Afghan provinces can improve their ease of doing business by learning from each other, WBG report

Stocks and Financial Services Press Releases Thursday May 18, 2017 09:35
KABUL--18 May--World Bank

KABUL, May 17, 2017 – Entrepreneurs in Afghanistan can obtain a permit for setting up a business with relative ease, but they face considerable hurdles in other areas which are important for a firm to start up and operate, says the World Bank Group's Subnational Doing Business in Afghanistan 2017 report, released today.

Regulatory quality and efficiency vary considerably between Kabul, and the provinces of Balkh, Herat, Kandahar and Nangarhar. The largest business cities covered by the report are Mazar-i-Sharif, Herat, Kandahar and Jalalabad.

Afghanistan's first Subnational Doing Business study measures business regulation in four areas: Starting a Business, Dealing with Construction Permits, Getting Electricity and Registering Property. It finds a number of good business practices which could be expanded across different provinces in Afghanistan.

Kabul leads in Starting a Business and Getting Electricity, as a result of reforms that were implemented only in the capital. Rolling out these reforms across Afghanistan would benefit entrepreneurs in other provinces and urban centers. Stronger local governments would enhance efficiency in the provinces and, at the same time, free up resources in Kabul, where many bureaucratic processes are centralized.

In those areas of regulation where there is more subnational autonomy, some local agencies offer examples of good practice in how to reduce the time, cost and complexity of bureaucratic processes: Kandahar ranks first in Dealing with Construction Permits and Registering Property, while Balkh comes in a steady second in all four areas measured by the report.

During 2016, the report notes, Afghan authorities took important steps to make it easier to do business. One area of focus was the process of starting a business, in which Kabul and each of the provinces benchmarked perform well, surpassing the global average performance. To improve efficiency and safety in the construction industry, the Kabul Municipality recently introduced a one-stop shop for issuing construction permits and adopted a regulation specifying the rules and requirements for getting final approval for a newly constructed building. A pilot project is being promoted in Herat and Kabul to make registering property an administrative process rather than one managed by the courts.

"Reform-minded local officials can achieve tangible improvements by replicating good practices already used in different provinces in Afghanistan. Reducing the time, cost and complexity of bureaucratic process will stimulate local businesses and help bring much-needed prosperity," said Mierta Capaul, Manager of the Subnational Doing Business program at the World Bank.

Promoting learning opportunities for national, provincial and municipal policy makers to share their good practices while learning from others about what has worked better elsewhere would be highly beneficial.
The Subnational Doing Business in Afghanistan 2017 report was produced by the Global Indicators Group of the World Bank Group as a component of the Investment Climate Program in Afghanistan.

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