates up to 50% lower.2 Promoting the With the signing of the peace agree- premises are leased, the loan process use of movable assets as loan guarantees ment, a dual banking system was estab- involved long negotiations and many ref- is especially important in developing lished in Sudan: Islamic in the North, erences by community members for the countries where they represent the ma- conventional in the South.5 In 2008, the bank branch manager to accept the brick jority of businesses’ assets.3 However, Bank of Southern Sudan—currently a oven as guarantee for his loan. Access to banks in these countries prefer immov- branch of the Central Bank of Sudan credit is very limited in Juba. Businesses able assets as collateral (figure 5.2). This but expected to become autonomous cite it as the second biggest obstacle after discrepancy particularly hurts small and after independence—established con- electricity constraints.1 medium-size companies, since they are ventional banking as the only system for Doing Business measures 2 types less likely to own land and real estate. Southern Sudan. At this point, all of the of institutions and systems that can fa- The financial system in Southern financial institutions that had been op- cilitate access to finance and improve its Sudan is underdeveloped due to over 2 erating in the South (all Islamic banks) allocation: credit information registries decades of war. Most lending is short withdrew. Since then, some foreign and or bureaus and the legal rights of bor- term (3 to 6 months) and interest spreads local conventional banks have opened in rowers and lenders in secured transac- are high. Only 10% of loans are extended Juba and a few are expanding to the rest tions and bankruptcy laws. The 2 types to small and medium-size enterprises. of Southern Sudan. of institutions are measured by 2 sets Microfinance institutions cover approxi- Considering the depth of credit of indicators. One describes how well mately 5% of clients in Juba and less than information and the strength of legal collateral and bankruptcy laws facilitate lending. The other measures the scope FIGURE 5.2 and accessibility of credit information In developing countries, there is a mismatch between assets owned by businesses available through public credit registries and assets accepted by banks as collateral for loans Share of assets (%) and private credit bureaus and provides information on coverage (figure 5.1) 9% A well functioning secured transac- 22% Land/building tions system—based on collateral and 34% 18% Machinery bankruptcy laws that protect the rights 73% 44% Accounts receivable of borrowers and lenders—expands ac- cess to credit and can reduce its cost. Business assets Assets used Research shows that in developed econ- as collateral omies borrowers with collateral get 9 times as much credit as those without Source: Safavian, Mehnaz, Heywood Fleisig and Jevgenijs Steinbuks, 2006. “Unlocking Dead Capital: How Reforming Collateral Laws Improves Access to Finance.” Private Sector Development Viewpoint, No. 307, World Bank, March 2006. GE T TING CREDIT 25 FIGURE 5.3 nity to give information about prospect WHAT TO REFORM? How Juba compares globally and debtors. Loans are made based on per- with selected African and Middle Eastern economies on the ease sonal connections, not necessarily the ENACT A SINGLE COMPREHENSIVE of getting credit likelihood of repayment. LAW CONCERNING THE USE OF MOVABLE ASSETS AS COLLATERAL Global ranking (1–183) On the strength of legal rights index, MALAYSIA EASIEST (1) Juba scores 2 out of 10. The Companies Southern Sudan could follow the United South Africa Act of 2003 regulates the registration of Nations Commission on International Kenya charges. It allows anyone (business or Trade Law (UNCITRAL) recommenda- 20 individual) to grant movable assets as tions for the scope of a secured transac- Rwanda 40 collateral while keeping possession of tions law. It should also look to other Uganda the assets. But the provisions in the Com- countries in the region which have re- 60 Egypt, Arab Rep. panies Act are insufficient and not en- cently improved their secured transac- United Arab Emirates 80 forced in practice. In Khartoum, the se- tions systems. For example, the countries Nigeria cured transactions system is fragmented making up the Organization for the Har- 100 among different laws and circulars issued monization of Business Law in Africa 120 by the Central Bank of Sudan. The Bank (OHADA) revised their Uniform Act of Southern Sudan does not have full Organizing Securities in 2010. Rwanda 140 Sudan (Khartoum) regulatory capacity yet. Meanwhile, the also passed a new law in 2009 which 160 Central Bank of Sudan, which does have enhanced its score on the Doing Business Juba (176) such capacity, has not issued any regula- legal rights index from 2 to 8 points (out 183 Palau tion about the use of collateral as a guar- of a possible 10 points). antee in the South. Best practice is for one single law Note: The ease of getting credit is based on the percentile ranking of the sum of the strength of legal rights index and the depth of Registration of charges is manda- to cover all types of movable assets, ap- credit information index. See Data notes for details. tory by law, but there is no collateral plicable to physical and legal persons, Source: Doing Business database. registry in place. Some banks register and allowing for the securing of all types rights indexes, Juba would rank 176th of debentures at the Business Registry, yet of obligations. The law should set clear the 183 economies measured by Doing most are unaware of this option. There rules for the creation of the security Business 2011—far behind Kenya (6th), is also a motor vehicles registry, but it agreement, its content, its form, and Uganda (46th), and Egypt (72nd). Khar- is not fully operational. The Companies its enforceability against third parties. toum ranks 138th, scoring 0 out of 6 in Act of 2003 is not clear about whether It should call for the establishment of terms of depth of credit information and or not debts and obligations can be de- a registry that allows for registration 5 out of 10 on the strength of legal rights. scribed in general terms in collateral and search that is simple and publicly Malaysia is the best performing economy agreements. Furthermore, there is no accessible. The law should contain clear with maximum scores on both indexes provision clearly defining whether all priority rules (within and outside of (figure 5.3). types of assets—including future and bankruptcy procedures) for creditors Juba scores 0 out of 6 on the depth of after-acquired assets—could be used and it should devise an enforcement credit information index because South- as collateral, nor does the Act clarify mechanism that is clear and efficient. ern Sudan has no public credit registry or whether a general description of all such private credit bureau. The only criterion assets is sufficient. In addition, the law is OVERHAUL THE SYSTEM OF banks have when it comes to extending not clear about the automatic extension REGISTRATION OF MOVABLE PROPERTY a loan in Juba is the “KYC” rule: Know to proceeds of an original asset. The Civil Your Customer. Financial institutions in Procedure Act of 2007 does not include A centralized collateral registry protects Juba only give loans to clients that have out of court enforcement. There are no secured creditors’ rights by allowing them kept an account with them for at least rules concerning priority of creditors. to see if an asset is already guaranteeing 6 months. They request all background another creditor. It also clarifies priority information, audited accounts, previous among creditors. Best international prac- bank statements, and often have other tices suggest that such a registry should requirements. As a managing director contain information on all types of loans of a local bank mentioned, banks rely on and assets, unified in a centralized and other customers who know the commu- electronic database. To make searches 26 DOING BUSINESS IN JUBA 2011 easier, the registry ought to be indexed by By sharing credit information, registries the name of the borrower, rather than by help lenders assess risk. That releases en- the date of the pledge. trepreneurs from the burden of having to Setting up registries—or unifying rely on personal connections alone when and improving existing ones—is a com- trying to obtain credit. The credit reg- mon reform that has been implemented istry or bureau should distribute more across the world. For example, Georgia, than 2 years of historical data; collect Ghana, the Marshall Islands, and the both negative and positive data; and Solomon Islands created unified reg- collect and distribute data from a broad istries for movable property in 2010. range of sources—e.g., retailers, trade Ghana now requires any secured credit creditors, utility companies, as well as agreement above US$ 350 to be regis- financial institutions. Borrowers should tered with the collateral registry in order have the right to access their data since to ensure that the security interest is it enhances the quality of the data and enforceable against third parties. protects borrowers’ rights. In 2010, Ghana, Iran, Papua New ALLOW OUT-OF-COURT Guinea, and Uganda all created new ENFORCEMENT credit registries or bureaus. Uganda’s first For security interests to be cost-effective, private credit bureau covers more than enforcement in case of default must be 200,000 individuals. A new biometric swift.6 Efficient enforcement procedures data system allows each new loan ap- are particularly important for movable plicant to be identified and issued a property because it may depreciate over financial identity card. time. Currently, in Southern Sudan, sei- zure of assets by creditors must be imple- mented through court proceedings. The law should allow parties to agree on 1. World Bank. 2010. Sudan Investment Cli- mate Assessment. Washington, D.C.: The out-of-court enforcement at the time the World Bank Group. security interest is created. 2. Álvarez de la Campa, Alejandro, Everett When it comes to the seizure of as- T. Wohlers, Yair Baranes and Sevi Si- sets, there are different models of extra- mavi. 2010. Secured Transactions Systems and Collateral Registries. Washington, judicial enforcement. Public collection D.C.: International Finance Corporation. agents are common in former Soviet 3. Safavian, Mehnaz, Heywood Fleisig and Union countries. Other countries use pri- Jevgenijs Steinbuks, 2006. “Unlocking vate collection agents—such as notaries Dead Capital: How Reforming Collateral Laws Improves Access to Finance.” Pri- (Georgia), bailiffs (France), or receivers vate Sector Development Viewpoint, No. (United Kingdom)—usually belonging 307, World Bank, March 2006. to a regulated and certified body.7 In 4. World Bank. 2010. Sudan Investment Cli- all, 105 of the 183 economies covered mate Assessment. Washington, D.C.: The by Doing Business have legal provisions World Bank Group. allowing the parties to a security agree- 5. Section 201, Chapter VI Dual Banking System. Part 13: Finance and Economic ment to agree to some form of out-of- Matters. Interim National Constitution of court enforcement. Sudan. 6. Kozolchyk, Boris, and Dale Furnish. PROMOTE THE ESTABLISHMENT OF A 2006. “The OAS Model Law on Secured CREDIT BUREAU Transactions: A Comparative Analysis.” Arizona Legal Studies Discussion Paper Public credit registries and private credit 06-39, University of Arizona Rogers Col- bureaus—institutions that collect and lege of Law, Tucson. distribute credit information on borrow- 7. Ibid. ers—can greatly expand access to credit. Protecting FIGURE 6.1 How well are minority shareholders protected against self-dealing in related-party investors transactions? Extent of disclosure Lawsuit Disclosure and approval requirements Mr. James Extent of director liability Ability to sue directors 60% ownership, 90% ownership, for damages sits on board of directors sits on board of directors Company A Company B Minority (buyer) (seller) Transaction shareholders involving conflict of interest Ease of shareholder suits Access by shareholders to documents plus other evidence for trial Abit, owner of a thriving company in centration and informal business rela- shareholders are better protected from Juba, is eager to take advantage of South- tions can create an ideal environment for director’s misuse of corporate assets for ern Sudan’s economic upswing that fol- such transactions, which allow control- personal gain in South Africa (10th), lowed the peace agreement. But even ling shareholders to profit at the expense Nigeria (59th), Egypt (74th) and Kenya though Abit’s business is yielding high of the company’s financial health—either (93rd). New Zealand, the global top per- returns, he cannot convince his business because company assets are sold at an former for this indicator, scores 9.7 on partners to invest in his company. They excessively low price or purchased at the strength of investor protection index feel insufficiently protected by the law. an inflated price, or because loans are (figure 6.2). Companies can grow more quickly granted by the company to controlling In Juba, and in the whole of South- by raising capital, which can be achieved shareholders on terms far better than the ern Sudan, corporate governance and through bank loans or by selling shares market offers. In countries with a weak protection of minority shareholders are of the company to equity investors. Sell- legal enforcement, such deals may even regulated by the Companies Act of 2003. ing shares allows companies to expand be considered fully legal.3 This law does not address many issues without providing collateral or repay- Doing Business measures the trans- affecting today’s businesses in Southern ing bank loans. Investors, however, are parency of related-party transactions, Sudan and offers limited protection to concerned with corporate governance the liability of company directors for self- minority shareholders in case of prejudi- and look for legal protection. If inves- dealing and the ability of shareholders to cial related-party transactions. tors fear potential expropriation by a sue directors for misconduct (figure 6.1). Juba scores 3 points out of 10 on the company’s officers, they tend to invest A higher ranking on the strength of in- “extent of disclosure” index. The Compa- in fewer companies in which they take vestor protection index indicates that an nies Act of 2003 requires that the board majority stakes.1 A recent study finds economy’s regulations offer stronger in- of directors be informed of a potential that the presence of legal and regulatory vestor protection against self-dealing in conflict of interest.5 This is not the case in protection for investors explains up to the areas measured. The indicator does Khartoum, which scores 0 of 10 on this 73% of the decision to invest.2 Because of not measure all aspects related to the sub-indicator. Nevertheless, full disclo- this, both governments and businesses protection of minority investors, such as sure of all material facts on related-party have an interest in strengthening inves- dilution of share value or insider trading. transactions is still not required in Juba. tor protection. Nor does it measure the dynamism of Only the board of directors approves One of the most important issues in capital markets or protection specific to the transaction and no input is required corporate governance—and a particular foreign investors. by shareholders. There are no external concern for minority shareholders—is With a score of 2.7 out of 10 on the reviews of the transaction before it takes self-dealing, the use of corporate assets overall strength of investor protection place and there are no specific rules by company insiders for personal gain. index, Juba would rank 173rd out of the on disclosure of related-party transac- Related-party transactions are the most 183 economies measured by Doing Busi- tions in annual reports.6 Global best common example. High ownership con- ness 2011.4 Within the region, minority performers on this sub-indicator, such as 28 DOING BUSINESS IN JUBA 2011 FIGURE 6.2 of shareholder suits” index. Both the Civil 16 members of countries of the Organi- How Juba compares globally and with selected African and Middle Procedure Act of 2007 and the Compa- zation for the Harmonization of Business Eastern economies on the ease of nies Act of 2003 facilitate the gather- Law in Africa have started reviewing the protecting investors ing of evidence guaranteed to minority Uniform Commercial Act.9 Global ranking (1–183) shareholders before and during the trial. Rwanda provides an excellent re- NEW Also, any shareholder or group of share- gional example of strengthening inves- ZEALAND EASIEST (1) holders holding at least 10% of the shares tor rights. This country has steadily South Africa of the company can request the appoint- reformed its commercial laws and insti- 20 Rwanda ment of a government inspector and the tutions since 2001. In April 2009, Rwan- 40 subsequent investigation of related-party da’s parliament adopted a new company transactions.7 However, shareholders are law. The new law regulates conflicts of 60 Nigeria not entitled to inspect corporate docu- interest by requiring shareholder approv- Egypt, Arab Rep. 80 ments before filing a suit. Even though als for related-party transactions involv- Kenya court rules allow shareholder plaintiffs ing more than 5% of company assets. The 100 access to some information from defen- law also introduces extensive require- 120 United Arab Emirates dants and witnesses during the exchange ments for disclosure of related-party Uganda of evidence process, shareholders must transactions—to the board of directors 140 identify specific documents related to the and in the company’s annual report. Sudan (Khartoum) transaction in question.8 This makes it easier for shareholders to 160 Juba (173) Minority shareholders in Juba need sue directors for prejudicial related-party 183 Afghanistan broader and stronger rights to protect transactions. And for the first time in Note: The ease of protecting investors is based on the percentile themselves from prejudicial behavior of Rwanda’s legal history, the law sets out a ranking of the average of the “extent of disclosure” index, “director liability” index and “ease of shareholder suits” index. company’s officers. Many of Southern clear catalogue of directors’ duties. Men- See Data notes for details. Source: Doing Business database. Sudan’s neighbors can serve as com- tioned reforms have already started to mendable examples of successful re- reap benefits. In 2009 alone, Rwanda at- Singapore, require shareholder approval formers in this field. Sub-Saharan Africa tracted some $1.1 billion in investment, of related-party transactions and do not implemented some of the most compre- 41% more than in the previous year and allow interested parties to participate in hensive investor protection reforms in this in the midst of the global economic the approval process. They also require 2010 (figure 6.3). For example, Tanzania crisis.10 that a director’s potential conflict of in- and Mozambique adopted entirely new terest be disclosed immediately and sub- company laws while new commercial sequently (in the annual report) while laws are being developed in Burundi, enforcing an external review of the terms Kenya, Malawi, and Uganda. Moreover, of the transaction before it takes place. FIGURE 6.3 On the “director liability” index, Stronger investor protections in Sub-Saharan African economies since 2005 which measures the ability of share- Strength of investor protection index (0–10) holders to sue officers and directors for 6.3 6.3 misconduct, Juba scores 0 points out of 6.0 6.0 2010 10. Directors and company officers can 5.7 5.0 only be held liable in case of fraud. In the event of damage from a related-party 4.7 4.3 2005 4.3 transaction, unless it is fraudulent, no 4.0 action can be undertaken, no penalties can be imposed, and there is no pos- 2.7 sibility of rescission. Broader protection 2.0 is offered in economies such as South Africa, where minority shareholders are allowed to sue company directors in case of prejudicial related-party transactions. Botswana Mozambique Rwanda Sierra Leone Swaziland Tanzania Juba scores 5 out of 10 on the “ease Source: Doing Business database. PROTEC TING INVESTORS 29 WHAT TO REFORM? pertaining to related-party transactions. power and company’s funds for their France, Singapore, and New Zea- own interests. In order to create a legal The Government of Southern Sudan must land have the world’s strictest rules on structure that ensures the protection of be recognized for its efforts in improving related-party transactions. Managers investors’ rights, future laws should re- the rights of minority shareholders. The and directors in these countries are re- quire that directors exercise appropriate government is in the process of adopting quired to disclose to the board any per- diligence, care, and loyalty—and make a new Companies Bill, currently awaiting sonal interest they have in the operations decisions that are well informed when enactment, which may improve the legal of the company. These disclosures should running the company. They should also framework and increase protection for state not only the existence of conflicts avoid conflicts of interests and always minority shareholders.11 The Companies of interests, but also reveal the nature put the concerns of the corporation be- Bill of 2010 clearly states the duties of of such interests and the extent of any fore self interests. For example, in New directors, requires directors’ disclosure personal gains from company actions. Zealand, directors and officers must pay of interests in potential contracts, and Countries with strong investor protec- damages caused to the company and pay demands that directors pay back profits tion systems require that annual reports back the profit made in violation of their made in violation of their duties to the include detailed information about duties to the corporation in the case of corporation.12 The bill, however, does related-party transactions. In order to prejudicial related-party transactions. not require an external assessment of increase shareholders’ access to informa- related-party transactions before they tion about management dealings, the an- ALLOW SHAREHOLDERS GREATER can take place nor does it require the nual report should publish the nature of ACCESS TO CORPORATE DOCUMENTS BEFORE AND DURING THE TRIAL publication of director’s potential conflict management interests and the extent to of interest in the annual report. which each party stands to gain person- In many ways, Southern Sudanese court In order to address these inade- ally from company actions. rules restrain shareholders’ access to quacies, it is necessary to implement a a company’s documents. For example, comprehensive set of reforms regard- REQUEST AN ASSESSMENT OF when filing a suit, shareholder plaintiffs ing the transparency of related-party RELATED-PARTY TRANSACTIONS BY have to identify specific documents per- AN INDEPENDENT BODY transactions and liability in cases of self- taining to a related-party transaction, dealing. It is also necessary to ascertain Currently, no external body—such as they cannot question defendants or wit- shareholders’ ability to sue officers and an external auditor—is required to re- nesses directly, and they cannot submit directors for misconduct. The following view large related-party transactions be- questions beforehand. are some of the major points that should fore they take place. In order to reduce In order to protect minority share- be taken into consideration. the risk of self-dealing, an independent holders from self-dealing, regulations auditor should review the terms and should give shareholders the right to INCREASE DISCLOSURE OBLIGATIONS conditions of a related-party transaction inspect a company’s documents if they TO THE BOARD OF DIRECTORS AND IN before it is approved. In Malaysia, for suspect wrongdoings by directors. The THE ANNUAL REPORT example, an auditor’s report evaluates law can grant this right with some excep- The Companies Act of 2003 requires the main terms of the transaction and tions—for example, protecting corporate only 2 types of disclosure: directors must presents an opinion on whether or not secrets. This could maintain a balance comply with general disclosure of poten- the transaction is being concluded at between the needs of managers (to oper- tial conflicts of interest and related-party market terms. ate without overly burdensome intru- transactions must be approved by the sion by shareholders) and the needs of board of directors. However, directors INCREASE THE LIABILITY OF shareholders (to monitor management are not obliged to undergo full and im- MANAGERS AND THE BOARD OF actions). For example, Mozambique and DIRECTORS mediate disclosure of information on Rwanda allow shareholders access to any topics such as a director’s immediate In Southern Sudan, neither a company’s internal documents except corporate family’s stake in a related-party transac- officers nor its board can be held li- secrets. And if the management fails tion, their names, and all holdings in able in cases of prejudicial related-party to provide sufficient information, share- personally owned companies or services transactions. With almost no incentive holders can ask the court to appoint provided and received. Failure to disclose to include minority shareholders’ inter- government inspectors with full powers such information provides opportunities ests into the decision-making process, to access all corporate documents. for directors to omit important evidence officers could be tempted to abuse their 30 DOING BUSINESS IN JUBA 2011 1. Dahya, Jay, Orlin Dimitrov and John Mc- Connell, 2008. “Dominant Shareholders, Corporate Boards, and Corporate Value: A Cross-Country Analysis.” Journal of Financial Economics 87 (1): 73–100. 2. Doidge, Craig, G. Andrew Karolyi and Rene M. Stulz, 2004. “Why Do Countries Matter So Much for Corporate Gover- nance?,” Journal of Financial Economics 86(1), 1-39. 3. Johnson, Simon, Rafael La Porta, Flor- encio López-de- Silanes, and Andrei Shleifer, 2000. “Tunnelling.” American Economic Review 90 (2): 22–27. 4. World Bank. 2011. Doing Business 2011: Making a Difference for Entrepreneurs. Washington, D.C.: The World Bank Group. 5. Article 200 of the Southern Sudan Com- panies Act 2003. 6. Article 147 of the Southern Sudan Com- panies Act 2003. 7. Article 165 of the Southern Sudan Com- panies Act 2003. 8. Ibid. 9. World Bank. 2010. Doing Business in East African Community 2010. Washington, D.C.: The World Bank Group. 10. Ibid. 11. All observations regarding the Compa- nies Bill of 2010 relate to the draft as of November 2010, and may not necessarily apply to the final version of the law. 12. Articles 238 and 293 of the Companies Bill of 2010. Paying taxes FIGURE 7.1 What are the time, total tax rate and number of payments necessary for a local medium-sized company to pay all taxes? Total tax rate Time To prepare, file and pay % of profit Hours value added or sales tax, profit tax and labor before all taxes per year taxes and contributions Number of payments (per year) Over 95% of the Government of Southern can help me out” he says. One way to Maldives, where paying taxes is the easi- Sudan’s revenues come from oil, whose help entrepreneurs like Majok comply est in the world, a company only needs to prices can be subject to abrupt fluctua- with tax requirements is to simplify the make 3 payments a year and pay 9.3% of tions.1 The consequence on government payment process and clearly inform the commercial profits (figure 7.2). coffers can be dire: Sudan’s government taxpayers of their obligations. The administrative burden of com- oil revenues plummeted by 37% from Doing Business measures the pay- plying with tax requirements is more 2008 to 2009 because of a sudden drop ments, time and total tax rate borne by cumbersome in Juba than in Sub-Saha- in oil prices.2 Furthermore, data suggests a standard firm with 60 employees in ran Africa on average, where 37 tax pay- that oil production in Sudan will peak in a given year. The number of payments ments are made per year. In fact, of Juba’s the next few years.3 Juba relies on taxes indicator measures the frequency with 46 annual payments, 36 are required to help finance its public infrastructure which the company has to file and pay FIGURE 7.2 and provide services necessary to sup- different types of taxes and contribu- How Juba compares globally and port much-needed economic and social tions, adjusted for the way in which those with selected African and Middle Eastern economies on the ease development. Southern Sudan enacted a payments are made. The time indicator of paying taxes Taxation Act in 2009. However, this new captures the number of hours it takes Global ranking (1–183) Act has not been fully implemented, and to prepare, file and pay 3 major types of MALDIVES EASIEST (1) Juba’s tax system remains poorly devel- taxes: profit taxes, consumption taxes United Arab Emirates oped. and labor taxes and mandatory contribu- 20 High tax rates and burdensome tax tions. The total tax rate measures the tax South Africa administration are consistently ranked cost borne by the standard firm (figure 40 Rwanda among the main obstacles to doing 7.1). 