THE COST OF BUSINESS REGISTRATION AND LICENSING IN ETHIOPIA AND OPTIONS FOR REFORM THE COST OF BUSINESS REGISTRATION AND LICENSING IN ETHIOPIA AND OPTIONS FOR REFORM March 2016 Disclaimer The organizations (that is, IBRD, IFC, and MIGA), using their best efforts in the time available, have endeavored to provide high-quality services hereunder and have relied on information provided to them by a wide range of other sources. However, they do not make any representations or warranties regarding the completeness or accuracy of the information included this report, or the results that would be achieved by following its recommendations. About the World Bank Group’s Trade and Competitiveness Global Practice (T&C GP) The Trade & Competitiveness Global Practice (T&C GP) provides policy advice and lending support to help client countries increase trade and investment, improve productivity and competitiveness at the national and industry levels, and create an inclusive, competitive private sector. The T&C GP works with governments to identify policies that promote growth, while helping identify and remove impediments to the smooth functioning of markets (such as gaps in coordination, undersupply of public goods, non-competitive market structures, and regulatory constraints). The Ethiopia Investment Climate Program, managed by the World Bank Group’s Trade and Competitiveness Global Practice aims at streamlining and simplifying high priority regulatory practices and processes burdensome to the private sector and address investment climate issues that are holding back investment and productivity growth in Ethiopia. Acknowledgments The WBG would like to thank the Ministry of Trade, and other Government Ministries and agencies for their support while preparing this report. The report is developed as part of the WBG’S Ethiopia Investment Climate Program. Mamo Mihretu, Program Manager of Ethiopia Investment Climate Program, and Yohannes Seifu, Business Regulation Project Lead, coordinated the overall work. This report is developed as a result of a study conducted by BKP Development Research and Consulting GmbH. Fikremarkos Merso, Derk Bienen, Yoseph Endeshaw, Mandefrot Belay, Yalew Teshome and Blen Sahilu contributed different section of the report. Petter Lundkvist provided useful guidance. We gratefully acknowledge the financial contributions made by Department of Foreign Affairs, Trade and Development (DFATD) of Canada, Sweden International Development Agency (SIDA), Department for International Development (DFID) and the Italian Cooperation. Contents 1 Introduction 1 2  Estimating the Cost of Business Registration and Licensing to Business 3 2.1 Methodological Considerations 3 2.2 Estimate of the Cost to Business of the Registration and Licensing Regime 4 2.2.1 The Macro Perspective: Total Fees and Compliance Costs 4 2.2.2 The Business Person’s Perspective: Fees and Compliance Costs per License 5 3 Key Findings and Recommendations for a Streamlined Business Licensing Regime in Ethiopia 9 3.1 Core Conceptual Issues and Recommendations 9 3.1.1 Too Many and Over-Specified Business Licenses 9 3.1.2 Lack of Compatibility between the Esic and the Sectoral Laws 11 3.1.3 Application of Competence Certification for Almost All Licenses 11 3.1.4 Overly Demanding Requirements for Competence Certification 14 3.1.5 No Necessity for Renewal of Commercial Registration 14 3.2 Operational Issues and Recommendations 15 3.2.1 Weaknesses in the Practice of Trade Name Registration 15 3.2.2 Evidence of Physical Address 16 3.2.3 Redundancy of Requirements for Registration and Licensing/Requirements with No Clear Legal Basis 16 3.2.4 Lack of Agency Coordination and Integrated Systems 17 3.2.5 Insufficient Institutional Capacity 18 3.2.6 Awareness Creation and Participation 18 3.2.7 Time Required to Obtain a License 19 3.2.8 Penalties 19 4  Summary and Conclusions 21 Annexes 25 Annex 1: Licenses for Which Competence Certificates Are Proposed to Be Abolished 25 Annex 2: Suggested Simplified List of Licenses 37 Annex 3: Detailed Analysis of Licenses 47 iii Acronyms BoTI Addis Ababa Bureau of Trade and Industrial Development CIDCA Construction Industry Development and Control Authority CRBLP Commercial Registration and Business Licensing Proclamation E.C. Ethiopian Calendar EEA Ethiopian Electric Agency EHDA Ethiopian Horticulture Development Agency EIA Environmental impact assessment ERCA Ethiopian Revenue and Customs Authority ESIC Ethiopian Standard Industrial Classification ETB Ethiopian Birr (currency) EWCA Ethiopian Wildlife Conservation Authority FMHACA Administration and Control Authority GDP Gross Domestic Product GoE Government of Ethiopia IFC International Finance Corporation MoA Ministry of Agriculture MOCIT Ministry of Communications and Information Technology MoCT Ministry of Culture and Tourism MoE Ministry of Education MoEF Ministry of Environment and Forestry MoFED Ministry of Finance and Economic Development MoI Ministry of Industry MoT Ministry of Trade MoUDC Ministry of Urban Development and Construction MoWIE Ministry of Water, Irrigation and Energy OECD Organisation for Economic Cooperation and Development SCM Standard Cost Model TIN Tax Identification Number TPCPP Trade Practices and Consumer Protection Proclamation v 1 Introduction Following the regime change in 1992, the Government of 189 in 2014.2 The cost of starting a business in terms of Ethiopia (GoE) has implemented a series of reform of percent of income per capita is 100.1—by far higher measures towards a market oriented economy, including than the Sub-Saharan African average which is 67.4.3 deregulation of domestic prices; liberalization of foreign Meanwhile, a number of countries have embarked trade; privatization of public enterprises; abolition of all on regulatory reform including simplification of the export taxes and subsidies; devaluation of the exchange entry requirements, and some of them have achieved rate followed by the introduction of inter-bank foreign encouraging results in terms of creating a conducive currency markets and the determination of exchange environment for business. These countries reformed rates based on market forces; promulgation of a liberal their licensing regimes and reduced costs, streamlined investment law for the promotion and encouragement procedures and made doing business easier. In 2009, of private investment, both foreign and domestic; Rwanda revamped its business start-up process by issuance of a new labor law; and strengthening and establishing a one-stop shop for business registration; enhancing institutional support for the export sector as a result of this and other reforms, Rwanda is now (in through strengthening/revitalizing existing institutions Doing Business 2014) ranked as the 9th best performer and establishing such new institutions. globally for starting a business. Major reforms of licensing systems have also taken place in several other The development policies adopted by the GoE have African countries such as Burundi, Liberia, Madagascar recognized the private sector as the engine of the and Sierra Leone, as well as, to a lesser extent, Kenya economy and pledged to nurture and support private or South Africa. Although Ethiopia’s performance has sector development in the country. However, the role improved markedly since 2010, much remains to be of the private sector in the economy remains rather done in comparison with regional leaders (Figure 1). weak. A number of studies highlighted the challenges of doing business in the country. For instance, the Against this background, the GoE has been working country’s rank in the World Bank Doing Business with the Investment Climate Department of the World indicator declined from 124 in 2013 to 125 in 2014.1 Bank Group’s International Finance Corporation (IFC) With regard to starting a business in the country, to improve the country’s business environment. Part Ethiopia’s rank dropped from 162 in 2013 to 166 out of the program includes a comprehensive review of business registration, licenses and permits required 1 World Bank (2014), “Doing Business in Ethiopia, 2014.” Available at http://www.doingbusiness.org/data/ 2 Ibid. exploreeconomies/ethiopia (last accessed on 22 January 2014). 3 Ibid. 1 Figure 1: Ethiopia’s Performance for Starting Businesses Compared to Peers, Distance to Frontier, 2006–20144 100 90 80 70 60 50 40 30 DB 2006 DB 2007 DB 2008 DB 2009 DB 2010 DB 2011 DB 2012 DB 2013 DB 2014 New Zealand Rwanda Madagascar Burundi South Africa Ghana Tanzania Kenya Ethiopia Uganda Source: Doing Business 2014, http://www.doingbusiness.org/data/exploretopics/starting-a-business/frontier. by public agencies of private businesses operating in licenses; a detailed analysis at a sector level is presented the country, as well as collection of data on private in Annex 3. sector compliance costs, and recommendations for This report consists of two main parts: in Chapter 2, streamlining. The study was commissioned to a we present an estimate of the costs which the team of experts from BKP Development Research registration and licensing regime in Ethiopia imposes and Consulting GmbH with the objective to arrive on the business sector in the country. Chapter 3 then at specific recommendations for streamlining of the presents the key findings and recommendations based different licensing procedures based on a comprehensive on the detailed analysis of Ethiopia’s licensing regime review of the procedures and compliance costs with a and implementation practice, the details of which are view to creating a more business friendly environment, presented in the Inventory of Business Licenses. A brief thereby enhancing competitiveness and ultimately concluding chapter summarizes the recommendations promoting economic growth in Ethiopia. The study and provides an estimate of the positive effects which has been prepared over the period October 2013 to they could have both for businesses and Government.4 April 2014. This report presents a summary of the major findings 4 The score illustrates the distance of an economy to the about the business registration and licensing regime “frontier” related to the “starting a business” indicator, which represents the best performance observed across all in Ethiopia and develops recommendations for economies and years included since 2005. An economy’s streamlining and improving it. The report is based on distance to frontier is indicated on a score from 0 to 100, where 0 represents the lowest performance and 100 the an in-depth review of the country’s more than 1,300 frontier, i.e., the best performance possible. 2  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Estimating the Cost of Business 2 Registration and Licensing to Businesses 2.1 Methodological licensing agencies and private sector representatives. For calculating total compliance costs, the IFC methodology considerations (Standard Cost Model, SCM) has been applied to the Business registration and licensing entail costs for extent possible.6 Due to information constraints, as businesses. These include not only the fees that have to described below, a simplified calculation method was be paid to the issuing agencies but also administrative adopted. Thus, for each individual license type for costs directly related to the process of obtaining a which the necessary data could be obtained, compliance license and registration, particularly the time required costs of an individual business were calculated as: for registering and obtaining licenses, as well as the Ci 5 [F 1 (Hi  Si) 1 Ai] costs required for obtaining documents, authentication, support services, etc.5 In addition to these direct where Ci: administrative compliance cost of costs, the application for a license may also require license to business i; F: fee to be paid for the substantive compliance costs, e.g., if compliance with license; Hi: working time of business i required license requirements demands certain investments in to obtain license; Si: salary and overhead cost of the business’ physical or human capital. Finally, new business i required to obtain license; Ai: additional businesses also face opportunity costs which result from costs spent by business i to obtain the license. the waiting time between the application for a license and the actual issuance of the license, which causes a Based on all observations, the simple average delay in the start of business operations and, hence, compliance cost of a business for obtaining the license foregone income. was then calculated. The total compliance cost of the registration and business regime then was obtained by As part of the study, the team has estimated the direct cost of compliance with business registration and licensing requirements. To this effect, to the extent 6 See IFC/MIGA/World Bank (2010), Here Is Your available, data on the number of licenses issued as well Money: Using the Standard Cost Model to Measure Regulatory Compliance Costs in Developing Countries, as on license fees and private sector direct compliance Washington: World Bank Group; Nijsen, André (2009), costs have been identified through consultations with SCM to Measure Compliance Costs, in: A Nijsen et al. (eds.), Business Regulation and Public Policy, International Studies in Entrepreneurship 20, DOI 5 These costs might also include bribes. 10.1007/978-0-387-77678-1_5. 3 multiplying the average individual compliance cost with considered as approximate estimates rather than precise the total number of new licenses issued in a year: figures. – – C5NC where N: number of licenses issued in fiscal 2.2 Estimate of the Cost to –– year E.C. 2005 (2012–13); C : simple average Business of the Registration compliance cost. and Licensing Regime A number of caveats should be noted: In particular, lack 2.2.1 The Macro Perspective: Total Fees of data availability has been a major constraint. The and Compliance Costs calculation of compliance costs for a license requires The total cost which businesses in Ethiopia face as a that both the number of any given license issued and result of complying with the registration and licensing the average individual business’ compliance costs regime is estimated at ETB 3.46 billion or 0.47% of must be known. Out of the 1,327 different licenses Ethiopia’s GDP (Table 1). It should be kept in mind included in the database, information on the number of that this figure excludes the substantive costs of licenses issued could be obtained for 386 licenses, and compliance, which in Ethiopia can be estimated to information on the number of licenses issued frequently be very significant as a result of the intensive use of were estimates. Thus, the 386 licenses together were competence certificates which often require businesses issued 28,246 times in E.C. 2005; assuming that the to engage in additional costs in order to meet the licenses for which no numbers could be obtained were requirements established for competence certificates (see issued with the same frequency, the total number of the discussion in Chapter 3). licenses issued in the year was 97,105. When comparing overall compliance costs with the Individual business’ compliance costs could be obtained total fees collected by licensing agencies (Table 2), it for 155 licenses, based on information collected in becomes clear that fees constituted only a small share a survey among businesses. However, the validity of in total compliance costs: 3.3%. In other words, more individual compliance costs reported by businesses than 95% of the costs for businesses are the result of is limited. It seems likely that some businesses cumbersome documentation and other requirements overestimated compliance costs, e.g., by including as well as time consuming procedures. On the other substantive compliance costs, while others did not hand, the contribution of total fees collected to the State include all cost factors. For the calculations, we took the simple average of costs reported by businesses in a sector. Furthermore, it has not been possible to distinguish Table 1: Estimation of Total Compliance the cost of commercial registration from the cost of Costs with Business Registration and obtaining licenses. Therefore, the calculated licensing Licensing Regime in Ethiopia compliance costs also include the cost of registration Average cost of compliance per license (ETB) 35593.1 for businesses. Likewise, compliance costs for obtaining Extrapolated total no of licenses issued in E.C. 97,105 a new license and renewing the license were assumed 2005 to be identical—this assumption appears to be quite Estimated (extrapolated) total cost of 3,456.3 compliance with all licenses (ETB M) realistic in view of the fact that most licenses have to be GDP 2012 (ETB B) 736.6 renewed yearly and requirements for a renewal are in Share of estimated total compliance cost in 0.47 most cases identical to those of a new license. relation to Ethiopia’s GDP 2012 (%) As a result of these constraints, the total calculated Sources: Calculations based on authors’ consultations; GDP compliance costs as presented below should be per capita: World Development Indicators. 4  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Table 2: Estimation of Total Fees Collected from Licensing Regime in Ethiopia Total no. of licenses in database 1327 Observations (licenses for which all required data are available) 383 Total calculated fees collected from all observed licenses (ETB M) 19.9 Average total fees collected per license, calculated based on all observed licenses (ETB ’000) 52.0 Estimated (extrapolated) total fees collected from all licenses (ETB M) 69.0 Share of fees collected in total compliance costs (%) 3.3 Total Federal Budget E.C. 2005 (planned) (ETB B) 124.2 Share of fees collected compared to total federal budget (%) 0.06 Sources: Calculations based on authors’ consultations. Federal Budget: MOFED, Budget Proclamation 2005. Table 3: Fees and Compliance Costs per License, Summary Statistics Av Compliance Cost Ratio Fees to Be Paid per Business Compliance   ETB % of GDP p.c. ETB % of GDP p.c. Cost/Fee Most expensive license 240,000 2989% 1,613,657 20095% Max 3,541.5 Least expensive license 0 0% 617 8% Min 1.1 Av license cost/fee: Mean 1,359.0 17% 35,593.1 443% Mean 43.5 Av license cost/fee: Median 254.0 3% 5,660.4 70% Median 11.9 No. of observations 792 155 153 Sources: Calculations based on authors’ consultations; GDP per capita: World Development Indicators (2012: ETB 8,030.33). budget is negligible, not even reaching 0.1% of Federal 75,000, with the average license fee ranging from ETB Government revenue (Table 2).7 254 (median) to ETB 695 (mean). This rate is modest when compared to per capita income (only 3%–9% of 2.2.2 The Business Person’s Perspective: GDP per capita). Fees and Compliance Costs Per License More importantly, total compliance costs for businesses From the point of view of an individual business, are substantially higher, ranging from an absolute more interesting than aggregated figures are the costs low of ETB 617 to an absolute high of ETB 1.6 associated with obtaining an individual license. Table 3 million. Averages are in the range of ETB 5,660 to provides a summary. As can be seen, the license fees to ETB 35,593, or 70% to 443% of income per capita. be paid to the issuing agency varies from ETB 0 to ETB These results are in line with the findings presented 7 in the Doing Business 2014 which, as stated above, It should be noted that the revenue from category 1417— Business and Professionals Registration & License Fees calculates the cost of starting a business in Ethiopia planned in the 2005 E.C. Budget Proclamation amounts at 100.1% of per capita income. They also confirm to ETB 9,569,914 only. The difference between this figure and the reported figure can be explained by various factors: that, by international comparison, compliance costs some fees reported by agencies may be exaggerated, with licensing requirements are high in Ethiopia. It is some fees do not accrue to the Federal Budget, and some reported fees do not fall into category 1417 of the Budget. recalled that the average cost for starting a business in Finally, the estimation method of simply extrapolating Sub-Saharan Africa is 67.4%; the corresponding figure the average fees/compliance costs is prone to overestimate collected fees and compliance costs: it is likely that licenses in OECD countries is 3.6%. Although these figures and for which data could not be obtained are used less often, or the compliance costs calculated in the present study are not at all, and thus would contribute less than average to overall fees and compliance costs. not directly comparable, the magnitude of the difference Estimating the Cost of Business Registration and Licensing to Businesses   5 Figure 2: Distribution of Fees and Compliance Costs Across Licenses (a) Fees 1000000 100000 10000 1000 100 10 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% (b) Compliance Costs 10000000 1000000 100000 10000 1000 100 1% 10% 19% 28% 37% 46% 55% 64% 73% 82% 91% 100% (c) Ratio Compliance Costs vs. Fees 10000 1000 100 10 1 1% 13% 25% 38% 50% 63% 75% 88% 100% Source: Authors’ calculations based on consultations. 6  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform does provide strong evidence for the comparatively high the two. It shows that most license fees are modest— cost of complying with the business registration and more than 70% cost ETB 254 or less. To the contrary, licensing regime in Ethiopia. more than 90% of licenses have total compliance costs of more than ETB 2,000, and 32% more than ETB Finally, the analysis of the individual businesses’ 8,030, the national per capita income. Finally, for more perspective confirms the macro-findings, presented than half of all licenses the compliance costs are ten in the previous section, that the vast majority of times or more the application fee. compliance costs are not due to high licensing fees charged, but due to documentation and other In sum, there is a strong case to be made for reducing requirements, as well as time consuming procedures. compliance costs by simplifying and streamlining the licensing regime in Ethiopia. The next chapter further Figure 2 provides a further analysis of the distribution elaborates on this and develops recommendations. of license fees, compliance costs and the ration between Estimating the Cost of Business Registration and Licensing to Businesses   7 Key Findings and Recommendations 3 for a Streamlined Business Licensing Regime in Ethiopia In Ethiopia, the Commercial Registration and Business 3.1 Core conceptual issues Licensing Proclamation (CRBLP) is the main body of and recommendations law governing business licensing across sectors. The analysis and recommendations below revolve around 3.1.1 Too Many and Over-Specified Business Licenses the key elements of this piece of legislation and are based on the team’s discussions on the overall business The revised Ethiopian Standard Industrial Classification registration and licensing regime, the inventory of (ESIC) has defined over 1,320 specific licenses, and licenses by sectors as well as the feedback from the the list is likely to increase even further since the private sector. Attempts have also been made to draw Ministry of Trade (MoT) continues to add licenses to lessons from international best practices in business the ESIC list from time to time.8 Moreover, a number licensing, where relevant and appropriate. The of additional licenses are being issued based on specific analyses and recommendations are meant to help in laws or practices. the effort to improve the regulatory environment on This number of licenses is very high by international business registration and licensing, facilitate business standards. One of the implications is that business entry and operation thereby enhancing the role of the persons are required to obtain multiple licenses for private sector in economic development and poverty closely related business activities. Even though in eradication. practice the MoT provides the list of business activities The findings and recommendations presented in a licensee can undertake at the back of a single the following sections have been grouped into two document, the applicant needs to comply with all the categories, based on their importance. Section 3.1 requirements for each specific license. This saves only analyzes some fundamental issues with the current paper not the time and cost of the business person. licensing regime and provides corresponding Furthermore, the existence of several, often potentially recommendations which would likely boost the ease overlapping licenses reduces transparency and clarity of starting and maintaining a business. Section 3.2 for business, which are not always certain about which presents operational issues and recommendations which would streamline the system and reduce the “hassle” 8 For example, the first version of the ESIC published in factor of the system. January 2010 only listed approximately 980 licenses. 9 Figure 3: Frequency of Issuance of Licenses, E.C. their ability to expand.9 Accordingly, the international 2005 (2012–2013) trend is towards providing general licenses which allows 7, 2% 2, 1% 24, 6% private firms to engage in any activity within a sector, 32, 8% except in those limited activities which require sector specific licenses. Many economies no longer require 19, 5% private business even to state objectives of their business 24, 6% activities for registration purposes and streamlined their licensing regime to few licenses.10 In sum, compared to international best practice and 37, 10% trends followed in many economies, the business licensing regime in Ethiopia is unduly prescriptive: it 193, 50% establishes too many and too specific licenses. Recommendations 45, 12% 1. It is recommended that the number of business licenses be reduced significantly, taking into account two parameters. First, it is suggested that None 20 to 49 200 to 499 in principle a single license be issued covering 1 to 9 50 to 99 500 to 999 all business activities under each of the “Major 10 to 19 100 to 199 1000 and more Groups” defined by the ESIC.11 Only exceptionally Source: Computed based on authors’ consultations. Total and when duly justified, a specific license would be number of different licenses for which data could be obtained: 383. required for a particular activity within the group of activities. licenses they have to obtain. Taken together, this creates Secondly, it is recommended that the different a substantial barrier to business start-up and expansion. licenses involving the same kind of product or service be merged together as a single license. It should also be noted that, as a result of the high This means, for example, that the importation, number of licenses, most licenses are issued only very wholesale and retail trade of the same or closely infrequently (Figure 3). Of the 383 different licenses for related products would require a single license which figures could be obtained, 6% were not issued rather than multiple licenses for each type of trade, at all in E.C. 2005, and another 50% were issued less as per the current practice. than ten times during the budget year. Only 10% were issued more than 100 times. It is likely that most of the licenses for which no data on the issued number are 9 See e.g., World Bank/IFC (2010), Policy Framework Paper available are also rarely used. This means that at least on Business Licensing Reform and Simplification. 80% of the legal existing more than 1,300 licenses are 10 World Bank Group (2013), Reforming Business in practice very rarely used. Registration: A Toolkit for Practitioners, p 18. 11 “Major Groups” are coded in the ESIC with a 3-digit International best practices indicate that a good code. For example, in Division 11, “Agriculture, Hunting and Related Services,” there are the following “Major regulatory framework should not be unduly prescriptive Groups”: 111—Growing of Crops; Market Gardening; in specifying how businesses should operate. Many Horticulture; 112—Farming of Animals; 113—Growing of Crops Combined with Farming of Animals (Mixed studies found that a licensing regime which is unduly Farming); 114—Agricultural and Animal Husbandry prescriptive, including through prescribing too specific Services, except Veterinary Activities (Artificial Breeding Including Bulls); 115—Hunting, Trapping and Game and too many licenses, hampers business start-up as Propagation, Including Related Services; and 116— well as growth of business firms by limiting and slowing Production of Organic Fertilizer. 10  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Annex 2 provides a suggested simplification of Furthermore, the ESIC currently performs two different the existing ESIC for further consideration and functions: it is used to structure the licensing regime, refinement. and it is used as a statistical tool to structure business The streamlining of licenses along these lines activity in the country. However, combining these two would significantly reduce the number of licenses functions in one tool leads to ineffective outcomes for and contribute to the ease of doing business in both functions: with regard to the licensing regime, Ethiopia. Streamlining the ESIC based on this the lack of compatibility with sector laws, as already recommendation would reduce the number of mentioned, and with regard to the statistical purposes, licenses significantly—by about 70%, from the a lack of coherence with international standard current 1,320 licenses to about 400 licenses. classifications and, thus, difficulties in producing internationally comparable statistics. 2. In many countries that have reformed their licensing regimes, licenses are now required only Recommendations for specific commercial activities with important 3. There is an urgent need for a comprehensive implications on public interest, national security, review of the ESIC with a view to bringing it into health, protection of the environment, etc. In all conformity with specific sector laws. This would other cases a business person can engage in trade include the elimination of licenses from the ESIC with a registration only, but without the need for which are not required by sector legislation. obtaining a license. While this is the international 4. It is recommended that the two roles that the trend, it is suggested that reforms to be successful ESIC currently fulfils are separated by splitting the need to be undertaken step-by-step and ESIC into two separate classifications, the ESIC streamlining the licenses as suggested above should used for statistical purposes, and an Ethiopian be the priority for Ethiopia. Once the streamlining License Classification (ELC), used for the licensing exercise is undertaken the issue whether to abolish regime.12 licenses for certain business activities could be considered. Note however recommendation 3 3.1.3 Application of Competence below. Certification for Almost All Licenses The findings made in Section 3.1 above regarding 3.1.2 Lack of Compatibility between the excessive use of licenses are compounded by the the ESIC and the Sectoral Laws frequent use of competence certification requirements The study has found that the ESIC is not in conformity in order to obtain licenses. Competence certification with sector specific laws. It is indeed common to find is one of the most radical innovations in Ethiopia’s licenses listed in the ESIC not being covered in the current business licensing system. The requirements of specific sector laws and vice versa. There are also great professional competence to be met while applying for variations between the ESIC and sector specific laws in licenses are envisaged in Article 32(8) of the CRBLP. terms of nomenclature as well as scope and coverage The central objective of this requirement is to certify of licenses. This has created confusion in the entire whether or not a business person has the capacity licensing system, not only among businesses applying and capability of operating a business. The financial for licenses but also among issuing agencies. and technical competence of a business should be This incompatibility between the ESIC and sector- ascertained before operating any business. Before the specific regimes appears to have arisen because of lack issuance of the CRBLP and the ESIC, competence of extensive examination of the sector specific laws and consultations with the concerned agencies dealing with 12 Note that, notwithstanding this recommendation, this licenses in the preparation process of the ESIC. report uses the term ESIC throughout. Key Findings and Recommendations for a Streamlined Business Licensing Regime in Ethiopia    11 certificates were required only in limited sectors based and applying to all licenses is one of the major issues on sector-specific laws. (with significantly hampering business start-up as well as promoting informal business) in the existing The international trend in many economies and the licensing regime in Ethiopia. best practice is to limit the very requirement to obtain licenses only to selected activities which may have a • Lack of adequate legal basis: The CRBLP envisages significant impact on health, security, environment, that requirements of professional competence are etc. Thus, ex-ante verifying the competence of a to be met while applying for licenses as defined in business person is an exception required only in limited directives to be issued or specified by relevant sector sector-specific licenses. However, contrary to this government institutions. However, while some of the international best practice, the requirement of certifying 35 competence verifying agencies identified in the the competence of a business person prior to issuing a ESIC are mandated by their respective establishing business license has become the rule, not the exception, or sector legislation to issue competence certificates, in the post CRBLP and ESIC period. some of them are not specifically mandated so. Moreover, even for those agencies mandated by In general, there are a number of problems in specific laws to issue competence certificates, their connection with the existing competence certification legal mandates do not usually cover all the licenses regime. Major issues include: in respect of which they are authorized to issue • Lack of adequate regulatory purpose: When seen in competence certificates under the ESIC. As a result, the light of international trends and best practices, most of the competence verifying agencies are not ex-ante certifying the competence of business firms certain or convinced about their legal mandate to can have a valid regulatory purpose only for limited issue competence certificates to businesses and many types of licenses in some sensitive and risky sectors. of them consider that this mandate is imposed on For the majority of business activities, requiring them by the MoT. a competence certificate does not have a valid There appears to be a misunderstanding of regulatory purpose and can only be considered as Article 32(8) of the CRBLP which reads as follows: a barrier to business start-up and expansion. No “There shall be submitted a certificate of valid regulatory purpose could be identified for the professional competence in testimony of the competence certificate requirement in relation to the fulfillment of the requirements set by the majority of licenses listed in the ESIC. In fact, during relevant government office in a directive, consultations even some representatives of agencies for the business a business license has been issuing competence certificates stated that they are requested, and a statement signed by the not sure about the need and importance as well as applicant. The appropriate authority shall the effectiveness of the competence certification inform the concerned government office system. Some argued that it would be more about the implementation of the directive.” appropriate and effective to regulate the product or services, where there are valid concerns, instead of This provision clearly indicates a number of regulating the capacity of the trader through ex-ante points. First, competence certificates are not competency certification. Some ESIC designated necessarily required for all business activities. competence verifying agencies, like the Ministry of Second, competence is required only when relevant Industry (MoI) for the manufacturing sector or the agencies require it in a directive they issue not by Ministry of Education (MoE) for trade in educational the MoT. There indeed are laws and regulations that materials, questioned the need and purpose of require certification in such areas as food, medicine requiring competence certificates in these sectors agricultural products, electricity, construction, and refused to act as certifying agency. In general, etc. This means that except in those cases where making competence certification requirement the rule sector-specific laws envisage certification the sector 12  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform agencies may not require competence certification. We recommend that the requirement for But the practice is that the MoT allocates licenses competence certification be abolished for the for agencies requiring them to issue directives on licenses listed in Annex 1. competence certification even if such certification is 6. To ensure the general purpose that businesses not envisaged in the establishing laws of the agencies. provide goods and services of adequate quality, In many cases agencies refuse to issue those directives the tools for consumer protection and competition stating that their laws do not mandate them to do entailed in the Trade Practices and Consumer so or the requirement is simply unnecessary. The Protection Proclamation (TPCPP) should be MoT does not appear to be justified in requiring strengthened, instead of having a standard competence certification in all cases except requirement for competence certification. This those activities considered requiring competence approach would be more in line with the overall certification by specific laws. objectives of the CRBLP, which are to further Only recently the MoT issued a circular exempting the ideals of a market-oriented economy, achieve some retail trade activities from the requirement economic development, remove barriers that of competence certificates. However, a further hinder the smooth operation of businesses, and simplification of competence certification requirements offer public services to the business community in is called for, because there is a: ways that are efficient and capable of contributing to economic growth. • Lack of clear demarcation between the different institutions with respect to the mandates of issuance The effect of recommendation 5 in terms of of competence certificate (mandate overlaps), creating compliance cost savings for businesses is estimated a lot of inconvenience on businesspeople; and in Table 4. Based on information obtained from the • Lack of preparation and little interest in handling survey among businesses, the private sector costs the task by some of the institutions in charge of stemming from certification requirements amount to administering certifications. approx. 