Building a business-enabling environment depends on knowing what challenges businessmen face, Mona El-Fiqi reports Since the international reports and indicators that assess business activity and the ease of doing business have become a major benchmark that any investor around the world refers to when he makes a decision to invest, Alexandria Business Association (ABA) designed an index to show the ease or otherwise of doing business in Egypt. The first issue of the "Islah index", entitled "A clearer vision for a brighter future" and issued in May, was welcomed by government officials who considered it a good step towards revealing the private sector's perception of the business climate in Egypt. In a press conference held last week in Alexandria, Rachid Mohamed Rachid, minister of trade and industry, said the government wants to know the concerns of the private sector about the business environment and the obstacles facing investors. Rachid asserted that in the coming period the government will take the problems mentioned in the Islah index into consideration when deciding on new policies. Rachid added that Islah index enjoys great credibility as it is put together by the private sector. Mohamed Ghatori, ABA chairman, said that Islah is the outcome of cooperation between civil society and investors to evaluate the business climate from a businessman's perspective. Ghatori added that index was issued by the ABA in cooperation with the International Finance Corporation (IFC), a member of the World Bank Group, the General Authority for Investment and Free Zones and the University of Alexandria. Last week, the ABA signed a memorandum of understanding with the Egyptian-French Chamber of Commerce to cooperate in publishing the second issue of the index. The objective of the new index is to identify specific challenges facing the business environment based on the experience of ABA members. International reports confirm that business conditions in Egypt are improving, the World Bank's "Doing Business Report 2008" putting Egypt at the forefront of the top 10 reformers out of 178 countries. According to the World Bank's "Doing Business Report 2009", Egypt ranked 114th out of 181 countries, compared to 125th and 165th out of 175 countries in 2008 and 2007 respectively. Nonetheless, at 114th, there is room for improvement. Overall, the Islah index concluded that despite the economic reform policies adopted by the government, businessmen face many problems when doing business. The index stated that economic development still hinges on integrated reform measures by the government, business community and civil society. The Islah index was based on a questionnaire carried out by ABA members concerning policy areas that affect their economic performance. The policy areas included starting businesses, paying taxes, dealing with licences, registering property, protecting investors and dealing with banks. According to the Islah index, businesses encounter many obstacles in some areas, such as obtaining building permits, particularly inside cities, while investors are satisfied with governmental policies in other areas, such as paying taxes. Businessmen complained of lengthy and complicated procedures that often overlap. For example, the approval of 14 different authorities is needed in order to receive a building permit. Difficulties were also revealed in the matter of registering property. The average time spent to register a property was 252 days. Concerning employer policies, dealing with government authorities such as the Labour Office, Social Security Office and the Public Health Insurance Office were the most difficult challenges facing ABA members. Regarding banks, an identified problem was the lack of risk sharing. Relatively high interest rates, fees and charges and the necessary collateral required were major obstacles addressed. Islah indicators also revealed that lawsuits related to enforcing contracts through courts take 800 days on average to settle. Indicators showed that 73 per cent of ABA members resort to arbitration to save time. Concerning outside trading, exporters were more satisfied with procedures than importers, who face time-consuming procedures with goods requiring inspection by a number of bodies before release.