60 Uganda business by entrepreneurs around the In Juba, a medium-size company world.4 Where tax rates are high and spends 218 hours per year making 46 tax 80 Juba (84) taxes difficult to file, many businesses payments, and pays 25.5% of its annual Sudan (Khartoum) 100 may choose to remain informal. Indeed, commercial profit in taxes. This is more a survey found that even among formally cumbersome but less expensive than in 120 registered companies in Juba, under- Khartoum, where the same company Nigeria 140 Egypt, Arab Rep. reporting was rampant: companies only spends 180 hours every year on 42 pay- reported 31% of employment levels and ments and 36.1% of its commercial prof- 160 Kenya 35% of revenues.5 Majok, a local business its. Globally, Juba would rank 84th among owner in Juba, is one of them. “I know I 183 economies on the ease of paying 183 Belarus have to pay taxes, but I don’t know how taxes as measured by Doing Business Note: The ease of paying taxes is based on a simple average of the much and who to pay the taxes to. And 2011—ahead of Egypt (136th) but behind economy’s percentile rankings on the number of payments, time and total tax rate. See data notes for details. there are no accountants in the city who Uganda (62nd) and Rwanda (43rd). In the Source: Doing Business database. 32 DOING BUSINESS IN JUBA 2011 because 3 taxes—value added tax (VAT), When compared globally, paying Act contains provisions for withholdings personal income tax, and social security taxes in Juba is not time consuming. In on wages, interest, dividends, and royal- contributions—must be filed and paid fact, the regional average (315 hours) is ties, currently only taxes on wages are manually each month (12 times per year) almost 100 hours higher. The reason it withheld. Meanwhile, no publicly avail- (table 7.1). taxes take less time in Juba is that there able document specifies which taxes in Companies in Juba spend 56 hours are no backlogs at the Federal Taxation the Act are currently in effect and which on corporate income taxes, 78 hours on Chamber of the Government of National are not. As a result, companies lack clear labor-related taxes,6 and 84 hours on Unity or at the Ministry of Finance of the information on what tax payments are value added taxes (VAT)—218 hours in Government of Southern Sudan. That is required. total. Even though the VAT is collected because only a small number of formal At the same time, there are overlaps and administered in the whole of Sudan companies pay taxes in the city. Indeed, and conflicts between levels of govern- by the same authority—the Federal Tax- the tax system in Southern Sudan is ment regarding the rights to collect taxes ation Chamber of the Government of complex and lacks transparency, creating or service fees.7 The legislation does not National Unity—paying the VAT takes confusion for entrepreneurs in Juba. This provide sufficient clarity—the peace more than twice as much time in Juba may encourage small and medium-size agreement implies that the Government than in Khartoum (where it takes 40 companies to evade taxes. of National Unity should collect busi- hours). Why? The answer is that certain There are 2 main reasons the cur- ness profit taxes of large companies and goods—namely, alcoholic beverages— rent tax system potentially discourages the Government of South Sudan should are allowed in Southern Sudan and not compliance: confusion regarding the law collect them of small and medium-size Northern Sudan, so the Government of and confusion regarding its application. companies, but the 2 governments have National Unity cannot collect VAT from Although Southern Sudan enacted a not officially clarified such demarcation these restricted products. All VAT col- Taxation Act in 2009, it is an omnibus in tax collection and have allowed differ- lected on these products is therefore law that sets broad tax provisions with- ent ministries to argue for jurisdiction. transferred to the Government of South- out providing sufficient detail—making As a result, very few companies know ern Sudan which, to facilitate the rev- it difficult to implement until more de- where they should file and pay taxes.8 enue transfer, has asked all companies in tailed regulations are drafted to accom- Compared to Khartoum, tax rates Juba to clearly itemize all goods sold and pany the Taxation Act. As a consequence, are low in Juba. In Juba, entrepreneurs purchased. This adds to the tax compli- not all components of the law have been pay 25.5% of their commercial profits ance burden of companies in Juba. enforced yet. For example, although the in taxes every year, while entrepreneurs TABLE 7.1 How easy is it for companies to pay taxes in Juba? Payments Time Total Tax Rate Tax (numbers) (hours) Statutory tax rate Tax base (% of commercial profit) Business Profit Tax 5 (4 quarterly advance 56 10% taxable income 4.8% (corporate income tax) payments + 1 final) VAT/GST 12 84 15% value added not included SDG 5,001 = 15% Social Security Contributions 12 30 17% gross salaries 19.2% interest earned Tax on interest earned 10% 0.3% on bank account Company license 1 SDG 800 0.5% Central Equatoria State State Tax Identity Card 1 SDG 90 0.1% Central Equatoria State State Tax Clearance Certificate 1 SDG 50 0.0% Central Equatoria State State Retail Trading Licenses 1 SDG 200 0.1% Central Equatoria State State Fuel Tax 1 15% fuel consumption 0.5% Central Equatoria State Fuel Tax paid jointly with 0.5% fuel consumption 0.0% Government of Southern Sudan fuel tax Total 46 218 25.5% PAYING TAXES 33 FIGURE 7.3 tional issues (between the Government large international companies. In order Companies in Juba and Khartoum face of National Unity and Government of to develop a broad-based tax system to different business profit taxes Total tax rate (% of commercial profit) Southern Sudan) and provide more clar- reduce the country’s dependence on oil ity on social security obligations, the revenues, the Government of Southern Khartoum Total tax rate Ministry of Labor of the Government of Sudan should improve tax compliance. 36.1% South Sudan recently issued a circular As a first step, the public needs to instructing each company to set aside be informed of the tax requirements in 3.2 0.2 their monthly contributions internally place as well as how to file and process Juba until a proper system to administer it can payments. The Government of Southern Total tax rate 25.5% be developed. Sudan has started distributing leaflets Other taxes 0.3 to entrepreneurs in Juba to explain how 1.2 State taxes 19.2 WHAT TO REFORM? to register with tax authorities and pay the personal income tax. This is a good CLARIFY AMBIGUITIES IN TAX start. Now this initiative must be ex- Social OBLIGATIONS Security panded to all taxes and taxpayers and contributions 19.2 A complex tax administration is costly— be repeated whenever a new tax is in- both for entrepreneurs who spend valu- troduced or modified. The government able time filing their tax and for the gov- could also deepen its communication 13.6 ernment who administers it. Since June efforts by reaching out to businesses via Business 2009, 25 economies around the world local chambers of commerce, organize profit tax 4.8 have made tax compliance easier.9 training workshops, and develop part- The tax system in Juba appears com- nerships with the press to engage the plex to entrepreneurs because there is public through simple messages in local Note: Sudan’s VAT is not included in the total tax rate as it does not affect commercial profits. See data notes for details. little clarity on what taxes must be paid languages.10 For example, in 2010, Sierra Source: Doing Business database. to which level of government. The cur- Leone established a customer service in Khartoum pay 36.1% (figure 7.3). In rent system is ad-hoc, where the larg- center to provide public information on Juba, companies with revenues below est companies are administered at the goods and services tax and other taxes, SDG 10 million (approximately US$ 4 federal government level, medium-size launched a national revenue authority million) are considered small companies companies at the Government of South- website, and ran regular public aware- and taxed at a statutory rate of 10%, ern Sudan level and smaller ones by ness campaigns. The efforts there are while in Khartoum, the same compa- the State Government of Central Equa- helping businesses better understand the nies would be considered medium-size toria—and legislations do not provide tax system. companies and be charged 15% of their clarity on the mandates of the different In order for these efforts to be suc- taxable profits. level of government. The Government cessful, the tax authorities staff in Juba Since 2009, the government has im- of National Unity, the Government of also needs to be fully trained to under- plemented several tax reforms in an ef- Southern Sudan, and the State Govern- stand the tax system. fort to facilitate paying taxes in Juba. The ment of Central Equatoria should clarify Taxation Act, enacted in 2009, is a move which taxes are paid to whom. In addi- SIMPLIFY TAXES WHERE POSSIBLE towards better defining the mandate of tion, the Government of Southern Sudan In the future, the Government of South- the Government of Southern Sudan in should either implement the Taxation ern Sudan should examine ways to sim- terms of tax collection and enforcement. Act in full by also enacting relevant regu- plify taxes by consolidating processes In addition, the government is focusing lations or clarify exactly which sections where it can. Subjecting the same tax on improving tax compliance, pushing of the Taxation Act are mandatory. base to more than one tax increases employers to obtain a Taxpayer Identi- firm’s cost of doing business as well as the fication Number (TIN) in order to fa- EDUCATE ENTREPRENEURS ON THE government’s cost of revenue administra- cilitate the proper audit of tax payments. TAXATION SYSTEM tion by requiring numerous calculations, The Government of Southern Sudan has Few entrepreneurs in Juba know what filings, and payments. In Juba, personal also printed leaflets to raise awareness their tax obligations are. As a result, income taxes and social security contri- of the system and obligations related to the bulk of Southern Sudan’s tax rev- butions are paid monthly and are admin- withholding taxes. To tackle jurisdic- enue comes from a limited number of istered by different offices, but are taxed 34 DOING BUSINESS IN JUBA 2011 on the same tax base. If the filing and payment could be consolidated on one form submitted at one single window, the administrative burden on taxpayers would be reduced. This requires design- ing a system where one of the relevant agencies serves as the receiving agency for all labor-related taxes, remitting the relevant shares of the pooled tax collec- tion to other agencies. 1. World Bank. 2010. Southern Sudan - En- abling the State: Estimating the Non Oil Revenue Potential of State and Local Gov- ernments. Washington, D.C.: The World Bank Group. 2. Government of Southern Sudan, Ministry of Finance and Economic Policy, Draft 2011 Budget. 3. World Bank. 2008. Revitalising Sudan’s Non-Oil Exports: A Diagnostic Trade Integration Study (DTIS) prepared for the Integrated Framework Program. Wash- ington, D.C.: The World Bank Group. 4. According to World Bank Enterprise Surveys, firms in 90% of countries sur- veyed rank tax compliance among the top 5 obstacles to doing business. World Bank (2006) “Enterprise Surveys: Regu- lations and Tax” (http://www.enterprise- surveys.org/) 5. World Bank. 2010. Sudan Investment Cli- mate Assessment. Washington, D.C.: The World Bank Group. 6. Labor-related taxes include personal income taxes withheld by employers as well as social security taxes and contri- butions. 7. World Bank. 2010. Southern Sudan - En- abling the State: Estimating the Non Oil Revenue Potential of State and Local Gov- ernments. Washington, D.C.: The World Bank Group. 8. The Government of Southern Sudan does not currently have the capacity to administer the business profit taxes, and has simplified request that all companies that are not registered with the Govern- ment of National Unity to be registered with the Government of Southern Sudan. 9. World Bank. 2010. Doing Business 2011: Making a Difference for Entrepreneurs. Washington, D.C.: The World Bank Group. 10. Rahman, Shaela. 2009. Changing the Minds of Skeptics: How Strategic Commu- nications Can Build Momentum for Tax Reform. IFC Smartlessons. Washington, D.C.: The World Bank Group Trading across FIGURE 8.1 How much time, how many documents and what cost to export and import borders across borders by ocean transport? TIME TIME COST COST To export To import DOCUMENTS DOCUMENTS Full, 20-foot container Import Export Port and terminal Customs and Inland handling border agencies transport Juba’s economy relies on cross-border entrepreneurs to look for export oppor- submit 9 documents, wait 52 days, and trade. The end of the war has allowed tunities. spend US$ 5,025. This is slower and more businesses to flourish, but decades of Doing Business measures the time expensive than from Khartoum where, conflict have wiped out basic infrastruc- and cost (excluding tariffs) associated via Port Sudan, importing takes 46 days ture and destroyed production capaci- with exporting and importing by ocean and costs US$ 2,900, while exporting ties. As a result, most goods—such as transport, and the number of documents takes 32 days and costs US$ 2,050. In food, construction materials, and basic necessary to complete the transaction other parts of Sub-Saharan Africa, the inputs—are imported. Conversely, (figure 8.1). The indicators cover proce- process is quicker and cheaper: import- Southern Sudan exports virtually noth- dural requirements such as documen- ing takes, on average, 38 days and costs ing apart from oil—which accounts for tation requirements and procedures at US$ 2,492 while exporting takes 32 days 97% of the revenue of the Government customs and other regulatory agencies FIGURE 8.2 of Southern Sudan.1 Yet, the region is as well as at the port. They also cover How Juba compares globally and endowed with fertile land for agricul- trade logistics, including the time and with selected African and Middle tural production—grains, coffee, fruit, cost of inland transport to the largest Eastern economies on the ease of trading across borders gum arabic, and vegetables—that could business city. Global ranking (1–183) be exported to international markets in Juba is an inland city. The primary the future.2 port used by its local traders is the port of SINGAPORE EASIEST (1) The more time-consuming the ex- Mombasa in Kenya, situated 1,400 kilo- United Arab Emirates port or import process, the less likely meters away. Even though Sudan is home 20 Egypt, Arab Rep. it is that traded goods will be able to to Port Sudan—a deep-water port in the 40 reach international markets in a timely northwestern part of the country—ge- fashion. Recent research shows that each ography and conflict have constrained 60 additional day a product is delayed prior Sudan’s north-south infrastructure link- 80 to being shipped reduces total exports ages. In order to trade overseas, cargos by more than 1%. For perishable ag- to and from Juba go through 2 customs Sudan (Khartoum) 100 Kenya ricultural products, a 10% increase in border posts—at Nimule/Bibia border 120 Nigeria delays decreases exports by about 3.5%.3 between Sudan and Uganda and at Mal- Uganda Making it easier to trade—by reducing aba between Uganda and Kenya. 140 South Africa the time and cost spent on paperwork, An entrepreneur in Juba needs to Rwanda 160 Juba (181) simplifying clearance procedures, and submit 11 documents, wait 60 days, and Central African Republic investing in inland transportation— spend US$ 9,420 to import a standard- 183 Afghanistan would facilitate the flow of goods to and ized container of cargo through the port Note: The ease of trading across borders is based on a simple average from Juba. It would also decrease input of Mombasa. To export4 through the of the economy’s percentile rankings on the number of documents, time and cost required to export and import. costs for local industries and encourage same port, an entrepreneur needs to See data notes for details. Source: Doing Business database. 36 DOING BUSINESS IN JUBA 2011 TABLE 8.1 the road from Nimule to Juba—a dis- To import a standard shipment to Juba, traders must obtain many documents from tance of less than 200 kilometers. These different authorities checkpoints, some of which are placed Requirements of the Requirements of the Government Requirement of the Kenyan or Government of National Unity of Southern Sudan* Ugandan authorities* for security reasons, unnecessarily re- •   Bill of Lading •  Exit Pass (Gate Pass) •  Transit documents peat some procedures already conducted •   Certificate of Origin •  Import (IM) Form and Letter at the Nimule border. The biggest bot- •  Commercial Invoice from commercial bank tleneck is located at the Juba Bridge •  Customs import declaration •  Letter of approval to import from the Ministry of Commerce checkpoint, at Juba’s doorsteps. There, •  Packing List and Industry the immigration office checks drivers’ •  Technical standard and health certificate •  Pre-shipment inspection clean visas and the police office checks driving report of findings and vehicle licenses, as done previously * Documents required by Sudan Government of National Unity that are also required by other governments (governments of Southern Sudan, Kenya or Uganda) are not repeated. at the Nimule border. In addition, the Source: Doing Business database. Central Equatoria State Revenue Author- ity and Sudan Standard and Metrological and costs US$ 1,962. Compared globally addition, a transit document is required Organisation—in charge of regulating to 183 economies, Juba would rank 181st by the customs authorities of Kenya and technical and health standards of goods on the ease of trading across borders as Uganda (table 8.1). in Sudan—check the relevant documen- measured by Doing Business—just ahead The main cause of document delays tation and the goods. As a result, the im- of Afghanistan (183rd) and the Central is the letter of credit, which must be ap- port cargo spends, on average, an extra African Republic (182nd). proved by the Bank of Southern Sudan. 2 days at the Juba Bridge checkpoint As in many landlocked economies Each time a trader wishes to import or (figure 8.4). around the world, distance makes trad- export, she must first prepare and submit Finally, poor road infrastructure re- ing costly and time consuming for entre- 6 documents to the Bank of Southern mains a challenge in Southern Sudan. It preneurs in Juba. Inland transportation Sudan—including an import/export ap- is estimated that at the time of the sign- between Mombasa and Juba takes 17 proval letter from the Ministry of Com- ing of the peace agreement in 2005, there days and costs US$ 8,075 for importing, merce and Industry (certifying that the were just 4 kilometers of tarred roads and 14 days and US$ 4,000 for export- goods being imported/exported will be in all of Southern Sudan.5 Since 2009, ing. But geography does not explain ev- allowed to move into/outside the coun- transport between Juba and Nimule has erything. A burdensome administrative try) and an import (IM) form or export improved, thanks to road rehabilitation process, multiple checkpoints, and trans- (EX) form filled out by both the trader projects, but the work is slow because port infrastructure constraints also make and the trader’s bank. landmines buried on and around the trading in Juba difficult (figure 8.3). Each Second, importers in Juba must main roads must be cleared first.6 of these 3 problems is described below. pass through at least 6 checkpoints along The Juba-Nimule road is not the First, the administrative process for importing and exporting is cumbersome. FIGURE 8.3 Traders in Juba spend, on average, 34 Importers in Juba spend over half of total time on paperwork days to obtain the 11 documents re- Document Port and terminal Customs clearance Inland quired for importing, and 28 days for preparation handling and inspection transportation the 9 documents required for exporting. This is in contrast with the requirements Time (days) in Khartoum, where only 6 documents Total 34 6 3 17 time: are needed for exporting and import- 60 days ing. Unlike in Khartoum, traders in Juba need to submit a commercial invoice, an Cost (US$ per container) import approval letter from the Ministry Total 525 8,075 cost: of Commerce and Industry, a pre-ship- US$9,420 ment inspection clean report of find- 390 430 ings, and a technical standard or health 0 10 20 30 40 50 60 70 80 90 100 certificate—all of which are required by % of total the Government of Southern Sudan. In Source: Doing Business database. TRADING ACROSS BORDERS 37 FIGURE 8.4 Inland transportation is hampered by numerous checkpoints Time (days) Procedures Total cost: US$ 9,420 60 1. Import letter of credit 2. Other documents: customs declaration forms, etc 3. Port and terminal handling at Mombasa port 4. Customs clearance and inspection at Mombasa port 40 5. Arrange for inland transportation 6. Transport from Mombasa port to Malaba (via Nairobi) Inland 7. Customs clearance at Malaba border (Kenya-Uganda) transportation 8. Transport from Malaba to Nimule 20 9. Customs clearance at Nimule border (Uganda-Sudan) 10. Transport from Nimule to Juba bridge checkpoint 11. Clearance and inspection at Juba bridge checkpoint 0 Trading process 1 2 3 4 5 6 7 8 9 10 11 Document Port and terminal Customs clearance Inland preparation handling and inspection transportation Source: Doing Business database. only route to sea, but alternate routes are ters of gravel roads in Southern Sudan. the Ministry of Commerce and Indus- rarely used because of infrastructure fail- The Government of National Unity has try and the import (IM) form with its ings. The road through Kenya using the started addressing some of the issues of accompanying letter from the commer- Lokichoggio border crossing is the clos- vessel rehabilitation and container han- cial bank. The Bank of Southern Sudan est route to Mombasa, but traders rarely dling to facilitate transportation along should consider simplifying this process, use this route due to poor road condi- the river Nile.8 for example by allowing a copy of the tions and instability around the border. annual import license to replace an ap- There used to be 2 main routes link- WHAT TO REFORM? proval letter by the Ministry of Com- ing Southern Sudan with the North— merce and Industry. through a combination of road, rail, and STREAMLINE DOCUMENTATION But complying with paperwork is REQUIREMENTS AND CUSTOMS inland water transportation using the CLEARANCE PROCEDURES only one aspect of the lengthy trading river Nile—but they were disrupted dur- process that entrepreneurs in Juba face. ing the war. Services have restarted, but Traders in Juba are spending over half A careful mapping out of the processes many problems remain—for example, of their time to trade complying with of customs clearance at Nimule and the navigation channels need to be dredged paperwork. Authorities involved—in- requirements by the authorities in Juba and there’s a lack of handling equipment cluding the Bank of Southern Sudan, is needed to identify further effective for containers.7 customs officials from the Government ways to make importing and exporting The Government of Southern of National Unity and the Government easier in Juba. Sudan and the Government of National of Southern Sudan, the Ministry of Com- Unity have recently undertaken several merce and Industry of the Government of REDUCE CHECKPOINTS TO A MINIMUM initiatives to improve the ease of trad- Southern Sudan, and the Sudan Standard ing across borders in Juba with the and Metrological Organisation—should Checkpoints along the Nimule and Juba assistance of donors. Since the end of reexamine procedural requirements and road should be reduced as much as pos- the war, the rehabilitation of destroyed reassess the need for certain documents. sible. While the delays at each checkpoint roads and bridges has been a priority, They should also work together on how are generally short, they can extend to and transportation infrastructure is im- best to integrate the required informa- several days in the case of the Juba Bridge proving. The paving of the Nimule-Juba tion. checkpoint—adding time, cost, and un- road started in 2010—it is to be the first For example, to control the move- predictability to road transportation. paved road outside of Juba in Southern ment of the currency, the Bank of South- Inspection and control procedures at Sudan. By 2015, the Government of ern Sudan insists on pre-approving let- these checkpoints should be simplified, Southern Sudan plans to build 3,000 ters of credit, and requires 2 additional and redundant or duplicative procedures kilometers of paved and 3,000 kilome- documents: the letter of approval from must be removed. 38 DOING BUSINESS IN JUBA 2011 The wealth-sharing agreement of the Comprehensive Peace Agreement of 2005 allows for each state to levy border- 1. World Bank. 2010. Sudan Investment Cli- mate Assessment. Washington, D.C.: The trade charges or levies. As a result, goods World Bank Group. imported to Juba are currently taxed 2. World Bank. 2008. Revitalizing Sudan’s twice—by the Eastern Equatoria State Non-Oil Exports: A Diagnostic Trade at the Nimule border and by the Central Integration Study (DTIS) Prepared for the Integrated Framework Program. Wash- Equatoria State at the Juba Bridge check- ington, D.C.: The World Bank Group. point. To streamline this process, the 2 3. Djankov, Simeon, Caroline Freund, and states could sign a cooperation agree- Cong S. Pham. 2006. “Trading on Time”. ment whereby the Central Equatoria World Bank Policy Research Work- ing Paper 3909. Washington, D.C.: The State revenue authority would be housed World Bank Group. and levied from the Nimule border post. 4. Doing Business assumes a standard- Southern Sudan could go further and ized cargo of general goods transported establish a revenue authority that col- in a 20-foot container. The time, cost, and number of documents required for lects taxes for all states. If appropriately exporting are best estimates of what a designed, this could solve the issue of tax trader will face if exporting occurred. collection upon entry into each state. For importing, cements were assumed as the traded product, consistent with the CONTINUE TO IMPROVE INLAND assumptions of the Doing Business meth- TRANSPORTATION odology. 5. Brenthurst Foundation. 2010. “Every- While infrastructure in Southern Sudan thing is at Zero – Beyond the Referen- is improving, there are still sections dum – Drivers and Choices for Develop- ment in Southern Sudan”. Discussion along the Juba-Nimule road where a Paper 2010/05. small amount of rainfall will flood the 6. http://www.usaid.gov/locations/sub- road so that trucks cannot go through. saharan_africa/countries/sudan/eco- Long lines of trucks along different sec- nomic_growth.html tions of the road are common during the 7. World Bank. 2008. Revitalizing Sudan’s Non-Oil Exports: A Diagnostic Trade rainy season. Raising the road in sections Integration Study (DTIS) Prepared for the near rivers and creating ditches where Integrated Framework Program. Wash- rain water can flow should be a priority ington, D.C.: The World Bank Group. as the government continues to work 8. Ibid. with donors to improve roads connecting to Mombasa. In the longer term, rehabilitating the transport infrastructure network should remain a priority. Rehabilitat- ing the major roads within Southern Sudan and improving water transporta- tion along the river Nile will not only facilitate trading within Southern Sudan, but may also open up trade routes via the Port of Sudan for entrepreneurs in Juba. Enforcing FIGURE 9.1 What are the time, cost and number of procedures to resolve a commercial contracts dispute through the courts? Court Time Cost Number of procedures Company A Company B COMMERCIAL DISPUTE (seller & plaintiff) (buyer & defendant) Filing of Trial & court case judgment Enforcement Rebuilding the judiciary in post-con- Doing Business measures the time, for the judiciary, including the Civil flict countries can take many years.1 cost and number of procedures to resolve Procedure Act of 2007, the Criminal The Comprehensive Peace Agreement of a commercial lawsuit between 2 domes- Procedure Act of 2008, and the Judi- 2005 vested legislative authority in the tic businesses. The dispute involves the ciary Act of 2008. The Civil Procedure Legislative Assembly of Southern Sudan breach of a sales contract worth twice Act determines jurisdiction by monetary which enacted several fundamental laws the income per capita of the economy. thresholds—without distinction of the governing commercial regulations and The case is disputed on the merits and subject matter, be it civil or criminal. If property rights. However, Southern Su- the court hears an expert on the quality the value of the claim is higher than SDG dan’s legal system is still in transition, of the goods sold (figure 9.1). 