70% of total compliance costs. As a result of recommendation 5, certification requirements Recommendations for approx. half of all different licenses would be 5. The requirement to obtain competence certificates eliminated. As a result, the total cost savings would should be applied only to limited types of licenses amount to 35% of compliance costs under the status in selected sensitive and risky sectors as foreseen by quo, or ETB 1.2 billion per year. sector specific law, and should be abolished for the majority of licenses. Table 4: Estimation of Compliance Cost Savings Resulting from Recommendation 5 Status quo a Total number of licenses in database 1327 b Average cost of compliance per license (ETB) 35,593 c Estimated total number of licenses issued in E.C. 2005 97,105 d5b*c Estimated total cost of compliance with all licenses (ETB M) 3,456.3 e Estimated compliance costs related to certification requirements (% of total 70% compliance cost) f5d*e Estimated total compliance costs related to certification requirements (ETB M) 2,419.4 Annual g Proposed reduction in number of licenses with certification requirements 672 compliance h 5 f * g/a Reduction in compliance costs resulting from reduced certification 1,225.2 cost requirements (ETB M) savings, i 5 h/d Reduction in compliance costs resulting from certification requirements 35% Rec. 5 (% of total compliance costs in status quo) Key Findings and Recommendations for a Streamlined Business Licensing Regime in Ethiopia    13 3.1.4 Overly Demanding Requirements follow up through other ways such as inspection for Competence Certification rather than requiring businesses to go through Out of the 35 competence verifying agencies identified this process annually. Alternatively, a competence by the ESIC, about 25 have prepared specific directives certificate should be valid for at least five years and or manuals outlining the requirements to be met renewal be required thereafter. for competence certification to be issued in their respective institutions. Based on a review of these 3.1.5 No Necessity for Renewal directives/manuals, requirements for certification of Commercial Registration are often cumbersome and it is questionable if they Under the CRBLP registration is a prerequisite to match the realities in the country. Unnecessary and start any business undertaking in Ethiopia. A set subjective requirements like sufficient capital and the of requirements need to be complied with for the necessary skilled manpower are commonly identified registration. While there are different views on specific in these directives/manuals which open the gate for aspects of the requirements of commercial registration, varied interpretation and at times corruption. Strict there appears to be a consensus on the part of the enforcement of the requirements may drive a number private sector that a one-time commercial registration of people out of business as well as deter new entrants is necessary and justified. However, under the CRBLP from establishing businesses. business registration must be renewed, in principle, every year—although an amendment to the CRBLP In addition, competence certificates for most of now permits the renewal for up to five budget years. the licenses have to be renewed yearly, which is a pre-requisite for the renewal of a business license. The requirements for renewal of commercial Thus, a business has to pass through the same costly registration are more or less the same as those for process each year, the regulatory purpose of which original registration and under current practice the is questionable. Indeed, in many cases maintaining a applicant has to go through the same procedure business from a licensing perspective is like establishing periodically. Even if a business person is now able to the business anew every year. This diverts significant renew the commercial registration for every budget cash and human capital from productive activities. year or for five consecutive budget years, the very It also creates a heavy administrative burden on idea of renewal of commercial registration remains competence verifying agencies, which have to check questionable. Renewal of commercial registration is whether a business meets the requirements on a yearly of course on top of renewal of business licenses and basis. whatever legitimate objective there might be in renewal of commercial registration could be achieved through Recommendations renewal of licenses. 7. For those licenses that require competence certification and which are therefore not abolished The need for renewal of commercial registration in line with recommendation 5, it is suggested that appears to be not sufficiently justified. Two reasons competence certificate issuing agencies review the seem to have dictated the renewal of commercial requirements with a view to making them clearer, registration requirement: information gathering/ less cumbersome and enforceable. Sector-specific updating, and collection of revenue. However, if the recommendations are provided in the detailed renewal is meant to gather and update information inventory report. about a business, this could be achieved by requiring businesses to provide an update or inform the 8. The need for an annual renewal of competence registration agency about any changes in the business, certification is questionable. As noted, the process failure of which could result in measures including as it stands now is generally cumbersome, costly deregistration. and time consuming. It is suggested that after a competence certificate is issued once, it is better to 14  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform On the other hand, in principle, the collection of • Lack of detailed and specific regulations, manuals revenue should not be a primary objective for this and explanatory notes that could guide the front renewal of business registration, but a reasonable fee desk officers while handling trade name related could be an important factor for the smooth functioning issues. of the entire system. There are, however, other ways • Lack of transparency in trade name registration: of addressing the concerns related to the fee, such as Business persons are often refused to register a trade increasing the one-time registration fee to a reasonably name of their choice for no valid reasons (or without higher level. The business community considers the sufficient explanation). They have no option but to current fee for registration as generally reasonable and visit trade offices on several occasions until such time indicated that increasing the fee is by far better and that their proposed trade names are accepted. Many less costly than the requirement to annually renew the complain that the way proposed trade names are registration. verified by registration offices lacks transparency. Recommendation • Inexistence of a publicly available database of 9. The renewal of business registration should be registered trade names: No database of trade names abolished with a specific requirement that changes is available to the public for checking. Therefore, with regard to the details in the registry should be business people cannot verify if their trade names notified to the MoT promptly. Failure to inform have been taken by others before visiting the about changes should have consequences including registration offices. in some cases deregistration. • Inexperienced agency staff handling trade name registration: It is not clear if front desk officers at the MoT can easily understand the legal intricacies of the 3.2 Operational issues provisions on trade name registration and make a and recommendations sound decision which in many cases is subjective. 3.2.1 Weaknesses in the Practice • Length of time required for trade name registration: of Trade Name Registration In practice, registration of trade names takes a long Registration of a trade name is a common practice time (up to three weeks). in business registration and licensing. Part Three of • Centralized decision-making structure and lack of the CRBLP has established a system of trade name information in regions: Trade name registration is registration and among others outlines the obligations particularly challenging for business people from the and conditions for registration of trade names and regional states since the regional bureaus cannot take provides a long list of names that would not be decisions on a trade name registration application regarded as trade names. The legality of the requirement before checking with the registry at the MoT in Addis is clear. There are different purposes for requiring Ababa. The regional trade offices are, however, not trade names; they are used to identify a particular linked by a network with the MoT in Addis Ababa, business from others, help in consumer protection and which causes additional delays. protection of unfair competition, etc. Registration of Recommendation trade names indeed is part of international practice. The 10. In order to address the identified issued, it is list of names that are not considered trade names have recommended that the practice of trade name legitimate purposes and are internationally accepted. registration be improved through the following However, the business community complains about measures: how the provisions on trade name are being enforced. • In order to improve the legal certainty and There are several problems with regard to trade name transparency of trade name registration, registration: Key Findings and Recommendations for a Streamlined Business Licensing Regime in Ethiopia    15 detailed directives, manuals and explanatory Recommendation notes on trade name registration should be 11. Requiring a commercial address for every put in place. This should also foresee the business activity may be too restrictive since requirement for the agency to sufficiently some business activities (e.g., consultancy) can be explain the rejection of a trade name, as well undertaken at one’s own residence. This implies as the establishment of an appeal mechanism that it is important to look into the use of personal against decisions made by front desk officers; residence as registered home office for selected • The database of registered trade names should business activities. There is also a need to be more be made available to the public; flexible with regard to this requirement as more and more business are being undertaken without as • Extensive training should be given to front desk such a permanent physical address through the use officers on the application of provisions related of technology. to trade name registration; and • Regional trade bureaus should be linked with 3.2.3 Redundancy of Requirements for the central trade name registry so that business Registration and Licensing/Requirements people will be able to get decisions quickly. with No Clear Legal Basis A closer look at the current practice of issuing 3.2.2 Evidence of Physical Address business licenses shows that the system involves, to a Besides disclosing the exact address of the business, considerable degree, duplication of information, with applicants for registration and licenses are obligated business registration. A business person is required to produce title deeds if they use their own property to submit some documents several times to obtain or, if leased, an authenticated contract of lease a commercial registration, a competence certificate or, alternatively, a certification from the Woreda and a business license, as shown in Table 5. These Administration of the physical address. Although a requirements are simply redundant and could be physical address for a business is required, among other directly generated from the certificate of registration. things, for traceability, it is not clear if that registered address should be a residential or commercial address. There are also some requirements which do not have a clear legal basis. The best example is the requirement It has been difficult to fully implement the of bank confirmation of deposited capital with regard requirement to provide evidence of a physical to sole businesses. While this requirement is only address, because the legal provisions have not taken applicable for business organizations under the CRBLP, account of the realities on the ground. Among the in practice sole businesses are also being required to implementation problems the following ones are furnish same bank confirmation deposited capital. particularly noteworthy: First, many leasers are not willing to enter into officially authenticated Recommendation contracts. Second, given that many houses in Addis 12. To simplify the process and in particular to reduce Ababa do not have title deeds and plans, it is very administrative burden for issuing agencies, it is difficult for business persons to get a fixed address recommended that supporting/evidence documents for their business activities. The Trade Bureau of are checked only once during the registration and Addis Ababa has temporarily solved the problem licensing process. Most documentary requirements through temporary rules whereby business persons for a business license could be abolished as the can present an agreement signed in the presence duplicate the requirements which a business person of local elders as evidence of physical permit. The already has to comply with during registration requirement has also somehow been relaxed since (shown in red in Table 5). In addition the bank the proof can be made by submitting a letter from confirmation of deposited capital for sole business the Woreda Administration testifying to the physical address of the business person. 16  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Table 5: Comparison of Requirements for Business Registration and Licenses Requirements for Registration Requirements for Business License New registration/ • Tax identification number • Valid business registration certificate license (sole • Bank confirmation of deposited capital • Competence certificate business person) • Proof of physical address (title deed/ • A document evidencing the capital allocated authenticated lease agreement/kebelle for the commercial activity confirmation) • Proof of physical address (title deed/ • Valid identification card/passport authenticated lease agreement/kebelle • Two passport size photographs taken within confirmation) the last six months • Two passport size photographs taken within • For a foreign investor, an investment permit the last six months • Where the application is submitted by an • For a foreign investor, the investment and attorney, an authenticated power of attorney residence permits • Where the application is submitted by an attorney, an authenticated power of attorney New registration/ • Tax identification number • Valid business registration certificate license (business • Bank confirmation of deposited capital • Competence certificate organizations) • Proof of physical address (title deed/ • A document evidencing the capital allocated authenticated lease agreement/kebelle for the commercial activity confirmation) • Proof of physical address (title deed/ • Valid identification card/passport of the authenticated lease agreement/kebelle manager confirmation) • Two passport size photographs of the • Authenticated original copies of manager taken within the last six months memorandum and article of association of • Authenticated Memorandum of Association the business organization and Articles of Association • Two passport size photographs of the • Where the application is signed by an manager taken within the last six months attorney; a power of attorney given by all of • For a foreign investor, the investment and the founders residence permits • Where there are foreign nationals as • Where the application is submitted by an members of the business organization; attorney, an authenticated power of attorney documents evidencing that the foreign nationals are considered as domestic investors or their investment permits should be abolished since the requirement does not duplicate information, and visit multiple offices in have a legal basis. person because the institutions are not interconnected via technology. 3.2.4 Lack of Agency Coordination One particular example of the lack of inter-agency and Integrated Systems coordination relates to the link between the licensing Multiple government institutions are involved, directly regime and the tax regime. Many businesses question or indirectly, in the process of business registration the appropriateness of how this currently functions. For and licensing, making registration and license renewal example, a registration officer cannot easily check the cumbersome and costly. Moreover, there appears to be tax status of an applicant on-line because the trade and little coordination within and across various institutions tax institutions are not connected by a network. involved in the registration and licensing process. It is a common practice that applicants have to often visit the Although there is no question that the business same institution on multiple occasions and comply with community needs to pay taxes and government has a procedures sequentially rather than in parallel. They legitimate responsibility to collect taxes, the government have to manually submit numerous forms containing may wish to enforce its right to collect taxes in a way Key Findings and Recommendations for a Streamlined Business Licensing Regime in Ethiopia    17 that appears more practical and enforceable. Licensing Apart from the Trade and Industry Offices, most regimes are typically linked to the tax regime in a of the competence verifying agencies are not number of countries but the processes are simple and well prepared and organized to issue competence short. The issue to be considered is whether there is a certificates. They lack the necessary commitment, possibility of doing this more efficiently than the way it capacity and organizational structure to efficiently is being done now. and effectively carry out the certification process. In particular, the data management system in most Recommendations competence certifying agencies is very poor. 13. Investment in networking is an important issue that the Government needs to take as a top priority Recommendation with a view to address these problems. Specifically, 15. Given the identified constraints, the MoT and there is a need to create networking between certifying agencies need to give utmost attention the licensing and tax institutions and improve to address the serious capacity limitations in terms the coordination and information flow between of manpower, equipment and organizational the two. structure. 14. It is also useful to develop an integrated online system to provide information to the business 3.2.6 Awareness Creation community which is relevant for the registration and Participation and licensing process. This will help the business Many of the consulted business persons do not know community to have access to practical and up-to- the contents of the CRBLP. Nor are the agency staff date information regarding the types of documents and service providers (such as lawyers/consultants/ required and where to go for obtaining or accountants) in charge of and assisting with registration renewing their licenses. and licensing fully familiar with the requirements of the CRBLP. As a result, they have at times been 3.2.5 Insufficient Institutional Capacity unable to provide the necessary information to their There is a serious capacity gap in the Trade and clients (business community). This seems to suggest Industry Offices at various levels. At times, the License that there is a need for extensive awareness creation Officers at the Trade and Industry Offices as well as the activity at both levels. While the primary responsibility MoT lack the necessary information about the rules. for this rests on the Government, the Ethiopian and It has been reported that business persons at the MoT Addis Ababa Chamber of Commerce and Sectoral were stranded due to lack of the required information Associations could play an important role by raising since employees at Commercial Registration and awareness about the laws to their memberships. Business Licensing Directorate were not well conversant Furthermore, the business community needs to be with the new law. consulted and actively participate in the formulation and design of laws and regulations. Trade and Industry Offices at the Woreda level particularly suffer from lack of capacity in terms of Recommendation both human resources and other materials: shortages 16. It is recommended that the GoE and Chamber of office materials and computers which are not system work together to improve awareness functioning due to maintenance problems slow down among public sector officials and the private the processing of registration and license. In addition, sector regarding the CRBLP. The Government the current registration and licensing system or software should also work closely with all stakeholders being used by many Trade and Industry Offices is not throughout the drafting and review process so only inefficient but also it cannot control multiple that the laws are understood by stakeholders. As licenses. This not only affects the speed of registration a result, there would be some merit in creating but also increases compliance costs for business persons. a standing mechanism for dialogue between the 18  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform government and the business community on issues application within which certificates should be related to commercial registration and business issued. licensing. 3.2.8 Penalties 3.2.7 Time Required to Obtain a License The CRBLP prescribes severe penalties, both in The CRBLP does not prescribe the maximum period terms of imprisonment and fines. Furthermore, the of time allowed from the submission of an application fine and criminal penalties are put cumulatively, not to the issuance of certificates. In practice, some licenses alternatively, which is not the case in other countries. require about four months to be issued (for financial This means that Ethiopian courts must apply both institutions and various telecommunications services). fines and imprisonment should they find a violation of There is a need to include the maximum period of the provisions of the CRBLP. The penalties need to be time the entire process should take once the necessary revisited with a focus on education and reform rather requirements have been complied with. This gives a than driving people out of business. right to the applicant to ask for a license within the Recommendation prescribed time while creating accountability on the 18. It is recommended that the penalty provisions licensing office. prescribed under the CRBLP be revisited. Recommendation 17. It is recommended that the CRBLP prescribes a maximum time period after submission of an Key Findings and Recommendations for a Streamlined Business Licensing Regime in Ethiopia    19 4 Summary and Conclusions The recommendations made in this report are intended improve public sector service quality in the registration to streamline the registration and licensing regime in and licensing process—issuing licenses faster, more Ethiopia, thereby reducing the cost which it imposes predictably and with improved legal certainty. both on businesses and the public agencies in charge of With regard to compliance costs for businesses, its administration. a quantification of cost savings is difficult for the The current cost of the business registration and individual recommendations and almost impossible licensing regime for the public sector is impossible for the combination of recommendations. However, to quantify with certainty, but our findings suggest taken together it is expected that the recommendations that it might be very high: first, the need to devise could help reduce cutting administrative compliance rules, procedures and administrative structures for costs by half or more—the effect of recommendation 5 competence certification for hundreds of different alone is estimated to cut private sector compliance business activities has consumed vast resources by costs by 35%. This would eliminate the gap which the numerous involved agencies, and has not even Ethiopia’s registration and licensing regime has in been completed to date. Second, duplication of comparison with the Sub-Saharan African average, and procedures and documents for registration, licensing bring it to the same level as Africa’s top-performing and competence certification entails unnecessary group. Furthermore, in addition to administrative costs. Third, lack of coordination among the different compliance costs, the proposed recommendations institutions involved in registration, licensing and would help significantly reduce substantive compliance certification requires frequent physical visits by costs resulting from overly demanding (or outright applicants which in turn also entails substantial superfluous) licensing requirements. administrative burden and cost. Finally, the vast In the longer term, the abolition of licenses with number of different licenses being issued and the small exception of commercial activities with important number of specific licenses being issued per year mean implications on public interest, national security, health, that agencies forego “economies of scale” which they protection of the environment, etc., should also be could reap from the more frequent issuance of a lower considered. number of difference licenses. Therefore, reducing the administrative burden of the business registration and Table 6 provides a short summary of the licensing regime for issuing agencies is expected to recommendations made and their expected effects. 21 Table 6: Summary of Recommendations and Expected Effects Recommendation Expected Effect Core Recommendations 1. Significantly reduce the number of business licenses The streamlining of licenses along these lines would (detailed proposal in annex): significantly reduce the number of licenses and contribute • Principle: a single license should be issued covering to the ease of doing business in Ethiopia. Streamlining all business activities under each of the “Major the ESIC based on this recommendation would reduce Groups” defined by the ESIC. Only exceptionally the number of licenses significantly—by about 70%, from and when duly justified, a specific license would be the current 1,320 licenses to about 400 licenses. It would required for a particular activity within the group of increase transparency in the licensing regime, clarifying activities. which licenses have to be obtained. Implementation • Merge different licenses involving the same kind of would benefit from economies of scale and more coherent product or service (e.g. import, wholesale and retail administrative practice. Compliance costs are expected trade of same or closely related products). Annex 2 to be reduced substantially by abolishing the need for provides a suggested simplification of the existing businesses to obtain multiple licenses. ESIC for further consideration and refinement. 2. Apply gradual approach to removal of licenses. The gradual approach would ensure buy-in from all First step, streamline license regime as per concerned stakeholders and increase likelihood of recommendation 1. Once the streamlining exercise is successful reform. The long-term objective would be to undertaken, consider abolition of licenses for certain align Ethiopia’s regime with international best practice, business activities. where licenses are now only required for specific commercial activities with important implications on public interest, national security, health, protection of the environment, etc. In all other cases a business person can engage in trade with a registration only, but without the need for obtaining a license. 3. Urgently and comprehensively review the ESIC with a Same effect as recommendation 1. view to bringing it into conformity with specific sector laws. This would include the elimination of licenses from the ESIC which are not required by sector legislation. 4. Separate the two roles which the ESIC currently fulfils Increased consistency of Ethiopian industrial statistics by splitting the ESIC into two separate classifications: with international standards and greater flexibility in the • the ESIC used for statistical purposes licensing regime. • an Ethiopian License Classification (ELC) used for the licensing regime. 5. Apply the requirement to obtain competence Significant reduction in administrative and substantive certificates only to limited types of licenses in selected compliance costs for businesses, by about 35% of total sensitive and risky sectors as foreseen by sector compliance costs at the status quo. Also, significant specific law, and abolish the requirement for majority reduction of administrative burden for competence of licenses (list in Annex 1). certification agencies. Also, reduced discretionary power (and incentives for corruption) of competence certifying officials. 6. Strengthen the tools for consumer protection, and This will ensure general purpose, currently pursued with competition in the Trade Practices and Consumer the almost universal competence certification requirement, Protection Proclamation (TPCPP) should be that businesses provide goods and services of adequate strengthened, instead of having a standard quality. The approach focusing on consumer protection, requirement for competence certification. rather than competence certification, would be more in line with the overall objectives of the CRBLP, which are to further the ideals of a market-oriented economy, achieve economic development, remove barriers that hinder the smooth operation of businesses, offer public services to the business community in ways that are efficient and capable of contributing to economic growth. 22  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Recommendation Expected Effect 7. For those licenses that require competence Same effect as recommendation 5. certification and which are therefore not abolished in line with recommendation 5, review the requirements for competence certificates with a view to making them clearer, less cumbersome and enforceable. Sector-specific recommendations are provided in the Business License Inventory. 8. Rather than requiring annual renewal, issue Significant reduction in administrative compliance competence certificates once and follow up through costs for businesses, as well as administrative burden other means such as inspection. Alternatively, extend for competence certification agencies: costs related to validity of competence certificates to at least five years competence certification would be reduced by 80%. before renewal is requested. 9. Abolish the renewal of business registration and Significant reduction in administrative compliance costs for introduce the obligation for businesses to promptly businesses, given that registration renewal requirements notify to the MoT changes with regard to the details are typically comparable to initial registration requirements. in the registry. Failure to inform about changes Likewise, the administrative burden for registration should have consequences including in some cases agencies would be reduced. deregistration. Operational Recommendations 10. Improve the practice of trade name registration Improved legal certainty and transparency of trade name through the following measures: registration. Faster registration process. • Put in place detailed directives on trade name registration. This should also foresee the requirement for the agency to sufficiently explain the rejection of a trade name, as well as the establishment of an appeal mechanism against decisions made by front desk officers; • The database of registered trade names should be made available to the public; • Extensive training should be given to front desk officers on the application of provisions related to trade name registration; and • Regional trade bureaus should be linked with the central trade name registry so that business people will be able to get decisions quickly. 11. Allow flexibility to businesses for providing either a Facilitate business start-up especially in some business commercial or residential address for registration activities (e.g., consultancy) which can be undertaken purposes. at one’s own residence or without a permanent physical address through the use of technology. 12. Check supporting/evidence documents only once Checking identical supporting documents only once during during the registration and licensing process. Most the registration and licensing process will simplify the documentary requirements for a business license process, shorten the time required for issuing licenses and could be abolished as the duplicate the requirements in particular reduce the administrative burden for issuing which a business person already has to comply with agencies. during registration. 13. Invest in inter-agency networking. Specifically, create Reduced duplication of document requirements. Improved a network between the licensing and tax institutions level of information by Government agencies about and improve the coordination and information flow businesses. Faster, less cumbersome renewal of business between the two. registrations and licenses. (continues) Summary and Conclusions   23 Table 6: Continued Recommendation Expected Effect 14. Develop an integrated online system to provide This will help the business community to have access to information to the business community which is practical and up-to-date information regarding the types relevant for the registration and licensing process. of documents required and where to go for obtaining or renewing their licenses. 15. The MoT and certifying agencies need to give utmost Improved service quality. attention to address the serious capacity limitations in terms of manpower, equipment and organizational structure. 16. GoE and Chamber systems should work together Better compliance with the registration and licensing to improve awareness among public sector regime. officials and the private sector regarding the CRBLP. The Government should also work closely with all stakeholders throughout the drafting and review process so that the laws are understood by stakeholders. Consider creating a standing mechanism for dialogue between the government and the business community on issues related to commercial registration and business licensing. 17. Amend the CRBLP to prescribe a maximum time Faster issuance of licenses. period after submission of an application within which certificates should be issued. 18. Revise penalty provisions prescribed under the Develop focus on education and reform rather than driving CRBLP. people out of business. 24  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Annex Licenses for Which Competence 1 Certificates Are Proposed to Be Abolished 1. Agriculture, Hunting, Forestry and Fishing 1.5.6. Floriculture (11170) 1.1. Coffee 1.5.7. Wholesale of cut flowers and plants 1.1.1. Growing of coffee license (ESIC code (61217) 11120)13 1.5.8. Retail trade in cut flowers & plants 1.1.2. Retail trade of coffee license (62207) (62204) 1.1.3. Import of coffee license (65214) 1.5.9. Import of cut flowers and plants (65217) 1.1.4. Retail trade of coffee straw (62267) 1.5.10. Export of non-processed fruits & 1.2. Sesame and White Pea Beans vegetables (66116) 1.2.1. Growing of oilseeds license (11112) 1.5.11. Export of cut flowers and plants (66117) 1.2.2. Growing of pulses license (11113) 1.6. Forestry and Related Services (12100) 1.2.3. Manufacture of oilseed cake and meal 1.6.1. Logging and related services (12200) license (30142) 1.6.2. Other activities of forestry and hunting 1.2.4. Wholesale of oilseeds license (61212) n.e.c. (12900) 1.2.5. Wholesale of pulses license (61213) 1.6.3. Manufacturing of mill products, including 1.2.6. Retail trade of oilseeds license (62206) wattle bark grinding and compressing 1.2.7. Import of oilseeds license (65212) (32120) 1.2.8. Import of pulses license (65213) 1.6.4. Wholesale trade in incense & gums 1.2.9. Export of oilseeds license (66112) (61263) 1.2.10. Export of pulses license (66113) 1.6.5. Wholesale of sawn timber, plywood and 1.3. Apiculture related products (61432) 1.3.1. Commercial beekeeping license (11220) 1.6.6. Retail trade of incense, gums and others 1.4. Fertilizer Production and Transaction smoky forest products (62264) 1.4.1. Fertilizer manufacture license (33320) 1.6.7. Retail trade of logs and timber (62351) 1.4.2. Fertilizer import license (65442) 1.6.8. Retail trade of sawn fiber, plywood and 1.4.3. Fertilizer export license (66342) related products (62352) 1.4.4. Fertilizer wholesale license (61442) 1.6.9. Sawmilling and preserving of timber (32110) 1.4.5. Fertilizer retail license (62393) 1.6.10. Wholesale of logs (61431) 1.4.6. Production of organic fertilizer license 1.6.11. Import trade in incense, gums (65263) (11600) 1.6.12. Export trade in incense and gums (66163) 1.5. Horticulture 1.6.13. Import of logs (65431) 1.5.1. Growing of vegetables (11161) 1.6.14. Export of logs (66331) 1.5.2. Growing of fruits (11162) 1.6.15. Import trade in forest products (na) 1.5.3. Growing of herbs (11163) 1.6.16. Export trade in forest products (na) 1.5.4. Aquatic vegetable production (11167) 1.7. Other Agricultural Production and Transaction 1.5.5. Growing of vegetables, fruits horticultural Activities specialties, herbs and nursery products 1.7.1. Growing of cereals (11111) other than floriculture n.e.c. (11169) 1.7.2. Growing of sugarcane (11130) 1.7.3. Growing of tea and other beverage, spice 13 crops and medicinal crops (11140) In some instances, where a license is not listed in ESIC, an ESIC code has been issued based on a “best match” 1.7.4. Growing of fiber crops (11150) assumption. 1.7.5. Growing of enset (11180) 25 1.7.6. Farming of cattle (11211) 1.7.47. Export of cereals (66111) 1.7.7. Farming of sheep and goats (11212) 1.7.48. Export of pepper and spices (66115) 1.7.8. Farming of camels (11213) 1.7.49. Export trade in agricultural raw materials 1.7.9. Farming of pack animals (horses, asses, n.e.c. (66119) mules, etc.) (11214) 1.7.50. Export trade in livestock (66121) 1.7.10. Farming of cattle and pack animals n.e.c. 1.7.51. Export trade in livestock and livestock (11219) products n.e.c. (66129) 1.7.11. Poultry (11240) 1.7.52. Export of beverage crops (except coffee 1.7.12. Swine farming (11250) and tea) (66162) 1.7.13. Production of silk (11260) 1.7.53. Export trade in crude rubber (66167) 1.7.14. Other animal farming; production of 1.7.54. Export trade in medicinal crops (moringa, animal products n.e.c. (11290) qasil etc.) (66171) 1.7.15. Growing of crops combined with farming 1.7.55. Export trade in other agricultural products of animals (mixed farming) (11300) n.e.c. (66179) 1.7.16. Harvesting (11401) 1.7.56. Exports of agricultural byproducts (66393) 1.7.17. Cleaning and other related activities 1.7.57. Export trade in agricultural machinery and (11402) equipment (66412) 1.7.18. Animal boarding and care (11404) 1.7.58. Renting of agricultural machinery and 1.7.19. Animal breeding (11405) equipment (85210) 1.7.20. Agricultural and animal husbandry 1.7.59. Research and experimental development services activities n.e.c. (11409) on agricultural and livestock research 1.7.21. Processing of animal byproducts including (87120) hides, bones, etc. (30113) 1.7.60. Consultancy service for food security 1.7.22. Wholesale trade in livestock (61221) (88215) 1.7.23. Wholesale of livestock byproducts 1.7.61. Consultancy service for agro-ecosystem including hides, bones, etc. (61224) development (88223) 1.7.24. Wholesale of beverage crops (except coffee 1.7.62. Agricultural consultancy (88224) and tea) (61262) 2. Mining and Quarrying (the licenses identified in the ESIC 1.7.25. Wholesale trade in other agricultural lack legal basis and duplicate licenses with legal basis products, n.e.c. (61270) under the relevant mining sector laws, but competence 1.7.26. Wholesale trade in agricultural machinery certification is not applied to the additional/overlapping and equipment (61512) licenses identified in the ESIC) 1.7.27. Retail trade in grains (62201) 2.1. Wholesale trade in gold (61391) 1.7.28. Retail trade of gessho and malt (62208) 2.2. Casting of gold (35330) 1.7.29. Retail trade in agricultural raw materials 2.3. Mining of coal and lignite (21000) n.e.c. (62209) 2.4. Other extraction of crude petroleum and natural 1.7.30. Retail trade of livestock (62250) gas (22110) 1.7.31. Retail trade of beverage crops (62261) 2.5. Activities for control of natural radio nuclides 1.7.32. Retail trade of cotton (62262) (22130) 1.7.33. Retail trade of sugar cane (62265) 2.6. Prospecting and developing of uranium and 1.7.34. Retail trade of fiber (rope) products (62266) thorium minerals (23400) 1.7.35. Retail trade of other agricultural products 2.7. Prospecting of minerals n.e.c. (23900) (62269) 2.8. Precious mineral (excludes gold and uranium) 1.7.36. Retail trade of agricultural machinery and mining (24100) equipment (62702) 2.9. Semiprecious mineral mining (24200) 1.7.37. Installation and maintenance of green 2.10. Metallic mineral mining (24300) houses including inside equipments and 2.11. Industrial mineral mining (24400) machines (63153) 2.12. Construction mineral mining (24500) 1.7.38. Import of cereals (65211) 2.13. Strategic mineral mining (24600) 1.7.39. Import of pepper and spices (65215) 2.14. Mining of gold & uranium ores mining (24700) 1.7.40. Import trade in agricultural raw materials 2.15. Dimension stone (granite, marble, slate, and n.e.c. (65219) wonder stone) (25110) 1.7.41. Import trade in livestock (65221) 2.16. Limestone and lime works (25120) 1.7.42. Import trade in livestock and livestock 2.17. Other stone quarrying, including stone crushing products n.e.c. (65229) and clay and sandpits (25190) 1.7.43. Import trade in crude rubber (65267) 2.18. Mining of diamonds (including alluvial diamonds) 1.7.44. Import trade in other agricultural and opals (25200) products, n.e.c. (65279) 2.19. Mining of chemical and fertilizer minerals (25310) 1.7.45. Import of sawn timber, plywood and 2.20. Extraction and evaporation of salt (25320) related products (65432) 2.21. Other mining and quarrying n.e.c. (25390) 1.7.46. Import trade in agricultural machinery and 2.22. Other mining n.e.c. (26900) equipment (65512) 26  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 2.23. Research & training and service activities 3.23. Manufacture of artificial leather substitutes incidental to mining of minerals (27000) (31530) 2.24. Manufacture of coke oven products (33100) 3.24. Manufacture of footwear (31540) 2.25. Manufacture of mining and surveying tools 3.25. Manufacture of components and accessories used (35720) for leather products (31550) 2.26. Mining and queering machines & equipments 3.26. Other tanning and dressing of leather; manufacture (61515) of luggage, handbags, saddler and harness (31590) 2.27. Retail trade of mining and queering machines & 3.27. Sawmilling and preserving of timber (32110) equipments (62705) 3.28. Sawmilling and planing of wood and production of 2.28. Import trade in precious stones, jewelry and articles of straw n.e.c. (32190) silverware (65392) 3.29. Manufacture of veneer sheets; manufacture of 2.29. Import trade in mining and querying equipments plywood, lamina board, particle board and other (65515) panels and boards (32210) 2.30. Service activities incidental to oil and gas 3.30. Manufacture of builders’ carpentry and joinery extraction, excluding surveying (22120) (32220) 3. Manufacturing Sector (no competence certification 3.31. Manufacture of wooden containers (32230) required under this category; but the licenses identified 3.32. Manufacture of coffins (32240) under the ESIC generally lack legal basis) 3.33. Picture frames and framing (32250) 3.1. Preparatory activities in respect of animal fibers, 3.34. Manufacture of other products of wood products including washing, combing and carding of wool except furniture n.e.c. (32290) (31111) 3.35. Manufacture of pulp, paper and paperboard, and 3.2. Preparatory activities in respect of vegetable fibers of containers made from paper products (32310) (31112) 3.36. Manufacture of stationery (32320) 3.3. Spinning, weaving and finishing of yarns and 3.37. Manufacture of paper and paper products (32390) fabrics predominantly of wool and other animal 3.38. Other printing of paper related (32490) fibers (31113) 3.39. Petrol, fuel oils, lubricating oils and greases, 3.4. Spinning, weaving and finishing of yarns and primarily from crude oil (33210) fabrics predominantly of vegetable fibers (31114) 3.40. Petrol, fuel oils, lubricating oils and greases, 3.5. Spinning, weaving and finishing of traditional primarily from coal (33220) clothes (31115) 3.41. Petrol, fuel oils, lubricating oils and greases, 3.6. Cotton ginning (31116) primarily from natural gas (33230) 3.7. Finishing yarns and fabrics (31117) 3.42. Lubricating oils and greases, primarily from other 3.8. Spinning, weaving and finishing of textiles n.e.c. organic products (33240) (31119) 3.43. Compounded and blended lubricating oils and 3.9. Manufacture of blankets, made-up furnishing greases from purchased materials other than crude articles and stuffed (31211) petroleum (33250) 3.10. Manufacture of tents, tarpaulins, sails and other 3.44. Other petroleum/synthesized products n.e.c. (33290) canvas goods (31212) 3.45. Manufacture of basic chemicals, except fertilizers 3.11. Manufacture of automotive textile goods and nitrogen compounds (33310) (including safety belts, and seat covers) (31213) 3.46. Manufacture of fertilizers and nitrogen compounds 3.12. Manufacture of carpets, rugs and mats (31214) (33320) 3.13. Manufacture of cordage, rope, twine and netting 3.47. Manufacture of plastics in primary form and of (31215) synthetic rubber (33330) 3.14. Manufacture of bags, sacks, rapping & packing 3.48. Other manufacture of basic chemicals (33390) materials (31216) 3.49. Manufacture of pesticides and other agro-chemical 3.15. Manufacture of other textile articles (except products (33410) apparel) n.e.c. (31219) 3.50. Manufacture of candle and tewaf (33451) 3.16. Manufacture of knitted and crocheted fabrics and 3.51. Manufacture of other preparations such as articles (31220) polishes, waxes and dressings n.e.c. (33459) 3.17. Manufacture of wearing apparel, except fur 3.52. Manufacture of paints, varnishes and similar apparel (31230) coatings, printing ink and mastics (33461) 3.18. Dressing and dyeing of fur, manufacture of 3.53. Manufacture of printer ink (33462) artificial fur, fur apparel and other articles of fur 3.54. Manufacture of industrial and general purpose (31310) salts (33463) 3.19. Other dressing and dyeing of fur manufacture of 3.55. Manufacture of adhesives, and glues (33464) articles of fur (31390) 3.56. Manufacture of gases (33465) 3.20. Manufacture of manmade fiber (31400) 3.57. Manufacture of dry cell (33466) 3.21. Leather and hide tanning and finishing (31510) 3.58. Manufacture of other chemical products except 3.22. Manufacture of leather clothes, travel goods, basic chemicals (33469) ladies’ handbags, and other general and small 3.59. Manufacture of tires and tubes (33511) goods of leather (31520) 3.60. Rebuilding and retreading of tires (33512) Licenses for Which Competence Certificates Are Proposed to Be Abolished   27 3.61. Manufacture of other rubber products (33519) 3.97. Manufacture of ovens, furnaces and furnace 3.62. Manufacture of plastic products (33520) burners (35640) 3.63. Manufacture of sheet & plate glass, glass blocks, 3.98. Manufacture of lifting and handling equipment tubes & rods; glass fibers & glass wool (34101) (35650) 3.64. Manufacture of glass containers; glass kitchenware, 3.99. Manufacture of fire extinguishers and other related tableware & other glass products (34102) activities (35660) 3.65. Manufacture of glass and glasses products n.e.c. 3.100. Manufacture of metal mills (35670) (34109) 3.101. Manufacture of agricultural and forestry 3.66. Manufacture of non-structural clay and ceramic machinery (35710) products (34210) 3.102. Manufacture of machinery for metallurgy (35730) 3.67. Manufacture of structural clay and ceramic 3.103. Manufacture of machinery for food, beverage and products (34220) tobacco processing (35750) 3.68. Manufacture of cement, lime and plaster (34230) 3.104. Manufacture of machinery for textile, apparel and 3.69. Manufacture of articles of concrete, cement and leather production (35760) plaster (34250) 3.105. Manufacture of other special purpose machinery 3.70. Cutting, shaping and finishing of stone (34260) n.e.c. (35790) 3.71. Manufacture of mills from stone (34270) 3.106. Manufacture of umbrellas (39260) 3.72. Manufacture of non-metallic mineral products 3.107. Manufacture of brushes and brooms (39291) n.e.c. (34290) 3.108. Manufacture of buttons, buckles, slide fasteners, 3.73. Basic iron and steel industries, except steel pipe etc. (39293) and tube mills (35101) 3.109. Manufacture of number plates, signs and 3.74. Manufacture of ferrous metal products other advertising displays, that are not electrical (39294) than precious metals, used for production inputs 3.110. Manufacture of engraving (39295) (35102) 3.111. Recycling of metal waste and scrap (39310) 3.75. Other manufacture of basic iron and steel (35109) 3.112. Recycling of non-metal waste and scrap (39320) 3.76. Manufacture of primary non-ferrous metal 3.113. Other recycling n.e.c. (39390) products, excluding precious metals (35202) 4. Electricity, Gas and Water Supply 3.77. Other manufacture of basic precious and 4.1. Electricity Sector non-ferrous metals (35209) 4.1.1. Manufacture, wholesale, import and 3.78. Casting of iron and steel (35310) export of electrical machines, equipment 3.79. Casting of non-ferrous metals (35320) and apparatus 3.80. Other casting of metals n.e.c. (35390) 4.1.1.1. Manufacture of electric motors, 3.81. Manufacture of metal structures or parts thereof generators and transformers (35411) (36100) 3.82. Manufacture of galvanized steel sheets (35412) 4.1.1.2. Manufacture of electricity 3.83. Manufacture of metal structures from aluminum distribution and control (35413) apparatus (36200) 3.84. Manufacture of metal structures from steel 4.1.1.3. Manufacture of insulated wire (35414) and cable (36300) 3.85. Other structural metal products, e.g., metal doors, 4.1.1.4. Manufacture of accumulators, windows & gates (35415) primary cells and primary 3.86. Manufacture of structural metal products, tanks, batteries (36400) reservoirs (35419) 4.1.1.5. Manufacture of electric lamps 3.87. Manufacture of tanks, reservoirs, safe boxes and and lighting equipment (36500) similar containers of metal (35420) 4.1.1.6. Manufacture of electrical 3.88. Forging, pressing, stamping and roll-forming of baking stove (36600) metal; powder metallurgy (35510) 4.1.1.7. Manufacture of energy-saving 3.89. Treatment and coating of metals; general technology devices (36700) mechanical engineering on a fee or contract basis 4.1.1.8. Manufacture of other electrical (35520) equipment n.e.c. (36900) 3.90. Manufacture of cutlery, hand tools and general 4.1.1.9. Manufacture of electronic hardware (35530) valves and tubes and other 3.91. Steel pipe and tube mills (35540) electronic components 3.92. Manufacture of crown cork and can (35550) (capacitors, resisters, 3.93. Manufacture of other fabricated metal products transistors, etc.) (37100) n.e.c. (35590) 4.1.1.10. Wholesale trade in lifts, 3.94. Manufacture of engines and turbines, except escalators, and industrial aircraft, vehicle and motor cycle engines (35610) and office air-conditioning 3.95. Manufacture of pumps, compressors, taps and equipment (61514) valves (35620) 4.1.1.11. Wholesale trade in electrical 3.96. Manufacture of bearings, gears, gearing and motors, generators, transformer, driving elements (35630) pumps, others not mentioned in 28  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform other places except household 5.1.4. Import trade in road site accuracy and office electrical equipments equipments (na) (61531) 5.1.5. Import trade in GPS equipments (na) 4.1.1.12. Wholesale trade in lighting and 5.1.6. Geospatial information service (na) lighting accessories (61533) 5.2. Wholesale, Retail, Repair, Import & Export Trade 4.1.1.13. Wholesale trade in electricity (though competence certification is not applied to distribution and controlling these licenses to date, the requirements are in the apparatus (61534) final stages of preparation) 4.1.1.14. Wholesale trade in wiring and 5.2.1. Broker (intermediary) in house renting and cables accessories (61535) sailing (61111) 4.1.1.15. Wholesale trade in solar energy 5.2.2. Broker (intermediary) in vehicles renting equipments (61536) and sailing (61112) 4.1.1.16. Wholesale trade in electrical 5.2.3. Brokers of livestock (61113) equipment n.e.c. (61539) 5.2.4. Broker (intermediary) of crops, vegetables 4.1.1.17. Installation and maintenance of and fruits (61114) electrical equipments (63151) 5.2.5. Broker (intermediary) of machinery and 4.1.1.18. Import trade in electrical industry materials (61115) motors, generators, 5.2.6. Broker (intermediary) household goods transformers, pumps, others (61116) not mentioned in other places 5.2.7. Other brokers (intermediary) duties except household and office (61119) electrical equipments (65531) 5.2.8. Domestic trade agent (61120) 4.1.1.19. Import of household electrical 5.2.9. Wholesale trade in agricultural raw appliances and equipment materials n.e.c. (61219) (including household air- 5.2.10. Wholesale of wool, raw hides and skins conditioners) (65532) (61222) 4.1.1.20. Import of lighting and lighting 5.2.11. Wholesale of pickle, wet blue, crust and accessories (65533) finished leather (61223) 4.1.1.21. Import of electricity distribution 5.2.12. Wholesale trade in livestock and livestock and controlling apparatus products n.e.c. (61229) (65534) 5.2.13. Wholesale trade in ethanol & molasses 4.1.1.22. Import trade in wiring and (61246) cables accessories (65535) 5.2.14. Wholesale of bee wax (61265) 4.1.1.23. Import of solar energy 5.2.15. Wholesale trade in crude rubber (61267) equipments (65536) 5.2.16. Wholesale trade in cork, wood & pulp 4.1.1.24. Import trade in electrical (61268) equipment n.e.c. (65539) 5.2.17. Wholesale trade in cotton (61269) 4.1.1.25. Export trade in electrical 5.2.18. Wholesale trade in textiles fibers and yarn motors, generators, (61311) transformers, pumps, others 5.2.19. Wholesale trade in textile (61312) not mentioned in other places 5.2.20. Wholesale trade in apparel and clothing except household and office (61313) electrical equipments (66431) 5.2.21. Wholesale trade in footwear (61314) 4.1.1.26. Export trade in household and 5.2.22. Wholesale trade in leather and textile office electrical appliances and goods, bags and luggage (61315) equipment (including household 5.2.23. Wholesale of accessories and components air-conditioners) (66432) used for finishing textile and leather 4.1.1.27. Export trade in lighting and products (61316) lighting accessories (66433) 5.2.24. Wholesale of made-up textile articles, 4.1.1.28. Export trade in electricity except apparel (61317) distribution and controlling 5.2.25. Wholesale of synthetics (61318) apparatus (66434) 5.2.26. Wholesale trade in other textile and 4.1.1.29. Export trade in wiring and leather products, n.e.c. (61319) cables accessories (66435) 5.2.27. Wholesale of household and office 4.1.1.30. Export trade in solar energy furniture, requites, boards and appliances equipments (66436) (61321) 5. Construction 5.2.28. Wholesale of households including 5.1. Mapping Equipment and Services mattresses, cushions, blankets, etc. (61322) 5.1.1. Surveying (na) 5.2.29. Wholesale of furnishings (including 5.1.2. Import trade in road site accuracy curtains, carpets, wallpaper) (61323) equipment (na) 5.2.30. Wholesale of crockery, cutlery and kitchen 5.1.3. Import trade in GPS equipment (na) utensils (61324) Licenses for Which Competence Certificates Are Proposed to Be Abolished   29 5.2.31. Wholesale of sponges and foam (61325) 5.2.63. Wholesale trade in grain mill and its spare 5.2.32. Wholesale sanitary and sanitary parts (61516) accessories (61327) 5.2.64. Wholesale of pesticides and agro chemicals 5.2.33. Wholesale flora foam (61328) (61546) 5.2.34. Wholesale of furniture, home and office 5.2.65. Wholesale trade in commercial food furnishings and other office and household service equipment (e.g., hotel kitchen equipment n.e.c. (61329) equipment) (61591) 5.2.35. Wholesale of record albums, cassette 5.2.66. Wholesale trade in service establishment tapes, laser discs and compact discs equipment and supplies (e.g., beauty salon (including VCDs, DVDs) (61333) equipment) (61592) 5.2.36. Wholesale of paper and paper products 5.2.67. Wholesale trade in security and fire- (61341) fighting equipment (61593) 5.2.37. Wholesale of packaging materials (61342) 5.2.68. Wholesale trade in machinery and 5.2.38. Wholesale of stationery (61343) equipment n.e.c. (61599) 5.2.39. Wholesale of books and magazines 5.2.69. Department store (mall) (62110) (61344) 5.2.70. Supermarket (62120) 5.2.40. Wholesale trade of materials used for 5.2.71. Mini market/shop (62130) promotion and advertising (61345) 5.2.72. Hyper market (62140) 5.2.41. Wholesale of paper products packaging 5.2.73. Small shop (kiosk) (62150) materials including plastic and fiber 5.2.74. Retail trade of fabricated metals except materials and stationery n.e.c. (61349) general hardware (e.g., steel pipes) (62353) 5.2.42. Wholesale trade in photographic 5.2.75. Retail trade of general hardware (e.g., apparatus, equipment and supplies and locks, hinges, nails, tins, etc.) (62354) optical goods (61392) 5.2.76. Retail trade of structural clay and concrete 5.2.43. Wholesale trade in iron and steel (61421) products (e.g., mosaic tiles, bricks) (62355) 5.2.44. Wholesale trade in non-ferrous metals 5.2.77. Retail trade of paints (including varnishes (61422) and supplies) (62356) 5.2.45. Wholesale trade in scraps (61423) 5.2.78. Retail trade of cements (62357) 5.2.46. Wholesale trade in non-metallic minerals 5.2.79. Retail trade of sand, gravel, stone and (61424) related materials (62358) 5.2.47. Wholesale trade in metal, non-metals, 5.2.80. Retail trade of other construction metal ores and scraps n.e.c. (61429) materials, hardware plumbing, and health 5.2.48. Wholesale of fabricated metals except equipment and supplies (62359) general hardware (e.g., steel pipes) (61433) 5.2.81. Retail trade in men’s, boys’ and children’s 5.2.49. Wholesale of general hardware (e.g., locks, clothing (62361) hinges) (61434) 5.2.82. Retail trade in ladies’, girls’ and children’s 5.2.50. Wholesale of structural clay and concrete clothing (62362) products (e.g., mosaic tiles, bricks) (61435) 5.2.83. Retail trade in apparel and clothing 5.2.51. Wholesale of paints (including varnishes, (62364) adhesives and supplies) (61436) 5.2.84. Retail trade of shoes and leather goods 5.2.52. Wholesale of cement (61437) (62365) 5.2.53. Wholesale of sand, gravel, stones and 5.2.85. Retail trade of textile products (except related materials (61438) apparel and clothing) (62366) 5.2.54. Wholesale trade in construction materials, 5.2.86. Retail trade of bags, luggage and related n.e.c. (61439) products (62367) 5.2.55. Wholesale trade in basic industrial 5.2.87. Retail trade of traditional wear (62368) chemicals except fertilizers (61441) 5.2.88. Retail trade in textiles, and leather goods 5.2.56. Wholesale trade in chemical fertilizers n.e.c. (62369) (61442) 5.2.89. Retail trade in household and office 5.2.57. Wholesale trade in petrochemical furniture, requisites, boards, and products/Vaseline, glycerin, wastes of appliances (62371) petrochemicals, tar etc. (61443) 5.2.90. Retail trade of household materials 5.2.58. Wholesale of dyeing, tanning and coloring (blanket, bed sheet, quilt and pillow) materials (61444) (62372) 5.2.59. Wholesale of dry cells (61445) 5.2.91. Retail trade of household and office 5.2.60. Wholesale trade in chemicals and chemical furnishings and decorative (curtain, carpet products n.e.c. (61449) and wallpaper) (62373) 5.2.61. Wholesale trade in other intermediate 5.2.92. Retail trade of crockery, cutlery and products, waste and scrap of both metals kitchen utensils (62375) and non-metals (61490) 5.2.93. Retail trade of sanitary and sanitary 5.2.62. Wholesale trade in industrial, machinery accessories (62378) and equipment (61511) 30  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 5.2.94. Retail trade of household and office 5.2.126. Import trade in apparel and clothing furniture’s furnishing and other household (65313) and office equipments n.e.c. (62379) 5.2.127. Import trade in footwear and leather 5.2.95. Retail trade in glasses and glass products goods (65314) (62381) 5.2.128. Import trade in bags, luggage, handbags 5.2.96. Retail trade in books and stationery and related products (65315) materials (62382) 5.2.129. Import of accessories and components 5.2.97. Retail trade in blank and recorded CDs, used for finishing textile and leather DVDs and related products (62384) products (65316) 5.2.98. Retail trade in basic industrial chemicals 5.2.130. Import trade in made-up textile articles, except fertilizers (62391) cordage, rope, twine and netting, bags, 5.2.99. Wholesale trade in chemical fertilizers sacks, rapping & packing materials (62392) (except apparel and clothing) (65317) 5.2.100. Retail trade in petrochemical 5.2.131. Import trade in synthetic leather (65318) products/Vaseline, glycerin, wastes of 5.2.132. Import trade in other textile and leather petrochemicals, tar, etc. (62393) products n.e.c. (65319) 5.2.101. Retail trade in dyeing, tanning and 5.2.133. Import of household and office furniture, coloring materials (62394) requites, boards and appliances (65321) 5.2.102. Retail trade in plastics in primary forms 5.2.134. Import of furnishings (including curtains, and non-primary forms (62395) carpets, wallpaper)/sanitary tools/brooms 5.2.103. Retail trade of chemicals n.e.c. (62399) (65322) 5.2.104. Retail trade in outside stores (62400) 5.2.135. Import of households including mattresses, 5.2.105. Retail trade in second-hand goods in cushions, blankets, etc. (65323) stores (62410) 5.2.136. Import of sponges and foam (65325) 5.2.106. Retail trade in industrial machinery and 5.2.137. Import of sanitary and sanitary accessories equipment (62701) (65327) 5.2.107. Retail trade of commercial food service 5.2.138. Import of flora foam (65328) equipment, e.g., hotel kitchen (62811) 5.2.139. Import of furniture, home and office 5.2.108. Retail trade of service establishment furnishings and other household and office equipment and supplies (e.g., beauty salon equipment n.e.c. (65329) equipment) (62812) 5.2.140. Import of blank record albums, cassette 5.2.109. Retail trade of security and firefighting tapes, laser discs and compact discs equipment (62813) including VCDs, DVDs) (65333) 5.2.110. Retail trade of materials used for 5.2.141. Import of paper and paper products promotion and advertising including (65341) painting ink (62814) 5.2.142. Import of packaging materials made from 5.2.111. Retail trade of non-agricultural plastics and papers (65342) intermediate products, waste and scrap 5.2.143. Import of stationery (65343) (62820) 5.2.144. Import of books and magazines (65344) 5.2.112. Maintenance and repair of footwear and 5.2.145. Import trade of materials and painting leather products (63110) inks used for promotion and advertising 5.2.113. Maintenance and repair of household and (65345) office goods (63120) 5.2.146. Import of paper, paper and cellophane 5.2.114. Maintenance of personal goods (63130) products and stationery n.e.c. (65349) 5.2.115. Installation and maintenance of 5.2.147. Import trade in photographic apparatus, machineries (63155) equipment and supplies and optical goods 5.2.116. Installation and maintenance services (65393) n.e.c. (63190) 5.2.148. Import trade in iron and steel (65421) 5.2.117. Foreign trade agent (65111) 5.2.149. Import trade in non-ferrous metals 5.2.118. Commercial representative (65120) (aluminum, zinc, silver, copper, etc.) 5.2.119. Import of wool, raw and hides, skins (65422) (65222) 5.2.150. Import trade in scraps (65423) 5.2.120. Import of pickle, wet blue, crust and 5.2.151. Import trade in non-metallic minerals finished leather (65223) (clay, ceramics, gypsum, lime, and their 5.2.121. Import trade in ethanol and molasses products except cement and glass) (65424) (65245) 5.2.152. Import trade in glass and glasses products 5.2.122. Import trade in cork, wood & pulp (65425) (65268) 5.2.153. Import trade in metal, non-metals, metal 5.2.123. Import trade in cotton (65269) ores and scraps n.e.c. (65429) 5.2.124. Import trade in textile fibers and yarn 5.2.154. Import of fabricated metals except general (65311) hardware (e.g., steel pipes) (65433) 5.2.125. Import trade in textiles (65312) Licenses for Which Competence Certificates Are Proposed to Be Abolished   31 5.2.155. Import of general hardware (e.g., locks, 5.2.190. Export trade in other textile and leather hinges, nails, etc.) (65434) products n.e.c. (66219) 5.2.156. Import of structural clay and concrete 5.2.191. Export of household and office furniture, products (e.g., mosaic tiles, bricks) (65435) requzite, boards, appliances (66221) 5.2.157. Import of paints (including varnishes, 5.2.192. Export of households (including mattresses, adhesive, glues and supplies) (65436) cushions, blankets, etc.) (66222) 5.2.158. Import of cements (65437) 5.2.193. Export of sponges and foam (66224) 5.2.159. Import of heating equipment and related 5.2.194. Export of crockery, cutlery and kitchen materials (65438) utensils (66225) 5.2.160. Import trade in construction materials 5.2.195. Export of flora foam (66226) (65439) 5.2.196. Export of sanitary and sanitary accessories 5.2.161. Import trade in basic industrial chemicals (66228) except fertilizers (65441) 5.2.197. Export of furniture, home furnishings and 5.2.162. Import trade in chemical fertilizers (65442) other household equipment n.e.c. (66229) 5.2.163. Import trade in petro chemical products/ 5.2.198. Export of record albums, cassette tapes, Vaseline, glycerin, tar, etc. (65443) laser discs and compact discs (including 5.2.164. Import of dyeing, tanning and coloring VCDs, DVDs) (66233) materials (65444) 5.2.199. Export of recreational goods n.e.c. (66239) 5.2.165. Import of plastics in non-primary form 5.2.200. Export of paper and paper products and primary forms (65447) (66241) 5.2.166. Import trade in chemicals and chemical 5.2.201. Export of packaging materials made of products n.e.c. (65449) plastics and papers (66242) 5.2.167. Intermediate products, waste and scrap 5.2.202. Export of stationery (66243) (65490) 5.2.203. Export of books and magazines (66244) 5.2.168. Import trade in industrial machinery and 5.2.204. Export of paper, paper and cellophane equipment (65511) products and stationery n.e.c. (66249) 5.2.169. Import trade in commercial food service 5.2.205. Export of sporting goods n.e.c. (66259) equipment (e.g., hotel kitchen equipment) 5.2.206. Export of photographic apparatus, (65592) equipment and supplies and optical goods 5.2.170. Import trade in service establishment (66292) equipment and supplies (e.g., beauty salon 5.2.207. Export trade in other household goods equipment) (65593) n.e.c. (66299) 5.2.171. Import trade in security and fire-fighting 5.2.208. Export trade in iron and steel (66321) equipment (65594) 5.2.209. export trade in non-ferrous metals (66322) 5.2.172. Import trade in candles and tewaf (65712) 5.2.210. export trade in scraps (66323) 5.2.173. Import trade in drycells (65713) 5.2.211. export trade in non-metallic minerals 5.2.174. Import trade in torch light (65714) (66324) 5.2.175. Import of grain mill spare parts (65801) 5.2.212. export trade in glass and glasses products 5.2.176. Export of wool, raw hides, and skins (66325) (66122) 5.2.213. export trade in metal, non-metals, metal 5.2.177. Export of pickle, wet blue, crust and ores and scraps n.e.c. (66329) finished leather (66123) 5.2.214. Export of sawn timber, plywood and 5.2.178. Export of ethanol and molasses (66146) related products (66332) 5.2.179. Export of honey and honey products 5.2.215. Export of fabricated metals except general (except bee wax) (66164) hardware (e.g., steel pipes) (66333) 5.2.180. Export of bee wax (66165) 5.2.216. Export of general hardware (e.g., locks, 5.2.181. Export trade in cork, wood & pulp (66168) hinges) (66334) 5.2.182. Export trade in cotton (66169) 5.2.217. Export of structural clay and concrete 5.2.183. Export trade in textile fibers and yarn products (e.g., mosaic tiles, bricks) (66211) (66335) 5.2.184. Export trade in textiles (66212) 5.2.218. Export of paints (including varnishes and 5.2.185. Export trade in apparel and clothing supplies) (66336) (66213) 5.2.219. Export of cements (66337) 5.2.186. Export trade in footwear and leather 5.2.220. Export trade in construction materials goods (66214) (66339) 5.2.187. Export trade in bags and luggage (66215) 5.2.221. Export of basic industrial chemicals except 5.2.188. Export accessories and components used fertilizers (66341) for leather textile products (66216) 5.2.222. Export of chemical fertilizers (66342) 5.2.189. Export trade in other textile product 5.2.223. Export of petrochemical/Vaseline, glycerin, cordage, rope, twine and netting, bags, etc. products (66343) sacks, rapping & packing materials except 5.2.224. Export of dyeing, tanning and coloring apparel and clothing (66218) materials (66344) 32  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 5.2.225. Export of plastics in primary forms and 6.1.18. Retail trade of computer hardware non-primary forms (66347) and peripheral equipment (including 5.2.226. Export of chemicals and chemical accessories) (62803) products n.e.c. (66349) 6.1.19. Software design, development and 5.2.227. Export of inedible animal product (66371) implementation consultancy service 5.2.228. Export of metallic scrap and wastes (86200) (66391) 6.1.20. Wholesale trade in telecommunications 5.2.229. Export of non-metallic scraps and wastes equipment (61522) (66392) 6.1.21. Wholesale trade in computer hardware 5.2.230. Export trade in industrial machinery and and peripheral equipment (including equipment (66411) accessories) (61523) 5.2.231. Export trade in commercial food service 6.1.22. Wholesale trade in pagers, hand phones equipment (e.g., hotel kitchen equipment) (e.g., palmtops, smart watches, wearable (66492) computer and electronic books) (61521) 5.2.232. Export trade in service establishment 6.1.23. Wholesale trade in software (61524) equipment and supplies (e.g., beauty salon 6.1.24. Computer network design and equipment) (66493) implementation/installation consultancy 5.2.233. Export trade in security and fire-fighting service (86100) equipment (66494) 6.1.25. Data center/hosting service (86500) 5.2.234. Import trade in candles and tewaf (66502) 6.1.26. Network cable installation (86400) 5.2.235. Import trade in drycells (66503) 6.1.27. Training service in information and 5.2.236. Import trade in torch light (66504) communication technology (92230) 5.2.237. Import of grain mill spare parts (66505) 6.1.28. Information and communication 6. Transport, Storage and Communication technology consultancy (88740) 6.1. Telecommunication, Information Technology and 6.1.29. National postal activities (75110) Computer Sub-Sector 6.1.30. Other postal and related courier activities 6.1.1. Communication and electronics equipments (75190) installation and maintenance (63154) 6.1.31. National telecommunication service 6.1.2. Data processing-digitization and e-filing (75200) systems work (86300) 6.1.32. Computer network cable installation 6.1.3. Database activities (86300) (86400) 6.1.4. Export trade in computer hardware 6.1.33. Manufacture of pagers, hand phones and and peripheral equipment (including other palmtops, smart watches, wearable accessories) (66423) computer and electronic books (39121) 6.1.5. Export trade in computers and accessories 6.1.34. Wholesale trade in telecom and (66423) computers equipment and accessories 6.1.6. Export trade in pagers, hand phones n.e.c. (61529) (e.g., palmtops, smart watches, wearable 6.1.35. Retail trade of telecom and computers computer and electronic books) (66421) equipment and accessories n.e.c. (62809) 6.1.7. Export trade in telecommunications 6.1.36. Computer and computer accessories apparatus equipment (including maintenance (63154) accessories) (66422) 6.1.37. Import trade in lifts, escalators and 6.1.8. Import trade in computer and computer industrial and office air-conditioning accessories and components (65523) equipment (65514) 6.1.9. Import trade in computer hardware 6.1.38. Manufactures of telecommunications and peripheral equipment (including equipments and apparatus (39122) accessories) (65523) 6.1.39. Manufactures of computer equipments 6.1.10. Import trade in pagers, hand phones and apparatus (39123) (e.g., palmtops, smart watches, wearable 6.1.40. Manufacture of telecommunications and computer and electronic books) (65521) computer equipments and apparatus n.e.c. 6.1.11. Import trade in software (65524) (39129) 6.1.12. Import trade in telecommunications 6.2. Customs and Tax Sub-Sector equipment (65522) 6.2.1. General storage and warehousing (na) 6.1.13. Competence for office, computation and 6.3. Measurement and Other Scientific Equipment and computers maintenance service (63154) Services (certification to be maintained) 6.1.14. Other computer related activities (86900) 6.4. Radiation Emitting Equipment and Services 6.1.15. Retail trade of pagers, hand phones (certification to be maintained) (e.g., palmtops, smart watches, wearable 7. Community, Social and Personal Services computer and electronic books) (62801) 7.1. Culture and Tourism 6.1.16. Retail trade of software (62804) 7.1.1. Tourism sector 6.1.17. Retail trade of telecommunications 7.1.1.1. Tour operators (74141) equipment (62802) 7.1.1.2. Travel agent (74142) Licenses for Which Competence Certificates Are Proposed to Be Abolished   33 7.1.1.3. Tour operators and travel 7.1.2.19. Export of toys and games agents (74143) (66234) 7.1.1.4. Tourism promotion (74144) 7.1.2.20. Export of computer games 7.1.1.5. Travel agency and related (including electronic games and services n.e.c. (74149) video game consoles) (66235) 7.1.1.6. Event organizers (74150) 7.1.2.21. Export trade of souvenir, 7.1.1.7. Hotel & tourism consultancy artifacts and artificial jewelry (88130) (66236) 7.1.1.8. Steam and hot water supply 7.1.2.22. Consultancy service for social (41300) affairs (88213) 7.1.1.9. Individual tour guide not listed 7.1.2.23. Art & culture consultancy in ESIC (74149) (88320) 7.1.1.10. Tourist car rental not listed in 7.1.2.24. Theater, music, film ESIC (71223) modeling, dance, video & 7.1.2. Art and culture sector photograph, design school, etc. 7.1.2.1. Printing of books, brochures, (92221) musical books and others 7.1.2.25. Body circus school (92222) (32410) 7.1.2.26. Motion picture, theatre 7.1.2.2. Manufactures of musical and video production and instruments and scores (39211) distribution (96111) 7.1.2.3. Manufactures of souvenirs, 7.1.2.27. Related activities—film and artifacts and artificial jewelry tape renting to other industries, (39212) booking, delivery and storage 7.1.2.4. Manufactures of toys and (96112) games (39213) 7.1.2.28. Motion picture, theatre 7.1.2.5. Manufactures of computer and video production and games (including electronic distribution (audio visual games and video game consoles) production and distribution/ (39214) radio and TV/and related arts) 7.1.2.6. Manufacture of blank CDs, n.e.c. (96119) cassette tapes, laser discs and 7.1.2.29. Motion picture projection by compact discs (39215) cinemas (96121) 7.1.2.7. Manufacture of other 7.1.2.30. Motion picture projection by recreational goods (39219) driver in house (96122) 7.1.2.8. Wholesale of musical 7.1.2.31. Other motion picture projection instruments and scores (61332) (96129) 7.1.2.9. Wholesale of toys and computer 7.1.2.32. Rental of musical instruments games (61334) (music, film, theatre and 7.1.2.10. Wholesale of electronic games other arts interments renting) and video game consoles (96141) (61335) 7.1.2.33. Player of musical instruments 7.1.2.11. Wholesale of sSouvenirs and (DJ) (na) artifacts (61336) 7.1.2.34. Arts gallery (96144) 7.1.2.12. Retail trade in toys, computer 7.1.2.35. Arts studio (96145) and electronic video games 7.1.2.36. Arts contest and awards (music, (62363) film, theatre, gallery and other) 7.1.2.13. Retail trade of souvenirs, (96146) artifacts and artificial jewelry 7.1.2.37. Arts festival (music, film, (62815) theatre, gallery and other) 7.1.2.14. Import of musical instruments (96147) and scores (film, theater and 7.1.2.38. Other dramatic arts, music other related instruments) and other arts activities n.e.c. (65332) (96149) 7.1.2.15. Import of toys and games 7.1.2.39. Music band (96150) (65334) 7.1.2.40. Mini cultural band (96151) 7.1.2.16. Import of computer games 7.1.2.41. Medium cultural band (96152) (including electronic games and 7.1.2.42. General cultural band (96153) video game consoles) (65335) 7.1.2.43. Mini modern band (96154) 7.1.2.17. Import of other recreational 7.1.2.44. Medium modern band (96155) goods n.e.c. (65339) 7.1.2.45. General modern band (96156) 7.1.2.18. Export of musical instruments 7.1.2.46. Classical music modern band and scores (66232) (96157) 34  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 7.1.2.47. Jazz modern band (96158) 7.2.4. Wholesale of sporting goods n.e.c. (61359) 7.1.2.48. Dance team (96159) 7.2.5. Retail trade of sporting goods and 7.1.2.49. Film production (96161) equipment (including healthcare 7.1.2.50. Cinema hall (96162) equipment) (62330) 7.1.2.51. Film studio (96163) 7.2.6. Retail trade of recreational and musical 7.1.2.52. Film capturing (96164) goods (62340) 7.1.2.53. Theatre production (96170) 7.2.7. Import of sporting goods and equipment 7.1.2.54. Library activities (96311) (including healthcare equipment) (65351) 7.1.2.55. Archives activities (96312) 7.2.8. Import of other sporting goods n.e.c. 7.1.2.56. Library and archives activities (65359) n.e.c. (96319) 7.2.9. Export of sporting goods and equipment 7.1.2.57. Preservation of historical sites (including healthcare equipment) (66259) and buildings (96322) 7.2.10. Research and experimental development 7.1.2.58. Cultural center service (96323) on physical science (87160) 7.1.2.59. Museum activities and 7.2.11. Activities of sports associations (licensing preservation of historical sites on activities of sport association) (95100) and buildings (arts center) n.e.c. 7.2.12. Sporting services (96410) (96329) 7.2.13. Pool and billiard houses (96421) 7.1.2.60. Botanical and zoological 7.2.14. Places for game sports (96430) gardens and nature reserve 7.2.15. Sports enrichment centers (96440) activities (96330) 7.2.16. Other sporting and recreational activities 7.1.2.61. Topographic beauty (96340) (96490) 7.1.2.62. Circus group (96450) 7.3. Education Sector 7.1.2.63. Decorating activities (99140) 7.3.1. Short term language study and training 7.1.2.64. Fashion and beauty contest (92160) services (99150) 7.3.2. Manufacture of crayons, chalk, pens and 7.1.2.65. Research and experimental pencils (39292) development on culture and 7.3.3. Manufacture of educational support sociology (87210) equipments (39297) 7.1.2.66. Research and experimental 7.3.4. Wholesale of educational equipments development on linguistics and (61549) literature (87230) 7.3.5. Import trade in educational support 7.1.2.67. Symphony orchestra (not listed equipments (65596) in ESIC) 7.3.6. Retail trade of education equipments 7.1.2.68. Art promotion (not listed in (62317) ESIC) 7.3.7. Export trade in education support 7.1.2.69. Theater promotion (not listed equipments (66496) in ESIC) 7.3.8. Other educational services including 7.1.2.70. Pair promotion (not listed in tuition (92190) ESIC) 7.3.9. Other education related services n.e.c. 7.1.2.71. Music promotion (not listed in (92290) ESIC) 7.4. Media and Communication Sub-Sector (these 7.1.2.72. Literature promotion (not listed licenses lack legal basis and are not currently in ESIC) administered by the BA; but, they are included in 7.1.2.73. Sculpture promotion (not listed the ESIC) in ESIC) 7.4.1. Electronics printing (32510) 7.1.2.74. Animation film studio (not 7.4.2. Retail trade of broadcasting equipment/ listed in ESIC) radio, television sets, sound reproducing 7.2. Sporting Sub-Sector and recording equipment and supplies 7.2.1. Manufacture of sports goods (39220) dish, decoder, etc. (66227) 7.2.2. Wholesale of other recreational and 7.4.3. Export trade of materials that are used for musical goods n.e.c. (61339) promotion and advertising (66245) 7.2.3. Wholesale of sporting goods and 7.4.4. Newspapers, journals and periodicals equipment (including healthcare distributor (89520) equipment) (61351) Licenses for Which Competence Certificates Are Proposed to Be Abolished   35 Annex 2 Suggested Simplified List of Licenses Detailed Classification 1: Agriculture, Detailed Classification 2:  Mining and Hunting, Forestry and Fishing Quarrying No. Title of Category No. Title of Category Agriculture, hunting and related services Mining of coal and lignite  1. Growing of crops; market gardening; horticulture Extraction of crude petroleum and natural  2. Farming of animals gas; service activities incidental to oil and gas extraction  3. Growing of crops combined with farming of animals (mixed farming) 13. Extraction of crude petroleum and natural gas  4. Agricultural and animal husbandry services, 14. Service activities incidental to oil and gas except veterinary activities (artificial breeding extraction, excluding surveying including bulls) 15. Activities for control of natural radio nuclides  5. Hunting, trapping and game propagation, including Prospecting of minerals related services 16. Reconnaissance  6. Production of organic fertilizer 17. Exploration Forestry, logging and related services 18. Retention  7. Forestry and related services 19. Prospecting and developing of uranium and  8. Logging and related services thorium minerals  9. Other activities of forestry and hunting n.e.c. 20. Prospecting of minerals n.e.c. Fishing, operation of fish hatcheries and fish Mining farms 21. Precious mineral (excludes gold and uranium) 10. In-land fishing mining 11. Fish hatcheries and fish farms 22. Semiprecious mineral mining 12. Other activities of fish farms and related services 23. Metallic mineral mining 24. Industrial mineral mining 25. Construction mineral mining 26. Strategic mineral mining (continues) 37 Detailed Classification 2: Continued No. Title of Category 51. Tanning and dressing of leather, manufacture of No. Title of Category luggage, handbags, saddlery and harness 27. Mining of gold & uranium ores mining Manufacture of wood & of products of wood & Other mining and quarrying cork, except furniture; manufacture of articles of straw & plaiting materials; manufacture of paper 28. Stone quarrying, clay and sandpits and paper products; publishing, printing and 29. Mining of diamonds (including alluvial diamonds) reproduction of recorded media and opals 52. Saw milling and planing of wood and production Mining and quarrying of articles of straw 30. Mining of chemical and fertilizer minerals 53. Manufacture of products of wood, cork, straw and 31. Extraction and evaporation of salt plaiting materials 32. Other mining and quarrying n.e.c. 54. Manufacture of paper and paper products Extraction 55. Paper related printing 33. Large scale mining 56. Electronic related printing 34. Small scale mining 57. Manufacture of coke oven products 35. Artisanal mining Petroleum refineries/synthesisers 36. Other mining n.e.c. 58. Petrol, fuel oils, lubricating oils and greases, 37. Research & training and service activities primarily from crude oil incidental to mining of minerals 59. Petrol, fuel oils, lubricating oils and greases, primarily from coal 60. Petrol, fuel oils, lubricating oils and greases, Detailed Classification 3: Manufacturing primarily from natural gas 61. Lubricating oils and greases, primarily from other No. Title of Category organic products Manufacture of food products, beverages and 62. Compounded and blended lubricating oils and tobacco products greases from purchased materials other than Production, processing and preservation of crude petroleum meat, fish, fruit, vegetables, oils and fats 63. Other petroleum/synthesized products n.e.c. 38. Production, processing and preserving of meat Manufacture of basic chemicals and meat products 64. Manufacture of basic chemicals, except fertilizers 39. Processing and preserving of fish and fish and nitrogen compounds products 65. Manufacture of fertilizers and nitrogen 40. Processing and preserving of fruit and vegetables compounds 41. Manufacture of vegetable and animal oils and fats 66. Manufacture of plastics in primary form and of 42. Manufacture of dairy products synthetic rubber 43. Manufacture of grain mill products, starches and 67. Other manufacture of basic chemicals starch products and prepared animal feeds Manufacture of other chemical products 44. Manufacture of other food products 68. Manufacture of pesticides and other agro- 45. Manufacture of beverages chemical products 46. Manufacture of tobacco products 69. Manufacture of edible salts Manufacture of textiles, clothing and leather 70. Manufacture of pharmaceuticals, medicinal goods chemicals and botanical products 47. Spinning, weaving and finishing of textiles 71. Manufacture of pharmaceuticals, medicinal 48. Manufacture of other textiles chemicals and botanical products for human use 49. Dressing and dyeing of fur; manufacture of 72. Manufacture of pharmaceuticals, medicinal articles of fur chemicals and botanical products for veterinary use 50. Manufacture of manmade fiber 38  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Detailed Classification 3: Continued No. Title of Category 96. Manufacture of broadcast equipments (television No. Title of Category and radio receivers, sound or video recording or 73. Manufacture of chemicals used for medical reproducing apparatus and associated goods) manufacture, food and medicine including Manufacture of medical appliances & precursor chemicals instruments & appliances for measuring, 74. Manufacture of cleansing and cosmetics checking, testing, navigating and for other purposes, except optical instruments 75. Manufacture of other chemical products except basic chemicals.  