1,000 (US$ 453), the dispute falls under relying on 3 different—and sometimes Enforcing a contract in Juba re- the jurisdiction of a first grade judge at overlapping—legal frameworks: the na- quires 46 procedures over 111 days and FIGURE 9.2 tional laws enacted by the Sudan Legisla- costs 26% of the value of the claim— How Juba compares globally and tive Assembly in Khartoum, the laws of faster and cheaper than the Sub-Saharan with selected African and Middle Eastern economies on the ease the “New Sudan” enacted by the Sudan average (which requires 639 days and of enforcing contracts People’s Liberation Movement before costs 50% of the value of the claim). Global ranking (1–183) 2005, and the laws enacted by the Legis- Compared globally, Juba would rank 74th LUXEMBOURG EASIEST (1) lative Assembly of Southern Sudan since of 183 economies measured by Doing 2005. In addition, there are not enough Business 2011—behind Rwanda (39th) 20 legal professionals in Juba and the courts but ahead of Khartoum (146th), Kenya Rwanda lack resources. (125th), and Uganda (113th). Enforcing 40 A functional dispute resolution sys- a contract in Luxembourg, the best per- 60 tem is essential for sustaining a healthy, former on this indicator, requires 26 Juba (74) stable economy. A recent study found procedures over 321 days and costs 9.7% 80 South Africa that efficient contract enforcement is of income per capita (figure 9.2). 100 Nigeria associated with greater access to credit According to the Civil Procedure Uganda for firms.2 Well-functioning courts help Act, the judicial process in Southern 120 Kenya businesses expand their networks and Sudan would consist of 46 procedures— United Arab Emirates 140 markets. Where enforcing contracts is above the Sub-Saharan Africa average Egypt, Arab Rep. easier, entrepreneurs may be less re- of 39 procedures (figure 9.3). The same Sudan (Khartoum) 160 luctant to undertake risky investments process takes only 20 steps in Ireland and and may be more likely to do business 31 in the OECD economies, on average. 183 Timor-Leste outside a limited circle of family, friends, Since 2005, the Legislative Assembly of Note: The ease of enforcing contracts is based on a simple average of and partners with whom they have al- Southern Sudan has enacted a number the economy’s percentile rankings on the procedures, time, and cost to resolve a commercial dispute through the courts. ready established relationships. of laws setting up the legal framework See Data notes for details. Source: Doing Business database. 40 DOING BUSINESS IN JUBA 2011 FIGURE 9.3 law system and not all spoke English— Enforcing contracts in selected African and Middle Eastern countries: Juba is faster than anywhere else in the world the language in which Southern Sudan laws are written. The situation has not Procedures Time Cost (number) (days) (% of claim) improved much, given that Juba Uni- 60 versity just reopened its doors in Juba 1,050 80 in 2007. Courts lack bailiffs and support Sudan (Khartoum) Egypt, Arab Rep. Rwanda staff and therefore resort to the police for 50 United Arab Emirates 900 70 enforcement purposes. Juba (46) Enforcing a contract in Juba costs Egypt, Arab Rep. Sudan (Khartoum) 40 Kenya, Nigeria 750 60 26% of the claim value—the same as SSA Average SSA Average in the United Arab Emirates but more SSA Average 50 than in Tanzania (14%). High advocates’ Uganda Kenya 600 South Africa 30 South Africa Uganda United Arab Emirates fees—which account for approximately Uganda 40 Rwanda Kenya South Africa 14% of the value of the claim—make up 450 Nigeria Nigeria 30 Egypt, Arab Rep. more than half of the total cost in Juba. 20 United Arab Emirates Court costs add another 7.1% of the 300 Juba (26) 20 Sudan (Khartoum) claim value—including 5.1% for court Rwanda 10 fees and 2% for an expert witness. En- 150 Juba (111) 10 forcement costs add up to 5% of the value of the claim, as set in the fee schedule of 0 0 0 the Civil Procedure Act. Enforcing a con- Note: SSA denotes the Sub-Saharan Africa region. Source: Doing Business database. tract in Khartoum is cheaper (at 19.8% of the claim value) due to its lower court the county court.3 to resolve commercial disputes. The Chief and enforcement costs (5% and 2.5%, Enforcing a contract in Juba takes Justice tried to solve the issue by estab- respectively) (figure 9.5). 111 days—faster than any of the 183 lishing a clear principle as to which laws Southern Sudan’s judicial system economies measured by Doing Business. apply in each case.4 The laws of the Leg- improved during the past 5 years through The indicator tracks the time needed to islative Assembly of Southern Sudan and the enactment of fundamental laws and resolve a commercial dispute through laws of the “New Sudan” apply if the cause FIGURE 9.4 the 3 stages of litigation: filing and ser- of action arose within territory under Enforcing contracts in Juba is about 8 times vice; trial and judgment; and, finally, control of the Sudan Peoples’ Liberation faster than in Khartoum enforcement. In Juba, the filing and ser- Movement before 2005 or within South- Total time vice period takes 21 days. The judgment ern Sudan afterwards. Otherwise, judges 810 days period, from the beginning of the trial should apply the national laws. Still, some until the judgment is pronounced, is judges refuse to apply the laws of the New the most time consuming (60 days). Sudan. Additionally, customary law— The enforcement period, from the end traditional justice applied by the chiefs 410 Enforcement of the appeal until the plaintiff receives and built upon custom and tradition—is his money, takes 30 days (figure 9.4). a predominant source of law in Southern Enforcing a contract in Juba is fast, not Sudan. In 2004 customary law was used because the judicial system is efficient to solve over 90% of disputes.5 and well functioning, but because few Second, there is a shortage of legal commercial cases are resolved in court. professionals in Southern Sudan, espe- Two main factors may explain why: legal cially advocates and judges specializing 310 Judgment uncertainty and understaffing. in commercial disputes. In 2005, there Total time 111 days First, legal uncertainty can discour- were only 22 judges to cover 202 avail- 30 age entrepreneurs from going to court, as able positions.6 Most had been trained 60 Filing 90 Southern Sudan’s legal system relies on 3 in Khartoum in the Sharia (Islamic) 21 different—and competing—frameworks. and continental law systems. They were, Juba Khartoum Some judges use different sources of law therefore, unfamiliar with the common Source: Doing Business database. ENFORCING CONTRAC TS 41 the resumption of training programs. FIGURE 9.5 Enforcing contracts in Juba is more expensive than in Khartoum and Dar es Salaam Additionally, Southern Sudan’s Chamber Cost (% of claim) of Commerce, Industry and Agriculture Total cost 26.0% was created, which provides an alter- native dispute resolution mechanism. 5.0 Enforcement cost Total cost However, alternative dispute resolution 19.8% is conducted by the chamber informally 2.5 Total cost 7.1 Court cost without a legal framework or training for 14.3% the arbitrators. 5.0 4.3 WHAT TO REFORM? 12.3 13.9 Attorney cost 10.0 KEEP STATISTICS AND MEASURE THE IMPACT OF REFORMS Statistical information helps assess court Dar es Salaam Khartoum Juba performance. The court should produce an annual report—as a (printed) hard Source: Doing Business database. copy or (digital) soft copy—with all the INCREASE THE NUMBER OF LEGAL cases they received and disposed of, in- lishing a rule for applicability, there is no PROFESSIONALS cluding details about the judges and consensus among judges as to which laws Legal professionals, such as advocates and finances, the number of cases handled to apply. The Government, the Legislative judges, are in short supply in Southern and disposed of by type, average time to Assembly, and the Judiciary of Southern Sudan. This is a common situation in disposition, and annual clearance and Sudan should work together to clarify post-conflict countries. Chad has about appeals rates. the legal commercial framework. To do 150 practicing lawyers, and in 2009 it had Measuring the performance of so, judges could be convened to identify only 6 new law graduates. Liberia has only courts and individual judges can in- why previous attempts at clarifying the about 300 practicing lawyers for a popula- crease efficiency. Assessments of a court’s legal framework have remained ineffec- tion of 3.4 million, and many lack legal performance can help its personnel set tive and what measures can be adopted. training.11 While training takes a long concrete targets. Assessments can also Enacting missing laws and regulations— time, other countries have found short- aid in evaluating the court’s progress namely the new Companies Act—could term solutions. Rwanda had to change its toward its goals—in setting budgets and solve some of the existing controversies. law to allow the hiring of non-Rwandese in motivating staff to improve perfor- Communicating the concrete steps the expatriate judges—in May 2008, 2 Mau- mance.7 What gets measured can range government is taking to improve legal ritian judges were sworn in to help local from user satisfaction to costs, timeliness certainty could build confidence in the judges run the courts during the first 3 and clearance rates.8 Economies such judicial system. years of operation.12 These solutions have as Australia, Singapore, and the United Informing the public about appli- to be assessed on a case-by-case basis States have been using tools to measure cable legislation is also critical. A well since they are not exempt from difficulties. performance in the judicial sector since informed public is encouraged to bring Judges should be trained, courts the late 1990s.9 their cases to court. By 2010, 104 econo- equipped with new resources, and legal mies around the globe made legal texts academies given the support they need. CLARIFY THE LEGAL FRAMEWORK, and recent court judgments available The capacity of administrative and sup- ENACT MISSING REGULATION, AND to the general public, while 30 econo- port staff (such as clerks and bailiffs) PUBLICIZE APPLICABLE LEGISLATION mies—most of them in Sub-Saharan ought to be strengthened. Training pro- When it is unclear which laws apply, Africa—did not provide access to such grams should target practicing judges judges apply different sources and prin- information.10 In Southern Sudan, hard and advocates as well as law students at ciples. Entrepreneurs can be discouraged copies could be made available at the Juba University. The curriculum at the from bringing a case to court when the Ministry of Legal Affairs and Constitu- Faculty of Law in Juba University should outcome is so unpredictable. In Southern tional Development and at the Legisla- be carefully reviewed to make sure that Sudan, although some laws have been tive Assembly. Electronic copies should the new laws are studied and that profes- enacted and a circular was issued estab- be published online. sional training is included. 42 DOING BUSINESS IN JUBA 2011 ESTABLISH SPECIALIZED JUDGES OR Constitutional Affairs. March 2004. Also: SPECIALIZED COMMERCIAL SECTIONS Leonardi, Cherry and Leben Nelson WITHIN EXISTING COURTS Moro, Martina Santschi, Deborah H. Isser. “Local Justice in Southern Sudan.” Currently, judges in Southern Sudan are United States Institute of Peace and Rift competent to hear all cases without re- Valley Institute. http://www.usip.org/ publications/local-justice-southern- gard of the subject matter. Even though sudan. the volume of commercial cases is low, 6. World Bank and United Nations. Joint having specialized commercial judges Assessment Mission. 2005. Also: UNDP. within existing courts would help ensure Institutional Support to Southern Sudan Judiciary. 2007. that commercial disputes are resolved 7. National Center for State Courts (2005a). more quickly and efficiently. It would “CourTools: Giving Courts the Tools to allow judges to acquire more knowledge Measure Success.” Williamsburg, VA. on commercial cases through practice http://www.ncsconline.org/. and through specific training. Jordan in- 8. National Center for State Courts (2005a, 2005b). 2005b. “CourTools: Trial Court troduced specialized commercial judges Performance Measures.” Williamsburg, sitting at its Conciliation Courts—these VA. http://www.ncsconline.org/. judges are either practicing lawyers with 9. For the United States, see the official commercial experience or those graduat- website of the National Center for State Courts (http://www.ncsconline.org/) and ing from a special training program at North Carolina Court System, “Court the Judicial Institute of Jordan. Performance Management System.” In the long term, a commercial sec- 10. World Bank. 2009. Doing Business 2010: tion could be established within South- Reforming through Difficult Times. Wash- ington, D.C.: The World Bank Group. ern Sudan’s existing courts, allowing for 11. World Bank. 2010. Doing Business 2011: further specialization. Economies with Making a Difference for Entrepreneurs. commercial divisions within high courts Washington, D.C.: The World Bank include Ireland, Kenya, Nigeria, Uganda, Group. and the United Kingdom. Within Sub- 12. Hertveldt, Sabine. 2008. “Pragmatism Saharan Africa, 24 economies already Leads the Way in Setting Up Specialized Commercial Courts.” Doing Business case have some kind of specialized court, study: Rwanda. Washington, D.C.: World including Khartoum. Bank Group. 1. Samuels, Kristi. “Rule of Law Reform in Post-Conflict Countries: Operational Initiatives and Lessons Learnt.” Social Development Paper No. 37. October 2006. Washington, D.C.: The World Bank Group. 2. Bae, Kee-Hong, and Vidhan K. Goyal. 2009. “Creditor Rights, Enforcement, and Bank Loans.” Journal of Finance 64 (2): 823–60. 3. The value of the claim, according to the Doing Business case study, amounts to 200% of gross national income per capita, SDG 5,437 (US$ 2,460). 4. Circular No. 1/2007. Judiciary of South- ern Sudan. 5. Jok, Aleu Akechak, Robert A Leitch, Carrie Vandewint. “A Study of Custom- ary Law in Contemporary Southern Sudan.” World Vision International and South Sudan Secretariat of Legal and Closing a FIGURE 10.1 What are the time, cost and outcome of the insolvency proceedings against a local company? business Court Outcome Time Cost Recovery rate Secured creditor Insolvent Unsecured (bank) company creditors SECURED OTHER LOAN CLAIMS Perhaps no other area of business regu- laws meeting these 3 objectives achieve corps) as a method of debt enforcement, lation has been tested more by the re- higher recovery rates than countries judges have little or no experience in cent global financial and economic crisis without such laws. handling bankruptcy cases, and costs are than insolvency. As crisis-affected busi- Doing Business studies the time, prohibitive.4 To close a business in Sub- nesses filed for bankruptcy, governments cost and outcome of insolvency proceed- Saharan Africa costs, on average, 20.7% around the world saw their insolvency re- ings involving domestic entities (figure of the value of the debtor’s estate and gimes bending under difficult economic 10.1).2 Speed, low costs and continua- takes 3.4 years. conditions. History shows that financial tion of viable businesses characterize In spite of its relevance to secur- crises can provide good opportunities for the top-performing economies. Doing ing sustainable economic growth, there bankruptcy reforms.1 The Great Depres- Business does not measure insolvency sion prompted the first comprehensive proceedings of individuals and financial FIGURE 10.2 reform of U.S. bankruptcy law in 50 institutions.3 How Juba compares globally and with selected African and Middle years. The Chandler Act of 1938, the Juba is among the world’s poorest Eastern economies on the ease of predecessor of today’s Chapter 11, estab- performers in the area of closing a busi- closing a business lished the authority of bankruptcy ad- ness. Globally, Juba would rank among Global ranking (1–183) ministrators vesting them with powers to the bottom 26 economies on this indica- JAPAN EASIEST (1) help effective reorganizations. Similarly, tor. Although closing a business is regu- the 1997 Asian financial crisis spurred lated by the Companies Act of 2003— New Zealand 20 efforts across East Asia to restructure and the new Insolvency Bill of 2009 is national bankruptcy procedures. When awaiting enactment—there are very few 40 illiquidity spread across the region in records of formal bankruptcy procedures Uganda 60 1997–98, the entire financial sector was being used. As such, Juba is classified as South Africa dragged down and liquidations became a “no practice” economy in the area of 80 Kenya widespread. Korea and Thailand modi- closing a business according to the Doing 100 Nigeria fied their laws to favor the rehabilitation Business methodology (figure 10.2). of distressed firms. This does not put Juba far behind 120 Good bankruptcy regimes achieve 3 other countries in the region. Sub-Sa- Egypt, Arab Rep. 140 goals. First, they maximize the total pro- haran Africa has the largest share of United Arab Emirates ceeds received by creditors, sharehold- economies with little or no insolvency 160 Juba (183) ers, employees, and other stakeholders. practice. In fact, 12 of the region’s 46 Rwanda Second, they rehabilitate viable busi- economies have had fewer than 5 in- 183 Sudan (Khartoum) nesses and close unviable ones. Third, solvency cases annually in recent years. Note: The ease of closing a business is based on the economy’s percentile ranking on the recovery rate: how many cents on the they establish a clear priority ranking of In these economies, the law still con- dollar claimants (creditors, tax authorities, and employees) recover creditors for repayment. Countries with templates imprisonment (contrainte par from the insolvent firm. See Data notes for details. Source: Doing Business database. 44 DOING BUSINESS IN JUBA 2011 FIGURE 10.3 A good regional example of such regula- Closing a business: no practice in bankruptcy in Juba tory environment is Botswana, where insolvency proceedings take less than 2 Time Cost Recovery rate (years) (% of estate) (cents on the dollar) years and cost 15% of the estate value. Creditors are expected to recover 63.7% 80 United Arab Emirates 30 Uganda New Zealand of the estate in the end—which is slightly United Arab Emirates short of the OECD’s average of 69.1% but Kenya 70 Egypt, Arab Rep. 25 significantly better than Sub-Saharan Af- Egypt, Arab Rep. 60 rica’s average of 23.2%. Kenya SSA Average Nigeria 20 SSA Average 50 WHAT TO REFORM? South Africa 40 Uganda 15 Nonviable businesses need to be able to Uganda South Africa Nigeria make orderly exits. However, overbur- 30 Kenya South Africa 10 Nigeria dened courts, unqualified liquidators, SSA Average 20 and rigid laws are obstacles to surmount. Egypt, Arab Rep. Governments can help in 3 basic ways: by 5 10 United Arab Emirates encouraging firms to seek pre-insolvency NO PRACTICE NO PRACTICE NO PRACTICE Juba Juba Juba solutions, by improving the efficiency Sudan (Khartoum) 0 Sudan (Khartoum) 0 Sudan (Khartoum) of courts, and by training receivers and Rwanda Rwanda Rwanda Note: SSA denotes the Sub-Saharan Africa region. liquidators to do a good job in admin- Source: Doing Business database. istering distressed companies and sell- ing their assets efficiently. Implementing were very few economies in the world ruptcy administrators. Malawi enacted these reforms could also help distressed improving their insolvency systems in its Companies Regulation of 2009 and businesses to successfully reorganize— recent years. There are 2 reasons that set a cap on liquidators’ fees: 5% of the an important factor in achieving sustain- help explain this. First, bankruptcy re- value of the estate. Previously, under able economic growth and preserving forms are complex: they usually involve older regulations, Malawi’s liquidators jobs. Southern Sudan’s new Insolvency making changes not only to the bank- were allowed to set their own fees, often Bill of 2009 and Companies Bill of ruptcy rules, but also in the rules of civil amounting to around 10% of the value 2010—both awaiting enactment—repre- procedure and the administration of the of the estate.5 Mauritius passed a new sent big moves in the right direction. In judiciary. In some countries, it might insolvency law which established a reha- addition, below are some of the lessons even involve establishing the first bank- bilitation procedure for companies as an learned from the world’s best reformers ruptcy law. That may take years. Second, alternative to winding up. The law also in insolvency proceedings. in many countries, a large number of sets clear time limits, defines the rights businesses operate in the informal sector and obligations of creditors and debtors, UNDERTAKE A REVIEW OF THE INSOLVENCY SYSTEM TO or are family-owned and so bankruptcy and outlines sanctions for those who UNDERSTAND WHY THERE ARE SO is not a priority reform. abuse the system. FEW INSOLVENCY PROCEEDINGS Nevertheless, some reformers in Efficient bankruptcy regimes help In any vibrant market economy, busi- Sub-Saharan Africa provide useful in- entrepreneurs get access to credit, which nesses fail and need a mechanism for sights regarding how to go about reform- allows them to start new businesses. orderly exit. If an analysis of business ing insolvency proceedings in Southern Easier exit means easier entry. In ad- exits in Juba illustrates that the current Sudan. Rwanda improved its process dition, a functioning bankruptcy sys- insolvency system does not respond to of dealing with distressed companies tem reassures creditors that if things go the needs of debtors or creditors on the through a new law designed to stream- wrong they have a secured mechanism to ground, it is important to identify what line reorganization procedures. The law get their money back. As a result of this alternative methods are preferred and allows viable but distressed firms to reassurance, they are more likely to lend why. It is likely that these mechanisms continue operating while setting clear and to require less collateral than they do not provide the predictability, trans- time limits on insolvency procedures would otherwise—stimulating the flow parency, and efficiency of a sound insol- and regulating the profession of bank- of credit to small and medium-size firms. vency system. Until such problems are CLOSING A BUSINESS 45 clearly identified, it is difficult to design INCREASE THE CAPACITY OF restructuring process by negotiating op- INSTITUTIONS THAT IMPLEMENT THE reforms that will affect practice on the INSOLVENCY FRAMEWORK tions that can later be approved in court. ground. It is therefore recommended This helps ease the burden on courts that a review is undertaken in order to The institutions that implement insol- while increasing the likelihood that com- try to answer 3 questions: 1) why the vency frameworks should include both panies will restructure their debt if there current insolvency system is not being courts and regulatory agencies. The scar- is still a chance of rescuing the business. used; 2) what alternatives are being used city of insolvency cases in Juba suggests in its place by both debtors and creditors; that enterprises facing difficulties do not CONSIDER WHETHER PROVISIONS and 3) what mechanisms can be imple- resort to the judicial system, preferring SHOULD BE IMPLEMENTED TO SPECIFICALLY ADDRESS THE NEEDS mented to address these problems. instead to deal with insolvency through OF MICRO, SMALL, AND MEDIUM-SIZE unofficial channels. Even though South- ENTERPRISES THAT HAVE FALLEN INTO BANKRUPTCY REVISE INSOLVENCY LEGISLATION ern Sudan has legislation in place to gov- TO CONFORM TO INTERNATIONAL ern judicial proceedings for companies Few insolvency regimes provide mecha- LEADING PRACTICES, INCLUDING THE INTRODUCTION OF UP-TO-DATE experiencing financial difficulties—such nisms that assist in flexible and cheap REORGANIZATION PROVISIONS as the Companies Act of 2003—the law restructuring of debt or bankruptcies A comprehensive evaluation of current is rarely applied in practice. The develop- for small business entities, even though legislation is recommended to identify ment of court practice would increase they often comprise the majority of busi- measures that could bring Southern creditor and debtor confidence in Juba’s nesses and contribute to an economy Sudan’s insolvency laws into line with formal bankruptcy proceedings. through their innovations, employment, international leading practices. For ex- and entrepreneurship. It might be useful ample, provisions for the efficient reorga- TRAIN DESIGNATED JUDGES TO to examine different insolvency mecha- nization (or restructuring) of distressed HANDLE INSOLVENCY CASES nisms that are used elsewhere for micro, companies that would allow the business The efficient processing of insolvency small and medium-size enterprises—al- to continue operating are working well cases is extremely important because though a tailored approach would most elsewhere. Many jurisdictions—includ- prolonged delays can cause business as- likely be required to address the specific ing the United Kingdom, Rwanda, Singa- sets to lose their value and reduce firms’ needs of enterprises in Juba. pore, and South Africa—have reformed chances to continue functioning as viable their insolvency legislation in recent enterprises. Within a commercial court, years to improve such procedures. 1 or 2 judges could be designated to handle insolvency cases, allowing them 1. Gine, Xavier and Inessa Love. “Do Reor- ganization Costs Matter for Efficiency? DEVELOP AND IMPLEMENT AN to develop specialized expertise in this Evidence from a Bankruptcy Reform in INSOLVENCY PRACTITIONER area. Also, in order to prevent the over- Colombia,” World Bank Policy Research REGULATORY FRAMEWORK burdening of the courts, new laws could Working Paper 3970, revised May 2009. One of the main prerequisites to creating limit the court’s involvement to cases 2. Outcome refers to whether the hotel business in the Doing Business case study a fully functioning insolvency system is where parties cannot agree on their own. emerges from the proceedings as a going the development of the insolvency prac- According to Doing Business 2011, only concern or whether the company’s assets titioner profession. Insolvency practitio- about 45 economies in a sample of 149 are sold piecemeal (see Data notes). ners play a key role in reorganization and have a framework for out-of-court work- 3. Djankov, Simeon. 