97. Manufacture of medical and surgical equipment and orthopedic appliances 76. Manufacturing of drycell  98. Manufacture of radiation emitting equipments & 77. Manufacture of rubber and plastics products radioactive sources Manufacture of other non-metallic mineral  99. Manufacture of instruments and appliances for products measuring, checking and testing of industrial 78. Manufacture of glass and glasses products process 79. Manufacture of non-metallic mineral products 100. Manufacture of industrial process control n.e.c. equipment Manufacture of basic metals, fabricated metal 101. Manufacture of watches and clocks products, machinery and equipment 102. Other manufacture of medical appliances & 80. Manufacture of basic iron and steel instruments & appliances for measuring, checking, 81. Manufacture of basic precious and non-ferrous testing, navigating and for other purposes, except metals optical instruments 82. Casting of metals 103. Manufacture of security cameras 83. Manufacture of structural metal products, tanks, 104. Manufacture of optical instruments and reservoirs photographic equipment 84. Manufacture of other fabricated metal products; Manufacture of transport equipment metalwork service activities 105. Manufacture of motor vehicles 85. Manufacture of general purpose machinery 106. Manufacture of bodies (coachwork) for motor 86. Manufacture of special purpose machinery vehicles; manufacture of trailers and semi-trailers Manufacture of electrical machinery and 107. Manufacture of parts and accessories for motor apparatus n.e.c. vehicles and their engines 87. Manufacture of electric motors, generators and 108. Building of ships and boats transformers 109. Manufacture of railway and tramway locomotives 88. Manufacture of electricity distribution and control and rolling stock apparatus 110. Manufacture of aircraft and spacecraft 89. Manufacture of insulated wire and cable 111. Manufacture of transport equipment n.e.c. 90. Manufacture of accumulators, primary cells and Manufacture of furniture; manufacturing n.e.c.; primary batteries recycling 91. Manufacture of electric lamps and lighting Manufacture of furniture; manufacturing equipment 112. Manufacture of office and household furniture 92. Manufacture of electrical baking stove 113. Manufacture of telecommunications and computer 93. Manufacture of energy-saving technology devices equipments and apparatus 94. Manufacture of other electrical equipment n.e.c. 114. Manufacturing of n.e.c. Manufacture of radio, television and 115. Recycling of metals and non-metals wastes and communication equipment and apparatus and scraps n.e.c. of medical, precision and optical instruments, watches and clocks 95. Manufacture of electronic valves and tubes and other electronic components (capacitors, resistors, transistors, etc.) Suggested Simplified List of Licenses    39 Detailed Classification 4:  Electricity, Gas and No. Title of Category Water Supply Building completion 138. Painting and decorating No. Title of Category 139. Water-proofing services ELECTRICITY, GAS, STEAM AND HOT WATER 140. Building and road construction contractor SUPPLY 141. Other related activities n.e.c. Generation, production, and distribution and sale of electricity 142. Demolition and site preparation for construction 116. Generation of electric energy from renewable 143. Other construction works sources 117. Generation of electric energy from non-renewable sources Detailed Classification 6:  Wholesale and 118. Distribution and sales of electricity Retail Trade; Repair; Hotels and Restaurants; Import & Export 119. Transmission of electricity 120. Installation of electric line (level A–level D) No. Title of Category 121. Manufacture of gas; distribution of gaseous fuels through mains Wholesale and commission trade 122. Steam and hot water supply 144. Domestic trade auxiliary 123. Collection, purification and distribution of water 145. Wholesale trade in agricultural raw materials, including bottled water livestock, food, beverages and tobacco & tobacco products 124. Other electricity, gas, steam and hot water supply n.e.c. 146. Wholesale trade in household goods 147. Wholesale trade in solid, liquid and gaseous fuels, equipment, chemicals, non-agricultural intermediate products, waste and scrap Detailed Classification 5: Construction 148. Wholesale trade in machinery, equipment and supplies No. Title of Category 149. Wholesale sale of motor vehicles, spare parts and Construction parts 125. Road contractor Retail trade, of motor vehicles and motorcycles; Building of complete constructions or parts repair of personal and household goods thereof; civil engineering 150. Retail trade in non-specialized stores 126. Buildings contractor 151. Retail trade in agricultural raw materials, food, 127. Construction of water works beverages and tobacco in specialized stores 128. General contractor except water work contractor 152. Retail trade in new goods in stores 129. Other building of complete constructions or parts 153. Retail trade in outside stores thereof; civil engineering 154. Retail trade in second-hand goods in stores Building installation (specialized) contractor 155. Retail sale of motor vehicles, bicycle, fuel, oil, 130. Plumbing lubricants 131. Electrical contracting 156. Retail sale of parts and accessories 132. Electromechanical work constructor 157. Retail trade in machinery, equipment and supplies 133. Sanitary work contractor 158. Retail trade of telecom, computers equipment and accessories 134. Wood & metal work contractor Maintenance and repair service 135. Landscaping contractor 159. Maintenance and repair of household, personal 136. Pile foundation work contractor and public goods 137. Other building installation (specialized) contractor 160. Maintenance and repair of vehicles and its parts 161. Car wash service and grease 40  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Detailed Classification 6: Continued No. Title of Category 183. Taxis No. Title of Category 184. Safaris and sightseeing service Hotels and restaurants 185. Tourist transport service 162. Hotels, camping sites of short and long stay 186. Other passenger transport, including the renting accommodation, home stays and other provision of passenger motor vehicles with drivers 163. Restaurants, bars and canteens 187. Freight transport by road Import trade 188. Transport of cargo trucks 164. Import trade on a fee or contract basis 189. Transport of fuel 165. Import trade in agricultural raw materials, livestock, 190. Transport of water liquid sewage and others food, beverages tobacco and tobacco products 191. Transport of dry freight 166. Import trade in household and office goods 192. Other freight transport by road 167. Import trade in solid, liquid and gaseous fuels and 193. Transport via pipelines related products, industrial products, chemicals and chemical products, construction materials, Water transport explosives, pyrotechnic products 194. Inland water transport Intermediate products, waste and scrap 195. Passenger water transport 168. Import trade in machinery, equipment and supplies Air transport 169. Import of vehicles and spare parts 196. Passenger air transport 170. Import trade in processed agricultural products 197. Cargo air transport 171. Import trade in other factory products 198. Ground handling 172. Import trade in other machinery and equipments 199. Balloon operation Export trade 200. Flying club 173. Export trade in agricultural raw materials, livestock, 201. Banner towing food, beverages and tobacco & tobacco products 202. Glider 174. Export trade in household goods 203. Parachute rigger 175. Export trade in solid, liquid and gaseous fuels and 204. Other activities of air transport n.e.c. related products, industrial products, chemicals Supporting and auxiliary transport activities; and chemical products, construction materials, activities of travel agencies explosives, pyrotechnic products 205. Cargo handling Intermediate products, waste and scrap 206. Storage and warehousing 176. Export trade in machinery, equipment and supplies 207. Bonded warehousing 177. Import trade in other factory products 208. General storage and warehousing 178. Export of vehicles and spare parts 209. Other supporting transport activities 210. Parking garages and parking lots Detailed Classification 7:  Transport, Storage 211. Salvaging of distressed vessels and cargoes and Communication 212. Maintenance and operation of harbor works, lighthouses, etc., pilot age No. Title of Category 213. Operation, construction and administration of Land transport; transport via pipelines airports Railway transport 214. Operation of roads and toll roads 179. Inter-urban railway transport 215. Other supporting transport activities n.e.c. 180. Railway commuter services 216. Travel agency and related activities Other land transport 217. Tour operators 181. Other scheduled passenger land transport 218. Travel agent 182. Other non-scheduled passenger land transport 219. Tour operators and travel agents (continues) Suggested Simplified List of Licenses    41 Detailed Classification 7: Continued No. Title of Category Other financial intermediation n.e.c. No. Title of Category 246. Lease financing 220. Tourism promotion 247. Other lease granting 221. Travel agency and related services n.e.c. 248. Other financial intermediation n.e.c. 222. Event organizers Activities auxiliary to financial intermediation, 223. Trade promotion service except insurance and pension funding 224. Activities of other transport agencies 249. Security dealing activities 225. Ship agents 250. Activities auxiliary to financial intermediation n.e.c. 226. Freight forwarders Activities auxiliary to financial intermediation, except insurance and pension funding 227. Customs clearance Insurance and pension funding, except 228. Multimodal transport operator compulsory social security 229. Harbor works 251. Life insurance institutions 230. Activities of other transport agencies n.e.c. 252. Pension funding institutions Post and telecommunication 253. Medical aid funding institutions Postal and related courier activities 254. General insurance institutes 231. National postal activities 255. Life and general insurance 232. Courier activities other than national postal activities 256. Reinsurance institutions 233. Others postal and related courier activities 257. Asset valuation National telecommunication service 258. Other insurance n.e.c. 234. Tele-center Activities auxiliary to insurance and pension 235. Internet café funding 236. Telecommunication inside cable installation and 259. Activities auxiliary to pension funding maintenance Activities auxiliary to insurance 237. Telecommunication outside cable installation and 260. Insurance broker maintenance 261. Insurance sales agent 238. Telecommunication exchange installation and maintenance 262. Actuary 239. Telecommunication terminal equipments 263. Loss assessor maintenance 264. Loss adjuster 240. Telecommunication value added services 265. Insurance survey 266. Other activities auxiliary to insurance and pension funding n.e.c. Detailed Classification 8: Financial Real estate activities Intermediation, Insurance, Real Estate and Business 267. Real estate activities with leased property Services 268. Real estate activities on a fee or contract basis No. Title of Category Renting of machinery and equipment, without operator and of personal and household goods Financial intermediation, except insurance and 269. Renting of transport equipment pension funding 270. Renting of other machinery and equipment Monetary intermediation 271. Renting of personal and household goods 241. Banking service Computer and related activities 242. Saving & credit associations 272. Computer network design and installation 243. Micro finance institutions 273. Software design, development and implementation 244. Discount houses and commercial and other banking 274. Data base activities and data processing 245. Other monetary intermediation 275. Computer network cable installation 42  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Detailed Classification 8: Continued No. Title of Category Consultancy on transport No. Title of Category 305. Maritime consultancy service 276. Data center/hosting 306. Aviation consultancy 277. Other computer related activities 307. Land transport (car) consultancy Research and experimental development 308. Land transports (train) consultancy 278. Research and experimental development on 309. Consultancy service on geo-information product natural sciences engineering and technology and service 279. Research and experimental development on social Other services sciences and humanities Technical testing, analysis and related services 280. Other business activities 310. Inspection 281. Accounting, bookkeeping and auditing activities; 311. Testing laboratories finance and administration services 312. Product certification Consultancy services on social and natural sciences 313. System certification 282. Social science consultancy 314. Person certification 283. Natural science consultancy 315. Calibration of laboratories 284. Hotel & tourism and art & culture consultancy 316. Verification 285. Quality management system consultancy 317. Vehicles technical assessment service 286. Occupational safety & health control consultancy 318. Quality award service 287. Consultancy on education 319. Irrigation line installation Architectural, engineering, construction and Advertising related technical consultancy 320. Newspapers, journals and periodicals publisher 288. Architectural construction and related consultancy 321. Newspapers, journals and periodicals distributor services 322. Publishing service of books, brochures, musical 289. Construction and related specialized consultancy books and others services 323. Notice 290. Urban planning and related consultancy Other business activities 291. Construction management consultancy 324. Conveyance 292. Consulting architects 325. Labor recruitment and provision of staff 293. Other construction related professional 326. Local activities of employment agencies and consultancy services n.e.c. recruiting organizations 294. Consulting engineers 327. Abroad activities of employment agencies and 295. Electrical consulting engineers recruiting organizations 296. Mechanical consulting engineers 328. Security activities 297. Industrial consulting engineers 329. Building, industries, airplane, resident house and 298. Mining consulting engineers other related cleaning activities 299. Chemical consulting engineers 330. Photographic activities 300. Civil consulting engineers 331. Packaging activities 301. Water works consultancy 332. Geospatial information service 302. Information communication technology consultancy 333. Surveying service 303. Consultancy service on scientific machineries 334. Mapping service selection, installation, commissioning, 335. Remote sensing works service maintenance and disposal consultancy 336. GIS works service 304. Consultancy service metrology (continues) Suggested Simplified List of Licenses    43 Detailed Classification 8: Continued No. Title of Category 361. General hospital No. Title of Category 362. Primary hospital 337. Quality control on geo-information product and 363. Health center service 364. Medical/speciality center 338. Property management 365. Diagnostic imaging 339. Pesticide fumigation 366. Diagnostic laboratory 340. International bid (according to the bid that the 367. Kela health station company wins) 368. Other human health activities 341. Logistic, supplies and support service (except other trade activities) 369. Supplementary health services or paramedical staff (practitioners) 342. Road marking paint 370. Clinics and related health care services 371. Nursing services Detailed Classification 9:  Community, Social 372. Specialty clinic and Personal Services 373. Middle clinic 374. Primary clinic No. Title of Category 375. Day care services Education 376. Traditional medical service Educational services 377. Other medical and health services n.e.c. Pre-primary education and activities of 378. Veterinary activities after-school centre 379. Social work activities 343. Primary and secondary education Other community, social and personal service 344. Cross boundary higher education activities 345. Education by technical colleges and technical 380. Sewage and refuse disposal, sanitation and institutions similar activities 346. Education by techniques (TVET) and training Activities of membership organisations (including short-term training) 381. Activities of sports associations 347. Short-term language study and training (licensing on activities of sport association) 348. Regular higher education Recreational, cultural and sporting activities 349. Regular distance higher education Motion picture, radio, television creative arts, 350. Other educational services including tuition and other entertainment activities Education related service 382. Motion picture and video production and distribution 351. Driving education both in regular and by special 383. Motion picture projection machineries 384. Radio and television activities 352. Culture & arts education 385. Dramatic arts, music and other arts activities 353. Theater, music, film modeling, dance, video & (promotion service on theatre, music, film, gallery) photograph, design school, etc.) 386. Music band 354. Body circus school 387. Film production 355. Training service in information and communication 388. Theatre production technology 389. Wildlife related commercial activities 356. Maritime training school 390. Other entertainment activities n.e.c. 357. Aviation training school 391. News service activities 358. Other education related services n.e.c. Library, archives, museums and other cultural Health and social work activities Human health activities 392. Library and archives activities 359. Hospital activities 393. Museum activities and preservation of historical 360. Specialized hospital sites and buildings 44  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Detailed Classification 9: Continued Detailed Classification 10: Private Households, Exterritorial Non-Governmental No. Title of Category Organizations, Representatives of Foreign Governments and Other Activities Not Adequately 394. Botanical and zoological gardens and nature Defined reserve activities 395. Topographic beauty No. Title of Category 396. Sporting, sports enrichment and related recreational services 403. Private households with employed persons— example, tutor Other service activities 404. Other activities not adequately defined 397. Washing and (dry-) cleaning of textiles and fur products 398. Hairdressing and other beauty treatment 399. Printing & book services 400. Decorating activities 401. Fashion and beauty contest services 402. Other service activities Suggested Simplified List of Licenses    45 Annex 3 Detailed Analysis of Licenses This annex is organized in three chapters. The first transaction costs, providing certainty and encouraging one briefly discusses the conceptual background for healthy competition, thus enhancing competitiveness, government regulation of the private sector, including investment, growth and employment.14 Indeed, a well- the need and approaches for regulatory reform in functioning regulatory system is an essential component business licensing. Chapter 2 provides an overview of of the modern economic order. The issue is not whether the regulatory framework for business registration and or not government should regulate, as there are good licensing in Ethiopia. It discusses the general business reasons to do so, but what kind of regulation, the registration and licensing regime, which is applicable extent of such regulation and how to do it. However, to all businesses nation wide. Chapter 3 presents the while there are always good reasons to justify regulation detailed inventory of business licenses by sectors. It such as market failure and public interest, it is generally describes and analyzes all business licenses which are accepted that the presence of these reasons justifies applicable to businesses operating in a specific sector or government regulation only where the benefits of such sub-sector. regulation exceed the costs and also where regulation is the best (e.g., most efficient) way of achieving policy objectives.15 To achieve this there are accepted features 1.  Background on of a high quality regulation (see Box 1). In addition, the Government regulation regulations need to be administered in a transparent, 1.1  Government Regulation through reasonable and impartial manner to achieve their Licensing objectives. Government regulation is an important tool to achieve Licensing is a commonly used type of regulation, by a wide range of social, economic, environmental, which governments regulate businesses’ entries into equity and other public policy objectives. There are markets and operations within markets. This can often reasons for governments to regulate markets involve the use of permits, certification, and other forms and businesses. Regulation could for example be of authorizations and notifications. Licenses typically intended to address risks that potentially cause harm impose on businesses a range of conditions, obligations or are a detriment to consumers, the public or the and rights, breaches of which typically involve environment. There may also be a market failure which needs to be addressed by a government regulation. 14 World Bank/IFC (2010), Policy Framework Paper on Above all, a well-functioning regulatory system Business Licensing Reform and Simplification, at 25. provides a stable environment for business by reducing 15 Ibid. 47 Box 1: Key Features of High Quality Box 2: Potential Risks and Costs of Regulations Licensing • Minimum requirements used to achieve objectives; • Unnecessarily restrict entry into a market and/or • Not being unduly prescriptive in specifying how competition within a market; businesses should operate; • Providing barriers to businesses operating in the • Accessible, transparent and accountable; informal sector moving to the formal sector; • Integrated and consistent with other laws/ • Severely limit the supply of important goods and regulations (including international, national and services (e.g., taxis or medical services); sub-national regulations); • Result in standards being unnecessarily high and • Communicated effectively to business and other otherwise distortive; stakeholders; • Be costly and/or difficult for governments to • Minimizing administrative compliance burdens on administer and properly enforce; business; and Source: World Bank/IFC (2010), Policy Framework • Enforceable. Paper on Business Licensing Reform and Simplification. Source: World Bank/IFC (2010), Policy Framework Paper on Business Licensing Reform and Simplification. and stay “invisible” for the public sector.16 Across the developing world, close to 15% of firms consider imposition of sanctions by the relevant regulatory business licenses and permits as a major constraint to authority—such as a fine or revocation of permission to doing business.17 In business, where time is money, perform an activity. both the delay and the business administrative time Licenses as a regulatory tool offers a number of required to deal with regulations detract from economic potential benefits. First the application and notification competitiveness where businesses in other countries do component of the licensing process allows governments not experience similar impositions. to identify, verify and contact businesses. Second, prior Second, in addition to imposing regulatory compliance approval allows governments to test businesses and burdens licensing requirements impose regulatory exclude those unlikely to meet minimum standards, requirement burdens and restrict healthy competition by such as businesses or business activities which generate establishing unnecessary entry barriers to a particular significant health, safety, security, environmental or business activity.18 Third, licensing and the associated other costs and/or risks. Third, licenses can allow compliance requirements—as with other types of the controlled use of valuable and scarce community regulation—can also often offer significant discretion resources, such as telecommunications spectrums, to the issuing authorities, which may lead to abuse, forests or fisheries. corruption, uncertainty and other risks. However, from an economic and business point of All of these outcomes could reduce significantly levels view, licensing can also be damaging for business of productivity, incomes and wealth creation of an (Box 2). First, licenses could be costly. To obtain the economy. required licenses, businesses typically have to comply with a series of legal requirements, which can impose 16 Ibid. substantial administrative and financial burdens 17 See www.enterprisesurveys.org (last accessed on 8 August on their activities. Potential entrepreneurs may be 2012). discouraged from setting up businesses by prohibitively 18 Bruhn, Miriam (2011), “License to Sell: The Effect of high costs and time-consuming licensing procedures, Business Registration Reform on Entrepreneurial Activity in Mexico.” Review of Economics and Statistics 93(1): and may thus be forced to join the informal sector 382–386. 48  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Cognizant of these constraints and potential negative effects of licensing, most governments seek to limit Box 3: The Key Features of Good licensing to a limited number of specified sectors Regulatory Administration and Practice and activities where prior control of the behavior of • Sound and transparent governance; businesses is deemed necessary to achieve important • Effective information management; economic, social, safety, security or environmental • Good relationship management with stakeholders; outcomes. • Adequate resourcing of regulatory institutions; • Capacity to efficiently and effectively receive 1.2  The Need for a Comprehensive applications from business and monitor compliance; Licensing Reform • Ability to address non-compliance; and A number of recent studies have found that simpler • Provide adequate response to adverse events. licensing systems (Box 3) translate into advantages for Source: World Bank Group 2010, How to Reform workers and employers, including greater employment Business Licenses. opportunities, more productive jobs, and higher total factor productivity.19 In addition, society as a whole benefits from licensing reform, which requires that encouraging results in terms of creating a conducive businesses pay taxes, play by the rules, and provide environment for business. These countries reformed productive, decent employment. These factors can lead their licensing regimes and reduced costs, streamlined to increased consumer welfare as enhanced competition procedures and made doing business easier. In 2009, results in better quality products and/or lower prices.20 Rwanda revamped its business start-up process by While reforming business licensing can generate establishing a one-stop shop for business registration; significant economic, social and environmental benefits as a result of this and other reforms, Rwanda is now (in for developing countries it can also be difficult, complex Doing Business 2014) ranked as the 9th best performer and challenging. The challenge could take different globally for starting a business. Major reforms of forms. To begin with, identification of all licenses and licensing systems have also taken place in several other consideration whether such licenses can be justified African countries such as Burundi, Liberia, Madagascar because they generate net benefits for society is not and Sierra Leone, as well as, to a lesser extent, in Kenya a simple task especially for least developed countries or South Africa. Ethiopia’s performance has improved (LDCs) where resources and expertise are limited. In markedly since 2010, but much remains to be done in addition, there could be interest groups (who benefit comparison with regional leaders (Figure 4). from the existing system) that feel threatened by the Experience shows that licensing reform follows reform and attempt to block the reform agenda in different steps. The first step in the process is to different ways. Furthermore, governments may consider identify and compile the existing licenses. Different licensing as a source of revenue and hence may show laws issued in different times may require licenses, little interest in reform that may potentially reduce its permits, and authorizations for different activities and revenues. there are often no systematic records of such licenses. Hence, a high level political commitment is essential to The compilation exercise identifies the licenses, the successfully implement licensing reforms. legal basis for each license, conditions to be complied with, etc. The next step would be to assess if each of In recent years a number of countries have embarked the licenses is based on law, or even if it is necessary. on regulatory reform including simplification of the This will be followed by an assessment of the entry requirements, and some of them have achieved compliance costs of licenses. The final stage will be to come up with a comprehensive proposal to simplify 19 The World Bank Group (2013), “Reforming Business the licensing regime. This may involve elimination of Licensing: A Toolkit for Practitioners.” 20 Ibid. some licenses, amalgamation of some licenses as well Detailed Analysis of Licenses   49 Figure 4: Ethiopia’s Performance for Starting Businesses Compared to Peers, Distance to Frontier, 2006–1421 100 90 80 70 60 50 40 30 DB 2006 DB 2007 DB 2008 DB 2009 DB 2010 DB 2011 DB 2012 DB 2013 DB 2014 New Zealand Rwanda Madagascar Burundi South Africa Ghana Tanzania Kenya Ethiopia Uganda Source: Doing Business 2014, http://www.doingbusiness.org/data/exploretopics/starting-a-business/frontier. Box 4: Key Arguments in Favor of a Comprehensive and Systemic Reform • Efficiency: evaluating all licenses through one • Addressing systemic issues: comprehensive reform process, proposing one reform package, and approach allows for clean-up of the whole system, implementing a series of changes at one time, through and the establishment of tools (e-registry) and one process, rather than setting up new reform institutions such as a regulatory reform units, which machinery, with heavy transaction costs every time. help solve some of the systemic problems that led • Efficacy: not giving into special interests, which will to poor business regulations (fixing the stock of emerge for almost every license or sector where valid regulations through the registry, and ensuring reforms are proposed. A piecemeal approach (e.g., a healthy flow of future regulation through the one sector after the other) gives special interests regulatory reform unit). much more leverage to impede reforms from Source: WB/IFC, Investment Climate Advisory happening. Services (2010). as simplification of others. Since the entire process healthy competition, thus enhancing international involves a range of government institutions, the competitiveness, investment, growth and employment.21 best option will be to establish an inter-institutional 21 The score illustrates the distance of an economy to the committee to follow up the entire process. “frontier” related to the “starting a business” indicator, which represents the best performance observed across all A well-functioning licensing system provides a stable economies and years included since 2005. An economy’s environment for business by reducing transaction distance to frontier is indicated on a score from 0 to 100, where 0 represents the lowest performance and 100 the costs, providing certainty and encouraging frontier, i.e., the best performance possible. 50  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform inadequate market institutions.22 Though the marketing Box 5: Review Criteria Used in a system has been liberalized, it remains costly, risky, and Number of Licensing Reforms segmented, which together makes it unfavorable for • Legality: is there a legal basis in a parent law or business activities.23 A number of studies highlighted higher ranking regulation to issue the license? the challenges of doing business in the country. For • Necessity: is the license used to protect the instance, the country’s rank in the World Bank Doing environment, health or safety. Does the license Business indicator declined from 124 in 2013 to 125 duplicate other licenses or regulations? in 2014.24 With regard to starting a business in the • Consistency: is it consistent with other regulations? country, Ethiopia’s rank dropped from 162 in 2013 • Business friendliness: can the processes to 166 out of 189 in 2014.25 The cost of starting a and documentation requirements be further streamlined to reduce the administrative burdens business in terms of percent of income per capita is imposed on businesses? Is the license unduly 100.1—by far higher than the Sub-Saharan African prescriptive, is it performance and outcomes average which is 67.4.26 focused, is it accessible, transparent and easy to understand, and can it be enforced? The business licensing and regulatory framework has an important implication for private sector development. While the licensing regime and practice and the costs associated with it in Ethiopia have not 1.3 Overview of Government Regulation yet been systematically documented the private sector in Ethiopia considers the existing licensing regime and practice Following the regime change in 1992, the Government as cumbersome, costly and complex.27 Some of the of Ethiopia (GoE) has implemented a series of reform business licensing processes and procedures are measures towards a market oriented economy, including considered to lack transparency, be time consuming and deregulation of domestic prices; liberalization of foreign in many cases unnecessary.28 This presents an important trade; privatization of public enterprises; abolition of all impediment to the country’s effort to improve export taxes and subsidies; devaluation of the exchange the quality of the business environment, promote rate followed by the introduction of inter-bank foreign investment, employment and wealth creation. currency market and the determination of exchange rates based on market forces; promulgation of a liberal The private sector may play a crucial role in the investment law for the promotion and encouragement country’s fight against poverty through investment of private investment, both foreign and domestic; and job creation. Where an effective private sector is issuance of a new labor law; and strengthening and 22 Demeke, M., Amha, W., Ferede, T. and Getnet, A. (2011), enhancing institutional support for the export sector “Structure and firm dynamics in the grain markets in through strengthening/revitalizing existing institutions selected Eastern and Southern African countries: the case of Millers and Wholesale traders in Ethiopia,” a research and establishing such new institutions. report prepared for the FAO, Addis Ababa. 23 Ibid. The development policies adopted by the GoE have 24 World Bank (2014), “Doing Business in Ethiopia, recognized the private sector as the engine of the 2014.” Available at http://www.doingbusiness.org/data/ economy and pledged to nurture and support private exploreeconomies/ethiopia (last accessed on 22 January 2014). sector development in the country. However, the role 25 Ibid. of the private sector in the economy remains rather 26 Ibid. 27 See for example, Fikremarkos Merso and Tadele Ferede weak. The development of the private sector has been (2012), “The Regulatory Regime on Commercial constrained by, among others, high transaction costs Registration and Business Licensing, and Competition and and risks, lack of finance, lack of access to information, Consumer Protection.” PSD Hub, Ethiopian Chamber of Commerce and Sectoral Association, Addis Ababa, absence of contract and property right laws, weak Ethiopia. technical know-how, high handling costs, and 28 Ibid. Detailed Analysis of Licenses   51 lacking, as is the case in Ethiopia, business licensing regime provided for by the CRBLP applies to all reform has been shown to be one of the essential first business activities except in a limited number of sectors steps toward fostering private-sector growth. The easier, which are regulated by specific laws. faster, and cheaper the business registration process becomes, the higher the number of businesses in an 2.1 Overview of the Ethiopian economy. Studies from Mexico, Colombia, Portugal, Commercial Registration and Business Belarus, Rwanda, and Malaysia as well as a number Licensing Proclamation (CRBLP) of cross-country studies have all illustrated this link.29 Object, purpose and scope: The preamble of the Hence simplifying and even abandoning unnecessary CRBLP refers to a host of ideals as its objectives.32 In requirements is critical in terms of creating a healthy its first line it puts forth what could be an overarching business environment. goal, which is creating an environment conducive to commercial activities in keeping with a free market economic policy.33 The free market economic policy 2.  The Regulatory seems to form the basis of action and the organizing Framework on Business economic principle to do business in Ethiopia. Registration and Licensing Further, the CRBLP declares to improve the system of in Ethiopia commercial registration and business licensing with a view to further the ideals of a market-oriented economy, Several pieces of legislation were introduced in Ethiopia achieve economic development, remove barriers that at different times with the purpose of governing hinder the smooth operation of businesses, and offer businesses within the general framework laid out by public services to the business community in ways that the Commercial Code of Ethiopia of 1960.30 Despite are efficient and capable of contributing to economic the amendment of some of its provisions (with a view growth. to respond to changes brought about with the lapse of time and/or because they could not have possibly Another overriding legislative consideration behind been foreseen at the time of its promulgation), the the enactment of the CRBLP is stated as the need Commercial Code remains the principal source of for modernization of the system of registration and commercial law. A series of specific legislation dealing licensing with the purported intention of suitability with particular subject matters or aspects of business for data management. Dealing with illegal activities by were promulgated at different times since its enactment, putting in place a robust regulatory mechanism based with some of them already envisaged by the Code itself. on international standards of business classifications and criteria is yet another of the stated rationales The Commercial Registration and Business Licensing behind the promulgation of the Proclamation.34 Proclamation No. 686/2010 (the CRBLP) and the Commercial Code as amended by piecemeal A “business person” is defined essentially in the way legislation of various kinds, promulgated at different the Commercial Code of 1960 defines a trader as “any times, provide the general legal framework to govern person (natural or juridical) who professionally and registration and licensing of businesses.31 The licensing for gain carries on any one of the activities specified under Article 5 of the Commercial Code or who 29 The World Bank Group (2013), “Reforming Business dispenses services.” However, the CRBLP introduces Licensing: A Toolkit for Practitioners.” 30 a further clause whereby any activity designated as The Commercial Code of 1960 was promulgated by Emperor Haile Selassie along with other codes as part of commercial by law could also be assimilated here as the modernization drive pursued vigorously. 