2009. “Bankruptcy Re- gimes during Financial Distress.” Wash- liquidation proceedings, as they often outs that allows creditors and debtors to ington, D.C.: The World Bank Group. supervise or take over the management bring to a court a prenegotiated reorga- 4. World Bank. 2010. Doing Business in the of companies undergoing bankruptcy. nization plan.6 East African Community 2010. Washing- It is important to establish and enforce ton, D.C.: The World Bank Group. professional standards for insolvency ADOPT GUIDELINES THAT FACILITATE 5. Ibid. practitioners—for example, through li- OUT-OF-COURT WORKOUTS 6. World Bank. 2011. Doing Business 2011: Making a Difference for Entrepreneurs. censing, training, ethical guidelines, and In light of the previous recommenda- Washington, D.C.: The World Bank national standards of professional con- tion, out-of-court guidelines have been Group. duct. Mechanisms to monitor insolvency introduced in many countries—includ- practitioners and to investigate any viola- ing the United Kingdom, Indonesia, and tions should also be introduced. Turkey. These guidelines enable debtors and creditors to undertake the informal Data notes ECONOMY CHARACTERISTICS GROSS NATIONAL INCOME (GNI) PER CAPITA Doing Business in Juba 2011 reports 2009 income per capita for Sudan as published in the World Bank’s World Development Indicators 2009. Income is calculated using the Atlas method (current US$). For cost indicators expressed as a percentage of income per capita, 2009 GNI in local cur- rency units is used as the denominator. Sudan’s GNI per capita in 2009 = US$1,230. EXCHANGE RATE The exchange rate used in this report is: 1 USD = 2.21 SDG (Sudanese Pounds) REGION AND INCOME GROUP Doing Business uses the World Bank regional and income group classifications available at http:// www.worldbank.org/data/countryclass. The indicators presented and analyzed in several rounds of interaction with the Doing ond, transactions described in a standardized Doing Business in Juba 2011 measure busi- Business in Juba 2011 team, through face-to- case study refer to a specific set of issues and ness regulation and the protection of property face interviews, conference calls and written may not represent the full set of issues a busi- rights—and their effect on businesses, espe- correspondence. The data from surveys are ness encounters. Third, the measures of time cially small and medium-size domestic firms. subjected to numerous tests for robustness, involve an element of judgment by the expert First, the indicators document the degree of which lead to revisions or expansions of the respondents. When sources indicate different regulation, such as the number of procedures information collected. For example, the pre- estimates, the time indicators reported in to start a business or to register and transfer liminary findings are presented through right Doing Business represent the median values commercial property. Second, they gauge reg- of reply sessions conducted with the Gov- of several responses given under the assump- ulatory outcomes, such as the time and cost ernment of Southern Sudan and state-level tions of the standardized case. to enforce a contract, go through bankruptcy government officials. Following the right of Finally, the methodology assumes that or trade across borders. Third, they measure reply sessions experts are contacted to validate a business has full information on what is the extent of legal protections of property, for findings and clarify issues from the right of required and does not waste time when com- example, the protections of investors against reply sessions. pleting procedures. In practice, completing looting by company directors or the range of The Doing Business methodology offers a procedure may take longer if the busi- assets that can be used as collateral according several advantages. It is transparent, using ness lacks information or is unable to follow to secured transactions laws. Fourth, a set of factual information about what laws and regu- up promptly. Alternatively, the business may indicators documents the tax burden on busi- lations say and allowing multiple interactions choose to disregard some burdensome pro- nesses. Finally, a set of indicators measures with local respondents to clarify potential cedures. For both reasons the time delays different aspects of employment regulation. misinterpretations of questions. Having rep- reported in Doing Business in Juba 2011 would The data for all sets of indicators in resentative samples of respondents is not an differ from the perceptions of entrepreneurs Doing Business in Juba 2011 are as of Novem- issue, as the texts of the relevant laws and reg- reported in the World Bank Enterprise Sur- ber 2010. The data for paying taxes refer to ulations are collected and answers checked for veys or other perception surveys. January – December 2009. accuracy. The methodology is inexpensive and easily replicable, so data can be collected in a STARTING A BUSINESS METHODOLOGY large sample of economies. Because standard The Doing Business in Juba 2011 data are assumptions are used in the data collection, Doing Business records all procedures that collected in a standardized way. To start, the comparisons and benchmarks are valid across are officially required for an entrepreneur to Doing Business team, with academic advisers, economies. Finally, the data not only highlight start up and formally operate a commercial designs a survey. The survey uses a simple the extent of specific regulatory obstacles to business. These include obtaining all neces- business case to ensure comparability across doing business but also identify their source sary licenses and permits and completing any countries and over time—with assumptions and point to what might be reformed. required notifications, verifications or inscrip- about the legal form of the business, its size, its tions for the company and employees with location and the nature of its operations. Then LIMITS TO WHAT IS MEASURED relevant authorities. The ranking on the ease the survey is customized to the particular case The Doing Business methodology applied to of starting a business is the simple average of Juba. Surveys are administered through 94 Doing Business in Juba 2011 has 4 limitations of the percentile rankings on its component local experts, including lawyers, business con- that should be considered when interpret- indicators (figure 11.1). sultants, construction firms, engineers, freight ing the data. First, the data often focus on After a study of laws, regulations and forwarders, local and national-level govern- a specific business form—a limited liability publicly available information on business ment officials and other professionals rou- company of a specified size—and may not be entry, a detailed list of procedures is de- tinely administering or advising on legal and representative of the regulation on other busi- veloped, along with the time and cost of regulatory requirements. These experts have nesses, for example, sole proprietorships. Sec- complying with each procedure under nor- 48 DOING BUSINESS IN JUBA 2011 FIGURE 11.1 heavily polluting production processes. entrepreneur to formally operate a business Starting a business: getting a local limited • Leases the commercial plant and offices are recorded (table 11.1). liability company up and running and is not a proprietor of real estate. Procedures required for official corre- Rankings are based on 4 subindicators • Does not qualify for investment incen- spondence or transactions with public agen- Preregistration, As % of income per tives or any special benefits. cies are also included. For example, if a com- registration and capita, no bribes included • Has at least 10 and up to 50 employees pany seal or stamp is required on official postregistration (in calendar days) 1 month after the commencement of documents, such as tax declarations, obtain- operations, all of them nationals. ing the seal or stamp is counted. Similarly, if 25% 25% • Has a turnover of at least 100 times a company must open a bank account before Time Cost income per capita. registering for sales tax or value added tax, • Has a company deed 10 pages long. this transaction is included as a procedure. 25% 25% Shortcuts are counted only if they fulfill 4 Procedures Paid-in PROCEDURES minimum criteria: they are legal, they are available to the Procedure is capital A procedure is defined as any interaction of the general public, they are used by the major- completed when company founder with external parties (for ex- ity of companies, and avoiding them causes final document is received Funds deposited in a bank or with ample, government agencies, lawyers, auditors substantial delays. a notary before registration, or notaries). Interactions between company Only procedures required of all busi- as % of income per capita founders or company officers and employees nesses are covered. Industry-specific proce- are not counted as procedures. Procedures that dures are excluded. For example, procedures must be completed in the same building but in to comply with environmental regulations are mal circumstances and the paid-in minimum different offices are counted as separate proce- included only when they apply to all businesses capital requirements. Subsequently, local in- dures. If founders have to visit the same office conducting general commercial or industrial corporation lawyers and government officials several times for different sequential proce- activities. Procedures that the company under- complete and verify the data. dures, each is counted separately. The found- goes to connect to electricity, water, gas and Information is also collected on the se- ers are assumed to complete all procedures waste disposal services are not included. quence in which procedures are to be com- themselves, without middlemen, facilitators, pleted and whether procedures may be carried accountants or lawyers, unless the use of such TIME out simultaneously. It is assumed that any a third party is mandated by law. If the ser- Time is recorded in calendar days. The mea- required information is readily available and vices of professionals are required, procedures sure captures the median duration that incor- that all agencies involved in the start-up pro- conducted by such professionals on behalf poration lawyers indicate is necessary to com- cess function without corruption. If answers of the company are counted separately. Each plete a procedure with minimum follow-up by local experts differ, inquiries continue until electronic procedure is counted separately. If with government agencies and no extra pay- the data are reconciled. 2 procedures can be completed through the ments. It is assumed that the minimum time To make the data comparable across same website but require separate filings, they required for each procedure is 1 day. Although countries, several assumptions about the busi- are counted as 2 procedures. procedures may take place simultaneously, ness and the procedures are used. Both pre- and post- incorporation pro- they cannot start on the same day (that is, cedures that are officially required for an simultaneous procedures start on consecutive ASSUMPTIONS ABOUT THE BUSINESS The business: TABLE 11.1 • Is a limited liability company. If there is What do the starting a business indicators measure? more than one type of limited liability company in the country, the limited Procedures to legally start and operate a company (number) liability form most popular among do- • Preregistration (for example, name verification or reservation, notarization) mestic firms is chosen. Information on the most popular form is obtained from • Registration in the economy’s largest business city incorporation lawyers or the statistical • Postregistration (for example, social security registration, company seal) office. Time required to complete each procedure (calendar days) • Operates in the commercial district of the selected cities. • Does not include time spent gathering information • Is 100% domestically owned and has 5 • Each procedure starts on a separate day owners, none of whom is a legal entity. • Procedure completed once final document is received • Has start-up capital of 10 times income • No prior contact with officials per capita at the end of 2009, paid in cash. Cost required to complete each procedure (% of income per capita) • Performs general commercial activi- • Official costs only, no bribes ties, such as the production or sale of • No professional fees unless services required by law products or services to the public. The business does not perform foreign trade Paid-in minimum capital (% of income per capita) activities and does not handle products subject to a special tax regime, for ex- • Deposited in a bank or with a notary before registration begins ample, liquor or tobacco. It is not using Source: Doing Business database. DATA NOTES 49 days). A procedure is considered completed the drop-down list. This methodology was de- FIGURE 11.2 once the company has received the final docu- veloped in Djankov, Simeon, Rafael la Porta, Dealing with construction permits: ment, such as the company registration cer- Florencio López-de-Silanes and Andrei Schle- building a warehouse tificate or tax number. If a procedure can be ifer. 2002. ¨The Regulation of Entry.¨ Quar- Rankings are based on 3 subindicators accelerated for an additional cost, the fastest terly Journal of Economics 117(1):1-37, and is Days to build As % of income per capita, procedure is chosen. It is assumed that the adopted here with minor changes. a warehouse no bribes included entrepreneur does not waste time and com- in main city mits to completing each remaining procedure 33.3% 33.3% without delay. The time that the entrepreneur DEALING WITH CONSTRUCTION Time Cost spends on gathering information is ignored. It PERMITS is assumed that the entrepreneur is aware of 33.3% all entry regulations and their sequence from Doing Business records all procedures re- Procedures the beginning but has had no prior contact quired for a business in the construction with any of the officials. industry to build a standardized warehouse. These procedures include submitting all rele- Procedure is completed when final document COST vant project-specific documents (for example, is received; construction permits, inspections and utility connections included Cost is recorded as a percentage of the coun- building plans and site maps) to the authori- try’s income per capita. It includes all official ties; obtaining all necessary clearances, li- fees and fees for legal or professional services censes, permits and certificates; completing ence necessary to obtain construction if such services are required by law. Fees for all required notifications; and receiving all permits and approvals. purchasing and legalizing company books are necessary inspections. Doing Business in Juba • Has at least 1 employee who is a li- included if these transactions are required by 2011 also records procedures for obtaining censed architect and registered with the law. The company law, the commercial code connections for electricity, water, sewerage, local association of architects. and specific regulations and fee schedules are and a fixed land line. Procedures necessary to • Has paid all taxes and taken out all used as sources for calculating costs. In the register the property so that it can be used as necessary insurance applicable to its absence of fee schedules, a government of- collateral or transferred to another entity are general business activity (for example, ficer’s estimate is taken as an official source. In also counted. The survey divides the process accidental insurance for construction the absence of a government officer’s estimate, of building a warehouse into distinct pro- workers and third-person liability estimates of incorporation lawyers are used. cedures and calculates the time and cost of insurance). If several incorporation lawyers provide dif- completing each procedure in practice under • Owns the land on which the warehouse ferent estimates, the median reported value is normal circumstances. The ranking on the is built. applied. In all cases the cost excludes bribes. ease of dealing with construction permits is the simple average of the percentile rankings ASSUMPTIONS ABOUT THE PAID-IN MINIMUM CAPITAL on its component indicators (figure 11.2). WAREHOUSE The paid-in minimum capital requirement re- Information is collected from experts in flects the amount that the entrepreneur needs construction permitting, including architects, The warehouse: to deposit in a bank or with a notary before construction lawyers, construction firms, • Will be used for general storage registration and up to 3 months following utility service providers and public officials activities, such as storage of books or incorporation and is recorded as a percentage who deal with building regulations, includ- stationery. The warehouse will not be of the country’s income per capita. The amount ing approvals and inspections. To make the used for any goods requiring special is typically specified in the commercial code or data comparable across economies, several as- conditions, such as food, chemicals or the company law. Many countries have a mini- sumptions about the business, the warehouse pharmaceuticals. mum capital requirement but allow businesses project and the utility connections are used. • Has 2 stories, both above ground, with to pay only a part of it before registration, a total surface of approximately 14,000 with the rest to be paid after the first year of ASSUMPTIONS ABOUT THE square feet (1,300.6 square meters). CONSTRUCTION COMPANY Each floor is 9 feet, 10 inches (3 meters) operation. In Italy in June 2009 the minimum high. capital requirement for limited liability com- The business (BuildCo): • Has road access and is located in the panies was €10,000, of which at least €2,500 • Is a limited liability company. periurban area of Juba (that is, on the was payable before registration. The paid-in • Operates in the selected cities. fringes of the city but still within its minimum capital recorded for Italy is there- • Is 100% domestically and privately official limits). fore €2,500, or 10.1% of income per capita. In owned. • It is not located in a special economic Mexico the minimum capital requirement was • Has 5 owners, none of whom is a legal or industrial zone. The zoning require- 50,000 pesos, of which one-fifth needed to be entity. ments for warehouses are met by build- paid before registration. The paid-in minimum • Is fully licensed and insured to carry ing in an area where similar warehouses capital recorded for Mexico is therefore 10,000 out construction projects, such as can be found. pesos, or 9.2% of income per capita. building warehouses. • Is located on a land plot of 10,000 • Has 60 builders and other employees, square feet (929 square meters) that is The data details on starting a business can all of them nationals with the technical 100% owned by BuildCo and is regis- be found for each economy at http://www. expertise and professional experi- tered in the cadastre and land registry. doingbusiness.org by selecting the economy in • Is a new construction (there was no 50 DOING BUSINESS IN JUBA 2011 TABLE 11.2 TIME What do the dealing with construction permits indicators measure? Time is recorded in calendar days. The mea- Procedures to legally build a warehouse (number) sure captures the median duration that local experts indicate is necessary to complete the • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits procedure in practice. It is assumed that the and certificates minimum time required for each procedure • Completing all required notifications and receiving all necessary inspections is 1 day. Although procedures may take place • Obtaining utility connections for electricity, water, sewerage and a land telephone line simultaneously, they cannot start on the same • Registering the warehouse after its completion (if required for use as collateral or for transfer day (that is, simultaneous procedures start of warehouse) on consecutive days). If a procedure can be Time required to complete each procedure (calendar days) accelerated legally for an additional cost, the fastest procedure is chosen. It is assumed that • Does not include time spent gathering information BuildCo does not waste time and commits to • Each procedure starts on a separate day completing each remaining procedure without • Procedure completed once final document is received delay. The time that BuildCo spends on gather- • No prior contact with officials ing information is ignored. It is assumed that BuildCo is aware of all building requirements Cost required to complete each procedure (% of income per capita) and their sequence from the beginning. Official costs only, no bribes COST Source: Doing Business database. Cost is recorded as a percentage of the econ- omy’s income per capita. Only official costs previous construction on the land). wet fire protection system is required are recorded. All the fees associated with • Has complete architectural and by law, it is assumed that the water completing the procedures to legally build technical plans prepared by a licensed demand specified below also covers the a warehouse are recorded, including those architect. water needed for fire protection. associated with obtaining land use approv- • Will include all technical equipment • Has an average water use of 662 liters als and preconstruction design clearances; required to make the warehouse fully (175 gallons) a day and an average wastewater flow of 568 liters (150 gal- receiving inspection before, during and after operational. lons) a day. construction; getting utility connections; and • Will take 30 weeks to construct (exclud- registering the warehouse property. Nonre- ing all delays due to administrative and • Has a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater curring taxes required for the completion of regulatory requirements). flow of 1,136 liters (300 gallons) a day. the warehouse project are also recorded. The • Will have a constant level of water de- building code, information from local experts ASSUMPTIONS ABOUT THE UTILITY mand and wastewater flow throughout and specific regulations and fee schedules are CONNECTIONS used as sources for costs. If several local part- the year. The electricity connection: ners provide different estimates, the median • Is 10 meters (32 feet, 10 inches) from The telephone connection: reported value is used. the main electricity network. • Is 10 meters (32 feet, 10 inches) from • Is a medium-tension, 3-phase, 4-wire Y, the main telephone network. The data details on dealing with construction 140-kilovolt-ampere (kVA) connection. • Is a fixed land line. permits can be found for each economy at Three-phase service is available in the http://www.doingbusiness.org by selecting the construction area. PROCEDURES economy in the drop-down list. • Will be delivered by an overhead A procedure is any interaction of the compa- service, unless overhead service is not ny’s employees or managers with external par- REGISTERING PROPERTY available in the periurban area. ties, including government agencies, notaries, • Consists of a simple hookup unless the land registry, the cadastre, utility compa- Doing Business records the full sequence of installation of a private substation nies, public and private inspectors and tech- procedures necessary for a business (buyer) (transformer) or extension of network nical experts apart from in-house architects to purchase a property from another business is required. and engineers. Interactions between company (seller) and to transfer the property title to • Requires the installation of only one employees, such as development of the ware- the buyer’s name so that the buyer can use the electricity meter. house plans and inspections conducted by property for expanding its business, as collat- • BuildCo is assumed to have a licensed employees, are not counted as procedures. eral in taking new loans or, if necessary, sell electrician on its team to complete the Procedures that the company undergoes to to another business. The process starts with internal wiring for the warehouse. connect to electricity, water, sewerage and obtaining the necessary documents, such as The water and sewerage connection: telephone services are included. All proce- a copy of the seller’s title if necessary, and • Is 10 meters (32 feet, 10 inches) from dures that are legally or in practice required conducting due diligence if required. The the existing water source and sewer tap. for building a warehouse are counted, even transaction is considered complete when it • Does not require water for fire protec- if they may be avoided in exceptional cases is opposable to third parties and when the tion reasons; a fire extinguishing system (table 11.2). buyer can use the property, use it as collateral (dry system) will be used instead. If a for a bank loan or resell it. The ranking on DATA NOTES 51 FIGURE 11.3 meters) is located on the land. The TIME Registering property: transfer warehouse is 10 years old, is in good Time is recorded in calendar days. The mea- of property between 2 local companies condition and complies with all safety sure captures the median duration that prop- Rankings are based on 3 subindicators standards, building codes and other erty lawyers, notaries or registry officials indi- legal requirements. The property of Days to transfer property As % of property value, cate is necessary to complete a procedure. It is in main city no bribes included land and building will be transferred in its entirety. assumed that the minimum time required for each procedure is 1 day. Although procedures • Will not be subject to renovations or additional building following the may take place simultaneously, they cannot 33.3% 33.3% Time Cost purchase. start on the same day (that is, simultaneous • Has no trees, natural water sources, procedures start on consecutive days). It is natural reserves or historical monu- assumed that the buyer does not waste time 33.3% and commits to completing each remaining ments of any kind. Procedures • Will not be used for special purposes, procedure without delay. If a procedure can and no special permits, such as for be accelerated for an additional cost, the fast- residential use, industrial plants, waste est legal procedure available and used by the Steps to check encumbrances, obtain clearance certificates, prepare deed and transfer title so storage or certain types of agricultural majority of property owners is chosen. If pro- that the property can be occupied, sold or used activities, are required. cedures can be undertaken simultaneously, it as collateral • Has no occupants (legal or illegal), and is assumed that they are. It is assumed that no other party holds a legal interest in it. the parties involved are aware of all regula- tions and their sequence from the beginning. PROCEDURES the ease of registering property is the simple Time spent on gathering information is not average of the percentile rankings on its com- A procedure is defined as any interaction considered. ponent indicators (figure 11.3). of the buyer or the seller, their agents (if an Every procedure required by law or nec- agent is legally or in practice required) or COST essary in practice is included, whether it is the the property with external parties, includ- Cost is recorded as a percentage of the property responsibility of the seller or the buyer or must ing government agencies, inspectors, notaries value, assumed to be equivalent to 50 times in- be completed by a third party on their behalf. and lawyers. Interactions between company come per capita. Only official costs required by Local property lawyers, notaries and property officers and employees are not considered. law are recorded, including fees, transfer taxes, registries provide information on procedures All procedures that are legally or in prac- stamp duties and any other payment to the as well as the time and cost to complete each tice required for registering property are property registry, notaries, public agencies or of them. recorded, even if they may be avoided in lawyers. Other taxes, such as capital gains tax exceptional cases (table 11.3). It is assumed or value added tax, are excluded from the cost ASSUMPTIONS ABOUT THE PARTIES that the buyer follows the fastest legal option measure. Both costs borne by the buyer and The parties (buyer and seller): available and used by the majority of property those borne by the seller are included. If cost • Are limited liability companies. owners. Although the buyer may use lawyers estimates differ among sources, the median • Are located in the periurban area of the or other professionals where necessary in the reported value is used. selected cities. registration process, it is assumed that it does • Are 100% domestically and privately not employ an outside facilitator in the reg- The data details on registering property can owned. istration process unless legally or in practice be found for each economy at http://www. • Have 50 employees each, all of whom required to do so. doingbusiness.org by selecting the economy in are nationals. the drop-down list. • Perform general commercial activities. TABLE 11.3 ASSUMPTIONS ABOUT THE PROPERTY What do the registering property indicators measure? The property: Procedures to legally transfer title on immovable property (number) • Has a value of 50 times income per • Preregistration (for example, checking for liens, notarizing sales agreement, paying property transfer taxes) capita. The sale price equals the value. • Registration in the economy’s largest business city • Is fully owned by the seller. • Postregistration (for example, transactions with the local authority, tax authority or cadastre) • Has no mortgages attached and has been under the same ownership for the Time required to complete each procedure (calendar days) past 10 years. • Does not include time spent gathering information • Is registered in the land registry or cadastre, or both, and is free of title • Each procedure starts on a separate day disputes. • Procedure completed once final document is received • Is located in a periurban commercial • No prior contact with officials zone, and no rezoning is required. Cost required to complete each procedure (% of property value) • Consists of land and a building. The land area is 6,000 square feet (557.4 • Official costs only, no bribes square meters). A 2-story warehouse • No value added or capital gains taxes included of 10,000 square feet (929 square Source: Doing Business database. 52 DOING BUSINESS IN JUBA 2011 GETTING CREDIT 11.4). Two case scenarios, case A and case TABLE 11.4 B, are used to determine the scope of the What do the getting credit indicators measure? Doing Business measures the legal rights of secured transactions system, involving a se- borrowers and lenders with respect to secured cured borrower, the company ABC, and a se- Strength of legal rights index (0–10) transactions through one set of indicators and cured lender, BizBank. In certain economies • Protection of rights of borrowers and lenders the sharing of credit information through an- the legal framework on secured transactions through collateral laws other. The first set of indicators describes how means that only case A or case B can apply • Protection of secured creditors’ rights through well collateral and bankruptcy laws facilitate (not both). Both cases examine the same set bankruptcy laws lending. The second set measures the cover- of legal restrictions on the use of movable Depth of credit information index (0–6) age, scope and accessibility of credit informa- collateral. tion available through public credit registries Several assumptions about the secured • Scope and accessibility of credit information and private credit bureaus. The ranking on borrower and lender are used: distributed by public credit registries and private the ease of getting credit is the simple average • ABC is a domestic, limited liability credit bureaus of the percentile rankings on its component company. Public credit registry coverage (% of adults) indicators (figure 11.4). • ABC has its headquarters and only base The data on the legal rights of borrowers of operations in Juba. • Number of individuals and firms listed in public and lenders are gathered through a survey of credit registry as percentage of adult population • To fund its business expansion plans, financial lawyers and verified through analy- ABC obtains a loan from BizBank for Private credit bureau coverage (% of adults) sis of laws and regulations as well as public an amount up to 10 times income per • Number of individuals and firms listed in larg- sources of information on collateral and bank- capita in local currency. est private credit bureau as percentage of adult ruptcy laws. The data on credit information • Both ABC and BizBank are 100% population sharing are built in 2 stages. First, banking domestically owned. Source: Doing Business database. supervision authorities and public informa- The case scenarios also involve assump- tion sources are surveyed to confirm the pres- tions. In case A, as collateral for the loan, ence of a public credit registry or private credit ABC grants BizBank a nonpossessory security • A security right may extend to future bureau. Second, when applicable, a detailed interest in one category of movable assets, for or after-acquired assets and may extend survey on the public credit registry’s or private example, its accounts receivable or its inven- automatically to the products, proceeds credit bureau’s structure, laws and associ- tory. ABC wants to keep both possession and or replacements of the original assets. ated rules is administered to the entity itself. ownership of the collateral. In economies in • A general description of debts and Survey responses are verified through several which the law does not allow nonpossessory obligations is permitted in the collateral rounds of follow-up communication with re- security interests in movable property, ABC agreements and in registration docu- spondents as well as by contacting third par- and BizBank use a fiduciary transfer-of-title ments: all types of debts and obligations ties and consulting public sources. The survey arrangement (or a similar substitute for non- can be secured between the parties, and the collateral agreement can include a data are confirmed through teleconference possessory security interests). maximum amount for which the assets calls or on-site visits in all economies. In case B, ABC grants BizBank a busi- are encumbered. ness charge, enterprise charge, floating charge STRENGTH OF LEGAL RIGHTS INDEX • A collateral registry or registration or any charge that gives BizBank a security institution is in operation, unified geo- The strength of legal rights index measures interest over ABC’s combined movable assets graphically and by asset type, with an the degree to which collateral and bank- (or as much of ABC’s movable assets as pos- electronic database indexed by debtors’ ruptcy laws protect the rights of borrowers sible). ABC keeps ownership and possession names. and lenders and thus facilitate lending (table of the assets. • Secured creditors are paid first (for The strength of legal rights index in- example, before general tax claims and cludes 8 aspects related to legal rights in col- employee claims) when a debtor de- FIGURE 11.4 lateral law and 2 aspects in bankruptcy law. A faults outside an insolvency procedure. Getting credit: collateral rules and credit information score of 1 is assigned for each of the following • Secured creditors are paid first (for Rankings are based on 2 subindicators features of the laws: example, before general tax claims and • Any business may use movable assets as employee claims) when a business is Regulations on 62.5% collateral while keeping possession of liquidated. nonpossessory of Strength 33% the assets, and any financial institution • Secured creditors are not subject to 33% security interests legal rights index may accept such assets as collateral. an automatic stay or moratorium on in movable (0–10) enforcement procedures when a debtor property • The law allows a business to grant a 37.5% nonpossessory security right in a single enters a court-supervised reorganiza- 33% tion procedure. Depth of credit category of movable assets (such as ac- information index counts receivable or inventory), without • The law allows parties to agree in a col- (0–6) lateral agreement that the lender may requiring a specific description of the Scope, quality and accessibility collateral. enforce its security right out of court. of credit information through public • The law allows a business to grant a non- • The index ranges from 0 to 10, with and private credit registries possessory security right in substantially higher scores indicating that collat- all its movable assets, without requiring eral and bankruptcy laws are better Note: Private bureau coverage and public registry coverage are measured but do not count for the rankings. a specific description of the collateral. designed to expand access to credit. DATA NOTES 53 DEPTH OF CREDIT INFORMATION reau (a score of 1). Summing across the indica- PROTECTING INVESTORS INDEX tors gives Lithuania a total score of 6. The depth of credit information index mea- Doing Business measures the strength of mi- sures rules and practices affecting the cover- PUBLIC CREDIT REGISTRY COVERAGE nority shareholder protections against direc- age, scope and accessibility of credit informa- The public credit registry coverage indicator tors’ misuse of corporate assets for personal tion available through either a public credit reports the number of individuals and firms gain. The indicators distinguish 3 dimen- registry or a private credit bureau. A score of 1 listed in a public credit registry with informa- sions of investor protections: transparency of is assigned for each of the following 6 features tion on their borrowing history from the past related-party transactions (extent of disclo- of the public credit registry or private credit 5 years. The number is expressed as a percent- sure index), liability for self-dealing (extent bureau (or both): age of the adult population (the population of director liability index) and shareholders’ • Both positive credit information (for age 15 and above in 2009 according to the ability to sue officers and directors for mis- example, outstanding loan amounts World Bank’s World Development Indicators). conduct (ease of shareholder suits index). and pattern of on-time repayments) A public credit registry is defined as a The data come from a survey of corporate and and negative information (for example, database managed by the public sector, usu- securities lawyers and are based on securities late payments, number and amount of ally by the central bank or the superintendent regulations, company laws and court rules of defaults and bankruptcies) are distrib- of banks, that collects information on the evidence. The ranking on the strength of in- uted. creditworthiness of borrowers (individuals or vestor protection index is the simple average • Data on both firms and individuals are firms) in the financial system and facilitates of the percentile rankings on its component distributed. the exchange of credit information among indicators (figure 11.5). • Data from retailers and utility compa- banks and financial institutions. If no public To make the data comparable across nies as well as financial institutions are registry operates, the coverage value is 0. economies, several assumptions about the distributed. business and the transaction are used. • More than 2 years of historical data PRIVATE CREDIT BUREAU COVERAGE are distributed. Credit registries and The private credit bureau coverage indicator ASSUMPTIONS ABOUT THE BUSINESS bureaus that erase data on defaults as soon as they are repaid obtain a score of reports the number of individuals and firms The business (Buyer): 0 for this indicator. listed by a private credit bureau with informa- • Is a publicly traded corporation listed • Data on loan amounts below 1% of tion on their borrowing history from the past on the economy’s most important income per capita are distributed. Note 5 years. The number is expressed as a percent- stock exchange. If the number of that a credit registry or bureau must age of the adult population (the population publicly traded companies listed on have a minimum coverage of 1% of the age 15 and above in 2009 according to the that exchange is less than 10, or if there adult population to score a 1 on this World Bank’s World Development Indicators). is no stock exchange in the economy, it indicator. is assumed that Buyer is a large private A private credit bureau is defined as a company with multiple shareholders. • By law, borrowers have the right to private firm or nonprofit organization that access their data in the largest credit • Has a board of directors and a chief maintains a database on the creditworthiness registry or bureau in the economy. executive officer (CEO) who may legally of borrowers (individuals or firms) in the act on behalf of Buyer where permitted, The index ranges from 0 to 6, with financial system and facilitates the exchange even if this is not specifically required higher values indicating the availability of of credit information among banks and finan- by law. more credit information, from either a public cial institutions. • Is a food manufacturer. credit registry or a private credit bureau, to fa- Credit investigative bureaus and credit • Has its own distribution network. cilitate lending decisions. If the credit registry reporting firms that do not directly facilitate or bureau is not operational or has a coverage information exchange among banks and of less than 0.1% of the adult population, other financial institutions are not con- the score on the depth of credit information sidered. If no private bureau operates, the FIGURE 11.5 index is 0. coverage value is 0. Protecting investors: minority shareholder In Lithuania, for example, both a public rights in related-party transactions credit registry and a private credit bureau oper- The data details on getting credit can be found Rankings are based on 3 subindicators ate. Both distribute positive and negative infor- for each economy at http://www.doingbusiness. Requirements on approval Liability of CEO and disclosure of and board of directors mation (a score of 1). Both distribute data on org by selecting the economy in the drop- related-party in a related-party firms and individuals (a score of 1). Although down list. This methodology was developed in transactions 33.3% transaction the public credit registry does not distribute Djankov, McLiesh and Shleifer (2007) and is 33.3% Extent Extent of of director data from retailers or utilities, the private credit adopted here with minor changes. disclosure liability bureau does do so (a score of 1). Although the index index private credit bureau does not distribute more than 2 years of historical data, the public credit 33.3% Ease of shareholder registry does do so (a score of 1). Although the suits index public credit registry has a threshold of 50,000 litai, the private credit bureau distributes data Type of evidence that can be collected on loans of any value (a score of 1). Borrowers before and during the trial have the right to access their data in both the public credit registry and the private credit bu- 54 DOING BUSINESS IN JUBA 2011 TABLE 11.5 to disclose immediately all information What do the protecting investors indicators measure? affecting the stock price, including the conflict of interest (a score of 2). In its Extent of disclosure index (0–10) annual report Buyer must also disclose • Who can approve related-party transactions the terms of the transaction and Mr. James’s ownership in Buyer and Seller (a • Requirements for external and internal disclosure in case of related-party transactions score of 2). Before the transaction Mr. Extent of director liability index (0–10) James must disclose his conflict of inter- est to the other directors, but he is not • Ability of shareholders to hold the interested party and the approving body liable in case of a prejudicial required to provide specific information related-party transaction about it (a score of 1). Poland does not • Available legal remedies (damages, repayment of profits, fines, imprisonment and rescission of the trans- require an external body to review the action) transaction (a score of 0). Adding these • Ability of shareholders to sue directly or derivatively numbers gives Poland a score of 7 on the extent of disclosure index. Ease of shareholder suits index (0–10) • Documents and information available during trial EXTENT OF DIRECTOR LIABILITY INDEX • Access to internal corporate documents (directly and/or through a government inspector) Strength of investor protection index (0–10) The extent of director liability index has 7 components:2 • Simple average of the extent of disclosure, extent of director liability and ease of shareholder suits indices • Whether a shareholder plaintiff is able Source: Doing Business database. to hold Mr. James liable for damage the Buyer-Seller transaction causes to the ASSUMPTION ABOUT THE to vote; 2 if the board of directors must company. A score of 0 is assigned if Mr. TRANSACTION vote and Mr. James is not permitted to James cannot be held liable or can be • Mr. James is Buyer’s controlling share- vote; 3 if shareholders must vote and held liable only for fraud or bad faith; 1 holder and a member of Buyer’s board Mr. James is not permitted to vote. if Mr. James can be held liable only if he of directors. He owns 60% of Buyer and • Whether immediate disclosure of the influenced the approval of the transaction elected 2 directors to Buyer’s 5-member transaction to the public, the regula- or was negligent; 2 if Mr. James can be board. tor or the shareholders is required.1 A held liable when the transaction is unfair • Mr. James also owns 90% of Seller, a score of 0 is assigned if no disclosure is or prejudicial to the other shareholders. company that operates a chain of retail required; 1 if disclosure on the terms • Whether a shareholder plaintiff is able hardware stores. Seller recently closed a of the transaction is required but not to hold the approving body (the CEO large number of its stores. on Mr. James’s conflict of interest; 2 if or board of directors) liable for the • Mr. James proposes that Buyer pur- disclosure on both the terms and Mr. damage the transaction causes to the chase Seller’s unused fleet of trucks to James’s conflict of interest is required. company. A score of 0 is assigned if the expand Buyer’s distribution of its food • Whether disclosure in the annual re- approving body cannot be held liable products, a proposal to which Buyer port is required. A score of 0 is assigned or can be held liable only for fraud or agrees. The price is equal to 10% of if no disclosure on the transaction is bad faith; 1 if the approving body can Buyer’s assets and is higher than the required; 1 if disclosure on the terms be held liable for negligence; 2 if the market value. of the transaction is required but not approving body can be held liable when • The proposed transaction is part of the on Mr. James’s conflict of interest; 2 if the transaction is unfair or prejudicial company’s ordinary course of business disclosure on both the terms and Mr. to the other shareholders. and is not outside the authority of the James’s conflict of interest is required. • Whether a court can void the transac- company. • Whether disclosure by Mr. James to tion upon a successful claim by a • Buyer enters into the transaction. All the board of directors is required. A shareholder plaintiff. A score of 0 is required approvals are obtained, and all score of 0 is assigned if no disclosure assigned if rescission is unavailable required disclosures made (that is, the is required; 1 if a general disclosure of or is available only in case of fraud or transaction is not fraudulent). the existence of a conflict of interest is bad faith; 1 if rescission is available required without any specifics; 2 if full when the transaction is oppressive or • The transaction causes damages to prejudicial to the other shareholders; disclosure of all material facts relating Buyer. Shareholders sue Mr. James and 2 if rescission is available when the to Mr. James’s interest in the Buyer- the other parties that approved the transaction is unfair or entails a conflict Seller transaction is required. transaction. of interest. • Whether it is required that an external EXTENT OF DISCLOSURE INDEX body, for example, an external auditor, • Whether Mr. James pays damages for The extent of disclosure index has 5 compo- review the transaction before it takes the harm caused to the company upon nents (table 11.5): place. A score of 0 is assigned if no; 1 a successful claim by the shareholder if yes. The index ranges from 0 to 10, plaintiff. A score of 0 is assigned if no; 1 • What corporate body can provide le- if yes. with higher values indicating greater gally sufficient approval for the transac- disclosure. In Poland, for example, the • Whether Mr. James repays profits made tion. A score of 0 is assigned if it is the board of directors must approve the from the transaction upon a successful CEO or the managing director alone; 1 transaction and Mr. James is not allowed claim by the shareholder plaintiff. A if the board of directors or shareholders to vote (a score of 2). Buyer is required score of 0 is assigned if no; 1 if yes. must vote and Mr. James is permitted • Whether both fines and imprisonment DATA NOTES 55 can be applied against Mr. James. A request that a government inspector PAYING TAXES score of 0 is assigned if no; 1 if yes. investigate the Buyer-Seller transaction • Whether shareholder plaintiffs are without filing suit in court. A score of 0 Doing Business records the taxes and manda- able to sue directly or derivatively for is assigned if no; 1 if yes. tory contributions that a mediumsize com- the damage the transaction causes to • Whether shareholders owning 10% or pany must pay in a given year as well as the company. A score of 0 is assigned less of the company’s share capital have measures of the administrative burden of if suits are unavailable or are available the right to inspect the transaction paying taxes and contributions. The project only for shareholders holding more documents before filing suit. A score of than 10% of the company’s share are 0 is assigned if no; 1 if yes. was developed and implemented in coopera- available for shareholders holding 10% tion with PricewaterhouseCoopers. Taxes and • Whether the standard of proof for civil or less of share capital. suits is lower than that for a criminal case. contributions measured include the profit or A score of 0 is assigned if no; 1 if yes. corporate income tax, social contributions The index ranges from 0 to 10, with and labor taxes paid by the employer, property higher values indicating greater liability of The index ranges from 0 to 10, with taxes, property transfer taxes, dividend tax, directors. Assuming that the prejudicial trans- higher values indicating greater powers of capital gains tax, financial transactions tax, action was duly approved and disclosed, in shareholders to challenge the transaction. In waste collection taxes, vehicle and road taxes order to hold Mr. James liable in Panama, Greece, for example, the plaintiff can access and any other small taxes or fees. The ranking for example, a plaintiff must prove that Mr. documents that the defendant intends to rely on the ease of paying taxes is the simple aver- James influenced the approving body or acted on for his defense and that directly prove age of the percentile rankings on its compo- negligently (a score of 1). To hold the other di- facts in the plaintiff ’s claim (a score of 2). nent indicators (figure 11.6). rectors liable, a plaintiff must prove that they The plaintiff can examine the defendant and Doing Business measures all taxes and acted negligently (a score of 1). The prejudicial witnesses during trial, though only with prior contributions that are government mandated transaction cannot be voided (a score of 0). If approval of the questions by the court (a score (at any level—federal, state or local) and that Mr. James is found liable, he must pay dam- of 1). The plaintiff must specifically identify apply to the standardized business and have ages (a score of 1) but he is not required to the documents being sought (for example, the an impact in its financial statements. In doing disgorge his profits (a score of 0). Mr. James Buyer-Seller purchase agreement of July 15, so, Doing Business goes beyond the tradi- cannot be fined and imprisoned (a score of 2006) and cannot just request categories (for tional definition of a tax. As defined for the 0). Direct or derivative suits are available for example, all documents related to the transac- purposes of government national accounts, shareholders holding 10% or less of share tion) (a score of 0). A shareholder holding 5% taxes include only compulsory, unrequited capital (a score of 1). Adding these numbers of Buyer’s shares can request that a govern- payments to general government. Doing Busi- gives Panama a score of 4 on the extent of ment inspector review suspected mismanage- ness departs from this definition because it director liability index. ment by Mr. James and the CEO without filing measures imposed charges that affect business suit in court (a score of 1). Any shareholder accounts, not government accounts. The main EASE OF SHAREHOLDER SUITS INDEX can inspect the transaction documents before differences relate to labor contributions. The The ease of shareholder suits index has 6 deciding whether to sue (a score of 1). The Doing Business measure includes government- components: standard of proof for civil suits is the same as mandated contributions paid by the employer • What range of documents is available that for a criminal case (a score of 0). Adding to a requited private pension fund or workers’ to the shareholder plaintiff from the these numbers gives Greece a score of 5 on the insurance fund. The indicator includes, for ex- defendant and witnesses during trial. ease of shareholder suits index. ample, Australia’s compulsory superannuation A score of 1 is assigned for each of the guarantee and workers’ compensation insur- following types of documents avail- STRENGTH OF INVESTOR PROTECTOR ance. For the purpose of calculating the total able: information that the defendant INDEX tax rate (defined below), only taxes borne are has indicated he intends to rely on for The strength of investor protection index is included. For example, value added taxes are his defense; information that directly proves specific facts in the plaintiff ’s the average of the extent of disclosure index, claim; any information relevant to the extent of director liability index and the FIGURE 11.6 the subject matter of the claim; and ease of shareholder suits index. The index Paying taxes: tax compliance for a local any information that may lead to the ranges from 0 to 10, with higher values indi- manufacturing company discovery of relevant information. cating more investor protection. Rankings are based on 3 subindicators • Whether the plaintiff can directly Number of hours Firm tax liability examine the defendant and witnesses The data details on protecting investors can per year to prepare, as % of profits before during trial. A score of 0 is assigned if be found for each economy at http://www. file returns all taxes borne and pay taxes no; 1 if yes, with prior approval of the doingbusiness.org by selecting the economy in questions by the judge; 2 if yes, without the drop-down list. This methodology was de- prior approval. 33.3% 33.3% veloped in Djankov, La Porta, López-de-Silanes • Whether the plaintiff can obtain Time Total and Shleifer (2008). tax rate categories of relevant documents from the defendant without identifying each 33.3% document specifically. A score of 0 is assigned if no; 1 if yes. Payments • Whether shareholders owning 10% or less of the company’s share capital can Number of tax payments per year 56 DOING BUSINESS IN JUBA 2011 TABLE 11.6 that the benefit becomes taxable in- What do the paying taxes indicators measure? come for the employee. The case study assumes no additional salary additions Tax payments for a manufacturing company in 2009 (number per year adjusted for electronic or joint filing and payment) for meals, transportation, education or others. Therefore, even when such • Total number of taxes and contributions paid, including consumption taxes (value added tax, sales tax benefits are frequent, they are not or goods and service tax) added to or removed from the taxable gross salaries to arrive at the labor tax • Method and frequency of filing and payment or contribution calculation. Time required to comply with 3 major taxes (hours per year) • Has a turnover of 1,050 times income • Collecting information and computing the tax payable per capita. • Completing tax return forms, filing with proper agencies • Makes a loss in the first year of opera- tion. • Arranging payment or withholding • Has a gross margin (pretax) of 20% • Preparing separate tax accounting books, if required (that is, sales are 120% of the cost of Total tax rate (% of profit) goods sold). • Distributes 50% of its net profits as • Profit or corporate income tax dividends to the owners at the end of • Social contributions and labor taxes paid by the employer the second year. • Property and property transfer taxes • Sells one of its plots of land at a profit at • Dividend, capital gains and financial transactions taxes the beginning of the second year. • Waste collection, vehicle, road and other taxes • Has annual fuel costs for its trucks Source: Doing Business database. equal to twice income per capita. • Is subject to a series of detailed as- • Started operations on January 1, 2008. sumptions on expenses and transac- generally excluded (provided they are not At that time the company purchased tions to further standardize the case. irrecoverable) because they do not affect the all the assets shown in its balance sheet All financial statement variables are accounting profits of the business—that is, and hired all its workers. proportional to 2005 income per capita. they are not reflected in the income statement. • Operates in the economy’s largest busi- For example, the owner who is also a ness city. manager spends 10% of income per They are, however, included for the purpose capita on traveling for the company of the compliance measures (time and pay- • Is 100% domestically owned and has (20% of this owner’s expenses are ments), as they add to the burden of comply- 5 owners, all of whom are natural purely private, 20% are for entertaining ing with the tax system. persons. customers and 60% for business travel). Doing Business uses a case scenario to • At the end of 2008, has a start-up capi- measure the taxes and contributions paid by tal of 102 times income per capita. ASSUMPTIONS ABOUT TAXES AND a standardized business and the complexity • Performs general industrial or commer- CONTRIBUTIONS of an economy’s tax compliance system. This cial activities. Specifically, it produces All the taxes and contributions recorded are case scenario uses a set of financial state- ceramic flowerpots and sells them at those paid in the second year of operation ments and assumptions about transactions retail. It does not participate in foreign (calendar year 2009). A tax or contribution is trade (no import or export) and does made over the year. In each economy tax considered distinct if it has a different name not handle products subject to a special experts from a number of different firms (in tax regime, for example, liquor or or is collected by a different agency. Taxes many economies these include Pricewater- tobacco. and contributions with the same name and houseCoopers) compute the taxes and man- • At the beginning of 2009, owns 2 plots agency, but charged at different rates depend- datory contributions due in their jurisdiction of land, 1 building, machinery, office ing on the business, are counted as the same based on the standardized case study facts. equipment, computers and 1 truck and tax or contribution. Information is also compiled on the frequency leases 1 truck. The number of times the company pays of filing and payments as well as time taken to • Does not qualify for investment taxes and contributions in a year is the number comply with tax laws in an economy. To make incentives or any benefits apart from of different taxes or contributions multiplied the data comparable across economies, several those related to the age or size of the by the frequency of payment (or withholding) assumptions about the business and the taxes company. for each tax. The frequency of payment in- and contributions are used. • Has 60 employees—4 managers, 8 cludes advance payments (or withholding) as assistants and 48 workers. All are well as regular payments (or withholding). ASSUMPTIONS ABOUT THE BUSINESS nationals, and 1 manager is also an The business: owner. The company pays for additional TAX PAYMENTS medical insurance for employees (not The tax payments indicator reflects the total • Is a limited liability, taxable company. If mandated by any law) as an additional there is more than one type of limited number of taxes and contributions paid, the benefit. In addition, in some economies liability company in the economy, the method of payment, the frequency of pay- reimbursable business travel and client limited liability form most popular ment, the frequency of filing and the number entertainment expenses are considered among domestic firms is chosen. The of agencies involved for this standardized case fringe benefits. When applicable, it is most popular form is reported by incor- study company during the second year of op- assumed that the company pays the poration lawyers or the statistical office. fringe benefit tax on this expense or eration (table 11.6). It includes consumption DATA NOTES 57 taxes paid by the company, such as sales tax or the different taxes and contributions payable sion with members of the International Tax value added tax. These taxes are traditionally after accounting for allowable deductions and Dialogue, which led to a refinement of the collected from the consumer on behalf of the exemptions. The taxes withheld (such as per- questions on the time to pay taxes indicator tax agencies. Although they do not affect the sonal income tax) or collected by the company in the survey instrument and the collection of income statements of the company, they add and remitted to the tax authorities (such as pilot data on the labor tax wedge for further to the administrative burden of complying value added tax, sales tax or goods and ser- research. with the tax system and so are included in the vice tax) but not borne by the company are tax payments measure. excluded. The taxes included can be divided The data details on paying taxes can be found The number of payments takes into ac- into 5 categories: profit or corporate income for each economy at http://www.doingbusiness. count electronic filing. Where full electronic tax, social contributions and labor taxes paid org by selecting the economy in the drop- filing and payment is allowed and it is used by the employer (in respect of which all down list. This methodology was developed in by the majority of medium-size businesses, mandatory contributions are included, even Djankov and others (2010). the tax is counted as paid once a year even if if paid to a private entity such as a requited filings and payments are more frequent. For pension fund), property taxes, turnover taxes TRADING ACROSS BORDERS payments made through third parties, such and other taxes (such as municipal fees and as tax on interest paid by a financial institu- vehicle and fuel taxes). Doing Business compiles procedural require- tion or fuel tax paid by a fuel distributor, only The total tax rate is designed to provide ments for exporting and importing a stan- one payment is included even if payments are a comprehensive measure of the cost of all dardized cargo of goods by ocean transport. more frequent. the taxes a business bears. It differs from the Every official procedure for exporting and Where 2 or more taxes or contributions statutory tax rate, which merely provides the importing the goods is recorded— from the are filed for and paid jointly using the same factor to be applied to the tax base. In comput- contractual agreement between the 2 par- form, each of these joint payments is counted ing the total tax rate, the actual tax payable is ties to the delivery of goods—along with the once. For example, if mandatory health insur- divided by commercial profit. time and cost necessary for completion. All ance contributions and mandatory pension Commercial profit is essentially net documents needed by the trader to export or contributions are filed for and paid together, profit before all taxes borne. It differs from import the goods across the border are also only one of these contributions would be in- the conventional profit before tax, reported in recorded. For exporting goods, procedures cluded in the number of payments. financial statements. In computing profit be- range from packing the goods at the ware- fore tax, many of the taxes borne by a firm are house to their departure from the port of exit. TIME deductible. In computing commercial profit, For importing goods, procedures range from Time is recorded in hours per year. The indi- these taxes are not deductible. Commercial the vessel’s arrival at the port of entry to the cator measures the time taken to prepare, file profit therefore presents a clear picture of the cargo’s delivery at the warehouse. The time and pay 3 major types of taxes and contribu- actual profit of a business before any of the and cost for ocean transport are not included. tions: the corporate income tax, value added taxes it bears in the course of the fiscal year. Payment is made by letter of credit, and the or sales tax and labor taxes, including payroll Commercial profit is computed as sales time, cost and documents required for the taxes and social contributions. Preparation minus cost of goods sold, minus gross sala- issuance or advising of a letter of credit are time includes the time to collect all informa- ries, minus administrative expenses, minus taken into account. The ranking on the ease tion necessary to compute the tax payable other expenses, minus provisions, plus capital of trading across borders is the simple average and to calculate the amount payable. If sepa- gains (from the property sale) minus interest of the percentile rankings on its component rate accounting books must be kept for tax expense, plus interest income and minus com- indicators (figure 11.7). purposes—or separate calculations made— mercial depreciation. To compute the com- Local freight forwarders, shipping lines, the time associated with these processes is mercial depreciation, a straight-line depre- customs brokers, port officials and banks pro- included. This extra time is included only if ciation method is applied, with the following the regular accounting work is not enough to rates: 0% for the land, 5% for the building, FIGURE 11.7 fulfill the tax accounting requirements. Filing 10% for the machinery, 33% for the comput- Trading across borders: exporting and time includes the time to complete all neces- ers, 20% for the office equipment, 20% for importing by ocean transport sary tax return forms and file the relevant the truck and 10% for business development Rankings are based on 3 subindicators returns at the tax authority. Payment time expenses. Commercial profit amounts to 59.4 All documents required Document preparation, by customs and customs clearance and considers the hours needed to make the pay- times income per capita. other agencies technical control, port ment online or at the tax authorities. Where The methodology for calculating the total and terminal handling, taxes and contributions are paid in person, the tax rate is broadly consistent with the Total Tax inland transport 33.3% 33.3% and handling time includes delays while waiting. Contribution framework developed by Price- Documents Time to waterhouseCoopers and the calculation within to export export TOTAL TAX RATE this framework for taxes borne. But while the and import and import The total tax rate measures the amount of work undertaken by PricewaterhouseCoopers 33.3% taxes and mandatory contributions borne by is usually based on data received from the Cost to export the business in the second year of operation, largest companies in the economy, Doing Busi- and import expressed as a share of commercial profit. ness focuses on a case study for standardized Doing Business in Juba 2011 reports the total medium-size company. US$ per 20-foot container, no bribes or tariffs included tax rate for calendar year 2009. The total The methodology for the paying taxes amount of taxes borne is the sum of all indicators has further benefited from discus- 58 DOING BUSINESS IN JUBA 2011 TABLE 11.7 DOCUMENTS ENFORCING CONTRACTS What do the trading across borders All documents required per shipment to ex- indicators measure? port and import the goods are recorded (table Doing Business measures the efficiency of the Documents required to export and import 11.7). It is assumed that the contract has judicial system in resolving a commercial dis- (number) already been agreed upon and signed by both pute. The data are built by following the step- • Bank documents parties. Documents required for clearance by-step evolution of a commercial sale dispute • Customs clearance documents by government ministries, customs authori- before local courts. The data are collected • Port and terminal handling documents ties, port and container terminal authorities, through study of the codes of civil procedure • Transport documents health and technical control agencies and and other court regulations as well as surveys banks are taken into account. Since payment completed by local litigation lawyers and by Time required to export and import (days) is by letter of credit, all documents required judges. The ranking on the ease of enforcing • Obtaining all the documents by banks for the issuance or securing of a contracts is the simple average of the per- • Inland transport and handling letter of credit are also taken into account. centile rankings on its component indicators • Customs clearance and inspections Documents that are renewed annually and (figure 11.8). • Port and terminal handling that do not require renewal per shipment (for The name of the relevant court in each example, an annual tax clearance certificate) economy—the court in the largest business • Does not include ocean transport time are not included. city with jurisdiction over commercial cases Cost required to export and import worth 200% of income per capita—is pub- (US$ per container) TIME lished at http://www.doingbusiness.org/Ex- • All documentation The time for exporting and importing is re- ploreTopics/EnforcingContracts/. • Inland transport and handling corded in calendar days. The time calculation • Customs clearance and inspections for a procedure starts from the moment it is ASSUMPTIONS ABOUT THE CASE initiated and runs until it is completed. If a • The value of the claim equals 200% of • Port and terminal handling procedure can be accelerated for an additional the economy’s income per capita. • Official costs only, no bribes cost and is available to all trading companies, • The dispute concerns a lawful transac- Source: Doing Business database. the fastest legal procedure is chosen. Fast- tion between 2 businesses (Seller and Buyer), located in the economy’s largest track procedures applying to firms located in business city. Seller sells goods worth vide information on required documents and an export processing zone are not taken into 200% of the economy’s income per cost as well as the time to complete each pro- account because they are not available to all capita to Buyer. After Seller delivers the cedure. To make the data comparable across trading companies. Ocean transport time is goods to Buyer, Buyer refuses to pay for economies, several assumptions about the not included. It is assumed that neither the ex- the goods on the grounds that the deliv- business and the traded goods are used. porter nor the importer wastes time and that ered goods were not of adequate quality. each commits to completing each remain- • Seller (the plaintiff) sues Buyer (the ASSUMPTIONS ABOUT THE BUSINESS ing procedure without delay. Procedures that defendant) to recover the amount un- The business: can be completed in parallel are measured der the sales agreement (that is, 200% • Has at least 60 employees. as simultaneous. The waiting time between of the economy’s income per capita). procedures—for example, during unloading Buyer opposes Seller’s claim, saying that • Is located in the economy’s largest busi- of the cargo—is included in the measure. the quality of the goods is not adequate. ness city. The claim is disputed on the merits. • Is a private, limited liability company. It COST • A court in the economy’s largest busi- does not operate in an export process- ness city with jurisdiction over com- ing zone or an industrial estate with Cost measures the fees levied on a 20-foot mercial cases worth 200% of income special export or import privileges. container in U.S. dollars. All the fees associ- • Is domestically owned with no foreign ated with completing the procedures to ex- ownership. FIGURE 11.8 port or import the goods are included. These Enforcing contracts: resolving a • Exports more than 10% of its sales. include costs for documents, administrative commercial dispute through the courts fees for customs clearance and technical con- Rankings are based on 3 subindicators ASSUMPTIONS ABOUT THE TRADED trol, customs broker fees, terminal handling GOODS Days to resolve Attorney, court and charges and inland transport. The cost does commercial sale dispute enforcement costs The traded product travels in a dry-cargo, not include customs tariffs and duties or costs before the court as % of claim value 20-foot, full container load. It weighs 10 tons and is valued at $20,000. The product: related to ocean transport. Only official costs are recorded. • Is not hazardous nor does it include 33.3% 33.3% military items. Time Cost The data details on trading across borders • Does not require refrigeration or any other special environment. can be found for each economy at http://www. doingbusiness.org by selecting the economy in 33.3% • Does not require any special phytosani- tary or environmental safety standards the drop-down list. This methodology was de- Procedures other than accepted international veloped in Djankov, Freund and Pham (2010) standards. and is adopted here with minor changes. Steps to file claim, obtain judgment • Is one of the economy’s leading export and enforce it or import products. DATA NOTES 59 TABLE 11.8 the parties or between them and the judge CLOSING A BUSINESS What do the enforcing contracts or court officer. This includes steps to file and indicators measure? serve the case, steps for trial and judgment Doing Business studies the time, cost and Procedures to enforce a contract (number) and steps necessary to enforce the judgment outcome of insolvency proceedings involving • Any interaction between the parties in a (table 11.8). domestic entities. The data are derived from commercial dispute, or between them and The survey allows respondents to record survey responses by local insolvency practitio- the judge or court officer procedures that exist in civil law but not ners and verified through a study of laws and • Steps to file the case common law jurisdictions and vice versa. For regulations as well as public information on • Steps for trial and judgment example, in civil law countries the judge can bankruptcy systems. The ranking on the ease appoint an independent expert, while in com- of closing a business is based on the recovery • Steps to enforce the judgment mon law countries each party submits a list rate (figure 11.9). Time required to complete procedures of expert witnesses to the court. To indicate To make the data comparable across (calendar days) overall efficiency, 1 procedure is subtracted economies, several assumptions about the • Time to file and serve the case from the total number for economies that business and the case are used. • Time for trial and obtaining judgment have specialized commercial courts, and 1 • Time to enforce the judgment procedure for economies that allow electronic ASSUMPTIONS ABOUT THE BUSINESS filing of court cases. Some procedural steps The business: Cost required to complete procedures (% of claim) that take place simultaneously with or are • Is a limited liability company. • No bribes included in other procedural steps are not • Operates in the economy’s largest busi- • Average attorney fees counted in the total number of procedures. ness city. • Is 100% domestically owned, with the • Court costs, including expert fees TIME founder, who is also the chairman of • Enforcement costs Time is recorded in calendar days, counted the supervisory board, owning 51% (no Source: Doing Business database. from the moment the plaintiff decides to file other shareholder holds more than 5% the lawsuit in court until payment. This in- of shares). per capita decides the dispute. cludes both the days when actions take place • Has downtown real estate, where it runs and the waiting periods between. The average a hotel, as its major asset. The hotel is • Seller attaches Buyer’s movable assets valued at 100 times income per capita (for example, office equipment and duration of different stages of dispute resolu- tion is recorded: the completion of service of or $200,000, whichever is larger. vehicles) before obtaining a judgment because Seller fears that Buyer may process (time to file and serve the case), the • Has a professional general manager. become insolvent. issuance of judgment (time for the trial and • Has 201 employees and 50 suppliers, • An expert opinion is given on the qual- obtaining the judgment) and the moment of each of which is owed money for the ity of the delivered goods. If it is stan- payment (time for enforcement of judgment). last delivery. dard practice in the economy for each • Has a 10-year loan agreement with a party to call its own expert witness, the COST domestic bank secured by a universal parties each call one expert witness. If it business charge (for example, a float- Costs recorded as a percentage of the claim, is standard practice for the judge to ap- ing charge) in economies where such assumed to be equivalent to 200% of income collateral is recognized or by the hotel point an independent expert, the judge per capita. No bribes are recorded. Three types property. If the laws of the economy do does so. In this case the judge does not allow opposing expert testimony. of costs are recorded: court costs, enforcement not specifically provide for a universal costs and average attorney fees. business charge but contracts com- • The judgment is 100% in favor of Seller: the judge decides that the goods are of Court costs include all court costs and monly use some other provision to that adequate quality and that Buyer must expert fees that Seller (plaintiff) must ad- effect, this provision is specified in the pay the agreed price. vance to the court, regardless of the final cost loan agreement. • Buyer does not appeal the judgment. to Seller. Expert fees, if required by law or commonly used in practice, are included in FIGURE 11.9 The judgment becomes final. Closing a business: time, cost and outcome • Seller takes all required steps for court costs. Enforcement costs are all costs of bankruptcy of a local company prompt enforcement of the judgment. that Seller (plaintiff) must advance to enforce Rankings are based on 1 subindicator The money is successfully collected the judgment through a public sale of Buyer’s Recovery rate is a function of time, cost and other through a public sale of Buyer’s mov- movable assets, regardless of the final cost factors such as lending rate and the likelihood able assets (for example, office equip- to Seller. Average attorney fees are the fees of the company ment and vehicles). that Seller (plaintiff) must advance to a local continuing to operate attorney to represent Seller in the standard- PROCEDURES ized case. 100% The list of procedural steps compiled for each Recovery economy traces the chronology of a commer- The data details on enforcing contracts can rate cial dispute before the relevant court. A proce- be found for each economy at http://www. dure is defined as any interaction, required by doingbusiness.org by selecting the economy in law or commonly used in practice, between the drop-down list. This methodology was de- veloped in Djankov and others (2003) and is Note: Time and cost do not count separately for the ranking. adopted here with minor changes. 60 DOING BUSINESS IN JUBA 2011 • Has observed the payment schedule ASSUMPTIONS ABOUT THE PARTIES into account, including the loss of value due and all other conditions of the loan up The bank wants to recover as much as possible to depreciation of the hotel furniture. Consis- to now. of its loan, as quickly and cheaply as possible. tent with international accounting practice, • Has a mortgage, with the value of the The unsecured creditors will do everything the annual depreciation rate for furniture is mortgage principal being exactly equal permitted under the applicable laws to avoid taken to be 20%. The furniture is assumed to to the market value of the hotel. a piecemeal sale of the assets. The majority account for a quarter of the total value of as- ASSUMPTIONS ABOUT THE CASE shareholder wants to keep the company op- sets. The recovery rate is the present value of erating and under its control. Management the remaining proceeds, based on end-2009 The business is experiencing liquidity prob- wants to keep the company operating and pre- lending rates from the International Mon- lems. The company’s loss in 2009 reduced its serve their jobs. All the parties are local entities etary Fund’s International Financial Statistics, net worth to a negative figure. It is January 1, or citizens; no foreign parties are involved. supplemented with data from central banks 2010. There is no cash to pay the bank interest and the Economist Intelligence Unit. or principal in full, due the next day, January TIME 2. The business will therefore default on its Time for creditors to recover their credit is NO PRACTICE loan. Management believes that losses will be recorded in calendar years (table 11.9). The If an economy has had fewer than 5 cases incurred in 2010 and 2011 as well. period of time measured by Doing Business is a year over the past 5 years involving a ju- The amount outstanding under the loan from the company’s default until the payment dicial reorganization, judicial liquidation or agreement is exactly equal to the market value of some or all of the money owed to the bank. debt enforcement procedure (foreclosure), the of the hotel business and represents 74% of Potential delay tactics by the parties, such as economy receives a “no practice” ranking. the company’s total debt. The other 26% of its the filing of dilatory appeals or requests for This means that creditors are unlikely to debt is held by unsecured creditors (suppliers, extension, are taken into consideration. recover their money through a formal legal employees, tax authorities). process (in or out of court). The recovery rate The company has too many creditors COST for “no practice” economies is zero. to negotiate an informal out-of court work- The cost of the proceedings is recorded as a out. The following options are available: a percentage of the value of the debtor’s estate. This methodology was developed in Djankov, judicial procedure aimed at the rehabilitation The cost is calculated on the basis of survey Hart, McLiesh and Shleifer (2008) and is ad- or reorganization of the company to permit responses and includes court fees and govern- opted here with minor changes. its continued operation; a judicial procedure ment levies; fees of insolvency administrators, aimed at the liquidation or winding-up of the auctioneers, assessors and lawyers; and all INDICATOR RANKING company; or a debt enforcement or foreclo- other fees and costs. Respondents provide cost sure procedure against the company, enforced estimates from among the following options: The ranking on each topic is the simple aver- either in court (or through another govern- less than 2%, 2–5%, 5–8%, 8–11%, 11–18%, age of the percentile rankings on its compo- ment authority) or out of court (for example, 18–25%, 25–33%, 33–50%, 50–75% and more nent indicators. The ease of starting a business by appointing a receiver). than 75% of the value of the estate. is a simple average of the city rankings on the number of procedures, and the associ- OUTCOME ated time and cost (% of income per capita) TABLE 11.9 What do the closing a business indicators Recovery by creditors depends on whether the required to start a business. The ease of deal- measure? hotel business emerges from the proceedings ing with construction permits is a simple Time required to recover debt (years) as a going concern or the company’s assets are average of the city rankings on the number of sold piecemeal. If the business keeps operat- procedures, and the associated time and cost • Measured in calendar years ing, no value is lost and the bank can satisfy (% of income per capita) required to build a • Appeals and requests for extension are included its claim in full, or recover 100 cents on the warehouse. The ease of registering property Cost required to recover debt dollar. If the assets are sold piecemeal, the is a simple average of the city rankings on (% of debtor’s estate) maximum amount that can be recovered will the number of procedures, associated time • Measured as percentage of estate value not exceed 70% of the bank’s claim, which and cost (% of the property value) required to • Court fees translates into 70 cents on the dollar. register property. • Fees of insolvency administrators The rankings are limited in scope. They RECOVERY RATE do not account for an economy’s proximity to • Lawyers’ fees The recovery rate is recorded as cents on the large markets, the quality of its infrastructure • Assessors’ and auctioneers’ fees dollar recouped by creditors through reor- services (other than services related to con- Recovery rate for creditors (cents on the dollar) ganization, liquidation or debt enforcement struction permits), the security of property • Measures the cents on the dollar recovered (foreclosure) proceedings. The calculation from theft and looting, macroeconomic condi- by creditors takes into account the outcome: whether the tions or the strength of underlying institutions. • Present value of debt recovered business emerges from the proceedings as a A large unfinished agenda remains for research • Official costs of the insolvency proceedings are going concern or the assets are sold piecemeal. into what regulation constitutes binding con- deducted Then the costs of the proceedings are de- straints, what package of reforms is most ef- • Depreciation of furniture is taken into account ducted (1 cent for each percentage point of the fective and how these issues are shaped by the • Outcome for the business (survival or not) affects value of the debtor’s estate). Finally, the value context of an economy. The Doing Business in- the maximum value that can be recovered lost as a result of the time the money remains dicators provide a new empirical data set that Source: Doing Business database. tied up in insolvency proceedings is taken may improve understanding of these issues. DATA NOTES 61 NOT IN THE EASE OF DOING to the methodology for the employing work- mum wage or if the minimum wage applies BUSINESS RANKING ers indicators. only to the public sector. A threshold was First, the standardized case study was set for excessive flexibility in the paid annual EMPLOYING WORKERS changed to refer to a small to medium-size leave period and the maximum number of company with 60 employees rather than 201. working days per week. In addition, for the The employing workers indicators set is not Second, restrictions on night and weekly holi- scoring of the annual leave period for the included in aggregate ranking on the ease of day work are taken into account if they apply rigidity of hours index and the notice period doing business for this report, because the to manufacturing activities in which con- and severance pay for the redundancy cost, methodology is currently being refined. tinuous operation is economically necessary. the average value for a worker with 1 year of Doing Business measures the regulation Third, legally mandated wage premiums for tenure, a worker with 5 years and a worker of employment, specifically as it affects the work performed on the designated weekly with 10 years is used rather than the value for hiring and redundancy of workers and the holiday or for night work are scored on the a worker with 20 years of tenure. rigidity of working hours. In 2007 improve- basis of a 4-tiered scale. Fourth, economies The data on employing workers are ments were made to align the methodology that mandate 8 or fewer weeks of severance based on a detailed survey of employment for the employing workers indicators with pay and do not offer unemployment protec- regulations that is completed by local lawyers the International Labour Organization (ILO) tion do not receive the highest score. Finally, and public officials. Employment laws and conventions. Only 4 of the 188 ILO conven- the calculation of the minimum wage ratio regulations as well as secondary sources are tions cover areas measured by Doing Business: was modified to ensure that an economy reviewed to ensure accuracy. To make the employee termination, weekend work, holiday would not benefit in the scoring from lower- data comparable across economies, several with pay and night work. The Doing Business ing the minimum wage to below $1.25 a day, assumptions about the worker and the busi- methodology is fully consistent with these 4 adjusted for purchasing power parity. This ness are used. conventions. It is possible for an economy to level is consistent with recent adjustments to receive the best score on the ease of employ- the absolute poverty line. ASSUMPTIONS ABOUT THE WORKER ing workers and comply with all relevant This year further modifications were The worker: ILO conventions (specifically, the 4 covering made to the methodology based on consulta- • Is a 42-year-old, nonexecutive, fulltime, areas measured by Doing Business)—and no tions with a consultative group of relevant male employee. economy can achieve a better score by failing stakeholders. For more information on the • Earns a salary plus benefits equal to to comply with these conventions. consultation process, see the Doing Business the economy’s average wage during the The ILO conventions covering areas re- website (http://www.doingbusiness.org). entire period of his employment. lated to the employing workers indicators do Changes agreed as of the date of publica- • Has a pay period that is the most com- not include the ILO core labor standards—8 tion are the following: For the scoring of the mon for workers in the economy. conventions covering the right to collective minimum wage, no economy can receive the • Is a lawful citizen who belongs to the bargaining, the elimination of forced labor, highest score if it has no minimum wage at same race and religion as the majority the abolition of child labor and equitable all, if the law provides a regulatory mechanism of the economy’s population. treatment in employment practices. for the minimum wage that is not enforced in • Resides in the economy’s largest busi- In 2009 additional changes were made practice, if there is only a customary mini- ness city. • Is not a member of a labor union, un- less membership is mandatory. TABLE 11.10 What do the employing workers indicators measure? ASSUMPTIONS ABOUT THE BUSINESS Difficulty of hiring index (0–100) The business: • Applicability and maximum duration of fixed-term contracts • Is a limited liability company. • Operates in the economy’s largest busi- • Minimum wage for trainee or first-time employee ness city. Rigidity of hours index (0–100) • Is 100% domestically owned. • Restrictions on night work and weekend work • Operates in the manufacturing sector. • Allowed maximum length of the workweek in days and hours, including overtime • Has 60 employees. • Paid annual vacation days • Is subject to collective bargaining agreements in economies where such Difficulty of redundancy index (0–100) agreements cover more than half the manufacturing sector and apply even to • Notification and approval requirements for termination of a redundant worker or group of redundant workers firms not party to them. • Obligation to reassign or retrain and priority rules for redundancy and reemployment • Abides by every law and regulation but Rigidity of employment index (0–100) does not grant workers more benefits than mandated by law, regulation or (if • Simple average of the difficulty of hiring, rigidity of hours and difficulty of redundancy indices applicable) collective bargaining agree- Redundancy cost (weeks of salary) ment. • Notice requirements, severance payments and penalties due when terminating a redundant worker, ex- pressed in weeks of salary Source: Doing Business database. 