31 The CRBLP replaces the Commercial Registration and Business Licensing Proclamation No. 67/97; Federal Government Commercial Registration and Business Licensing Council of Ministers Regulations No. 13/1997; 32 Addis Ababa/Dire Dawa Administrations Commercial See Preamble CRBLP. 33 Ibid. Registration and Business Licensing Council of Ministers Regulations No. 14/1997. 34 See the fourth line of the CRBLP Preamble. 52  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Figure 5: Steps Required for Obtaining a Business Registration and License Authenticate Complete Register with ERCA company Register trade name for income tax and application form documents at VAT DARO Submit documents Register and obtain Authenticate lease and obtain a letter the commercial agreement (or any Open a bank from the Commercial registration other proof of account Registry to open a certificate business address) bank account Apply and obtain competence Obtain business certificate (when license required) commercial.35 This appears to make it easier to ensure first registering is prohibited. A business is required to that commercial activities designated by any future law register only once, even if it has different commercial to be as such are accommodated within the ambits of activities in many regions (Article 6(3)). According to the legislation. The Commercial Code use of “trader” Article 5 of the CRBLP the Ministry of Trade (MoT) is seems to have been replaced under the CRBLP with given the power to administer a nationwide commercial the term “business person” with apparently little legal register. However, in accordance with powers delegated consequence, although the CRBLP itself uses the term to them by the MoT, relevant regional bureaus and the “trader” in a few instances.36 All persons engaged in Ethiopian Investment Agency can carry out commercial commercial activities37 as defined in the CRBLP are the registration themselves.38 Registration in the subject of this piece of legislation. commercial register shall take place at the place where the main office of the business is located (Article 6). Two separate processes are provided for by the CRBLP: commercial registration and business Article 7 of the CRBLP stipulates that the application licensing. Engaging in any commercial activity without for registration should be made at least a month before registration and obtaining the appropriate license is starting operation of the business being contemplated. prohibited. Figure 5 shows the different steps required It further provides that where the requirements are to obtain a business registration and license. met, certificates of registration shall be issued upon payment of a fee set for the purpose in regulations. The 2.2  Commercial Registration period of time between the submission of an application Any person, including companies, engaged in any and the issuance of certificates is not indicated in the commercial activity must be registered (Article 6(1) CRBLP, but the CRBLP stipulates that any commercial CRBLP), and engaging in commercial activities without registration shall be valid and will have all the effects 35 See the CRBLP’s section on definitions of terms under 38 See proclamation Article 5(1) and (2) CRBLP providing for Article 2(2). the institutions empowered to register commercial activities 36 See for instance Article 2(8) CRBLP defining commercial which include the MoT or its branches, regional trade and representatives. industry bureaus, or appropriate regional bodies, regional 37 Commercial activities are defined in an indirect way to bureaus empowered to issue investment permits and the refer to activities undertaken by business persons. Ethiopian Investment Agency. Detailed Analysis of Licenses   53 Table 7: Basic Requirements for Registration and Fees Services Requirements Fee New registration • Tax identification number ETB 102 (sole/individual • Bank confirmation of deposited capital business) • Proof of physical address (title deed/authenticated lease agreement/kebelle confirmation) • Valid identification card/passport • Two passport size photographs taken within the last six months • Where the applicant is a foreign investor, an investment permit New registration • Tax identification number ETB 102 (business • Bank confirmation of deposited capital organizations) • Proof of physical address (title deed/authenticated lease agreement/kebelle confirmation) • Valid identification card/passport of the manager • Two passport size photographs of the manager taken within the last six months • Authenticated Memorandum of Association and Articles of Association • Where the application is signed by an attorney, a power of attorney given by all of the founders • Where there are foreign nationals as members of the business organization, documents evidencing that the foreign nationals are considered as domestic investors or their investment permits Renewal of • Bank confirmation of deposited capital ETB 102 registration • Proof of physical address (title deed/authenticated lease agreement/kebelle confirmation) • Valid identification card/passport • Two passport size photographs taken within the last six months as from the date of registration of the applicant in the • Proof of physical address (title deed/authenticated commercial register. lease agreement/kebelle confirmation); Where the registering body rejects the application for • Valid identification card/passport; registration it must give the reasons thereof in writing. • Two passport size photographs taken within the last However, the CRBLP does not specify where an six months; aggrieved party can turn to in case of such rejection. • Where the applicant is a foreign investor or a foreign Table 7 summarizes basic requirements for business investor is involved, an investment permit; registration and fees. The following sub-sections • Where a foreigner is treated as a domestic investor, provide further details. documents certified to that effect by the Ethiopian Investment Agency should be produced.39 2.2.1  Requirements for Registration The CRBLP provides for specific sets of requirements Business Organizations Other than Share for different types of business persons. Companies40 Founders or the legal representatives of business Sole Business Persons (Sole Proprietors) organizations should submit original copies of their From among a long list of these requirements, most of memorandum and articles of association. Where which are required as a matter of routine, the following foreigners are shareholders in the business organization, are worth mentioning: • Tax identification number; 39 See provisions under Article 10 CRBLP. • Bank confirmation of deposited capital; 40 See Articles 6(7)–(10) and 7 CRBLP. 54  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform documents certifying their treatment as domestic Commercial Representatives investors or their investment permits should be A commercial representative41 is also required to submitted. Besides, where a foreign juridical entity is a register and fulfill specific requirements including shareholder in a business organization being formed, its the following: under Article 15 a commercial certificate of incorporation, memorandum and articles of representative should submit duly authenticated association, minutes of the decision to be a shareholder documents certifying proof of registration and juridical by the authorized body of this foreign judicial entity, existence of the business organization in the country and investment permits should be submitted. Further, of registration or in the country where the principal a bank statement of the capital to be contributed in business person operates. In addition, if it is a business cash is deposited and contributions in kind should organization, original copies of the memorandum and be submitted. When the commercial registration of a articles of association or similar documents should business organization is completed, the bank should be produced. There is also a financial requirement release the funds deposited in blocked accounts ordered to comply with: a bank certification of a minimum by the registering body during the processing of a of USD 100,000 brought into the country for business organization upon a written instruction from administrative expenses and salary is needed. It is the same. The CRBLP does away with requirements of explicitly provided in the CRBLP that a commercial publication in newspapers for the acquisition of legal representative may not offer goods or services for sale personalities by business organizations as provided or enter into contracts on behalf of the principal as he in the Commercial Code Articles 87, 219, 220, 223, is not a trader. and 224. The commercial registration of business 2.2.2 Renewal organizations is open for public access. This makes it Rules for renewal are provided for in Article 18 particularly important for those interested to verify, for CRBLP. The renewal of commercial registration can instance, whether there are pre-existing trade names be made every year or for five prospective years at that they should not duplicate if they want to start once, provided this is done within the time after the businesses, or form business organizations. In addition, completion of the budget year of the registration. Unless it also encourages partnerships and commercial renewed as provided for by Article 18, the commercial contracts, thereby improving business formation. registration shall be cancelled. While the CRBLP does Share Companies not list the specific requirements for the renewal of a A unique set of rules apply in respect of share registration, in practice the following documents are companies. The following documents have to be required: submitted for registration: • Bank confirmation of deposited capital; • A bank statement indicating that at least one fourth • Proof of physical address (title deed/authenticated of the par value of the subscribed shares of the lease agreement/kebelle confirmation); company have been deposited in a blocked account; • Valid identification card/passport; • Original copies of minutes of the resolutions of • Two passport size photographs taken within the last the subscribers of the company, and other related six months. documents; • Original copies of the memorandum and articles of association. 41 A commercial representative is defined as one who is not domiciled in the country where the head office of the The founders of a share company to be formed by business organization or business person he represents is situated and bound to the business organization or public subscription as stipulated under Articles 318 to sole business person (sole proprietor) by a contract of 322 of the Commercial Code should first secure a prior employment and carries on business promotion activities on behalf and in the name of the business organization or written permission of the registering body for them to sole business person (sole proprietor) he represents without start formation of the company. being a trader himself. See Article 2 CRBLP. Detailed Analysis of Licenses   55 2.2.3 Cancellation a year.44 The CRBLP does not clearly specify if this Article 17 CRBLP stipulates cases of cancellation of time limit extends to cases of cancellation other than registration. While the Commercial Code provisions of violation of its provisions or those of the regulations. Articles 112, 113 and 226 operate in cases involving 2.2.4  Registration of Trade Names cancellation, the CRBLP provides further specific The CRBLP institutes a trade names register to be provisions. The registering body may decide to cancel administered by the MoT.45 Much in the same way as registration where: in the commercial register, the MoT may delegate its • It is aware that the business person has ceased to powers to regional bureaus or the Ethiopian Investment operate his business; Agency to conduct trade name registration while • The business person is lawfully prohibited to carry carrying out commercial registration.46 It is a duty on his business; upon any person to register his trade name while being registered in the commercial register.47 Foreign business • The business person has violated the provisions of organizations are required to submit authenticated the Proclamation; documents of commercial and trade name registration • The registration has not been renewed; or or any other document of similar effect from the • The business person has submitted false information country of registration.48 or documents for registration. Before registering a trade name, the registering body The registering body follows a set of procedures before it should ascertain that the requirements set by Article 24 decides to cancel the registration of a particular business CRBLP are complied with. Where the registering body person. Accordingly, a business person, the subject of rejects an application for registration of a trade name, cancellation, shall be offered the opportunity to give it must notify the applicant in writing of the reasons for their opinion before any decision of cancellation is the rejection.49 With regard to trade names registered made. However, its opinion may not be sought where before the coming into force of the CRBLP, there is a the person ceased to operate their business, or has transitional clause that treats them for legal purposes as applied for the cancellation of the registration of their being registered in accordance with the requirements of business or has failed to renew the registration of their the CRBLP.50 business. Similarly, in cases where the business person Trade names may be cancelled where the registration could not be reached at the address given on registration, body determines that: the registering body may go ahead and give its decision thereon with whatever information it has at its disposal. • The commercial registration of the business person has been cancelled; When the cancellation takes effect depends on the type of business concerned. If, for instance, it is a • The owner of the trade name requests to change the business organization, the cancellation shall be effective trade name; or as from the date of publication of cancellation in a • The registration was made fraudulently.51 newspaper.42 All other cancellations of commercial Where the cancellation of the trade name registration registration shall be effective from the date of the entry is on the grounds of fraud, the registering body shall of the cancellation in the register.43 The cancellation of give the business person whose trade name is the subject the commercial registration of a business for violating provisions of the CRBLP and regulations issued 44 See Article 17(6) CRBLP. 45 See Article 22(1) CRBLP. pursuant to the CRBLP will have the effect that re- 46 See Article 22(2) CRBLP. registration would not be allowed before the lapse of 47 See Article 24(1) CRBLP. 48 See Article 24(2) CRBLP. 49 See Article 24(6) CRBLP. 42 See Article 17(4) CRBLP. 50 See Article 24(7) CRBLP. 43 Ibid. 51 See Article 28(1) CRBLP. 56  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform of the cancellation under reviews the opportunity to • the business of generating or transmitting, or, be heard. The registering body will go ahead with the distributing, or selling electricity; cancellation where it is not satisfied with submissions • repairing and maintaining of arms and firearms and made by the business person, or fails to respond within sale of explosives; 30 days after notification or where the business person • sea and inland water ways transportation services; cannot be contacted.52 Cancellation certificates are • multimodal transport services; issued when it occurs.53 The business person whose trade name has been cancelled should come up with a • the business of warehouse receipt system; and new trade name provided it is not cancelled from the • trade in tobacco and tobacco products. commercial register as well.54 Table 8 summarizes basic requirements for business licenses and fees. The following sub-sections provide 2.3  Business Licensing further details. In addition to commercial registration, Article 31 of Based on its power under the CRBLP, the MoT the CRBLP proclaims that no person shall carry on a has developed the Ethiopian Standards Industrial commercial activity without obtaining a valid business Classification (ESIC) which classifies licenses into license. No commercial activity may be ventured into 10 major categories, identifies the licensing agencies as without getting a license for it first, and the authorities well as the agency in charge of competence certification are empowered to order the closure of any business for each license. There are over 1,320 licenses without a valid license. This pretty much stands in categorized under nine major business sectors for the contrast to requirements of registration for commercial purpose of licensing: activities under Article 6(1) which, the way it is worded, appears to imply, the operation of businesses without • Agriculture, Hunting, Forestry and Fishing; necessarily having a license.55 • Mining and Quarrying; Under Article 30 of the CRBLP the appropriate • Manufacturing; authorities—the MoT, the Ethiopian Investment Agency • Electricity, Gas and Water Supply; or a regional bureau—issue licenses other than licenses • Construction; issued for the following commercial activities by other • Wholesale and Retail Trade, Repair, Hotel and relevant government institutions: Restaurants, Import & Export; • prospecting and mining; • Transport, Storage and Communication; • various water works services excluding water works • Financial intermediation, Insurance, Real Estate, and construction services; Business Services; • banking, insurance and micro finance services; • Community, Social and Personal Services. • air transport and other aviation services; Each category is further subdivided into major group, • commercial activities involving the use of radioactive group and sub-group materials and radiation emitting equipment; 2.3.1  Licensing Requirements • telecommunication services; Article 32 CRBLP sets out the detailed requirements and procedures involved in getting a business license. The 52 See Article 28(2) CRBLP. key requirements for a license for a sole business include: 53 See Article 28(3) CRBLP. 54 See Article 28(4) CRBLP. • Valid business registration certificate; 55 Article 6(1) CRBLP which has the title “Registration in the commercial register” stipulates that “No person • Competence certificate; shall engage in any commercial activity which requires business license without being registered in the commercial • A document evidencing the capital allocated for the register.” commercial activity; Detailed Analysis of Licenses   57 Table 8: Basic Requirements for Business Licenses and Fees Services Requirements Fee New business • Valid business registration certificate ETB 102 license (sole • Competence certificate business) • A document evidencing the capital allocated for the commercial activity • Proof of physical address (title deed/authenticated lease agreement/kebelle confirmation) • Two passport size photographs taken within the last six months • For a foreign investor, the investment and residence permits • Where the application is submitted by an attorney, an authenticated power of attorney New business • Valid business registration certificate ETB 102 license (business • Competence certificate organizations) • A document evidencing the capital allocated for the commercial activity • Proof of physical address (title deed/authenticated lease agreement/kebelle confirmation) • Authenticated original copies of memorandum and article of association of the business organization • Two passport size photographs of the manager taken within the last six months • For a foreign investor, the investment and residence permits • Where the application is submitted by an attorney, an authenticated power of attorney Renewal of • Tax clearance (not older than one month) ETB 102 business licenses • Competence certificate • Bank confirmation of capital • Proof of physical address (title deed/authenticated lease agreement/kebelle confirmation) • Two passport size photographs taken within the last six months • Proof of physical address (title deed/authenticated the Ethiopian Investment Agency should be produced. lease agreement/kebelle confirmation);56 Moreover applicants seeking business licenses should • Two passport size photographs taken within the last produce documents showing recommendations by six months; concerned government bodies on the suitability of the business premises for the intended business. There are • If the applicant is a foreign investor, his investment specific provisions involving foreign investors who wish and residence permits; and to take over an existing business enterprise. They are • Where the application is submitted by an attorney, required, among other things, to produce documents an authenticated power of attorney. of purchase of the enterprise from the Privatization In the case of a foreign citizen wishing to be considered and Public Enterprise Supervisory Agency where it is as a domestic investor, a document certifying same by bought from the agency or, where it is bought from private owners, an authenticated document of proof of 56 Under Article 10(6) and (7) CRBLP which is of application purchase.57 Under Article 30(1) CRBLP, license holders to both sole proprietors and business organizations are obligated to submit statements that they have (see Article 11(1)(e) CRBLP, which cross refers to the preceding provisions), besides disclosing the exact address complied with their tax and other related obligations of the business, applicants are obligated to produce title while renewing their licenses. deeds if they use their own property. And if leased, an authenticated contract of lease and a certification from the Kebele Administration of the said address should be produced. 57 See Article 32(4) CRBLP. 58  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Another requirement under Article 32 CRBLP is the Licenses may also be cancelled for a range of reasons. need to have product or activity-specific licenses as Cancellation of a business license could occur where opposed to what used to be licenses of a general nature. grounds that follow exist:61 Licensed business persons have the following • Where the license is secured fraudulently; obligations:58 • Where the license is employed for purpose other than • They cannot carry on various businesses at the same that which it is issued for; place or premises where this endangers public health • Where it is used for unfair trade practices; and safety or property; • Where bankrupt or the business ceases to operate; • May not concurrently carry on different activities • Failure to renew the license in accordance with the where doing so entails harm to consumers or gives requirements of the CRBLP; rise to conflict of interests; • Where the commercial registration is cancelled; • May not assign or lease the license to any other • Where the appropriate government institution person or put it up as a guarantee; and determines that carrying on the business poses harm • Permits for expansion and upgrading could be to public health and safety or the national economy obtained where one wishes to expand or upgrade and is sealed before cancellation. existing industry or agricultural development or a The appropriate authority goes ahead with the decision service business by filing their applications with the to cancel the business when the licensee does not submit appropriate authorities under this proclamation.59 his views within 30 days of notification about the 2.3.2  Suspension and Cancellation impending cancellation or where he has, it is found to Licenses can be suspended for different reasons. be inadequate. This may also hold true in cases where The following constitute grounds for suspension of the licensee could not be reached and hence obtaining licenses:60 his opinion becomes impossible. • Failure to maintain the standards of health and The appropriate authorities or sector government sanitary conditions; agencies which issue directives on, or certificates of, • Failure to protect the environment; professional competence have the responsibility to • Failure to maintain safety measures and standards of monitor and inspect whether the licenses are being quality of goods and services; used for the purposes for which they are issued. The relevant sector government agencies are responsible • Engaging in illegal activities in connection with the for informing the appropriate authorities where the business the business person is carrying on; licensee transgresses the purposes of the license so that • Failure to observe the obligations accompanying the administrative measures could be taken.62 issuance of the license. 2.3.3  Renewal of Licenses The concerned body shall in writing notify the licensee A business license is valid as long as it is renewed. of the reasons of the suspension and the measures to be Unless the business license is renewed within four taken to ensure the grounds for suspension are rectified months after the expiry of the budget year63 in which within a specified period of time presumably within the the license has been issued or renewed upon payment discretion of the appropriate authority in the absence of of the appropriate fee, the business license shall not, any indication of specific time limits. In the meantime in anyway be put in use.64 The CRBLP grants an the business may be closed down or sealed by the appropriate authority. 61 See Article 39 CRBLP. 62 See Article 44 CRBLP. 58 See Article 34 CRBLP. 63 The Ethiopian budget year starts on July 1 and ends on 59 See Article 35 CRBLP. June 30. 60 See Article 37 CRBLP. 64 See Article 36(2) CRBLP. Detailed Analysis of Licenses   59 additional two month grace period (Hidar and Tahisas) with which the business was being conducted will be to renew a license without penalty.65 A business person confiscated by the government (Article 60.1 TPCPP). who fails to renew the license within this period can still Registration with false information may also entail a renew it from Tir 1 to Sene 30 but only upon paying, fine ranging from ETB 60,000 to ETB 120,000 and in addition to the renewal fee, a penalty of ETB 2,500 rigorous imprisonment from 7 to 12 years (Article 60.2 for the month Tir and ETB 1,500 for each subsequent TPCPP). Violations of other provisions of the TPCPP month of delay (up to Sene 30).66 A business license or regulations or public notices in turn entails a fine not renewed within the time provided shall be cancelled ranging from ETB 30,000 to ETB 60,000 and rigorous after the expiry of the time made available for the imprisonment from 3 to 5 years (Article 60.3 TPCPP). renewal of the business license with penalty.67 Where a business license is cancelled because of lack of renewal, as stated above, the business person can apply to get 3.  Inventory of Business the cancelled license back within one year after the licenses by Sectors cancellation, provided the reason for not getting the This chapter presents a description and analysis license renewed in due time is accepted by the higher of the various licenses, permits, certificates and official of the appropriate authority and upon payment authorizations currently applying to businesses by of double of the penalty.68 law or administrative practice. For ease of analysis, With regard to requirements for renewal, the the presentation of the inventory and analysis of requirements set for the issuance of a new business the business licenses is categorized by sectors. While license shall be applicable to the renewal of business the report uses the ESIC major business sector licenses.69 But in addition, the applicant should classifications for description and analysis of business submit a tax clearance and the renewed commercial licenses, for ease and proper analysis some adjustments registration.70 have been made, such as pulling together licenses for some major sectors which are scattered under different 2.3.4  Appeals and Penalties sectors in the ESIC. Any person aggrieved by administrative measures taken by relevant authorities under the CRBLP could appeal Under each major sector, the description and analysis the administrative decisions in courts of law only on of business licenses has been made by further dividing points of law.71 The Proclamation does not provide licenses into sub-sectors. Under each sub-sector, indications as to the administrative structures in place attempts have been made to identify all currently to entertain grievances internally. applicable business licenses, and to analyze the legal basis and objectives/purposes of licenses as well as the The CRBLP prescribes fines and penalties for the requirements, fees charged and time required to obtain violations of its provisions. While fines could go as the licenses. high as ETB 300,000, imprisonment could be up to 15 years. Engaging in a commercial activity without a 3.1  Agriculture, Hunting, Forestry valid license entails a fine ranging from ETB 150,000 and Fishing to ETB 300,000 and with rigorous imprisonment from Although agriculture, hunting, forestry and fishing is 7 to 15 years; in addition, the goods and/or the service identified as one of the 10 major business sectors in delivery equipment and/or manufacturing equipment the ESIC, the licenses listed under this section of the 65 See Article 36(3) CRBLP. ESIC mainly cover the production aspects of the sector. 66 See Article 36(4) CRBLP. Licenses related to the manufacturing and trade aspects 67 See Article 36(5) CRBLP. of agricultural products are scattered under other 68 See Article 36(6) CRBLP. 69 major sectors of the ESIC. For ease of analysis, this See Article 36(14) CRBLP. 70 See Article 36(8) CRBLP. section discusses business licenses related to both the 71 See Article 61 CRBLP. production and trade activities of agricultural products. 60  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform The production and marketing/trade of most, but not the coffee marketing system fast and cost effective; and all, agricultural products and inputs are governed by harmonizing coffee marketing with the organizational specific legislations. For ease of analysis, this section work of the Ethiopia Commodity Exchange. Thus, the discusses agricultural sub-sectors governed by specific purpose and necessity of the competence certificate legislations separately. requirement for the above coffee transaction licenses should be viewed in light of these general objectives of 3.1.1  Coffee Production and Marketing the Proclamation. Coffee production and trade are primarily governed by the Coffee Quality Control and Marketing According to Regulation No. 161/2009, the major Proclamation No. 602/2008 and Coffee Quality requirements to obtain competence certificates for Control and Transaction Council of Ministers the above business activities relate to a warehouse Regulation No. 161/2009. Article 8 of Regulation (applicable to all activities); necessary machines and No. 161/2009 provides that any coffee supplier, equipment (depending on the type of activities); exporter, wholesaler, roaster, processor or coffee weighing scale and moisture calibrator certified by warehouse operator shall obtain a certificate of the Quality and Standards Authority of Ethiopia (for competence prior to applying for a trade license. coffee supplier, exporter, wholesaler and processor); Accordingly, the Regulation has established the waste disposal processes (for coffee supplier, exporter following licenses in relation to coffee marketing/ and processor); procedures to process coffee products transaction and stipulated the requirements to obtain of different ecological properties separately (for coffee competence certificates for each these licenses. supplier and processor); service catering office (for all activities); and permanent staff sufficiently qualified License 1 Coffee supplier license in coffee quality matters (for coffee supplier, exporter, License 2 Coffee export roaster and processor). License 3 Coffee wholesale The revised ESIC issued by the MoT identifies only License 4 Coffee roasting coffee exporter and coffee wholesaler licenses from License 5 Coffee processing the above six coffee transactions related licenses License 6 Coffee warehouse operation established by Regulation No. 161/2009. It does not According to Regulation No. 161/2009, competence include coffee supplier, roaster and processor as well as certificates for coffee export licenses are to be issued by coffee warehouse operator licenses. However, the ESIC the Ministry of Agriculture, while appropriate regional includes the following additional licenses which are not organs (i.e., regional organs responsible for Agriculture) established in Regulation No. 161/2009. are authorized to issue competence certificates for the License 7 Growing of coffee remaining five coffee transaction licenses identified in License 8 Manufacture of coffee, coffee substitutes the Regulation. Regulation No. 161/2009 does not License 9 Retail trade of coffee provide for the renewal of competence certificates and License 10 Import of coffee requires the issuance only once, prior to obtaining trade License 11 Retail trade of coffee straw licenses. The objectives of the competence certificate and In relation to the above listed business licenses, the licenses for the coffee business activities are not ESIC tasked the Food, Medicine and Health Care expressly stated in either Proclamation No. 602/2008 Administration and Control Authority (FMHACA) or Regulation No. 161/2009. From the preamble of to issue competence certificates for the manufacture Proclamation No. 602/2008, the major objectives of of coffee and coffee substitutes license, whereas it the Proclamation are promoting efficient supply of authorized the Ministry of Agriculture (MoA) to issue quality and competitive coffee to the global market; competence certificates for the remaining licenses. In improving the earning of coffee producers by making March 2012, the MoA issued a Directive to determine Detailed Analysis of Licenses   61 requirements for competence certification of business accountable process than customarily used by bodies activities on which the MoA is mandated to prepare that are engaged in agricultural development and trade. requirements as per the ESIC. In this Directive, According to the Directive issued by MoA, the requirements for competence certification are provided requirements to obtain competence certificates for only for coffee production and marketing licenses that coffee grower licenses include possession of appropriate are identified in the ESIC (coffee grower, exporter, land for coffee development, adequate capital, necessary wholesaler, retailer and coffee straw retailer). However, infrastructure/machinery, qualified human resources no competence certification requirements are put in the and commitment to conduct an environmental Directive for coffee supplier, roaster and processor as impact assessment (EIA) and put in place an adequate well as coffee warehouse operator licenses, which are information system. For coffee exporter and wholesaler not directly identified in the ESIC. licenses, the requirements include having necessary The regulatory requirement for competence certification equipment, warehouse, sufficient capital, weighing for coffee grower and retailer as well as for coffee scale, well equipped office and permanent qualified staff straw retailer activities does not have a clear legal as well as the commitment to put in place an adequate basis, since this is not provided under Regulation information system and to have inspected and tested the No. 161/2009, which is the most relevant law for the quality of coffee to be supplied. For coffee and coffee subject. The MoA established competence certificate straw retail trade licenses, the requirements are having a requirements for these licenses citing Article 30(3) of shop and adequate capital. the CRBLP, which in general terms authorizes relevant Competence certificates for coffee production and sectoral government institutions to issue directives for marketing related licenses issued as per the ESIC and competence certification. the MoA Directive are required to be renewed annually. In practice, business licenses related to coffee However, as noted above, Regulation No. 161/2009 does production and marketing are being issued as per not require competence certificates for coffee transaction the ESIC, based on competence certificates issued in activities to be renewed annually or otherwise. accordance with the requirements of the Directive Regulation No. 161/2009 stipulates that an application issued by the MoA. Businesses engaged in coffee for a competence certificate shall be processed within roasting and processing activities in Addis Ababa 15 days. However, as stated above coffee production operate by obtaining a business license for the and marketing related licenses are being processed in manufacture of coffee and coffee substitutes (as per the practice as per the ESIC and the MoA Directive, not as ESIC) from the Bureau of Trade and Industry (BoTI) in per the requirements of Regulation No. 161/2009. In Addis Ababa. However, this license is issued based on practice, obtaining coffee production and marketing competence certificates issued by the Urban Agriculture licenses approximately takes 2–4 weeks. Extension Department of the BoTI at the sub-city level, although the ESIC authorizes the FMHACA to issue Regulation No. 161/2009 as well as the Directive a competence certificate in relation to this business issued by MoA do not provide for any fee to obtain a license. In general, the business licensing regime (types competence certificate to engage in coffee production of licenses and requirements) established under Coffee and marketing activities. However, businesses engaged Quality Control and Transaction Council of Ministers in coffee production and marketing activities are Regulation No. 161/2009 are disregarded and not subjected to the regular fees applicable to all businesses applied in practice. to obtain and renew commercial registration, trade name and business license. The Directive issued by the MoA states that the objective of certifying the competence of businesses A total of 32 licenses (all of them for coffee exporter engaged in agricultural production and marketing is to licenses, except one) were issued in 2012–2013 and serve the public by establishing a more transparent and 62  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform the administrative compliance cost for this category No. 178/2010. Article 5 of the Regulation provides that of licenses approximately ranges from ETB 2,500 to any sesame and white pea beans supplier, exporter or ETB 9,000. service provider shall obtain a certificate of competence prior to applying for a trade license. Accordingly, it Findings has established the following licenses in relation to • Coffee sector related licenses identified in Regulation sesame and white pea beans transactions and stipulated No. 161/2009 and in the ESIC do not directly requirements to obtain competence certificates for each match, as some licenses identified in Regulation of these licenses. No. 161/2009 are not included in the ESIC and vice versa. This creates confusion and practical problems License 1 Sesame and white pea beans supplier’s in the licensing process. license • The legal basis as well as validity of the regulatory License 2 Sesame and white pea beans exporter purpose to certify the competence of coffee growers license and retail traders of coffee and coffee straw is License 3 Sesame and white pea beans processing service provider license questionable. License 4 Sesame and white pea beans warehousing • The requirements listed in Regulation No. 161/2009 service provider license to certify the competence of coffee supplier, exporter, wholesaler, roaster, processor and coffee warehouse According to Regulation No. 178/2010, competence operator are largely considered reasonable. certificates for sesame and white pea beans export • However, there are variations in the list of licenses are to be issued by the MoA, whereas requirements for competence certification provided appropriate regional organs (regional organs in Regulation No. 161/2009 and in the Directive responsible for Agriculture) are authorized to issue issued by the MoA in 2012 for some similar types competence certificates for the remaining three of coffee transaction licenses. The MoA directive sesame and white pea beans transaction licenses. usually provides for more stringent and subjective The Regulation does not provide for the renewal of requirements, such as sufficient capital. competence certificates, i.e., they are required only once prior to obtaining trade licenses. Recommendations • The type of coffee production and transaction related The regulatory purposes of licenses in the sector are licenses identified in the ESIC should be revised not expressly and separately stated in Regulation taking into account the type of licenses established No. 178/2010. However, the reference to Article 31(2) under Regulation No. 161/2009. of the Ethiopian Commodity Exchange Proclamation • Competence certification requirements should be No. 550/2007 in the preamble of the Regulation applied only to coffee production