62 DOING BUSINESS IN JUBA 2011 RIGIDITY OF EMPLOYMENT INDEX annual leave for a worker with 1 year of tenure, (a score of 2) to terminate a single redundant The rigidity of employment index is the aver- a worker with 5 years and a worker with 10 worker, and has to both notify a third party (a age of 3 subindices: a difficulty of hiring index, years is more than 26 working days or fewer score of 1) and obtain its approval (a score of a rigidity of hours index and a difficulty of than 15 working days. For questions (i) and 1) to terminate a group of 9 redundant work- redundancy index (table 11.10). All the sub- (ii), if restrictions other than premiums apply, ers. The law mandates retraining or alternative indices have several components. And all take a score of 1 is given. If the only restriction is placement before termination (a score of 1). values between 0 and 100, with higher values a premium for night work or weekly holiday There are priority rules for termination (a indicating more rigid regulation. work, a score of 0, 0.33, 0.66 or 1 is given, de- score of 1) and reemployment (a score of 1). The difficulty of hiring index measures pending on the quartile in which the economy’s Adding the scores and scaling to 100 gives a (i) whether fixed-term contracts are prohib- premium falls. If there are no restrictions, the final index of 80. ited for permanent tasks; (ii) the maximum economy receives a score of 0. For question (iii) cumulative duration of fixed-term contracts; a score of 1 is assigned if the legally permitted REDUNDANCY COST and (iii) the ratio of the minimum wage for a workweek is less than 5.5 days or more than The redundancy cost indicator measures the trainee or first-time employee to the average 6 days; otherwise a score of 0 is assigned. For cost of advance notice requirements, severance value added per worker.3 An economy is as- question (iv), if the answer is “no”, a score of 1 payments and penalties due when terminating signed a score of 1 if fixed-term contracts are is assigned; otherwise a score of 0 is assigned. a redundant worker, expressed in weeks of sal- prohibited for permanent tasks and a score For question (v) a score of 0 is assigned if the ary. The average value of notice requirements of 0 if they can be used for any task. A score average paid annual leave is between 15 and 21 and severance payments applicable to a worker of 1 is assigned if the maximum cumulative working days, a score of 0.5 if it is between 22 with 1 year of tenure, a worker with 5 years and duration of fixed-term contracts is less than 3 and 26 working days and a score of 1 if it is less a worker with 10 years is used to assign the years; 0.5 if it is 3 years or more but less than than 15 or more than 26 working days. score. If the redundancy cost adds up to 8 or 5 years; and 0 if fixed-term contracts can last 5 For example, Honduras imposes restric- fewer weeks of salary and the workers can ben- years or more. Finally, a score of 1 is assigned if tions on night work (a score of 1) but not on efit from unemployment protection, a score of the ratio of the minimum wage to the average weekly holiday work (a score of 0), allows 0 is assigned, but the actual number of weeks value added per worker is 0.75 or more; 0.67 for 6-day workweeks (a score of 0), permits 50- is published. If the redundancy cost adds up to a ratio of 0.50 or more but less than 0.75; 0.33 hour workweeks for 2 months (a score of 0) 8 or fewer weeks of salary and the workers can- for a ratio of 0.25 or more but less than 0.50; and requires average paid annual leave of 16.7 not benefit from any type of unemployment and 0 for a ratio of less than 0.25. A score of 0 working days (a score of 0). Averaging the protection, a score of 8.1 weeks is assigned, is also assigned if the minimum wage is set by scores and scaling the result to 100 gives a final although the actual number of weeks is pub- a collective bargaining agreement that applies index of 20 for Honduras. lished. If the cost adds up to more than 8 weeks to less than half the manufacturing sector or The difficulty of redundancy index has 8 of salary, the score is the number of weeks. One does not apply to firms not party to it, or if the components: (i) whether redundancy is disal- month is recorded as 4 and 1/3 weeks. minimum wage is set by law but does not apply lowed as a basis for terminating workers; In Mauritania, for example, an employer to workers who are in their apprentice period. (ii) whether the employer needs to notify a is required to give an average of 1 month’s no- A ratio of 0.251 (and therefore a score of 0.33) is third party (such as a government agency) to tice before a redundancy termination, and the automatically assigned in 4 cases: if there is no terminate 1 redundant worker; (iii) whether average severance pay for a worker with 1 year minimum wage, if the law provides a regulatory the employer needs to notify a third party to of service, a worker with 5 years and a worker mechanism for the minimum wage that is not terminate a group of 9 redundant workers; (iv) with 10 years equals 1.42 months of wages. enforced in practice, if there is no minimum whether the employer needs approval from a No penalty is levied. Altogether, the employer wage set by law but there is a wage amount that third party to terminate 1 redundant worker; pays the equivalent of 10.5 weeks of salary to is customarily used as a minimum or if there is (v) whether the employer needs approval from dismiss a worker. no minimum wage set by law in the private sec- a third party to terminate a group of 9 redun- tor but there is one in the public sector. dant workers; (vi) whether the law requires the The data details on employing workers can be In Benin, for example, fixed-term con- employer to reassign or retrain worker before found for each economy at http://www.doing- tracts are not prohibited for permanent tasks making the worker redundant; (vii) whether business.org by selecting the economy in the (a score of 0), and they can be used for a maxi- priority rules apply for redundancies; and (viii) drop-down list. This methodology was devel- mum of 4 years (a score of 0.5). The ratio of the whether priority rules apply for reemploy- oped in Botero and others (2004) and is adopted mandated minimum wage to the value added ment. For question (i) an answer of “yes” for here with changes. per worker is 0.58 (a score of 0.67). Averaging workers of any income level gives a score of 10 the 3 values and scaling the index to 100 gives and means that the rest of the questions do not Benin a score of 39. apply. An answer of “yes” to question (iv) gives 1. This question is usually regulated by stock exchange or The rigidity of hours index has 5 com- a score of 2. For every other question, if the an- securities laws. Points are awarded only to economies with more than 10 listed firms in their most important ponents: (i) whether there are restrictions on swer is “yes,” a score of 1 is assigned; otherwise stock exchange. night work; (ii) whether there are restrictions a score of 0 is given. Questions (i) and (iv), as 2. When evaluating the regime of liability for company di- on weekly holiday work; (iii) whether the work- the most restrictive regulations, have greater rectors for a prejudicial related-party transaction, Doing week can consist of 5.5 days or is more than 6 weight in the construction of the index. Business assumes that the transaction was duly disclosed and approved. Doing Business does not measure director days; (iv) whether the workweek can extend to In Tunisia, for example, redundancy is liability in the event of fraud. 50 hours or more (including overtime) for 2 allowed as grounds for termination (a score 3. The average value added per worker is a ratio of an months a year to respond to a seasonal increase of 0). An employer has to both notify a third economy’s GNI per capita to the working-age population in production; and (v) whether the average paid party (a score of 1) and obtain its approval as a percentage of the total population. Doing Business indicators 64 DOING BUSINESS IN JUBA 2011 Doing Business indicators Sudan Sub-Saharan Global best practice Juba (Khartoum) Africa average Ease of doing business (rank) 1-Singapore 159 154 137 Starting a business (rank) 1-New Zealand 123 121 126 Procedures (number) 1 11 10 9 Time (days) 1 15 36 45 Cost (% of income per capita) 0.4 250.2 33.6 95.4 Min. capital (% of income per capita) 0 0 0 145.7 Dealing with construction permits (rank) 1-Hong Kong SAR, China 49 139 117 Procedures (number) 7 10 19 18 Time (days) 67 30 271 240 Cost (% of income per capita) 19.4 5,935.7 192.2 1,773.3 Registering property (rank) 1-Saudi Arabia 124 40 121 Procedures (number) 2 7 6 7 Time (days) 2 18 9 68 Cost (% of property value) 0 14.7 3 9.6 Getting credit (rank) 1-Malaysia 176 138 120 Strength of legal rights index (0-10) 10 2 5 4.6 Depth of credit information index (0-6) 6 0 0 1.7 Public registry coverage (% of adults) 62 0 0 2.7 Private bureau coverage (% of adults) 100 0 0 4.9 Protecting investors (rank) 1-New Zealand 173 154 113 Extent of disclosure index (0-10) 10 3 0 4.8 Extent of director liability index (0-10) 9 0 6 3.4 Ease of shareholder suits index (0-10) 10 5 4 5 Strength of investor protection index (0-10) 9.7 2.7 3.3 4.4 Paying taxes (rank) 1-Maldives 84 94 116 Payments (number per year) 3 46 42 37 Time (hours per year) 0 218 180 315 Total tax rate (% of profit) 9.3 25.5 36.1 68.1 Trading across borders (rank) 1-Singapore 181 143 136 Document to export (number) 4 9 6 8 Time to export (days) 5 52 32 32 Cost to export (US$ per container) 456 5,025 2,050 1,962 Document to import (number) 4 11 6 9 Time to import (days) 4 60 46 38 Cost to import (US$ per container) 439 9,420 2,900 2,492 Enforcing contracts (rank) 1-Luxembourg 74 146 118 Procedures (number) 26 46 53 39 Time (days) 321 111 810 639 Cost (% of claim) 9.7 26.0 19.8 50.0 Closing a business (rank) 1-Japan 183 183 128 Time (years) 0.6 no practice no practice 3.4 Cost (% of estate) 4 no practice no practice 20.7 Recovery (cents on the dollar) 92.7 0.0 0.0 23.2 INDICATOR DETAILS 65 Cost: SDG 300 Indicator details Comments: An application form is filled and the companies' documents are Starting a business submitted to the Executive Director at the payam. Once the fee is paid, the applicant receives a receipt to go to the Revenue Authority and obtain a Tax Clearance Certifi- JUBA cate. Once he/she obtains the certificate, the entrepreneur can return to the payam Standard company legal form: limited liability company office and obtain the Trading License. Paid-in minimum capital requirement: SDG 0 There is no specific regulation concerning this procedure, but Art. 85 Central Equato- Data as of: November 2010 ria State Constitution (2006, amended 2008) provides the general principle allowing states to collect fees. Procedure 1. Reserve the company name at the Business Registry (Government of Southern Sudan) and pay the fee Procedure 7. Obtain a Tax ID Card and a Tax Clearance Certificate Time: 1 day from the Revenue Authority (State Government of Central Equatoria) Cost: SDG 15 Time: 1 day Comments: The entrepreneur submits a form with three different business names to check the availability. Once the availability is confirmed, the entrepreneur can Cost: SDG 1,050 (SDG 800 State Development Tax + SDG 150 fee for Tax Clearance reserve the name, which will be valid for 30 days. This process can be completed on Certificate + SDG 90 fee for Tax ID Card + SDG 10 Stamp duty) the spot at the Business Registry. Comments: The entrepreneur must submit: Art. 10.1 of the Registration of Business Names Act (2008) regulates the registration a. Copy of the Certificate of Incorporation; of business names. Even though this Act is not directly applicable to companies, the b. Copy of the Operating License; Business Registry applies it by extension. c. Receipt obtained at the Payam for the Trading License; and Procedure 2*. Prepare the company documents before an d. Two passport size photographs of the company manager. advocate The entrepreneur then pays the fees corresponding to the Tax ID Card and the Tax Clearance Certificate as well as the State Development Tax. Time: 2 days Cost: SDG 2,500 There is no specific regulation concerning this procedure, but the Revenue Authority of Central Equatoria establishes the fees through appropriation bills. In this case Comments: The entrepreneur prepares the Memorandum and Articles of Associa- Appropriation Bill (2009). Art. 85 of the Central Equatoria State Constitution (2006, tion with an advocate (registered lawyer). Art. 17.2 Companies Act (2003) states "a amended 2008) and the State Revenue Authority Act (2007, amended 2008), provide statutory declaration by an advocate engaged in the formation of the company, or the general principles allowing the Revenue Authority to collect fees. by a person named in the articles as a director or secretary of the company, of com- pliance with all or any of the said requirements shall be delivered to the registrar, Procedure 8*. Register with the Ministry of Finance (Government and the registrar may accept such a declaration as sufficient evidence of compli- ance." The Business Registry requires entrepreneurs to use an advocate. of Southern Sudan) and obtain a Tax Identification Number (TIN) Time: 1 day Procedure 3. Apply for approval of the company registration at Cost: No cost the Business Registry (Government of Southern Sudan) and pay Comments: Registration with the Tax Authority of the Government of Southern the fee Sudan was introduced with the enactment of the Taxation Act in 2009. Chapter III Time: 2 days section 17 establishes registration requirements. The Ministry of Finance has under- taken an interim initiative to register taxpayers and will forgo penalties and fines Cost: SDG 25 during this period. The government is reaching out to businesses to complete regis- Comments: Once the Memorandum and Articles of Association have been tration with mobile units. As of October 2010, 300 companies had been registered. completed with the reserved business name, the applicant returns to the Business Registry. An application form is submitted together with the memorandum and Procedure 9*. Register with the Ministry of Labor (Government of articles. The application form should state the particulars of the company. The ap- Southern Sudan) plication is forwarded to the Legal Counsel, which sits in the same Business Registry. If approved, the file is passed to the Chief Registrar for his signature. Time: 1 day Arts. 15-17 Companies Act (2003) establish registration requirements for companies Cost: No cost and contain statutory memorandum and articles of association. Comments: Part X of the Labor Act of Sudan (1997) establishes that the company must deposit the basic work and penalties regulations with the competent labor Procedure 4. Pay the registration fees and obtain the Certificate office. of Incorporation from the Business Registry (Government of Southern Sudan) Procedure 10*. Open a separate bank account for social security Time: 1 day payments Cost: SDG 821 Time: 1 day Comments: Once the application has been approved, the entrepreneur pays the fee Cost: No cost to obtain the Certificate of Incorporation. Comments: There is no social security fund or institution yet in Southern Sudan. As a temporary measure, the Ministry of Public Labour, Public Service & Human Resource Procedure 5. Obtain an Operating License from the Directorate of Development of the Government of Southern Sudan issued a circular (Circular Trade and Supplies (State Government of Central Equatoria) J/5/21, March 22, 2010) instructing companies to open a separate bank account to deposit social security payments until a new mechanism is devised. Time: 2 days Cost: SDG 2,000 Procedure 11*. Obtain a company seal Comments: The entrepreneur fills in a form, presents the Certificate of Incorporation Time: 1 day and indicates the address of the company headquarters. He pays the fees. An official Cost: SDG 90 from the Directorate of Trade should visit the office to confirm its whereabouts, but it does not happen in practice. Comments: Art. 108.b Companies Act (2003) requires companies to obtain a company seal. The company seal had to be approved by the security authorities. Cur- There is no specific regulation concerning this procedure, but the Directorate of rently such approval is not necessary and seals can be acquired at any shop. Trade establishes the fees through appropriation bills, in this case, the Appropriation Bill (2009). Art. 85 of the Central Equatoria State Constitution (2006, amended in 2008) provides the general principle allowing states to collect fees. *This procedure can be completed simultaneously with previous procedures. Procedure 6. Obtain a Trading License from the payam (county authority) Time: 2 days 66 DOING BUSINESS IN JUBA 2011 Dealing with construction permits On the building permit is mentioned that the payam must be notified when the foundation and roofing are completed, and after construction. The payam is sup- JUBA posed to conduct an inspection before issuing the permit, but the inspection rarely happens in the case of private commercial buildings. Warehouse value: USD 190,045 = SDG 420,000 Data as of: November 2010 Procedure 4. Request the Survey Department of the Ministry of Physical Infrastructure (State Government of Central Equatoria) Procedure 1. Apply for and obtain a croquis from the Survey to peg the plot and the building surface Department of the Ministry of Physical Infrastructure (State Time: 4 days Government of Central Equatoria) Cost: No cost Time: 1 day Comments: After receiving the building permit from the payam, BuildCo applies to Cost: SDG 125 (croquis fees for a plot located in a 2nd class area) the Survey Department to have its plot and the buidilng surface pegged. Depending Comments: If BuildCo has owned the land for more than one year, it must first on the department’s work schedule, it may take a few days for the team of surveyors obtain a croquis (site map), detailing the dimensions and location of the plot where to come and complete the work. After having pegged the plot, the team signs the the construction will be undertaken, from the Survey Department of the Ministry of building permit and BuildCo is free to start construction. Physical Infrastructure at the Government of Central Equatoria. No document needs to be submitted. BuildCo simply applies and pays the fees to the Survey Department, Procedure 5. Receive an inspection during construction by who issues the croquis on the spot. The cost of the croquis depends on the location engineers from the payam of the plot: Time: 1 day a. 1st class area: SDG 240; Cost: No cost b. 2nd class area: SDG 125; Comments: When BuildCo applies for a construction permit, the payam assigns c. 3rd class area: SDG 62. a team of public engineers to follow the project. The team is legally mandated to A commercial building such as the one BuildCo intends to build is most likely to be inspect the building when the excavations, roof, drains and overall construction have constructed in a 2nd class area. been completed, and to fill the progress report chart attached to the completed Form 34 previously submitted by BuildCo. However, in practice, these inspections Procedure 2. Obtain a building plan approval from the rarely happen for commercial buildings. The engineers might visit the site once to Construction Department of the Ministry of Physical ensure that the construction is supervised by a licensed engineer, and that BuildCo Infrastructure (State Government of Central Equatoria) has received a building permit, but carry little technical verification. Inspections are Time: 4 days most often made after an accident has happened. Cost: SDG 3,000 (for all businesses) Procedure 6. Request and receive a Certificate of Completion Comments: By law, construction companies must submit building plans to the Con- from the payam struction Department of the Ministry of Physical Infrastructure at the Government of Central Equatoria for approval. At the ministry, BuildCo must submit the following Time: 1 day documents: Cost: No cost a. Proof of land ownership (lease and search certificate issued by the High Court); Comments: By law, BuildCo is required to notify the payam when the construction b. Croquis (site plan) issued by the Survey Department; is completed, so as to receive a final inspection and a Certificate of Completion (Form number 9). However, in practice, few constructions request and receive this c. Building plans – architectural drawings, structural drawings, floor plans, eleva- certificate. tions, plumbing drawings and electrical drawings – which must abide by the building specifications established by the Council of Engineers in Khartoum. The Procedure 7. Obtain a permanent satellite phone connection engineer in charge of BuildCo’s project must add on the plan his/her name and his/her license number, provided by the Council of Engineers in Khartoum, so that Time: 3 days the Construction Department can check his/her credentials. Cost: SDG 16,575 (SDG 14,365 for the equipment + SDG 2,210 for the installation) Engineers at the Ministry check the building plans and recommend them to the Comments: There is no functioning fixed phone line system in Juba. Satellite director general for approval. When the plans have been approved and signed by phones are the only fixed infrastructure alternative. The phone is often plugged to a the Director General, BuildCo must pay the fees (SDG 3,000 for all businesses) at the fixed station connected by cable to a VAST antenna/dish. Revenue Office within the Ministry. Several companies already provide the necessary equipment in Juba. The equipment In practice, however, few construction companies seek to obtain a construction is available in situ, and only takes 2 days to obtain and one day to install. Engineers permit for private commercial buildings. Most construction companies obtain representing the phone company in Juba assist in the installation for the cost of SDG permits either for large public projects, constructions designed to house NGOs and 2,210 (US$1,000). The equipment necessary to obtain quality phone connection in international organizations, or projects needing a bank loan (for which a construc- Juba, including the phone, the station, the cable and the antenna/dish, costs about tion permit is required). SDG 14,365 (US$ 6,500). Many Southern Sudanese companies and entrepreneurs also use cellphones, with a Procedure 3. Obtain a construction permit from the payam (Juba subscription to one of the operators available in the country (Zain, Vivacell and Gem- county) tel). Since inter-network connectivity is still not very reliable, it is not uncommon for Time: 4 days entrepreneurs to own several cellphones. Cost: SDG 7,100 (SDG 200 for Form 34 + SDG 250 for Form 35 + SDG 150 for Comple- tion Certificate + SDG 6,500 for Construction Permit fee [SDG 5 per square meter of Procedure 8*. Apply for and obtain a borehole drilling permit the construction, paid every year]) from the Ministry of Water and Rural Irrigation (Government of Comments: BuildCo applies to the payam for a construction permit, pays the fees, Southern Sudan) and submits the plans approved by the Ministry of Physical Infrastructure, along with Time: 4 days Form 34, the application form for building permit. On the application, BuildCo must Cost: SDG 1,350 clarify whether the land is leasehold or freehold, specify the proposed use of the Comments: Before digging a well to obtain water. BuildCo must first obtain a land, provide an estimate of the construction value and spell out which materials will borehole drilling permit from the Ministry of Water and Rural Irrigation at the Gov- be used for the construction. ernment of Southern Sudan. To obtain the document, BuildCo must submit an appli- Engineers from the payam check the building plans and, granted that the construc- cation form, the registration certificate of the company (as issued by the Companies tion abides by the city’s construction requirements, transfer Form 34 and the Registry), the company’s articles of association as well as the designs of the borehole building plans to the council for consideration. Depending on when the council sits, to be drilled, and pay the fees (SDG 1,350). It may take 3 to 4 days for the ministry to it can take from 2 to 7 days for the building permit to be issued. If the council has no issue the permit, since the document needs to be signed by the Undersecretary, who objection, the payam issues four copies of the building permit (Form 35) signed by might not be immediately available. The permit is to be renewed – and the fees are the Executive Director. One is given to BuildCo, one to the town surveyors, and two to be paid – every year. remain with the payam. INDICATOR DETAILS 67 Procedure 9. Dig a borehole to obtain water Registering property Time: 10 days JUBA Cost: SDG 33,750 (average cost for a 80 meter deep borehole in a 2nd class area) Comments: The public water delivery system in Juba covers only a portion of the Property value: USD 61,500 = SDG 135,687 city. Juba’s treatment plant, located by the river Nile, has been rehabilitated recently, Data as of: November 2010 and can now deliver water to 20,000 people, according to the Ministry of Water and Rural Irrigation. If located close to the water pipeline system, a company can opt to Procedure 1. Verify land ownership with a survey engineer from buy and lay down the pipes necessary to connect the facility to the grid, but this is a the Survey Department of the Ministry of Physical Infrastructure rare occurrence. (State Government of Central Equatoria) Most construction companies hire private borehole drilling contractors to dig a Time: 2 days borehole of commercial capacity. The borehole company first conducts a survey Cost: No cost to determine how deep the well needs to be to reach water. In Juba, water can be Comments: Prior to closing the negotiations, it is common practice in Juba for the located as high as 40 meters underground and as deep