and marketing suggests that the objectives of these licenses are licenses established under Regulation No. 161/2009 associated with ensuring quality and harmonizing and only based on the requirements set in the sesame and white pea beans marketing with the Regulation. organizational work of the Ethiopian Commodity Exchange. • The competence certificate licenses for coffee growers and retail traders of coffee and coffee straw should The requirements for a competence certificate under be eliminated. Regulation No. 178/2010 relate to: warehouse (for all licenses) and other equipment relevant to the specific 3.1.2  Production and Sale of Sesame, White Pea Beans and Other Oilseeds and Pulses license, weighing scale verified by the Ethiopian The production and trade of sesame and white pea Standards Authority (supplier, exporter and processor), beans is governed by the Sesame and White Pea operational procedures to process different types Beans Transaction Council of Ministers Regulation of sesame and white pea beans separately (supplier, processor and warehouse service provider), catering Detailed Analysis of Licenses   63 office (all licenses), permanently deployed staff with basis. The MoA established competence certificate appropriate qualifications (supplier, exporter and requirements for these licenses citing Article 30(3) of processor), information mechanisms (supplier and the CRBLP, which in general terms authorizes relevant exporter), and waste disposal processes (exporter and sectoral government institutions to issue directives for processor). competence certification. The ESIC issued by the MoT has not identified specific The Directive issued by the MoA states that the and separate licenses for businesses engaged in sesame objective of certifying the competence of businesses and white pea beans transactions. It rather identifies engaged in agricultural production and marketing is to licenses related to the production and transaction of serve the public by establishing a more transparent and oilseeds and pulses in general terms. Moreover, the ESIC accountable process than customarily used by bodies provides licenses for production, import and retail trade that are engaged in agricultural development and trade. of oilseeds and pulses, whereas the licenses established The requirements for competence certification in Regulation No. 178/2010 do not cover these business for growing of oilseeds and pulses are: securing activities. The ESIC establishes the following licenses an investment permit; possession of appropriate related to the production and transaction of oilseeds land; adequate capital; qualified human resources; and pulses. commitment to conduct EIA; the necessary machinery and camp facilities. The license for manufacture of License 5 Growing of oilseeds license oilseed cake and meal requires: appropriate (location) License 6 Growing of pulses license land; adequate capital; appropriate qualifications or License 7 Manufacture of oilseed cake and meal license capacity to engage qualified staff. The MoA Directive License 8 Wholesale of oilseeds license does not establish the requirements for wholesale of License 9 Wholesale of pulses license oilseeds and pulses licenses and retail of pulses licenses. License 10 Retail trade of oilseeds license The requirements for retail of oilseeds license are shop License 11 Import of oilseeds license space and adequate capital while import of oilseeds License 12 Import of pulses license license, and import of pulses license are appropriate License 13 Export of oilseeds license warehousing facilities, adequate capital, office space License 14 Export of pulses license and qualified staff. Export of oilseeds license requires warehousing and preparation facilities, weighing scales The mandate to issue competence certificates for the certified by the Quality and Standards Authority, waste above licenses is allocated to the MoA through the disposal facilities, staff with relevant qualifications and ESIC. The Directive issued by MoA in March 2012 to office space. determine the requirements for competence certification Competence certificates for the growing, wholesale, of business activities falling within its mandate (as retail, import and export of oilseeds and pulses as well per the ESIC) provides requirements for competence as manufacture of oilseed cake and meal licenses issued certification only for oilseeds and pulses production as per the ESIC are to be renewed annually. On the and marketing licenses that are identified in the ESIC. other hand, the provisions of Regulation No. 178/2010 No competence certification requirements are put in the governing sesame and white pea beans transactions do Directive for sesame and white pea beans supplier and not provide for renewal of supplier, exporter and service processing and warehousing service provider licenses, provider licenses. which are not specifically identified in the ESIC. Regulation No. 178/2010 does not provide for the The regulatory requirement of competence certification payment of any fees for the issuance of competence for the growing, wholesale, retail, import and export certificates. The same is true for the Directive issued of oilseeds and pulses as well as manufacture of oilseed by MoA. Yet, businesses engaged in sesame and white cake and meal licenses does not have a clear legal pea beans transactions as well as activities related 64  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform to the growing, wholesale, retail, import and export 3.1.3  Seed Production and Transaction of oilseeds and pulses are subjected to the regular The recently issued Plant Seed Proclamation fees applicable to all businesses to obtain and renew No. 782/2013 governs the production of seed and commercial registration, trade name and business seed transactions. According to Article 19 of the license. Obtaining oilseeds/pulses production and Proclamation, any importer, exporter, producer, marketing licenses approximately takes 2–4 weeks. processor, wholesaler, distributor or retailer of seed A total of 417 licenses (all of them for export of oilseeds is required to obtain competence certificates. The or pulses, save one) were issued in 2012–2013 and the Proclamation mandates the MoA to prescribe, through estimated administrative compliance cost for obtaining a Directive, the requirements to be satisfied to obtain export of oilseeds or pulses licenses is about ETB 5,000. competence certificates for these licenses. Moreover, the MoA is mandated to issue competence certificates Findings for seed import and export licenses as well as for • Licenses related to sesame and white pea beans other seed production and transaction businesses that transactions defined in Regulation No. 178/2010 and are operated in more than one region. For other seed in the ESIC do not directly match, as some licenses production and transaction businesses that are operated defined in Regulation No. 178/2010 are not included within one regional state, a regional organ responsible in the ESIC and vise versa. This creates confusion for agriculture is mandated to issue competence and practical problems in the licensing process. certificates. Businesses are required to pay fees to get • The requirements listed in Regulation No. 178/2010 competence certificates in accordance with a schedule to certify the competence of sesame and white pea to be determined in a regulation to be issued under the beans suppliers, exporters, processors and warehouse Proclamation. However, such regulation has not been services providers are largely considered reasonable. issued yet. • However, there are variations in the list of The Proclamation does not expressly state the purpose/ requirements for competence certification provided objective of ex-ante regulating the competence of in Regulation No. 178/2010 and in the Directive businesses engaged in seed production and transaction. issued by the MoA in 2012 for some similar types However, the preamble of the Proclamation emphasizes of oilseed and pulses transaction licenses. The MoA the importance of the seed sector to ensure the country’s Directive usually provides for more stringent and agricultural development and the need to facilitate the subjective requirements, such as sufficient capital. introduction of improved seed varieties and ensure the Recommendations supply of quality seed to farmers and other seed users. • The licenses identified in the ESIC should be revised The revised ESIC identified the licenses listed below taking into account the type of licenses established in relation to seed production and transaction and under Regulation No. 178/2010. authorized the MoA to issue competence certificates in • Competence certification requirements should be relation to same. applied only to sesame and white pea beans supplier, exporter, processing and warehouse services provider License 1 Growing of plant seeds licenses established under Regulation No. 178/2010, License 2 Growing of different seedlings and only based on the requirements set in the License 3 Plant micro propagation Regulation. License 4 Collection of plant species • The competence certificate requirements for growing, License 5 Wholesale of plant seed wholesale, retail, import and export of other oilseeds License 6 Retail trade plant seed and pulses as well as manufacture of oilseed cake and License 7 Import of plant seed meal should be eliminated, as their legal basis and License 8 Export trade in plant seeds regulatory purpose are questionable. Detailed Analysis of Licenses   65 The MoA has established competence certificate Findings requirements for these licenses citing Article 30(3) of • Seed production and transaction related licenses the CRBLP, which in general terms authorizes relevant identified in Proclamation No. 782/2013 and in sectoral government institutions to issue directives for the revised ESIC are closely matched. The same competence certification. Yet, the close similarities is true for institutional mandates since the MoA between the licenses identified in the Plant Seed is mandated to regulate seed production and Proclamation No. 782/2013 and the ESIC and the transactions under both instruments. However, the mandating of the MoA to issue directives to implement correlation is not complete. the proclamation suggest that the Proclamation could • The similarities between the licenses identified in the be used as a legal basis for the above listed licenses and Proclamation and the ESIC, and the mandating of competence certificates identified in the ESIC. the MoA also give the licenses a firmer legal basis. The Directive issued by the MoA in March 2012 for • Considering the importance of the seed sector in competence certification specifies the requirements that agricultural development and the environmental should be met to obtain competence certificates for each and other concerns related to seed production of these licenses. The requirements for the growing of and marketing, the regulatory measure to ex-ante plant seed licenses under the Directive are: possession certify the competence of businesses engaged in the of appropriate land, adequate capital, availability of seed business can be considered as having a valid adequate inputs and water resources, appropriate regulatory purpose. facilities, feasibility and appropriateness of seedlings • The requirements listed in the MoA Directive for to the area or market, and qualified human resources. competence certification of businesses engaged The license for collection of plant seeds requires a in seed production and transaction contain some work permit, adequate capital, appropriate facilities, inappropriate or subjective requirements, such as qualified staff, appropriate equipment, and information sufficient capital, etc. on location of seed provenance. The MoA Directive sets Recommendations similar requirements for wholesale, import and export of plant seeds licenses. These are: appropriate warehousing; • The licenses identified under Proclamation qualified expert/staff; adequate capital, and office space. No. 782/2013 endorse the ESIC and should be maintained. The Seed Proclamation No. 782/2013 does not explicitly provide for the payment of fees; nor does • The requirements outlined in the MoA Directive it address the renewal of certificates of competence. should be streamlined to make them appropriate and Instead, Article 20(3) of the Proclamation directs the clear. MoA to issue a directive prescribing the duration of 3.1.4 Fisheries validity of competence certificates and conditions of The Fisheries Development and Utilization their renewal. In practice, businesses engaged in these Proclamation No. 315/2003 is the key legal instrument activities are subjected to the regular fees applicable governing fishing activities. Article 6(1) of the to all businesses to obtain and renew commercial Proclamation provides that any person who wishes registration, trade name and business license. Obtaining to undertake commercial fishing from natural and seed production and marketing licenses approximately manmade water bodies shall do so upon acquisition of takes 2–4 weeks. a legal fishing permit. A total of two licenses, both of which for the import License 1 Legal fishing permit of plant seeds, were issued in 2012–2013 and the estimated administrative compliance cost for this The permits are to be issued by the relevant federal category of licenses ranges from ETB 3,000 to or regional authority, namely the MoA and regional ETB 9,000. 66  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform government bodies responsible for the agricultural The Directive issued by the MoA in March 2012 for sector. The MoA is also mandated to issue directives competence certification specifies the requirements that regarding standards for the establishment and operation should be met to obtain competence certificates for each of aquaculture facilities and aquaculture as necessary. of these licenses. Inland fishing licenses are issued after confirming Ethiopian nationality, exclusive engagement The objectives of the Fisheries Development and in fishing as a livelihood, possession of appropriate and Utilization Proclamation are: to conserve fish permitted equipment, capacity to engage qualified or biodiversity and its environment as well as to prevent trained staff, and commitment to sell catches only to and control over-exploitation of the fisheries resource; to licensed businesses. The requirements for fish hatcheries increase the supply of safe and good quality fish and to and fish farms under the Directive include adequate ensure a sustainable contribution of the fisheries towards water supply and grounds (aquaculture), adequate food security; and to expand aquaculture development. capital, appropriate water body (cage culture), and The requirements for a permit to establish an qualified staff. aquaculture facility or undertake aquaculture under the The Fisheries Development and Utilization Proclamation Proclamation are: adequate land and water resources; No. 315/2003 does not provide for the payment of fees permit to utilize water resources from the appropriate for the issuance or renewal of competence certificates. federal or regional administrative organization; and, However, the Proclamation directs the Council of ensuring that the commercial activity does not have Ministers, regional states and MoA to issue regulations, a negative impact on the environment or fish species regional laws and directives respectively to implement in the water body. While the Proclamation does not the Proclamation. These laws are expected to address directly address renewal of aquaculture licenses, procedures for the issuance and renewal of permits Article 12 stipulates that laws to be issued as per the among other things. In practice, businesses engaged in Proclamation should address the procedures for issuing, these activities are subjected to the regular fees applicable renewal and suspension of aquaculture fish trade to all businesses to obtain or renew commercial licenses. registration, trade name and business license. The ESIC identifies the following three licenses in No license under this sector was issued at the Federal or relation to fisheries business. Addis Ababa levels. License 2 In-land fishing (ESIC only) Findings License 3 Fish hatcheries and fish farms (both • The rationale for the permit required under ESIC & proclamation) Proclamation No. 315/2003 is environmental License 4 Other activities of fish farm and related protection and efficient utilization of a scarce services (ESIC only) resource. The Proclamation has also stated the The ESIC assigns the MoA to issue competence requirements for the permit very clearly and in a certificates for these licenses. manner linked with its stated objectives. As such, it is justifiable. Although the Fisheries Development and Utilization • The three types of licenses identified in the ESIC Proclamation No. 315/2003 mandates the MoA to and the MoA mandate to set requirements for issue directives on the establishment and operation competence certification are backed by provisions of of aquaculture facilities and aquaculture, the MoA Proclamation No. 315/2003. Directive only refers to the CRBLP. Moreover, the list of licenses under the ESIC and MoA Directive cover Recommendation a broader area extending to an open ended license for • The license under Proclamation No. 315/2003 and ‘other activities of fish farm and related services.’ identified in the ESIC should be maintained. Detailed Analysis of Licenses   67 3.1.5 Veterinary Drug and Feed Production License 1 Growing of animals feed license and Transaction License 2 Manufacture of prepared animal feeds The Veterinary Drug and Feed Administration and license Control Proclamation No. 728/2011, among others, License 3 Manufacture for veterinary use license regulates trade in veterinary drug and feed. As defined License 4 Wholesale trade in feeding stuff for in the Proclamation, veterinary drug or feed trade animals license includes veterinary drug or feed production/processing, License 5 Wholesale of veterinary drugs, medicines repacking, import, export, wholesale and retail as well and equipments license as veterinary drug or feed quality control laboratory License 6 Retail trade of animal feed license service and acting as commercial agent for veterinary License 7 Retail trade of veterinary drugs and medicines license drug or feed. Article 12 and 19 of the Proclamation License 8 Import of veterinary drugs, medicines and provide that no person may engage in veterinary equipment’s license drug or feed trade without obtaining a certificate License 9 Export trade in fodder for animals license of competence from the appropriate organization. License 10 Export trade in veterinary drugs, medicines As per the Proclamation, for import, export and and equipments license trans-regional transactions and services of veterinary License 11 Research and experimental development drugs and feed, the appropriate organization to issue on veterinary license competence certificates is the Veterinary Drug and Feed License 12 Veterinary activities license Administration and Control Authority (VDFACA) to be established by the Council of Ministers Regulation. licenses in contradiction to Proclamation No. 728/2011 This Authority was established by Council of Ministers and Regulation No. 272/2012, which authorize the Regulation No. 272/2012, which was published in Veterinary Drug and Feed Administration and Control December 2012. Competence certificates to veterinary Authority to issue competence certificates for veterinary drug and feed trade activities limited in one regional drug and feed trade activities. state are to be issued by regional organizations As per the ESIC and citing Article 30(3) of the CRBLP, authorized to exercise veterinary drug and feed the MoA included (in the Directive it issued in 2012) administration and control activities. requirements to be fulfilled to obtain competence According to Proclamation No. 728/2011, the need certificates for veterinary drug and feed business to regulate the production, distribution and use of activities listed in the revised ESIC. The requirements veterinary drugs and feed is related to addressing for growing and manufacture of animal feed include animal health concerns and thereby enhancing public having appropriate land, adequate capital, appropriate health safety and the productivity of animal and animal storage facility/warehouse and qualifications or products. This objective could be considered as the capacity to engage qualified staff. The requirements for regulatory purpose of the requirement of competence manufacture of veterinary drugs include appropriate certificates for veterinary drug and feed trade activities production facilities, adequate capital and qualifications identified in the Proclamation. or capacity to engage qualified staff. For wholesale, retail, import and export trade in animal feed, the The revised ESIC issued by the MoT identifies the requirements include a properly located warehouse, following 12 licenses in relation to the production and sale and distribution facilities, weighing scale certified transaction of veterinary drugs and feed. by the Quality and Standards Authority and adequate These licenses do not fully match with the type of capital. For wholesale, retail, import and export trade veterinary drug and feed trade activities defined in veterinary drugs the requirements include having under Proclamation No. 728/2011. Moreover, the veterinarian, adequate capital, and appropriate store. revised ESIC authorizes the MoA to issue competence For a veterinary service license, the requirements certificates in relation to veterinary drug and feed include having appropriate (education and experience) 68  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform qualifications, veterinary clinic (office, laboratory, store, competence certificates for these activities could be shower and toilet), appropriate uniform and veterinary considered as having a valid regulatory purpose. equipment and chemicals. Recommendations The Regulation for the establishment of the Veterinary • The type of veterinary drug and feed trade licenses Drug and Feed Administration and Control Authority identified in the ESIC should be revised taking was issued at the end of 2012, whereas the Authority into account the type of licenses established under was actually established and started operation only Proclamation No. 728/2011. recently around the end of 2013. Accordingly, until • The assignment of institutional mandate for the 2013 veterinary drug and feed related business licenses issuance of competence certificate licenses for were issued as per the ESIC by MoT (for import and veterinary drug and feed trade activities in the export activities) and by BoTIs based on competence ESIC should be corrected in light of Proclamation certificates obtained in accordance with requirements of No. 728/2011. the MoA Directive. • The competence certification requirement for licenses Obtaining veterinary drug and feed trade licenses for veterinary drug and feed trade activities serves approximately takes 2–4 weeks. A total of ten licenses a regulatory purpose related to animal and human were issued in 2012–2013 under this sector and the health concerns and should be maintained. estimated compliance costs for this category of licenses 3.1.6 Apiculture range from ETB 2,500 to ETB 8,000. The Apiculture Resources Development and Protection Findings Proclamation No. 660/2009 provides that any person Most licenses for veterinary drug and feed trade that are who wishes to undertake commercial beekeeping identified in Proclamation No. 728/2011 are covered in development shall obtain a business license issued the ESIC. However, the import of animal feed license, pursuant to the relevant laws. The Proclamation thus which is identified in the Proclamation, is not included does not establish any form of competence certification. in the ESIC listing. Moreover, the names of some of The revised ESIC, on the other hand, establishes a the licenses in the Proclamation and the ESIC do not beekeeping license. exactly match and this may create confusions in the licensing process. License 1 Commercial beekeeping license (both ESIC and proclamation) • There is a contradiction between the ESIC and Proclamation No. 728/2011 in terms of identifying The ESIC identifies the MoA as the issuing authority the authorized organization to issue competence for a competence certificate license for commercial certificates in relation to veterinary drug and feed beekeeping. trade licenses. While the ESIC authorizes the MoA, The Directive issued by the MoA in March 2012 for Article 20(2) of Proclamation No. 728/2011 and competence certification states that the objective of Regulation No. 272/2012 specifically authorize certifying the competence of businesses engaged in the Veterinary Drug and Feed Administration apiculture is to serve the public by establishing a more and Control Authority to set standards and issue transparent and accountable process than customarily competence certificates for veterinary drug and feed used by bodies that are engaged in agricultural trade licenses that fall under the federal jurisdiction. development and trade. The Directive also specifies the • As stated in Proclamation No. 728/2011, the requirements that should be met to obtain a beekeeping requirement of getting competence certificates to license. These include submission of a business plan, obtain licenses for veterinary drug and feed trade qualified staff, adequate capital, and an environmental activities is justified on account of animal and protection plan. human health concerns. Hence, the requirement for Detailed Analysis of Licenses   69 Finding control, fumigation and spraying of pesticides for • Apart from a general business license, the household purposes under the ESIC. Proclamation No. 660/2009 does not require obtaining a competence certificate to engage in License 1 Pesticide manufacture and formulation license (Proclamation & ESIC) commercial beekeeping. Thus, the legal basis of License 2 Pest control license (Proclamation & ESIC) the competence certificate is doubtful. Moreover, License 3 Wholesale of pesticides and no valid regulatory purpose for the competence agrochemicals (ESIC) certificate license is ascertained. License 4 Retail trade of pesticides and herbicides Recommendation license (ESIC) • The competence certificate license for commercial License 5 Import trade in pesticides and agrochemicals license (Proclamation & beekeeping activity should be eliminated, as its legal ESIC) basis and regulatory rationale are doubtful. License 6 Export of pesticides and agrochemicals 3.1.7  Pesticide Production, Transaction license (Proclamation & ESIC) and Services License 7 Pesticide fumigation license (ESIC & Pesticide production, transaction and services are Proclamation) regulated by the Pesticide Registration and Control License 8 Spraying of pesticides for household purposes (ESIC) Proclamation No. 674/2010. According to Article 15(1) of the Proclamation, any person who intends to For pesticide related licenses, the revised ESIC manufacture, formulate, pack, repack, label, import, authorizes the MoA to issue competence certificates. export, store, sell, distribute, transport, or offer Accordingly, the Directive issued by the MoA in pesticide application services shall obtain a certificate March 2012 for competence certification specifies the of competence, which shall be a precondition for requirements that should be met to obtain competence the issuance of a business license. The objective of certificates for pesticide related licenses identified in the registration and control under the Proclamation is ESIC. The legal basis of the Directive is Article 30(3) of stated as minimizing the adverse effects that pesticide the CRBLP directing the appropriate authority to issue use might cause to human beings, animals, plants and licenses as may be appropriate. the environment in the preamble to the Proclamation. No specific requirements have been set for the issuance The Directive issued by the MoA states that the of a competence certificate under the Proclamation. objective of certifying the competence of businesses engaged in pesticide transactions and services is to The Proclamation further stipulates that competence serve the public by establishing a more transparent and certificates for the manufacture, formulation, import and accountable process than customarily used by bodies export of pesticides as well as for pesticide application that are engaged in agricultural development and trade. services involving fumigation shall be issued by the MoA, whereas the actual business license for these The Pesticide Registration and Control Proclamation activities shall be issued by the MoT. For the remaining No. 674/2010 does not provide for renewal of licenses, pesticide related licenses, competence certificates shall nor does it address the issue of fees for licensing be issued by regional organizations responsible for or renewal. Instead, Article 15(4) stipulates that agriculture, and the business licenses by BoTIs. the issuance, renewal, suspension and revocation of competence certificates shall be prescribed by a The revised ESIC also identifies licenses related to regulation to be issued for the implementation of the pesticide production and services. While the wording Proclamation. The anticipated regulation has not been is different in the documents, the ESIC has identified issued by the Council of Ministers to date. Similarly, licenses relating to manufacture, selling (retail and the MoA Directive does not set fees for the issuance wholesale), import and export of pesticides. Pesticide or renewal of competence certificates for pesticide services have been further disaggregated into pest 70  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform transactions and services. In practice, licenses are regulatory purpose and clarity. Thus, these licenses renewed annually and businesses engaged in these should be maintained. activities are subjected to the regular fees applicable 3.1.8  Fertilizer Production and Transaction to all businesses to obtain and renew commercial The Fertilizer Manufacturing and Trade Proclamation registration, trade name and business license. No. 137/1998 regulates the production of and A total of five licenses have been issued in 2012–2013 transactions in fertilizer. Article 4 of the Proclamation under this sector and the estimated compliance cost stipulates that any person who wants to engage in the for this category of licenses ranges from ETB 3,000 to fertilizer business shall obtain a competence certificate. ETB 10,000. As defined under Article 2(5) of the Proclamation, the fertilizer business includes import, wholesale, retail, Findings export and manufacture of fertilizer. The Proclamation • Most of the licenses for pesticide trade that are does not explicitly state the objective of competence identified in Proclamation No. 674/2010 are covered licenses. Nevertheless, the preamble to the Proclamation in the ESIC. Some of the licenses covered in the refers to the importance of maintaining an adequate Proclamation are also subdivided into two or more supply of quality fertilizer to the agricultural sector and licenses in the ESIC. Moreover, the names of some the need for special care in handling fertilizers. of the licenses in the Proclamation and the ESIC do not exactly match, which may create confusion in the The general requirements for engaging in the fertilizer licensing process. business are not stated in the Proclamation. Article 5 • The additional licenses identified in the ESIC lack of the Proclamation merely states that competence a legal basis since they do not match with the list certificates will be given to applicants having fulfilled of licenses under the Proclamation. In addition, the requirements of the Agency, i.e., the National the absence of a Council of Ministers regulation Fertilizer Industry Agency. However, persons determining the conditions for the issuance, renewal, engaged in the manufacture of fertilizer are required suspension and revocation of licenses for pesticide to have qualified personnel directly engaged in the transactions and services casts doubt on the legality manufacturing process and to establish a laboratory to of the current practice relating to competence test the quality and contents of the fertilizer. certification. The MoA Directive, whose legal status The revised ESIC also identifies the manufacture, is far from clear, cannot replace the anticipated wholesale, retail, import and export of chemical regulation. fertilizers. It also identifies the production of organic • The Proclamation clearly identifies the regulatory fertilizer as a separate license. Based on Proclamation rationale for the licenses identified therein in terms No. 137/1998 and the ESIC, the following fertilizer of protecting human and animal health as well production and transaction licenses are identified. as the environment. As such, the requirement of competence certificates is justified. License 1 Fertilizer manufacture license (Proclamation & ESIC) • Most of the requirements under the MoA Directive License 2 Fertilizer import license (Proclamation & correlate with the regulatory purpose of the ESIC) Proclamation. However, some of the requirements License 3 Fertilizer export license (Proclamation & such as adequate capital are not relevant when seen ESIC) in light of the other requirements for training and License 4 Fertilizer wholesale license (Proclamation equipment. & ESIC) License 5 Fertilizer retail license (Proclamation & Recommendation ESIC) • The licenses identified in the Proclamation and License 6 Production of organic fertilizer license reflected in the ESIC are valid in terms of legal basis, (ESIC) Detailed Analysis of Licenses   71 The ESIC assigns competence licensing for wholesale, 3.1.9 Horticulture retail, import and export trade in fertilizer to the The revised ESIC establishes or provides for 11 types MoT while the production of organic fertilizer and of business licenses related to horticulture activities. the manufacture of fertilizer are assigned to MoA and These are: MoI respectively. In practice, the MoI does not provide competence certificates to fertilizer manufacturing. License 1 Growing of vegetables License 2 Growing of fruits The Directive issued by the MoA states that the License 3 Growing of herbs objective of certifying the competence of businesses License 4 Aquatic vegetable production engaged in fertilizer transactions and services is to License 5 Growing of vegetables, fruits horticultural serve the public by establishing a more transparent and specialties, herbs and nursery products accountable process than customarily used by bodies other than floriculture n.e.c. that are engaged in agricultural development and trade. License 6 Floriculture The Directive sets requirements only for the production License 7 Wholesale of cut flowers and plants of organic fertilizer. These requirements are: a business License 8 Retail trade in cut flowers & plants plan, production process and environmental impact License 9 Import of cut flowers and plants assessment; materials and inputs for the production of License 10 Export of non-processed fruits & compost; adequate capital; qualified staff/employees; vegetables and possession of land. License 11 Export of cut flowers and plants The proclamation stipulates that competence licenses The ESIC further authorizes the Ethiopian Horticulture for fertilizer businesses should be renewed annually. Development Agency (EHDA) to issue competence However, it does not provide for fees. Similarly, the certificates in relation to the above listed licenses. MoA Directive does not set fees for the issuance However, issuing licenses or competence certificates or renewal of competence certificates for pesticide to businesses is not included in the powers and transactions and services. In practice, licenses are responsibilities of the EHDA listed under Article 5 of renewed annually and businesses engaged in these the Council of Ministers Regulation No. 152/2008, activities are subjected to the regular fees applicable which established the Agency. Nevertheless, mainly to all businesses to obtain and renew commercial due to pressure from the MoT, the EHDA has issued registration, trade name and business license. a Directive in November 2010 (with entry into In this sector, only one license for wholesale of fertilizer force date of 01 December 2011) that defines the was issued in 2012–2013. The estimated compliance requirements of professional competence to be satisfied cost for this category of licenses ranges from ETB 2,500 by businesses that engage in horticulture activities. to ETB 10,000. Article 30(3) of the CRBLP, which authorizes relevant sectoral government institutions to issue directives for Finding competence certification, was cited as the legal basis for • The status of the Fertilizer Manufacturing and Trade issuing this Directive. Proclamation No. 137/1998 is far from clear. For instance, the National Fertilizer Industry Agency The Directive states that its objective is to ensure that does not exist anymore. horticulture products which are produced in the country and exported to foreign markets meet acceptable quality Recommendation requirements so that they can generate the required foreign • The competence certificate licenses for fertilizer currency by supplying customers with quality products. business should be eliminated, as their legal basis and According to the Directive, it is necessary to ensure the regulatory purpose are doubtful. competence of businesses that engage in the sector from the beginning (ex-ante) to achieve the above objective. 