as 120 meters underground. seller and the buyer to visit the plot of land together with a survey engineer from the The price of the borehole then depends on the location of the construction (1st class, Survey Department of the Ministry of Physical Infrastructure (Government of Central 2nd class, 3rd class area), the depth of the well and the quality of the equipment Equatoria). used (steel casing, head pump or water pump, pipes and overhead water tank). Before the visit, the seller has to show the following documents to the survey engineer: It is also common practice for companies to rely on water tanks, regularly filled by water trucks at the cost of SDG 5 per 200 liter drum. a. Copy of the lease; b. Copy of the Search Certificate obtained by the seller when acquiring the plot; Procedure 10*. Buy and install a generator to obtain power c. Copy of the Croquis (site map) obtained by the seller when acquiring the plot. connection The seller and the buyer bring the survey engineer to the site. The survey engineer Time: 2 days testifies that the plot of land belongs to the seller and shows the buyer the position Cost: SDG 99,450 (US$ 45,000 for a 140 kVA generator) and the dimensions of the plot. Comments: Currently, as 2 of the 3 power plants in Juba are no longer functional, Procedure 2. Obtain a fresh copy of the Search Certificate for Sale power cuts remain recurrent in many portions of the city, and most companies still rely on diesel fueled generator to ensure continuous electricity delivery. A 140 kVA from the Land Registry of the High Court generator cost on average US$ 45,000. Since most companies in Juba use a generator Time: 3 days to obtain electricity, Doing Business in Juba 2011 measures the related time and cost. Cost: SDG 4 (SDG 3 for administrative fee + SDG 1 for stamp duty) Public electricity delivery has nonetheless improved in Juba since 2005. Some Comments: After the negotiations between the seller and the buyer have been companies, especially if located in the city center or close to ministries, can apply completed and before drafting the deed of transfer with a lawyer, the seller must for electricity connection at the Southern Sudan Electricity Corporation (SSEC). At obtain a Search Certificate for Sale from the Land Registry at the High Court in Juba. the SSEC, BuildCo must apply to the Southern Sudan Electricity Corporation (SSEC) In order to obtain the Search Certificate for Sale, the seller has to pay the relevant by submitting a letter of request on headed paper carrying the seal of the company. fees in cash and the stamp duty and present the following documents: The request must specify the plot number, the name of the plot’s owner, as well as a. Copy of the lease; the area where the plot is located. After paying the filing fee and security deposit, BuildCo is issued Form 15, the official application form, which it must fill. b. Copy of the Search Certificate obtained by the seller when acquiring the plot; After the application has been made and the payment has been completed, the c. Copy of the Croquis (site map) obtained by the seller when acquiring the plot. Deputy Director for Distribution of the Southern Sudan Electricity Corporation (SSEC) The Search Certificate for Sale is valid for 7 days only from the moment it has been and his technical team come to BuildCo’s site to verify: issued. If the certificate is not used within 7 days, the seller would need to return the a. The physical location of the premises; outdated certificate to the Land Registry in order to obtain a new one. b. The material (poles, cables, switchboard) required to connect the building to the line; Procedure 3. Draft the deed of transfer with an advocate c. The consumption needs of the facility, which eventually determines what type Time: 1 day of meter is needed (1 phase, 3 phase, high current) and whether a transformer is Cost: SDG 250 necessary. Comments: After obtaining the Search Certificate for Sale from the High Court, the After the inspection, the team issues BuildCo a bill detailing what materials will be seller and the buyer meet an advocate along with two witnesses in order to draft a provided for free by the Electricity Corporation, and what equipment BuildCo will deed of transfer. have to purchase by itself, either from the Electricity Corporation (3 phase meter and In order to draft the deed of transfer, the advocate examines the following docu- switchboard) or from the market (poles and cables). ments: Once BuildCo has purchased the necessary equipment, it notifies the Southern a. Copy of the newly-issued Search Certificate of Sale obtained by the seller from the Sudan Electricity Corporation (SSEC), which sends a first team to connect the power Land Registry of the High Court; line and install the switchboard. A second team follows a few days later, to install b. Copy of the lease (in possession of the seller); and connect the meter. How long it takes for the teams to come depends on the work schedule of the SSEC. While it usually takes 1 week for the teams to come and c. Copy of the Croquis (site map) obtained by the seller when acquiring the plot; complete the work, it might sometimes take 2 to 3 weeks due to disruptions in the d. Identification documents of seller, buyer and their witnesses; supply of 3 phase meters. e. Affidavit authorizing the representative of the selling company to act on its behalf; f. Affidavit authorizing the representative of the buying company to act on its behalf. *This procedure can be completed simultaneously with previous procedures. Procedure 4. Obtain Form for Consent to Assign Premises held on Lease (Form 31A) from the Land Registry at the High Court Time: 1 day Cost: SDG 5 (SDG 3 for administrative fees + SDG 1 for application form + SDG 1 for stamp duty) Comments: After drafting the deed, the parties go to the Land Registry of the High Court to obtain Form 31A. This form has to be signed by the Director of Lands in the Ministry of Physical Infrastructure (Government of Central Equatoria) in order to authorize the transfer of the lease. 68 DOING BUSINESS IN JUBA 2011 Procedure 5. Obtain leasehold document from the Directorate of Land of the Ministry of Physical Infrastructure (State Government of Central Equatoria) Time: 7 days Cost: SDG 13,569 (10% of the property value) Comments: In order to change the name of the buyer on the document of lease, the buyer has to pay 10% of the property value (in cash) and submit the follow- ing documents to the Directorate of Land of the Ministry of Physical Infrastructure (Government of Central Equatoria): a. Form 31A (duly filled); b. Deed of transfer; c. Search Certificate for Sale (obtained by the seller in procedure 2). After authorizing the transfer of the leasehold, the Directorate of Land issues three documents to the buyer: a. New lease (bearing the name of the buyer); b. Approval of the Land Authority (Form 31A, signed by the Director of the Land's Authority); c. Receipt of payment. Procedure 6. Register the transfer of the lease at the Land Registry of the High Court and obtain Search Certificate Time: 2 days Cost: SDG 3,392 (2.5% of the property value) Comments: In order to register the transfer of the leasehold in the name of the buyer, the buyer has to submit the following documents to the Land Registry of the High Court: a. New lease (bearing the name of the buyer); b. Approval of the Land Authority (Form 31A, signed by the Directors of the Land Authority); c. Receipt of payment from the Directorate of Land. Depending on the time passed from the moment when the deed of transfer was signed by the parties to the moment when the transfer is registered at the Land Registry, the following fees apply: a. 2.5% of the property value (1 day to 6 months); b. 4% of the property value (6 months to 1 year); c. 6% of the property value (older than 1 year). Fees are paid in cash at the Land Registry of the High Court. Upon receipt of pay- ment, the Registrar transfers the name of the owner in the register books and keeps a copy of the document of transfer in the Box File. Subsequently, the Registrar issues the buyer with a Search Certificate attesting that the land now belongs to the buyer. Procedure 7. Obtain a croquis (site map) from the Survey Department of the Ministry of Physical Infrastructure (State Government of Central Equatoria) Time: 2 days Cost: SDG 2,714 (2% of the property value) Comments: In order to complete the transfer of land, the buyer has to obtain a new croquis (site map) from the Survey Department of the Ministry of Physical Infrastruc- ture (Government of Central Equatoria). This document has to be attached to the other documents officializing the transfer of the lease under the name of the buyer (i.e. Search Certificate issued by the High Court in procedure 6 + Leasehold issued by the Land Directorate in procedure 5). In order to obtain this document, the buyer has to present the following documents to the Survey Department: a. Copy of the Lease (bearing the name of the buyer); b. Copy of the Search Certificate. In order to obtain the croquis, the buyer has to pay a fee equal to 2% of the property value in cash to the Survey Department. Upon receipt of payment, the survey engi- neer will draft a croquis and issue it to the buyer. The buyer has the right to request the survey engineers to visit the plot before drawing the croquis. This visit does not carry any additional cost and takes place the same day in which the croquis is issued. After receiving the croquis, the buyer attaches it to the other documents attesting the transfer of the lease. The transfer of property is now complete. *This procedure can be completed simultaneously with previous procedures. INDICATOR DETAILS 69 Getting credit City: Juba Private credit bureau Public credit registry Indicator Depth of credit information index (0-6) 0 Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade creditors or utility No No 0 companies as well as financial institutions? Are more than 2 years of historical credit information distributed? No No 0 Is data on all loans below 1% of income per capita distributed? No No 0 Is it guaranteed by law that borrowers can inspect their data in the largest credit No No 0 registry? Coverage 0 0 Number of individuals 0 0 Number of firms 0 0 Strength of legal rights index (0-10) 2 Can any business use movable assets as collateral while keeping possession of the assets; and any financial institu- Yes tion accept such assets as collateral? Does the law allow businesses to grant a non possessory security right in a single category of revolving movable No assets, without requiring a specific description of the secured assets? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requir- No ing a specific description of the secured assets? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, No proceeds or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations No and debts can be secured by stating a maximum amount rather than a specific amount between the parties? Is a collateral registry in operation that is unified geographically and by asset type as well as indexed by the grantor's No name of a security right? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? Yes Does the law authorize parties to agree on out of court enforcement? No 70 DOING BUSINESS IN JUBA 2011 Protecting investors City: Juba Strength of investor protection index (0-10) 2.7 Disclosure index 3 What corporate body provides legally sufficient approval for the transaction? (0-3) 2 Immediate disclosure to the public and/or shareholders (0-2) 0 Disclosures in published periodic filings (0-2) 0 Disclosures by Mr. James to board of directors (0-2) 1 Requirement that an external body review the transaction before it takes place (0=no, 1=yes) 0 Director liability index 0 Shareholder plaintiff's ability to hold Mr. James liable for damage the buyer-seller transaction causes to the company (0-2) 0 Shareholder plaintiff's ability to hold the approving body (the CEO or board of directors) liable for damage to the company (0-2) 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff (0-2) 0 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff (0=no, 1=yes) 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff (0=no, 1=yes) 0 Whether fines and imprisonment can be applied against Mr. James (0=no, 1=yes) 0 Shareholder plaintiff's ability to sue directly or derivatively for damage the transaction causes to the company (0-1) 0 Shareholder suits index 5 Documents available to the plaintiff from the defendant and witnesses during trial (0-4) 2 Ability of plaintiffs to directly question the defendant and witnesses during trial (0-2) 1 Plaintiff can request categories of documents from the defendant without identifying specific ones (0=no, 1=yes) 0 Shareholders owning 10% or less of buyer's shares can request an inspector investigate the transaction (0=no, 1=yes) 1 Level of proof required for civil suits is lower than that for criminal cases (0=no, 1=yes) 1 Shareholders owning 10% or less of buyer's shares can inspect transaction documents before filing suit (0=no, 1=yes) 0 Paying taxes City: Juba Payments Notes on Time Statutory Total tax rate Notes on Tax or mandatory contribution (number) payments (hours) tax rate Tax base (% of profit) total tax rate Business Profit Tax quarterly advanced 5 56 10% taxable income 4.8% (corporate income tax) payments VAT/GST 12 84 15% value added - not included < SDG 300 = 0% Personal Income Tax 12 48 SDG 301–5,000 = 10% gross salaries - not included > SDG 5,001 = 15% Social security contributions 12 30 17% gross salaries 19.2% interest earned on Tax on interest earned - - 10% 0.3% bank account Company license 1 - SDG 800 0.5% (Central Equatoria State) State Tax Identity Card 1 - SDG 90 0.1% (Central Equatoria State) State Tax Clearance Certificate 1 - SDG 50 0.0% (Central Equatoria State) State Retail Trading License 1 - SDG 200 0.1% (Central Equatoria State) State Fuel tax 1 - 15% Fuel consumption 0.5% (Central Equatoria State) Fuel tax Paid jointly with - - 0.5% Fuel consumption 0.0% (Government of Southern Sudan) State tax Total 46 218 25.5% INDICATOR DETAILS 71 Trading across borders Juba trading through the port of Mombasa, Kenya Export documents Time Cost (days) (US$ per container) • Bill of lading • Certificate of origin Exporting • Commercial invoice Documents preparation 28 275 • Customs export declaration Customs clearance and technical control 4 375 • Export Form and Letter from commercial bank • Letter of approval to export Ports and terminal handling 6 375 • Packing list Inland transportation and handling 14 4,000 • Pre-shipment inspection clean report of findings Export total: 52 5,025 • Transit documents Importing Import documents • Bill of lading Documents preparation 34 525 • Certificate of origin Customs clearance and technical control 3 430 • Commercial invoice Ports and terminal handling 6 390 • Customs import declaration • Exit Pass (Gate Pass) Inland transportation and handling 17 8,075 • Import Form and Letter from commercial bank Import total: 60 9,420 • Letter of approval to import • Packing list • Pre-shipment inspection clean report of findings • Technical standard/health certificate • Transit documents Enforcing contracts City: Juba Value of claim: SDG 5,437 Indicator Procedures (number) 46 Time (days) 111 Filing and service 21 Trial and judgment 60 Enforcement of judgment 30 Cost (% of claim) 26 Attorney cost (% of claim) 13.9 Court cost (% of claim) 7.1 Enforcement cost (% of claim) 5 *Claim assumed to be equivalent to 200% of income per capita. 72 DOING BUSINESS IN JUBA 2011 ANNEX: EMPLOYING WORKERS 72 Annex: Employing workers Rigidity of employment index Answer Difficulty of hiring index Are fixed-term contracts prohibited for permanent tasks? No What is the maximum length of a single fixed-term contract? (months) 24 What is the maximum length of fixed-term contracts, including renewals? (months) 48 What is the minimum wage for a 19-year old worker or an apprentice? (US$/month) 90.6 What is the ratio of minimum wage to average value added per worker? 0.5 Rigidity of hours What is the standard workday in manufacturing? (hours) 8 What is the minimum daily rest required by law? (hours) n.a. What is the maximum overtime limit in normal circumstances? (hours) 4 hours a day, 12 hours a week What is the maximum overtime limit in exceptional circumstances? (hours) 4 hours a day, 12 hours a week What is the premium for overtime work? (% of hourly pay) 50 Are 50-hour workweeks allowed for 2 months a year in case of increase in production? Yes What is the maximum number of working days per week? 6 What is the premium for night work? (% of hourly pay) 0 What is the premium for work on weekly rest day? (% of hourly pay) 0 Are there restrictions on night work and do these apply when continuous operations are economically necessary? No Are there restrictions on "weekly holiday" work and do these apply when continuous operations are economically necessary? No What is the paid annual vacation (in working days) for an employee with 9 months of service? 0 What is the paid annual vacation (in working days) for an employee with 1 year of service? 20 What is the paid annual vacation (in working days) for an employee with 5 years of service? 25 What is the paid annual vacation (in working days) for an employee with 10 years of service? 25 What is the paid annual vacation (in working days) for an employee with 20 years of service? 30 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 23.3 Difficulty of redundancy Is the termination of workers due to redundancy legally authorized? Yes Must the employer notify a third party before terminating one redundant worker? Yes Does the employer need the approval of a third party to terminate one redundant worker? Yes Must the employer notify a third party before terminating a group of 9 redundant workers? Yes Does the employer need the approval of a third party to terminate a group of 9 redundant workers? Yes Is there retraining or reassignment obligation before an employer can make a worker redundant? No Are there priority rules applying to redundancies? No Are there priority rules applying to re-employment? No Redundancy costs (weeks of salary) What is the notice period for redundancy dismissal after 9 months of continuous employment? (weeks of salary) 4.3 What is the notice period for redundancy dismissal after 1 year of continuous employment? (weeks of salary) 4.3 What is the notice period for redundancy dismissal after 5 years of continuous employment? (weeks of salary) 4.3 What is the notice period for redundancy dismissal after 10 years of continuous employment? (weeks of salary) 4.3 What is the notice period for redundancy dismissal after 20 years of continuous employment? (weeks of salary) 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in salary weeks) 4.3 What is the severance pay for redundancy dismissal after 9 months of employment? (weeks of salary) 0 What is the severance pay for redundancy dismissal after 1 year of employment? (weeks of salary) 0 What is the severance pay for redundancy dismissal after 5 years of employment? (weeks of salary) 21.7 What is the severance pay for redundancy dismissal after 10 years of employment? (weeks of salary) 43.3 What is the severance pay for redundancy dismissal after 20 years of employment? (weeks of salary) 113.7 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in salary weeks) 21.7 Acknowledgments Contact details for local partners are available on the Doing Business website at http://subnational.doingbusiness.org Doing Business in Juba 2011 was produced We would like to make a special mention by a World Bank Group team led by Brice to Apollonia Mathia, who contributed to Richard. The report was prepared under the project as communications officer at the direction of Mierta Capaul within the the IFC local office and who sadly passed context of a wider Investment Climate away on March 18, 2011. project led by Catherine Masinde. The The report website (http://www.do- team comprised Goran Amidzic, Jean ingbusiness.org/Juba) was developed by Lubega-Kyazze, Ngozi Njemanze, Mikiko Graeme Littler, Hashim Zia, and Preeti Imai Ollison, Pilar Sánchez-Bella, and Endlaw. The report was edited by Cintra Alessio Zanelli. Scott and designed by G. Quinn Informa- Alwaleed Alatabani, William Bat- tion Design. taile, David Bridgman, and Ismail Rad- This project was made possible wan reviewed the full text. Peer review thanks to the support of the Ministry of comments were received from Alejandro Investment of the Government of South- S. Alvarez de la Campa, Dobromir Chris- ern Sudan. Special thanks go to Joseph tow, Laurent Olivier Corthay, Iva Hamel, Hassan and James Luate from the Min- Ankur Huria, Andrei Mikhnev, Thomas istry of Investment; Martin Sebit Hakim Moullier, Raha Shahidsaless, Richard from the Directorate of Trade of the State Stern, Uma Subramanian, and Justin Yap. Government of Central Equatoria; and Santa Maria Aguti, Karim Ouled Paul Tesloach Kulang and Vincent Wil- Belayachi, Frederic Bustelo, Cesar Chap- liams from the Business Registry. arro, Amitava Chaudhuri, Alejandro Es- The project was funded by the United pinosa Wang, Ernesto Franco-Temple, States Agency for International Develop- Betina Hennig, Zenaida Hernandez, Nan ment (USAID). Jiang, Thomas Kenyon, Aikaterini Leris, The team wishes to express its spe- Jean Michel Lobet, Jana Malinska, Valé- cial gratitude to the 94 lawyers, accoun- rie Erica Maréchal, Frédéric Meunier, tants, architects, engineers, entrepreneurs, Trimor Mici, William Scott Mut, Mada- freight forwarders, judges, public officials lina Papahagi, Maria Camila Roberts, and international experts who generously Pilar Salgado-Otonel, Nadine Shamounki participated in this project. The names Ghannam, Tea Trumbic, Yutaka Yoshino of contributors who have agreed to be and Yasmin Zand provided valuable as- publicly acknowledged are listed on the sistance at various stages of the project. following page. 74 DOING BUSINESS IN JUBA 2011 P U B L IC OF F IC IA L S Richard Abe General Oyay Deng Louis Kwot Mary Aketch Taban Mil Reech Samuel Deputy Chief of Customs, Minister, Ministry of Director, Ministry of Director, Directorate Head of Inspection, Nimule Customs Investment, Government of Physical Infrastructure, of Private Sector Directorate of Taxation, Southern Sudan State Government of Development, Ministry of Ministry of Finance at the Yool Akau Central Equatoria Commerce, Government of Nimule border Brigade General of Gabriel Garang Deng Southern Sudan Customs (Chief in Charge), Director of Taxation, Laku Loggale Legge Kalisto Lado Severio Nimule Customs Ministry of Finance, Counsel General, Samuel Modiyand Director General of Land Government of Southern Ministry of Legal Affairs Head, Revenue Authority and Town Planning, Land Benjamin Akol Sudan and Constitutional (Juba Bridge checkpoint), Directorate, Ministry of Member, Land Commission Development, Government State Government of Physical Infrastructure, Akuei Deng of Southern Sudan Central Equatoria State Government of Mathews Loch Akon Undersecretary, Ministry Payam Director, Central Equatoria of Investment, Government Ijjo Peter Lemin Edrid Mohamed Juba Payam of Southern Sudan Employment inspector, Head of Station, Standard Wilson Walani Sokiri Delfino Abbas Alex Ministry of Labor and Office, Government of Director for Generation, Paul Gove Public service and Human National Unity Area Director, Southern Administrator, Land Head of the Station, Registry, Judiciary of Resources Development, Sudan Electricity Ministry of Commerce at Government of Southern Steven Pitya Lako Mori Corporation (SSEC) Southern Sudan the Nimule border Investment officer, Sudan Gabriel Aliga Ministry of Investment, George Lado Tartisio Daniel Gwagwe Hellen Achiro Lotara Government of Southern Justice of the Court of Program Coordinator, Director, Administration Southern Sudan Business Director general, Sudan Appeal, Land Registry, and Finance, Bank of Directorate of Labor Judiciary of Southern Forum (SSBF) Southern Sudan Liberio Lado Mori and Industrial Relations, Sudan Silvas Clark Amozay Ministry of Labor and Deputy Clerk, State Martin Sebit Hakim Legislative Assembly David Chan Thiang Director general, Director, Commerce and Public service and Human Directorate of Housing Resources Development, Director, Southern Supply, Directorate of Ali Musa Sudan Centre for Census, and Urban Development, Trade, State Government Government of Southern Director, Federal Tax Ministry of Housing, Sudan Statistics and Evaluation of Central Equatoria Authority (SSCCSE) Physical Planning and Emmanuel Parmenas Lupai Environment, Government Mubarak Hassam Luka N. Nasdna Cosmas Juma Tranquillo of Southern Sudan Land Registrar, Land Director, operations and Director of Labor, maintenance, Ministry Controller of Judges Registry, Judiciary of Ministry of Labor, affairs, Land Registry, Manhien Bol Southern Sudan of water resources and Public Service and Director, Ministry of Irrigation, Government of Judiciary of Southern Human Resources, State Sudan water resources and Joseph Hassan Southern Sudan Government of Central Irrigation, Government of Director, Ministry of Kuot Madhor Equatoria Emmanuel Matayo Wani Southern Sudan Investment, Government of Director General, Southern Sudan Director, Directorate of Ukuhi Paul John Buol External Trade, Ministry Directorate of Housing Program Officer, and Construction, Deputy Head, Ministry of Galdino Hillary of Commerce, Government Southern Sudan Business Commerce at the Nimule Surveyor, survey of Southern Sudan Ministry of Physical Forum (SSBF) Infrastructure, State border department, Ministry of Justice Madol Physical Infrastructure, Winston Paulo Government of Central Lino G. Warkuk Chol State Government of Judge, Supreme Court Surveyor, survey Equatoria Inspector For Industrial Central Equatoria Makune Majole department, Ministry of John Akuar Wilton Development, Directorate Physical Infrastructure, of Industry, Ministry of Aquilino Itira Secretary General, South Sergeant, Nimule Border Sudan Concern Citizens State Government of Traffic Police Commerce, Government of Director, Customs Central Equatoria Southern Sudan Juba Station International Association (SSCCIA) Justice Kukurlopita Marino Deng Gau Den Michael Amule Joseph Pitia Member, Land Commission Commissioner general, Judge, Court of Appeal, Revenue Authority, State Central Equatoria Circuit Government of Central Equatoria ACKNOWLEDGMENTS 75 P R I VAT E P ROF E S SIONA L S A N D OT H E R SP E C IA L I ST S Alemu Aberra Paul Gitonga William E. Kosar Prasad Reddy Managing Director, Treasury Advisor, Deloitte Legal & Legislative Manager, Water Africa Buffalo commercial bank Advisor, USAID, Services Limited Elizabeth Gresty “Strengthening Ian Alsworth-Elvey Advisor, USAID “Sudan Institutional Structures Joseph Tibaijuka Managing Director, Core Institutions” project, in Southern Sudan” Accounting firm, Goldstar Southern Sudan Beverages Deloitte Project and Partners Certified Limited (SSBL) Public Accountants Francois Henepin Dengtiel Kuer Charles Anyama General Manager, Advocate, Southern Sudan Edmund Tumusiime Consultant, Southern Southern Sudan, SDV Associated Advocates Architect & Partner, Sudan Chamber of Logistics Astroid Building Commerce, Industry & David Taban Lasu Consultancy Agriculture Mande Johnson Operations Manager, Administrator, Lobo Civicon construction Ramadan Waku Kennedy Bangasu Bakorodi Investments Company Clearing Agent, Dolphin Managing Director, Joseph Philip Lokuku Clearing General business, Bangasu John Chaw Juk Chairman, Jophco - Star Overseas Manager, South Sudan Engineering and Yacoub Kenyi Leju Yanga Investment Company Construction Member, Chamber of Solomon Chaplain (Nimule border) Commerce, Southern Sudan Chairman / Managing Dong Samuel Luak Chamber of Commerce, Director, Rock City Wani Mathias Jumi Advocate, Dong S. Kur Co. Industry & Agriculture Investments Advocate, Lomoro & Co. Advocates Advocates Mansuk Denis Yata Simon Akuei Deng Evans Wambaki Maina Managing Director / Secretary General, Ngor Ayuel Kacgor Assistant Finance Clearing Agent, Dolphin Southern Sudan Chamber C.E.O., Regional Trade and Manager, Equity Bank Clearing of Commerce, Industry & Contracting Co Ltd Agriculture Lomoro Robert Mullen Charles Yeka Yasmin Hamed Kamis Advocate, Lomoro & Co. Manager, Rhino Stars Petro Maluk Deng Advocate, Yasmin & Anter Advocates Forwarder Corporate Relationship Advocates Manager, KCB Sudan Ltd Ituu Ngacha Guy Keeble Head of Credit, KCB Sudan Achai Bom Deng Logistics Manager, Freight Ltd Legal advisor, KCB Sudan and Logistics, Kuehne + Ltd Nagel Ltd John Nsubuga Audit manager, Goldstar Roda Allison Dokolo Rup Khadka and Partners Certified Protection Assistant, Tax Collection Advisor, Public Accountants UNHCR USAID “Sudan Core Institutions” project, Theo Osogo Nazih M.S. Farhat Deloitte Treasury Manager, Equity Lawyer, Fattouch Bank Investment Group Joseph Kinyua Credit Manager, Equity Aaron Qayumi Jashinto Genye Bank Project Technical Executive Director, Coordinator, Deloitte CEFAD Lawrence Korbandy Advocate and P. Ravi Paul Gitahi Commissioner for Business Unit Manager Executive Director, Oaths, Southern Sudan Logistics, Interfreight Equity Bank Association of Advocates (Southern Sudan) LTD F S OU T TO HE EN R M N N ER SU GOV DAN GOSS The Government of Southern Sudan