72  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform The Directive enumerates 12 general requirements However, the regular commercial registration, trade that apply to all of the above listed 11 licenses. These name and business license application and renewal fees requirements mainly relate to proof of identity, apply to businesses engaged in the horticulture sector. investment permit, tax identification number, proof The EHDA Directive provides that the Agency shall of land possession, etc. Moreover, it sets out 9–13 process applications submitted in accordance with the specific requirements for each of the licenses. These requirements and issue competence certificates within requirements commonly include having sufficient not more than seven working days. However, the capital, appropriate land, facilities and working systems Agency has not started implementing the Directive and to ensure product qualities and qualified human it has only been writing support letters for business resources. license renewal to businesses that started exporting Although the Directive was supposed to come into force horticulture products. Obtaining this support letter is on 01 December 2011, the EHDA has not yet started usually completed within a day. applying it or issuing competence certificates. The According to information obtained from EHDA, EHDA mandate relates only to horticulture businesses no new application for export related horticulture operated through investment permits and directed at business was submitted to the Agency in 2012–2013. export to foreign market. No application to start a new However, according to data from the MoT, a total of 78 horticulture business directed at an export market has horticulture business licenses were issued in 2012–2013, been submitted to the EHDA since the issuance of the and the estimated compliance cost per license for this Directive. Businesses that already engaged in the sector category of licenses ranges from ETB 2,500 to ETB before the issuance of the directive are, in principle, 5,000. required to obtain a competence certificate to renew their business licenses. However, the existing practice Findings for the renewal of business licenses in the horticulture • The competence certificate licenses for horticulture export sector is that 1) the business applies to the business activities (both for foreign and domestic EHDA to be provided with a support letter to renew markets) as well as the mandates of the EHDA and its license; 2) the EHDA verifies only the fact that the agricultural bureaus to issue these licenses do not business has actually started or is engaged in exporting have clear legal basis. horticulture products. If the business started exporting, • The objective of competence certificate licenses for then the EHDA writes a support letter to the MoT horticulture activities relates to increasing foreign requesting the renewal of the license; and 3) the MoT currency earnings from the sector and not directly renews the license based on the support letter. to the most common and valid regulatory purposes of licenses such as addressing health, safety, security As stated above, the organizational mandate of the and environmental concerns. EHDA relates to promoting exports of horticulture products. Accordingly, the EHDA is not involved in • The requirements in the existing directive could be certifying the competence of horticulture business considered as stringent. If the Directive starts to be activities (production and trade of fruits, vegetables, implemented, businesses who want to engage in the herbs and flowers) directed at the domestic market. In sector need to meet too many requirements and have practice, the Urban Agriculture Departments in Addis to produce large amount of documents to obtain a Ababa sub-cities issue competence certificates to these license. horticulture related businesses without any clear legal • Most of the requirements in the Directive are very basis. general and subjective. For instance, for most of the licenses the applicant is required to produce evidence No application or renewal fee for competence of sufficient capital for the work or employment of certification is provided in the EHDA Directive. Detailed Analysis of Licenses   73 professionals with appropriate knowledge and skills License 1 Raising birds license for the work. However, what constitutes “sufficient License 2 Game propagation license capital” or “appropriate professionals” is not License 3 Civet ranch or capturing license provided in the Directive. License 4 Crocodile farming license Recommendations License 5 Ostrich farming license • The competence certificate licenses for horticulture License 6 Hunting operation license business activities should be eliminated, as they lack License 7 Foreign tourist hunting license clear legal basis and valid regulatory purposes. License 8 Resident tourist hunting license • If they are to be maintained, the excessively stringent, License 9 Full professional hunter’s license vague and subjective requirements should be License 10 Assistant professional hunter’s license simplified and clarified. License 11 Apprentice professional hunter’s license License 12 Bird hunting operation license 3.1.10 Hunting and Wildlife Utilization License 13 Falcon hunting service license The Development, Conservation and Utilization of License 14 Wildlife capturing professional license Wildlife Proclamation No. 541/2007 prohibits any License 15 Wildlife taxidermy operation license activity of trade in wildlife and their products unless a License 16 Various wildlife products trade license permit is obtained from the Ministry of Agriculture and License 17 Wildlife filming license Rural Development or Regional Authorities. However, License 18 License for research and study in wildlife Proclamation No. 575/2008, which established the conservation areas Ethiopian Wildlife Conservation Authority (EWCA), License 19 Live wildlife trade license has transferred the power to issue hunting and other License 20 Live wild plant trade license wildlife utilization permits/licenses to the Authority. License 21 Wildlife conservation areas lodges and Moreover, the Wildlife Development, Conservation guest house building license and Utilization Council of Ministers Regulation License 22 Publishing of wildlife postcard and posters No. 163/2008 has identified different types of hunting trade license and other wildlife utilization licenses and specified the fees payable to obtain each type of license. After the revised ESIC was published, the following four licenses related to hunting and wildlife utilization The ESIC also identified 12 types of licenses related have been added in Annex II of the ESIC which was to hunting and wildlife utilization and tasked the issued in January 2014. Ethiopian Wildlife Conservation Authority to issue competence certificates for these licenses. To facilitate License 23 Import trade wild animals the competence certification process, the Ministry of License 24 Import trade wild animals products Culture and Tourism (MoCT), to which the Authority License 25 Export trade wild animals is accountable, has issued a Directive in June 2012 License 26 Export trade wild animals products that sets out the requirements to be met to engage in business activities related to wildlife utilization. The The above listed business licenses, competence Directive establishes requirements for 22 types of certificates, professional certificates and permits licenses related to hunting and other wildlife utilization related to hunting and wildlife utilization basically activities. Most of these licenses relate to competence emanate from Proclamation No. 541/2007 and certificates to operate different types of business in a Regulation No. 163/2008. According to the preamble sector, while some are related to professional certificates of Proclamation No. 541/2007, one of the objectives to individuals and others are related to permits to carry of the Proclamation is to address the depilation and out specific activities in the sector. endangered existence of the country’s wildlife resources. 74  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform This objective could be considered as the regulatory activities. For instance, game propagation, civet purpose for the above listed hunting and wildlife ranch, crocodile farming and ostrich farming, which utilization business licenses. are now separate licenses, can be merged under one wildlife farming/ranch license. According to the Directive issued by the MoCT in June 2012, the requirements to obtain competence • Some of the requirements for establishing business certificates for game propagation activities include: organizations to engage in game propagation, adequate and appropriate accommodation, securing hunting operations and trade activities in technical and veterinary support from the Woreda/ wildlife and their products, such as minimum Zonal agriculture bureau or ability to employ a capital requirements, lack reasonableness and veterinarian, conducting EIA and annual audit, expertise appropriateness. in trapping or ability to engage a qualified trapper Recommendations when necessary, vehicle for transporting animals, • Merging some of the licenses under this section to appropriate trapping equipment for the animal species avoid multiple licenses should be considered. to be raised, knowledge of the species to be raised • Revise the Directive issued by the MoCT with a view or ability to engage an expert, food, water and cages to simplify and clarify the requirements for obtaining appropriate for the species. The requirements to obtain the different licenses listed under this section. competence certificates for hunting operation activities include: having a registered business with no tax arrears, 3.1.11 Forestry possession of hunting rifle, professional qualifications in The Forest Development, Conservation and Utilization hunting or engaging a professional hunter, at least ten Proclamation No. 542/2007 governs activities in the standard tents, one pick-up 434 vehicle, two insured forestry subsector. Article 6(4) of the Proclamation 434 station wagon vehicles with radio facilities, five provides that a forest products trade license shall be short-range radios, office space (3 rooms), qualified issued in accordance with the management plan, taking staff (2 cooks, 1 camp manager, 2 cleaners, drivers and into account the utilization of the country’s limited 1 ranger per 10 sq.km), initial capital of ETB 1.5 million. forest resources and in a manner that shall not disturb the natural resource balance of the area. However, the Regulation No. 163/2008 specifies the fees payable Proclamation does not define forest products, nor does to obtain the different hunting and wildlife utilization it specify/enumerate the types of forest products trade. licenses. The fees to obtain competence certificates Article 13 of the Proclamation identifies two types of for the different wildlife raising or farming, hunting permits in relation to harvesting and transporting forest operation as well as trade in wildlife and their products products. range from ETB 2,500 to ETB 4,000. The amount and currency of fees payable to obtain permits for wildlife License 1 Harvesting forest products from state hunting, filming and researching varies depending forest permit on whether the applicant is an Ethiopian resident or License 2 Forest products movement permit a foreigner. The highest amount of fee is for wildlife filming from air, which is 15,000 USD. Data on the A forest products movement permit is issued for moving total number of hunting and other wildlife utilization forest products from the production site to the local licenses issued in 2012–2013 is not available. market or from within the country to the international market. The above two permits are to be issued by Findings appropriate regional bodies, i.e., regional organizations • The licenses under this section serve a valid responsible for development, conservation and regulatory purpose, as they are directed to ensure the utilization of forests. sustainable utilization of wildlife resources. The preamble to the Proclamation states its objectives • Some of the licenses can be merged with other in terms of preventing soil erosion, expansion of licenses to avoid multiple licenses for similar desertification, disturbance of ecological balance, Detailed Analysis of Licenses   75 depletion of biodiversity and reduction of agricultural of the MoA to the MoEF. Accordingly, the MoEF is production due to the alarming situation of forest currently issuing competence certificates in relation to degradation in the country. The requirements for the 15 forestry related business licenses identified in the the issuance of permits have not been set in the ESIC based on the requirements already set out in the Proclamation. Directive issued by the MoA in March 2012. The revised ESIC has established the following 15 forest The Directive issued by the MoA states that the products trade licenses. objective of certifying the competence of businesses engaged in forestry activities is to serve the public by License 3 Forestry and related services establishing a more transparent and accountable process License 4 Logging and related services than customarily used by bodies that are engaged in License 5 Other activities of forestry and hunting n.e.c. agricultural development and trade. License 6 Manufacturing of mill products, including wattle bark grinding and compressing The generic requirements for all forestry subsector License 7 Wholesale trade in incense & gums activities are adequate capital, human resources License 8 Wholesale of sawn timber, plywood and (with special qualifications for manufacturing of mill related products products), valid business license, tax payer identification License 9 Retail trade of incense, gums and other number, processing/seasoning and storage facilities. smoky forest products An investment permit is also required for logging and License 10 Retail trade of logs and timber related services, wholesale trade in incense and gum, License 11 Retail trade of sawn fiber, plywood and import trade in incense and gum, and export trade in related products incense and gum. Import trade in incense and gums License 12 Sawmilling and preserving of timber additionally requires a certificate indicating the product License 13 Wholesale of logs is free from invasive species and things that are harmful License 14 Import trade in incense, gums to the environment and health. License 15 Export trade in incense and gums License 16 Import of logs In practice, competence certificates are renewed License 17 Export of logs annually and businesses engaged in these activities are subjected to the regular fees applicable to all businesses Annex II of the revised ESIC has identified the following to obtain and renew commercial registration, trade two additional licenses. name and business license. A total of 197 licenses have been issued in 2012–2013 License 18 Import trade in forest products and the estimated compliance cost for this category of License 19 Export trade in forest products licenses ranges from ETB 3,000 to ETB 4,000. The ESIC has further authorized the MoA to set Findings requirements and issue competence certificates • The two permits established by Proclamation for businesses that engage in the above activities. No. 542/2007 are aimed at ensuring the sustainable Accordingly, the Directive issued by the MoA in utilization of forest products and could be considered March 2012 for competence certification specifies the as having a valid legal basis and regulatory purpose. requirements that should be met to obtain competence • In relation to the seventeen forest products trade certificates for forest products trade licenses identified licenses identified in the revised ESIC and Annex II, in the ESIC. Until recently, the MoA had been issuing the requirement to ex-ante certify the competence competence certificates for the above listed licenses of businesses to engage in these activities does not based on the requirements set in the Directive. However, seem to have a clear legal basis as well as a valid the recently issued Proclamation No. 803/2013 regulatory purpose. Obtaining the general business established the Ministry of Environment and Forestry (MoEF) and transferred the forestry related mandates 76  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform registration and trade license should be sufficient to License 20 Agricultural and animal husbandry engage in these business activities. services activities n.e.c. • Moreover, the existing list of requirements to obtain License 21 Processing of animal by-products including hides, bones, etc. a competence certificate to engage in forest products License 22 Wholesale trade in livestock trade (set out in the Directive issued by the MoA in License 23 Wholesale of livestock by-products March 2012) commonly contain several stringent, including hides, bones, etc. inappropriate and subjective requirements. License 24 Wholesale of beverage crops (except Recommendations coffee and tea) • The two permits established by Proclamation License 25 Wholesale trade in other agricultural products, n.e.c. No. 542/2007 should be maintained. License 26 Wholesale trade in agricultural machinery • The competence certification under the revised ESIC and equipment and Annex II of the ESIC should be eliminated. License 27 Retail trade in grains 3.1.12 Other Agricultural Production License 28 Retail trade of gessho and malt and Transaction Activities License 29 Retail trade in agricultural raw materials The ESIC identifies a number of licenses related to n.e.c. agricultural production and transaction business License 30 Retail trade of livestock activities which are not regulated by specific agriculture License 31 Retail trade of beverage crops sector laws. The ESIC further authorized the MoA to License 32 Retail trade of cotton set out requirements and issue competence certificates License 33 Retail trade of sugarcane for these licenses. License 34 Retail trade of fiber (rope) products License 35 Retail trade of other agricultural products License 1 Growing of cereals License 36 Retail trade of agricultural machinery and License 2 Growing of sugarcane equipment License 3 Growing of tea and other beverage, spice License 37 Installation and maintenance of crops and medicinal crops greenhouses including inside equipment License 4 Growing of fiber crops and machines License 5 Growing of enset License 38 Import of cereals License 6 Farming of cattle License 39 Import of pepper and spices License 7 Farming of sheep and goats License 40 Import trade in agricultural raw materials n.e.c. License 8 Farming of camels License 41 Import trade in livestock License 9 Farming of pack animals (horses, asses, mules, etc.) License 42 Import trade in livestock and livestock products n.e.c. License 10 Farming of cattle and pack animals n.e.c. License 43 Import trade in crude rubber License 11 Poultry License 44 Import trade in other agricultural products, License 12 Swine farming n.e.c. License 13 Production of silk License 45 Import of sawn timber, plywood and License 14 Other animal farming; production of animal related products products n.e.c. License 46 Import trade in agricultural machinery and License 15 Growing of crops combined with farming equipment of animals (mixed farming) License 47 Export of cereals License 16 Harvesting License 48 Export of pepper and spices License 17 Cleaning and other related activities License 49 Export trade in agricultural raw materials License 18 Animal boarding and care n.e.c. License 19 Animal breeding License 50 Export trade in livestock (continues) Detailed Analysis of Licenses   77 Continued The revised ESIC does not provide for renewal of licenses License 51 Export trade in livestock and livestock and payment of fees. In practice, competence certificates products n.e.c. are renewed annually and businesses engaged in these License 52 Export of beverage crops (except coffee activities are subjected to the regular fees applicable to all and tea) businesses to obtain and renew commercial registration, License 53 Export trade in crude rubber trade name and business license. License 54 Export trade in medicinal crops (moringa, qasil, etc.) A total of 563 licenses have been issued in 2012–2013 License 55 Export trade in other agricultural products under this section and the estimated compliance cost n.e.c. for this category of licenses ranges from ETB 2,900 to License 56 Exports of agricultural byproducts ETB 9,000. License 57 Export trade in agricultural machinery and Findings equipment • The competence certification for the activities falling License 58 Renting of agricultural machinery and equipment within this group does not have a clear legal basis. License 59 Research and experimental development • The requirement to ex-ante certify the competence on agricultural and livestock research of businesses that want to engage in the above listed License 60 Consultancy service for food security activities does not seem to have a valid regulatory License 61 Consultancy service for agro-ecosystem purpose. development • Moreover, the existing list of requirements to obtain License 62 Agricultural consultancy a competence certificate to engage in the above listed The Directive issued by the MoA in March 2012 for agricultural production and transaction activities competence certification specifies the requirements that (set out in the Directive issued by the MoA in should be met to obtain competence certificates for March 2012) commonly contains several stringent, most of these licenses identified in the ESIC. inappropriate and subjective requirements. The above listed licenses are not supported by any Recommendation sector laws. Therefore, the licenses lack a clear legal • All of the competence certificate licenses falling basis. The Directive issued by the MoA states that the within this group should be eliminated. Obtaining the objective of certifying the competence of businesses general business registration and trade license should engaged in forestry activities is to serve the public by be sufficient to engage in these business activities. establishing a more transparent and accountable process than customarily used by bodies that are engaged in 3.2  Mining and Quarrying agricultural development and trade. The Ministry of Mines (MoM) is the government agency in charge of licensing business activities related to mining The requirements for growing of cereals and mixed and quarrying which have to be renewed annually. farming are an investment permit, possession of Article 7 of the Mining Operations Proclamation land, 30% of total capital, commitment to conduct No. 678/2010 (Mining Proclamation) provides that environmental impact assessment, proof of human no person may undertake mining operations or hold, resources, experts, machinery and camp facilities. transport or sell any minerals in their natural state Most other competence certificates require appropriate without having obtained the relevant license. The land or building, adequate capital, qualified human Mining Operations Council of Ministers Regulation resources. Land use and environmental plans as No. 182/1994 (Mining Regulation) complements the well as commitment to conduct environmental Mining Proclamation insofar as it is consistent with it. impact assessments are also included for some of the certificates. No requirements have been set for many of The MoM has issued the Mining Licensing the competence certificates in this group. Implementation Directive 1/2003 EC and the Directive on Processing of Mining Exploration 78  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License Applications No. 1/2006 to facilitate Some of these licenses have some particular its duties, but the focus of these directives is on characteristics. For instance, the petroleum production processing procedures and different technical aspects sharing agreement is more of a negotiation process than of applications rather than listing of requirements a licensing one between petroleum companies and the for licenses and permits. The specific directive that MoM. A certificate of discovery, reconnaissance and addresses requirements for licensing is the Directive retention licenses are issued temporarily. Furthermore, on Professional Competence Certification of artisanal mining and precious minerals brokerage Consultants for Mining Activities No. 3/90. licenses are issued at regional levels mainly because of the absence of precious minerals in Addis Ababa. In addition to the Mining Proclamation, the Transaction In the case of small and large scale mining licenses for of Precious Minerals Proclamation No. 651/2009 construction minerals, they are issued by the Addis (Precious Metals Proclamation) empowers the MoM Ababa City Government Environment Protection to license the purchase, custody, transport, crafting, Authority based on the powers given to state bodies refining, sale or export of precious minerals or under Article 52(1) of Proclamation No. 678/2010. products of precious minerals for commercial purposes. The Precious Metal Proclamation reiterates that no The revised ESIC provides for 41 types of business person shall carry out the transaction of precious licenses related to the MoM as a competence or license minerals unless he/she is registered in the appropriate issuing body, but only licenses listed in the above table government office and is a holder of an appropriate and are mentioned in the laws and are being issued by the valid license or certificate of competence as appropriate. MoM. One particular feature of the interface between the licenses in the laws and in the ESIC is, in mining Still another law that vests licensing powers on the and exploration (sometimes referred as prospecting) the MoM is the Petroleum Operations Proclamation ESIC mentions licenses for particular minerals while the No. 295/1986 (Petroleum Proclamation) which mineral related laws described above do not state so. regulates all petroleum operations in the country. The following licenses provided for by the ESIC are not Despite its age, the law is still applicable. being administered by the MoM or at least not in the The licenses identified based on the laws described name the licenses are described. above are the following: License 16 Wholesale trade in gold License 1 Reconnaissance license License 17 Casting of gold License 2 Exploration license License 18 Mining of coal and lignite License 3 Retention license License 19 Other extraction of crude petroleum and License 4 Artisanal mining natural gas; service activities incidental to License 5 Small scale mining license oil and gas extraction License 6 Large scale mining license License 20 Activities for control of natural radio License 7 Certificate of discovery nuclides License 8 Certificate of professional competence License 21 Prospecting and developing of uranium License 9 Precious minerals brokerage license and thorium minerals License 10 Precious minerals crafting license License 22 Prospecting of minerals n.e.c. License 11 Precious minerals refining license License 23 Precious mineral (excludes gold and License 12 Precious mineral trade certificate of uranium) mining competence License 24 Semiprecious mineral mining License 13 Precious mineral export certificate of License 25 Metallic mineral mining competence License 26 Industrial mineral mining License 14 License petroleum production sharing License 27 Construction mineral mining agreement License 15 Small and large scale mining licenses for License 28 Strategic mineral mining construction minerals License 29 Mining of gold & uranium ores mining (continues) Detailed Analysis of Licenses   79 Continued operators to purchase, hold and transport precious License 30 Dimension stone (granite, marble, slate, minerals and, carry out smithery or lapidary and sale of and wonder stone) its product locally or abroad, can be inferred as possible License 31 Limestone and lime works objectives from the reading of the law. The Petroleum License 32 Other stone quarrying, including stone Proclamation states the purpose of petroleum extraction crushing and clay and sandpits licenses to be: the carrying out of petroleum extraction License 33 Mining of diamonds (including alluvial with modern technology and sound principles of diamonds) and opals resource conservation and developing infrastructure by License 34 Mining of chemical and fertilizer minerals fostering the acquisition of petroleum technology. License 35 Extraction and evaporation of salt License 36 Other mining and quarrying n.e.c. Under the Mining Proclamation there are License 37 Other mining n.e.c. documentation and other requirements for exploration License 38 Research & training and service activities and large scale mining, for reconnaissance and for small incidental to mining of minerals scale mining respectively. These comprise: ID Card/ License 39 Manufacture of coke oven products Passport, Principal Business Registration Certificate, License 40 Manufacture of mining and surveying tools evidence verifying the financial status of the applicant, License 41 Mining and quarrying machines & work program/exploration work proposal, feasibility equipments study, Environmental and Social Impact Assessment License 42 Retail trade of mining and quarrying (ESIA) report, Tax Identification Number (TIN), Article machines & equipments of Association and Memorandum of Association. On the License 43 Import trade in precious stones, jewelry other hand, a laboratory result for a strategic mineral and silverware is demanded for discovery licenses while educational License 44 Import trade in mining and quarrying equipments and work evidence as well as nonemployment by License 45 Service activities incidental to oil and gas government is needed for professional competence. extraction, excluding surveying Similarly, there are documentation and other License 46 Mining of coal and lignite requirements for petroleum production sharing License 47 Other extraction of crude petroleum and agreements. These include: the identified block to natural gas; service activities incidental to oil and gas extraction which the application applies; evidence of the financial License 48 Activities for control of natural radio nuclides standing and technical qualification and experience License 49 Prospecting and developing of uranium of the applicant, including a copy of the most recent and thorium minerals audited accounts of the applicant and of any corporate body having control of the applicant; where the The objectives of the licenses issued under the application is made by a group of companies, the name Mining Proclamation are not directly given but can of the operator and the participating interest of each only be inferred from general principles in Article 7 company; and the terms proposed by the applicant in and the preamble which include: the conservation respect of the major aspects of the model agreement. and development of mineral resources to the socio- For the licenses and competencies required under economic progress of all Ethiopians, protection of the Precious Metal Proclamation, the number the environment for the benefit of present and future of documentation and substantive required to generations and to ensure ecologically sustainable be submitted range from seven to nine.72 On development of minerals, promotion of employment, provision for security of tenure and developing the field in an orderly and sustainable manner. The 72 For example, the requirements of a Precious Mineral mineral transaction licenses and competences under Export license are: ID card, proof of work experience, if known to him/her at the time of application, his potential the Precious Metal Proclamation on their part, do not markets or any contractual commitment entered, proof have a clearly stated objective but having responsible of legal source of the precious minerals he/she wishes to export, TIN, and 2 photos. 80  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform the other hand, the license given by the Addis and the estimated administrative compliance cost for Ababa Environment Protection Bureau has four this category of licenses ranges from ETB 3,415 to documentation and substantive requirements: ID, ETB 838,766. geographical coordinates (UTM-ADINDAN), location Findings map, Memorandum of Association and Articles of • Comparison of the licensing fields in the revised Association. ESIC with what is statutorily laid out demonstrates The time required to complete the process is not the licenses that are actually issued are referred indicated in laws but is mentioned in the citizen’s in general terms such as large scale mining and charter of the MoM. The duration ranges from exploration (with mention of the mineral type in minutes for crafting and refining licenses to 23 days the license) while the ESIC classifies licenses based for petroleum, although for the latter, negotiations may on individual mineral types such as: gold, salt, sometimes take years. limestone, clay, diamonds, opal, etc., while at the same time mentioning larger categories like large In practice, processing times are reported to be scale mining and small scale mining. This certainly slow partly because of shortage of manpower at the looks repetitive. Besides, the exact difference between MoM. All private sector interviewees gave very poor mining and extracting divisions in the Mining and evaluation for the licensing services at the MoM, stating Quarry Chapter of the ESIC is not clear; it appears that the current licensing system of the MoM is slow they can be merged together. and archaic. The MoM believes the main cause is the low salary scale of the MoM which has resulted in a • There are licenses/certificates that are not included in high turnover of staff. In fact, the manpower shortage is the ESIC. Of particular importance are the precious so severe that there is only half of what is recommended mineral transaction licenses and certificates (precious for the licensing work in a MoM Business Processing minerals crafting license and Precious Mineral Trade Reengineering (BPR) study. On a positive note, the Certificate of competence). Moreover, certificates of MoM has introduced software named FlexiCadastre73 discovery are not addressed. The exclusion makes to facilitate and bring transparency into its licensing the licensing information available incomplete for process, but its positive effects remain to be seen.74 licensees that want to understand and plan their investment and exposes them to unplanned wastage The license fees range from no license fees for of time and money in getting these. petroleum (although there are expenses like land rent) • There is a regulatory purpose to the licenses in to ETB 1,000. terms of safeguarding the interest of licensees, Based on figures available a total of 70 licenses have environmental protection and to ensure the most been issued for mining and exploration in 2005 E.C., sustainable exploitation of mineral resources. 73 • There is a severe shortage of manpower and The FlexiCadastre system has a central server in MoM. It applies mainly FlexiCadastre, data base (access, SQL) & capacity in processing the mining and exploration ArcGIS software. It is real time internet/web based mineral license applications at the MoM. This has made license data management. It uses topographic maps as a main background in Arc map. Its purpose is to establish the application process time-consuming and might modern & computerized mineral license data handling induce investors to lose interest. and management as per the existing Mining legislation, thus establishing a transparent and efficient licensing • Although the introduction of FlexiCadastre software system. Particularly, it automatically makes available license information of the whole country at a time, making is a positive measure to resolve issues that may it possible to avoid overlap of license areas, as well as arise in terms of processing and possible tampering bringing about integrated administration. 74 with applications, its inaccessibility from Ethiopia This might dispel some of the corruption allegations made in Plummer, Janelle. 2012. Diagnosing Corruption in Ethiopia: (indicated by licensees and alluded by MoM for Perceptions, Realities, and the Way Forward. Washington, internet connection issues) is thwarting progress DC: World Bank. DOI 10.1596/978-0-8213-9531-8. License: Creative Commons Attribution CC BY 3.0. made to improve licensing. Detailed Analysis of Licenses   81 • Some of the directives at the legal department of the competence certificates in the sector would hamper MoM are not shared with the personnel that process the development of the infant manufacturing sector in the applications which might show the existence of the country. Mentioning the position of the MoI, the disconnect between policy/law and implementation. MoT issued a circular to BoTIs to issue manufacturing • Some of the requirements are very general and business licenses without requiring for competence subjective. For example, for some of the licenses the certificates. applicant is required to present financial standing License 1 Preparatory activities in respect of animal and technical qualification and experience of the fibers, including washing, combing and applicant, work program and proposal. Nonetheless, carding of wool the precise nature of the criteria remains unclear. License 2 Preparatory activities in respect of • The licensing office is centralized and not easily vegetable fibers accessible, especially for those applicants that come License 3 Spinning, weaving and finishing of yarns and fabrics predominantly of wool and from regional states. other animal fibers Recommendations License 4 Spinning, weaving and finishing of yarns and • The discrepancies between the revised ESIC and the fabrics predominantly of vegetable fibers mining laws on licensing fields should be resolved License 5 Spinning, weaving and finishing of traditional clothes in a way that helps the development of the sector. License 6 Cotton ginning Cutting out the overlap in licenses should be a good License 7 Finishing yarns and fabrics start. License 8 Spinning, weaving and finishing of textiles • Requirements should be clear and objective to n.e.c. avoid confusion and are helpful in the planning of License 9 Manufacture of blankets, made-up investments. furnishing articles and stuffed • The severe shortage of manpower needs to be License 10 Manufacture of tents, tarpaulins, sails and other canvas goods addressed urgently as it is slowing down the licensing License 11 Manufacture of automotive textile goods process. (including safety belts, and seat covers) License 12 Manufacture of carpets, rugs and mats 3.3  Manufacturing Sector License 13 Manufacture of cordage, rope, twine and The licenses identified and discussed under this section netting are licenses in the manufacturing sector with the License 14 Manufacture of bags, sacks, rapping & exclusion of manufacturing licenses governed as part packing materials of other sectors, such as manufacturing of medicines License 15 Manufacture of other textile articles (except apparel) n.e.c. (health sector) or manufacturing of agricultural License 16 Manufacture of knitted and crocheted products (agriculture sector). In other words, this fabrics and articles section discusses manufacturing licenses supposed to be License 17 Manufacture of wearing apparel, except fur regulated or verified by the Ministry of Industry (MoI) apparel as per the ESIC. The revised ESIC identifies a total of License 18 Dressing and dyeing of fur, manufacture of 277 licenses under the manufacturing sector. Out of artificial fur, fur apparel and other articles these, it assigned the below listed 113 licenses to be of fur verified by the MoI. License 19 Other dressing and dyeing of fur manufacture of articles of fur However, the MoI has not been convinced with the License 20 Manufacture of manmade fiber need to ex-ante certify the competence of businesses License 21 Leather and hide tanning and finishing engaged in the manufacturing sector. The MoI notified License 22 Manufacture of leather clothes, travel the MoT that it will not issue competence certificates goods, ladies’ handbags, and other general for the manufacturing sector, arguing that requiring and small goods of leather 82  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License 23 Manufacture of artificial leather substitutes License 52 Manufacture of paints, varnishes and License 24 Manufacture of footwear similar coatings, printing ink and mastics License 25 Manufacture of components and License 53 Manufacture of printer ink accessories used for leather products License 54 Manufacture of industrial and general License 26 Other tanning and dressing of leather; purpose salts manufacture of luggage, handbags, License 55 Manufacture of adhesives, and glues saddles and harness License 56 Manufacture of gases License 27 Sawmilling and preserving of timber License 57 Manufacturing of drycell License 28 Sawmilling and planing of wood and License 58 Manufacture of other chemical products production of articles of straw n.e.c. except basic chemicals License 29 Manufacture of veneer sheets; License 59 Manufacture of tires and tubes manufacture of plywood, lamina board, License 60 Rebuilding and retreading of tires particle board and other panels and boards License 61 Manufacture of other rubber products License 30 Manufacture of builders’ carpentry and joinery License 62 Manufacture of plastic products License 31 Manufacture of wooden containers License 63 Manufacture of sheet & plate glass, glass blocks, tubes & rods, glass fibers & glass License 32 Manufacture of coffins wool License 33 Picture frames and framing License 64 Manufacture of glass containers: glass License 34 Manufacture of other products of wood kitchenware, tableware & other glass products except furniture n.e.c. products License 35 Manufacture of pulp, paper and paperboard License 65 Manufacture of glass and glasses products and of containers made from paper product n.e.c. License 36 Manufacture of stationery License 66 Manufacture of non-structural clay and License 37 Manufacture of paper and paper products ceramic products License 38 Other printing of paper related License 67 Manufacture of structural clay and ceramic License 39 Petrol, fuel oils, lubricating oils and products greases, primarily from crude oil License 68 Manufacture of cement, lime and plaster License 40 Petrol, fuel oils, lubricating oils and License 69 Manufacture of articles of concrete, greases, primarily from coal cement and plaster License 41 Petrol, fuel oils, lubricating oils and License 70 Cutting, shaping and finishing of stone greases, primarily from natural gas License 71 Manufacture of mills from stone License 42 Lubricating oils and greases, primarily from License 72 Manufacture of non-metallic mineral other organic products products n.e.c. License 43 Compounded and blended lubricating oils License 73 Basic iron and steel industries, except and greases from purchased materials steel pipe and tube mills other than crude petroleum License 74 Manufacture of ferrous metal products License 44 Other petroleum/synthesized products n.e.c. other than precious metals, used for License 45 Manufacture of basic chemicals, except production inputs fertilizers and nitrogen compounds License 75 Other manufacture of basic iron and steel License 46 Manufacture of fertilizers and nitrogen License 76 Manufacture of primary nonferrous metal compounds products, excluding precious metals License 47 Manufacture of plastics in primary form License 77 Other manufacture of basic precious and and of synthetic rubber nonferrous metals License 48 Other manufacture of basic chemicals License 78 Casting of iron and steel License 49 Manufacture of pesticides and other agro- License 79 Casting of nonferrous metals chemical products License 80 Other casting of metals n.e.c. License 50 Manufacture of candle and tewaf License 81 Manufacture of metal structures or parts License 51 Manufacture of other preparations such as thereof polishes, waxes and dressings n.e.c. (continues) Detailed Analysis of Licenses   83 Continued License 109 Manufacture of number plates, signs and License 82 Manufacture of galvanized steel sheets advertising displays, that are not electrical License 83 Manufacture of metal structures from License 110 Manufacture of engraving aluminum License 111 Recycling of metal waste and scrap License 84 Manufacture of metal structures from steel License 112 Recycling of non-metal waste and scrap License 85 Other structural metal products, e.g., metal License 113 Other recycling n.e.c. doors, windows & gates License 86 Manufacture of structural metal products, The BoTIs issue the above manufacturing business tanks, reservoirs licenses without requiring a competence certificate, License 87 Manufacture of tanks, reservoirs, safe provided that the general business registration and boxes and similar containers of metal license requirements are fulfilled. License 88 Forging, pressing, stamping and roll- forming of metal; powder metallurgy In practice, obtaining any of the above manufacturing License 89 Treatment and coating of metals; general business licenses approximately takes 1 to 2 weeks. mechanical engineering on a fee or A total of ten licenses were issued in 2012–2013 and contract basis the administrative compliance cost for this category License 90 Manufacture of cutlery, hand tools and general hardware of licenses approximately ranges from ETB 1,200 to License 91 Steel pipe and tube mills ETB 3,000. License 92 Manufacture of crown cork and can Findings License 93 Manufacture of other fabricated metal • The MoI position to avoid competence certificate products n.e.c. licenses seems valid, as the regulatory purpose of License 94 Manufacture of engines and turbines, such certificates for the above list of manufacturing except aircraft, vehicle and motorcycle engines activities is doubtful. License 95 Manufacture of pumps, compressors, taps • The licenses under these categories are too specific and valves with no apparent regulatory purpose. License 96 Manufacture of bearings, gears, gearing and driving elements Recommendations License 97 Manufacture of ovens, furnaces and • The elimination of competence certificate licenses for furnace burners the above list of manufacturing activities should be License 98 Manufacture of lifting and handling maintained. equipment • The licenses need to be streamlined and the too many License 99 Manufacture of fire extinguishers and other licenses should be reduced by sub-categories. related activities License 100 Manufacture of metal mills 3.4  Electricity, Gas and Water Supply License 101 Manufacture of agricultural and forestry machinery 3.4.1  Electricity Sector License 102 Manufacture of machinery for metallurgy 3.4.1.1  Electricity Generation, Transmission, License 103 Manufacture of machinery for food, Distribution, Sale, Importation and Exportation beverage and tobacco processing Article 10(1) of the Electricity Proclamation License 104 Manufacture of machinery for textile, No. 86/1997 provides that “No person may generate, apparel and leather production transmit, distribute or sell electricity for commercial License 105 Manufacture of other special purpose purposes unless he is a holder of a license.” In relation machinery n.e.c. to electricity generation, transmission, distribution and License 106 Manufacture of umbrellas sale, the Electricity Operations Council of Ministers License 107 Manufacture of brushes and brooms Regulation No. 49/1999 has established four licenses License 108 Manufacture of buttons, buckles, slide to be issued by the Ethiopian Electric Agency (EEA). fasteners, etc. It also sets out requirements to be met to obtain each 84  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Maximum Duration No. License of License (Years) License Fees in ETB License 1 Hydro power generation license 40 1.00 per kilowatt; minimum 1000.00 License 2 Thermal power generation license 30 " License 3 Geothermal power generation license 25 " License 4 Biomass power generation license 20 " License 5 Wind power generation license 20 " License 6 Solar power generation license 20 " License 7 Diesel power generation license 15 " License 8 Electricity transmission license 50 20 per circuit kilo meter; minimum 2000 License 9 Electricity distribution and sale 50 2 per kilo volt ampere; license minimum 1000.00 License 10 Electricity importation license 10 1.00 per megawatt hour; minimum 2000.00 License 11 Electricity exportation license 10 " type of license. The generation of electricity from non- objection to an application is filed, the Agency shall hydro sources is further subdivided into five licenses grant the requested license within 30 days from the under a Directive issued by the previous Ministry of expiry of the 60 days notice period, provided that the Infrastructure (Maximum Duration of License for relevant requirements are fulfilled. If an objection is Non-Hydro Power Generation Plants for Commercial filed, the granting of license shall be deferred pending Purposes Directive No. 1/2005). Accordingly, the a decision by the Agency within 120 days on the above 11 business licenses are identified for electricity objection filed. generation, transmission, distribution and sale activities. The Ethiopian Electric Agency (EEA) has given According to Proclamation No. 86/1997, it is necessary investment and operational licenses as per the to regulate the activities of electricity suppliers to ensure Proclamation No. 86/1997 and Regulation the supply of efficient and reliable electricity services No. 49/1999. However, almost all electricity operation to the public. Thus, ensuring the efficient and reliable licenses issued by the EEA have been given to the supply of electricity services, which is one of the basic Ethiopian Electric Power Cooperation. utilities and networked services, is the regulatory Findings purpose for requiring licenses for electricity generation, • All of the licenses related to electricity generation, transmission, distribution and sale activities. As transmission, distribution and sale, and importation specified in Regulation No. 49/1999, the requirements and exportation have a firm legal basis and serve to obtain electricity generation, transmission, valid regulatory purposes. distribution and sale licenses mainly include an • The requirements to obtain the licenses are largely application, feasibility study and Environmental Impact necessary and reasonable when seen in light of the Assessment (EIA report). regulatory purpose. As per Regulation No. 49/1999, applications for Recommendation the above licenses are required to be registered and • All of the licenses related to electricity generation, advertised. Moreover, the copies of the maps of the transmission, distribution and sale, and importation proposed area of license are required to be made and exportation should be maintained. available for public inspection for 60 days. If no Detailed Analysis of Licenses   85 3.4.1.2  Electrical and Electromechanical Work human resources, machineries) to be met to obtain Construction and Consultancy competence certificates in relation to each of the above Proclamation No. 86/1997 and Regulation No. 49/1999 licenses. The actual business licenses for electrical works authorize the EEA to issue professional competence contractor, electromechanical work contractor and certificates to electrical contractors. Although these laws electrical engineering consultants are issued/renewed refer to electrical contractors, the certificate envisaged by the Bureau of Trade and Industry (BoTIs) after under them is to certify individual professionals, not obtaining competence certificates from the EEA. No fee business institutions engaged as electrical contractors or is charged by EEA to issue competence certificates for consultants. these licenses. License 12 Electrical professional competence A total of ten licenses have been issued in 2012–2013 certificate under this sector and the estimated compliance cost for this category of licenses is about ETB 8,700. Regulation No. 49/1999 establishes four categories Findings (Grade A–D) for electrical professional competence • Proclamation No. 86/1997 and Regulation certificates. The Regulation further provides for No. 49/1999 mandates the EEA only to certify a maximum of 30 days to process the issuance of the professional competence of individuals in the a certificate as well as fees payable to obtain each electric field, not business organizations. These category of certificate (ETB 500 for Grade A, ETB 400 laws do not mandate the EEA to issue competence for Grade B, ETB 300 for Grade C and ETB 100 for certificates to businesses that engage as electrical or Grade D). electromechanical work contractors. This could be The Electricity Proclamation No. 86/1997 and considered as a legal gap in the mandate of the EEA. Regulation No. 49/1999 do not establish licenses to be • The certification of electrical professionals and the issued to business organizations engaged in electrical or competence of electrical and electromechanical electromechanical work construction or consultancy, contractors as well as electrical engineering nor do they authorize the EEA to verify and issue consultants serve valid regulatory purposes. competence certificates to business organizations • The requirements to obtain the electrical and engaged in these activities. However, the revised ESIC electromechanical work contractor licenses and has established the following three licenses in relation electrical engineering consultant licenses in the first to electrical or electromechanical work contractors or Directive issued in December 2011 were considered consultants and authorized the EEA to verify and issue very stringent and not realistic to the country competence certificates to businesses in relation to these context. The revised Directive tried to make the licenses. requirements less stringent. License 13 Electrical work contractor (Grade 1–8) • With regard to electromechanical work contractor license license, there is an overlap and lack of clarity License 14 Electromechanical work contractor between the mandate of the EEA and the Ministry of (Grade 1–8) Urban Development and Construction (MoUDC) in License 15 Electrical engineering consultancy license issuing competence certification. (Grade 1–5) Recommendation The EEA issued a Directive to determine requirements • The certification of electrical professionals and the for competence certification for electrical and electric- competence of electrical and electromechanical related trade activities in December 2011 and it revised contractors as well as electrical engineering the Directive in June 2013. This Directive sets out consultants should be maintained. requirements (mainly related to office/work place, 86  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 3.4.1.3  Manufacture, Wholesale, Import and License 31 Wholesale trade in electrical equipment Export of Electrical Machines, Equipment and n.e.c. Apparatus License 32 Installation and maintenance of electrical The ESIC identifies/establishes the licenses listed below equipments regarding business activities related to the manufacture, License 33 Import trade in electrical motors, wholesale, import and export of electrical machineries, generators, transformers, pumps, others equipment and appliances. It further authorizes the EEA not mentioned in other places except household and office electrical equipments to issue competence certificates and BoTIs to issue the License 34 Import of household electrical appliances actual licenses in relation to these activities. However, and equipment (including household Proclamation No. 86/1997 and Regulation No. 49/1999 air-conditioners) do not establish competence certificate licenses, nor do License 35 Import of lighting and lighting accessories they mandate the EEA to issue competence certificates License 36 Import of electricity distribution and to businesses that engage in the manufacture, wholesale, controlling apparatus import and export of electrical machineries, equipments License 37 Import trade in wiring and cables and apparatus. Article 30(3) CRBLP is cited as the legal accessories basis for these competence certificate licenses. License 38 Import of solar energy equipments License 39 Import trade in electrical equipment n.e.c. License 16 Manufacture of electric motors, generators License 40 Export trade in electrical motors, and transformers generators, transformers, pumps, others License 17 Manufacture of electricity distribution and not mentioned in other places except control apparatus household and office electrical equipments License 18 Manufacture of insulated wire and cable License 41 Export trade in household and office electrical appliances and equipment License 19 Manufacture of accumulators, primary (including household air-conditioners) cells and primary batteries License 42 Export trade in lighting and lighting License 20 Manufacture of electric lamps and lighting accessories equipment License 43 Export trade in electricity distribution and License 21 Manufacture of electrical baking stove controlling apparatus License 22 Manufacture of energy-saving technology License 44 Export trade in wiring and cables devices accessories License 23 Manufacture of other electrical equipment License 45 Export trade in solar energy equipments n.e.c. License 24 Manufacture of electronic valves and tubes and other electronic components The EEA has been issuing competence certificates (capacitors, resisters, transistors, etc.) in relation to the above listed licenses based on the License 25 Wholesale trade in lifts, escalators and Directive it issued in December 2011 and revised in industrial and office air-conditioning June 2013. According to the Directive, the objective of equipment the competence certificate requirement for the above License 26 Wholesale trade in electrical motors, listed business activities is safeguarding the property generators, transformer, pumps, others not mentioned in other places except and safety of the public. household and office electrical equipments No fee is charged by the EEA to issue competence License 27 Wholesale trade in lighting and lighting certificates in relation to these licenses. Processing this accessories group of licenses may take from 2–4 weeks. A total of License 28 Wholesale trade in electricity distribution and controlling apparatus seven licenses have been issued in 2012–2013 and the License 29 Wholesale trade in wiring and cables estimated administrative compliance cost ranges from accessories ETB 2,500 to ETB 8,000. License 30 Wholesale trade in solar energy equipments Detailed Analysis of Licenses   87 Findings certificates and has not included requirements for retail • Proclamation No. 86/1997 and Regulation trade activities in electrical machines, equipment and No. 49/1999 do not mandate the EEA to issue apparatus in its revised Directive issued June 2013. competence certificates to businesses that engage in the manufacture, wholesale, import and export of License 46 Retail trade of electrical motors, generators, transformers, pumps, others electrical machineries, equipments and apparatus. not mentioned in other places except This could be considered as a legal gap in the household and office electrical equipments mandate of the EEA. License 47 Retail trade of household electrical • Ensuring ex-ante the competence of businesses appliances and equipment (including household air-conditioners) engaged in the manufacture, wholesale, import License 48 Retail trade of lighting and lighting and export of electrical machineries, equipments accessories and apparatus is not considered to serve a strong License 49 Retail trade of electricity distribution and regulatory purpose. Even the regulators stated that it controlling apparatus would be more appropriate to regulate the quality of License 50 Retail trade of wiring and cable accessories the products than the competence of the traders. License 51 Retail trade of solar energy equipments • The licenses for the manufacture, wholesale, import License 52 Retail trade of electrical equipment n.e.c. and export of electrical machineries, equipments and License 53 Retail trade of lifts, escalators and industrial apparatus are unnecessarily prescriptive/specific. and office air-conditioning equipment Recommendations Findings • The competence certificate licenses for the • Exempting retail trade activities in electrical manufacture, wholesale, import and export of machines, equipment and apparatus from the electrical machineries, equipments and apparatus requirement to obtain competence certificates is should be eliminated, as their legal basis and a right decision, as the ex-ante regulation of the regulatory purpose is doubtful. competence of businesses engaged in these activities • Most of the business licenses for the manufacture, does not serve a valid and strong purpose. wholesale, import and export of electrical • The licenses for the retail trade in electrical machineries, equipments and apparatus should be machineries, equipments and apparatus are merged to avoid multiple business licenses. unnecessarily specified and may result in requiring 3.4.1.4  Retail Trade in Electrical Machines, one trader to obtain multiple licenses. Equipment and Apparatus Recommendation The ESIC established the following eight licenses in • All the business licenses for retail trade activities in relation to retail trade activities in electrical machines, electrical machines, equipment and apparatus should equipment and apparatus. It also authorized the EEA be merged into one license to avoid multiple licenses. to issue competence certificates and the BoTIs to issue the actual business licenses to these activities. The EEA, 3.4.2  Water Sector in the Directive it issued in December 2011, included 3.4.2.1  Water Utilization Permits requirements to obtain competence certificates for The Ethiopian Water Resources Management these activities. However, based on a recent circular Proclamation No. 197/2000 (Articles 11–18) establishes issued by the MoT to exempt retail trade activities in the following three permits related to the utilization of most sectors, the EEA has stopped issuing competence water resources. 88  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 3.4.2.2  Water Works Professionals, Contractors No. License License Fees in ETB and Consultancy License Water use 87 for issuance and 55 for The Ethiopian Water Resources Management 1 permit cancellation, transfer or alteration Proclamation No. 197/2000 (Articles 11–18) provides License Waterworks 94 for issuance and 54 for that no person shall engage, without holding Certificate 2 construction extension, cancellation, of Professional Competence, in the field of waterworks permit transfer or alteration construction activity, including in water well drilling, License Waste water 81 for issuance and 41 for cleaning activity or giving a consultancy service relating 3 discharge permit cancellation or alteration thereto. The competence certificates for these activities are to be issued by the MoWIE or other organs These permits are not business licenses per se, but are delegated by it and are required to be renewed annually. usually required to be obtained by businesses engaged Regulation No. 115/2005 has further specified the type in drinking water supply, irrigation, industry, power of competence certificates to be issued for waterworks generation, transport, animal husbandry, fishing, professionals, contractors and consultants. mining, etc. Although the objective of these permits is not expressly stated, the purpose of Proclamation The MoWIE has issued a Directive for the No. 197/2000, which established these permits, is implementation of competence certification based on to ensure that the water resources of the country the power given to it by Proclamation No. 197/2000. are protected and utilized for the highest social and The Directive was revised on 4 October 2013. The economic benefits of the people of Ethiopia. According revised Directive specifies the types of competence to Proclamation No. 197/2000, applications for the certificates to be issued in the field of waterworks above permits shall be processed within 60 days. More professionals, contractors and consultants, including the specific application requirements and fees to obtain detail requirements to obtain each type of competence the above permits are further stipulated in the Council certificate. Based on Proclamation No. 197/2000, of Ministers Ethiopian Water Resources Management Regulation No. 115/2005 and the revised Directive Regulation No. 115/2005. The permits are to be issued by the MoWIE, the following licenses are issued by the Ministry of Water, Irrigation and Energy identified in relation to waterworks professionals, (MoWIE) or other organs delegated by the Ministry, contractors and consultants. usually river basin authorities or regional water bureaus. License 1 Certificate of professional competence in The revised ESIC identified the following water supply/ waterworks construction use related licenses and authorized the MoWIE to License 2 Certificate of professional competence in issue competence certificates: 1) production of bottled waterworks study, design and supervision waters (with FMHACA), 2) collection, purification License 3 Certificate of highly experienced professional water designer and distribution of water including bottled water License 4 Certificate of professional competence in (with FMHACA), 3) steam and hot water supply (with water well drilling MoCT), 4) in-land fishing (with MoA), and 5) fish farms License 5 Waterworks contractor (Grade 1–10) (with MoA). However, the water use permit discussed License 6 Water well drilling and cleaning contractor above applies to these businesses or any other type of license (Grade 1–5) water use and the MoWIE is not providing competence License 7 General water resource consultant certificates for these licenses as envisaged in the ESIC. (Grade 1–6) License 8 Water supply and sanitary engineering Findings consultant (Grade 1–7) • All of the above 3 permits serve valid regulatory License 9 Hydro-power generation engineering purposes, ensuring sustainable utilization of water, consultant (Grade 1–8) which is one of the scarce resources. • The requirements to obtain the licenses are largely necessary and reasonable. Detailed Analysis of Licenses   89 The first four types of certificates aim to certify the requirement. Normally waterwork construction qualification/competence of individual professionals, activities could involve public health, safety or not businesses per se, whereas the last five types of environmental risks/concerns. Thus, the regulatory certificates are directed at certifying the competence purpose of certifying the competence of professionals of business organizations engaged in the field of and businesses engaged in waterworks construction waterworks construction and consultancy. and consultancy could be related to addressing these concerns, although not expressly specified in the Although the Directive issued by the MoWIE identifies relevant laws. five types of licenses for business organizations engaged as contractors or consultants in the area of waterworks, According to the Directive issued by the MoWIE, the the revised ESIC identifies only the following three requirements to certify the professional competence of general licenses: individual professionals relate to having appropriate educational qualification and experience in the field. License 10 Construction of waterworks (contractor) For business organizations to be engaged as waterworks License 11 Sanitary work contractor contractors or consultants, the requirements to obtain License 12 Waterworks consultancy professional competence certificates generally relate to human resources, office space, machinery and Thus, the licenses identified by the MoWIE Directive equipment. The type and size of these requirements for competence certification purposes do not directly vary depending on the contractor and consultancy match with the licenses identified by the revised ESIC grade requested by the applicant. Moreover, all for issuance of business licenses. In practice, MoWIE businesses required to obtain competence certificates issues competence certificates as per its Directive, for waterworks contractor or consultancy license are while BoTIs issue actual business licenses as per the required to present Tax Identification Number (TIN) ESIC for business engaged as water works contractors and Memorandum and Articles of Associations (if the and consultants. Moreover, while the relevant laws applicant is a company) or professional certificate (if and the Directive issued by the MoWIE authorizes the the applicant is sole proprietorship). Private sector MoWIE to exclusively issue competence certificates informants consider that the requirements to obtain for all businesses engaged in the area of water works professional competence certificates are very stringent construction and consultancy, the revised ESIC and sometimes lack clarity. authorizes the MoWIE and the MoUDC to jointly issue competence certificates for business licenses for water Regulation No. 115/2005 provides that professional works contractors and sanitary work contractors. competence certificates for waterworks professionals, contractors and consultants shall be issued within Although Proclamation No. 197/2000 and Regulation ten days of application. However, as per information No. 115/2005 provide that no person shall engage in obtained from the private sector, obtaining professional the business of waterworks contractor or consultant competence may sometimes take longer time than what without holding certificate of professional competence, is legally set. they do not expressly state the objective of this regulatory requirement. The Directive issued by the Regulation No. 115/2005 also specifies the fees charged MoWIE states the regulatory purpose of certifying the to obtain and renew the various competence certificates competence of professionals and business engaged in for waterworks professionals, contractors and consultants, waterworks construction and consultancy is to protect which range from ETB 41 to ETB 162. A total of 4,676 the interest of the public and government. However, it licenses have been issued in 2012–2013 and the estimated does not specify which types of public or government administrative compliance cost for this category of licenses interest are to be protected by this regulatory ranges from ETB 2,800 to ETB 12,800. 90  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Findings License 1 Manufacture of gas; distribution of • The type of waterworks contractor and consultant gaseous fuels through mains licenses certified by the MoWIE and issued by BoTIs License 2 Wholesale trade in coal, coke and briquettes as per the revised ESIC do not directly match. License 3 Wholesale trade in petroleum, petroleum • With regard to waterworks (including sanitary products & related materials work) contractor’s license, there is overlap and lack License 4 Wholesale trade in gas, natural and manufactured of clarity between the mandate of the MoWIE and License 5 Wholesale trade in solid, liquid and MoUDC in issuing competence certification. gaseous fuels and related products n.e.c. • Although not clearly stated in the relevant laws, the License 6 Installation and maintenance of fuel station regulatory purposes of certifying the professional equipments competence of waterworks professionals, contractors License 7 Import trade in coal, coke and briquettes and consultants are related to protection of public License 8 Import trade in petroleum, petroleum health and safety as well as environmental protection products & related materials and could be considered as serving a valid regulatory License 9 Import trade in gas, natural and manufactured purpose. License 10 Import trade in solid, liquid and gaseous • The requirements of professional competence fuels and related products n.e.c. could be considered stringent and unrealistic when License 11 Export coal, coke and briquettes considered with the country situation. License 12 Export petroleum, petroleum products & related materials Recommendations License 13 Export gas, natural and manufactured • The competence certificate licenses for waterworks License 14 Export trade in solid, liquid and gaseous professionals, contractors and consultants should be fuels and related products n.e.c. maintained, as they have clear legal basis and valid License 15 Transport via pipelines regulatory purposes. However, the inconsistency between the laws that govern competence activities and authorizes the MoWIE to issue certification (Proclamation No. 197/2000, competence certificates for these licenses. Regulation No. 115/2005 and the revised Directive issued by the MoWIE) and the issuance of business In fact, one of the powers given to the MoWIE under licenses (the revised ESIC) should be addressed. Article 26 of the Definition of Powers and Duties of the Executive Organs of the Federal Democratic • The overlap and lack of clarity between the mandate Republic of Ethiopia Proclamation No. 691/2010 of the MoWIE and MoUDC in issuing competence is to set standards for petroleum storage and certification for waterworks contractors should be distribution facilities, and follow up the enforcement addressed. of same. However, the MoWIE is still in the process • The excessively stringent requirements to obtain of establishing a legal framework to regulate the professional competence certificates for waterworks transaction and supply of petroleum and other fuel contractors and consultants need to be simplified. materials. Accordingly, it has not started issuing • The requirement to yearly renew professional competence certificates for business that engage in competence certification should be reconsidered so as petroleum and gas transaction and supply. The MoWIE to abolish the requirement. has delegated/requested in writing to the MoT to issue 3.4.3  Petroleum, Gas and Other Fuel Supply trade licenses for businesses engaged in these activities, Sector until it puts in place the necessary legal framework. The revised ESIC identifies the following licenses Accordingly, the MoT and BoTI are issuing business in relation to gas, petroleum and other fuel supply licenses for petroleum, gas and other fuel supply and transaction activities without requiring a competence Detailed Analysis of Licenses   91 certificate, provided that the general business engineering aides (building and civil) are also addressed registration and license requirements are fulfilled. in the directives. No new license was issued in 2012–2013 in this sector. Based on the law and directives described above the However, the estimated administrative compliance cost licenses identified with regard to contractors, specialized to obtain a license from this category of licenses would contractors and consultants are: be around ETB 10,000. License 1 Building contractor Finding License 2 Pile foundation work contractor • The delay in putting the legal framework governing License 3 (Landscaping SC-LS) specialized this sector has created a gap and uncertainty in the contractor licensing process in the sector. License 4 (Wood and metal works) specialized contractor Recommendation License 5 (Painting and decorating) specialized • The legal framework for the regulation of the contractor licensing process in the sector should put in place as License 6 (Sanitary installation) specialized contractor soon as possible. License 7 Road contractor License 8 General contractor 3.5 Construction License 9 Architectural and engineering consultancy 3.5.1  Contractors and Consultants License 10 Construction management consultancy The Definition of Powers and Duties of the Executive License 11 Consulting architects Organs of the Federal Democratic Republic of License 12 Consulting engineers, general Ethiopia, Proclamation No. 691/2010 under Article License 13 Highway & bridge consultants 27/1/l authorizes the MoUDC to register and issue License 14 Hydraulic engineering consultancy certificates of professional competence to engineers License 15 Irrigation drainage and flood control and architects; determine the grades of contractors consultancy and consultants, and issue certificates of competence License 16 Office for consulting architects to those operating in more than one regional state. License 17 Office for consulting engineers The MoUDC has issued the Amended Directives for License 18 Office for consulting specialized the Registration of Construction Professionals and License 19 Sanitary engineering consultancy Contractors No. 19/2013, a directive that came out to License 20 Water resource consultancy implement these powers of the MoUDC. This again License 21 Electromechanical contractor has been amended by the Amended Directives for the Registration of Construction Professionals and The MoUDC only issues competency certificates for Contractors No. 23/2013. These directives provide road contractors, building contractors, pile foundation the requirements for contractors including for: pile work contractors and general contractors, out of the foundation contractors, General contractors (GC), licenses listed above. The MoUDC has delegated its Building Contractors (BC) and Road Contractors power to issue competency certificates for consultancy (RC) with the last three each having 10 grades each services to the Addis Ababa City Administration depending on project cost that they can carry out. Construction and Houses Development Bureau, Specialized contractors75 are also provided for in the Construction Industry Development and Control directives. Besides, the registration of civil engineers, Authority (CIDCA).76 With regard to contractors, the architects, associate engineers (building or civil) and MoUDC issues licenses for federal contractors, i.e., for those operating in more than one regional state while the CIDCA gives competencies for contractors that 75 only operate in Addis Ababa. In reality however, it Painting and decorating, sanitary installation, wood and metal works and landscaping SC-LS (specialized contractors for landscaping). 76 Though the legal basis for the delegation is not clear. 92  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform seems licenses given for contractors at the CIDCA can License 50 Demolition be used outside of Addis Ababa. Besides, the CIDCA License 51 Demolition of building and other administers the specialized contractors.77 constructions License 52 Other activities of demolition The revised ESIC establishes 44 types of business License 53 Wholesale trade in construction equipment licenses related to construction. However the licenses (e.g., concrete mixer) below are not currently getting competence approvals License 54 Retail trade of construction equipment from the MoUDC or are not identified in these names (e.g., concrete mixer) although they appear in the revised ESIC. License 55 Installation, and fixing of aluminum windows and doors/aluminum works License 22 Asset valuation License 56 Import trade in construction equipment License 23 Property owning and letting (e.g., concrete mixer) License 24 Developing real estate, subdividing real License 57 Export trade in construction machinery estate into lots and residential development and equipment License 25 Owning and/or sale of own fixed property License 26 Other real estate activities Outside of the ESIC’s categories, the MoUDC also License 27 Renting of construction and civil registers civil engineers or related professionals; engineering machinery and equipment architects or related professionals; associate engineers License 28 Construction and related specialized (building or civil); engineering aides (building or consultancy services civil); and professionals who are certified for the License 29 Urban planning and related consultancy different levels in the occupational standards for civil License 30 Other construction related professional construction that are relevant for the requirements for consultancy services n.e.c. the competency certificates. License 31 Mechanical consulting engineers License 32 Civil consulting engineers The Amended Directives for the Registration License 33 Building, industrial plant and resident of Construction Professionals and Contractors house activities No. 19/2013 and Directive 23/2013 indicate the License 34 Parking service objective of the licensing by the MoUDC to be: License 35 Cobblestone service safeguarding the interest of the public at large and that License 36 Manufacture of machinery for construction of the government by regulating the participation of License 37 Construction of waterworks the persons and other legal entities engaged in the field License 38 Other building of complete constructions of construction by setting certain rules and standards or parts thereof; civil engineering to be observed for purposes of safety, quality of License 39 Plumbing works and efficiency. Despite the clear and convincing License 40 Sanitary work contractor presentation of these purposes, the directives only License 41 Other building installation address contractors and registration of professionals License 42 Water-proofing services and exclude consultants. License 43 Building and road construction contractor License 44 Other related activities n.e.c. According to directives the number of requirements for License 45 Demolition and site preparation for consultancy ranges from 9–10 with a small difference construction depending on the grade. These mostly comprise License 46 Site preparation for construction documentation, capital, equipment, and manpower License 47 Soil testing work and office facility. The time it takes to issue licenses License 48 Clearing site for construction and competence certificates is not given in the laws License 49 Other site preparations but competence processing personnel at MoUDC and CIDCA indicated that it takes 2–3 days for contractors, 1–5 days for consultants from grade 1–5, and 20 to 77 These have four grades depending on the cost of construction that they undertake. 30 minutes for the rest of the grades. This is without Detailed Analysis of Licenses   93 considering the business registration and licensing at 2 loaders, 2 crushers, 2 graders, 2 excavators, BoTI. Private sector licensees do not accept this time 3 rollers, 8 dump trucks, 2 4W drives, and 4 pickups frame and allege that it takes for contractors from 1 to (5 quintals & above). Besides, the requirements do 10 days and from 15 days to 7 months for consultants not include the offices that contractors/consultants to get the licenses. This is in sharp contrast to what is rent at building sites where work is actually done often alleged by the license issuing agencies. over and above the office requirements that have to be met. The fees for the competencies for contractors which are indicated on Directive 23/2013 range from ETB 500 • The ad-hoc approach of preparing the grades and to ETB 5,000 depending on the grade. The directive requirements with the relevant associations for also states that the fee for professional competencies applications for fields not provided in the Directive to be ETB 500. The fees for consultants is not written No. 19 (for registration of contractors) and in the directive but what is being asked ranges from submitting it to the minister for approval, might take ETB 5,000 for grade 1 to ETB 2,000 for grade 6. These considerable time and resources. figures are minus trade registration, licensing and name • Although the MoUDC is making preparations to verification costs. certify new licenses such as asset valuation, it also has to decide whether the other licenses included in A total of 19, 1, 11 and 1 licenses have been the ESIC but not yet being issued are worth issuing. issued for Building Contractors, Pile Foundation The MoUDC believes a lot more has to be delegated Work Contractors, Road Contractors and General to the regional states such as contractors’ certificate contractors respectively in 2005 E.C. and the estimated of competence, and particularly registration of administrative compliance cost for this category of construction equipment. The MoUDC admits it has licenses ranges from ETB 6,548 to ETB 15,089. In the the problem of accessibility. Moreover, admittedly case of the consultation licenses figures are hard to it seems overwhelmed with its current licenses and come by but the estimated administrative costs for these it looks like it might have a challenge receiving new ranges from ETB 7,037 to ETB 181,779. responsibilities. Findings • Based on its mandate on Proclamation 691/2010 • There is a regulatory purpose to licensing of these the MoUDC does not have the power to register fields such as to ensure safety, quality of works and associate engineers (building or civil) and engineering efficiency in the field, but the input of the private aides (building and civil) but it does. It does not sector has to be taken on board if current obstacles make sense to register professions that have no in the system are to be addressed. direct contact with the public or work under the • The licensing process including preparation of supervision of others. requirements appears to be in a state of flux. Recommendations Directive 23/2013 was issued within one month of • The MoUDC should function based on its mandate the issuance of Directive 19/2013. Besides, it is hard and reform competency issuance in line with the to tell how the two are going to be applied together. delivery of quality service to the public. Focusing on • Requirements are expensive across the board. The equipment, professionals and office facilities should reason could be the capital and equipment needed only be done in the relevant places. Addressing this for such fields. For instance a pickup truck for all issue will considerably reduce the workload on specialized contractors looks cumbersome.78 Another certifying and registering. example is the equipment requirement for general • The delegation of responsibility and accountability contractor grade 1 which are: 4 dozers, 2 cranes, between MoUDC and CIDCA must be clarified to avoid replication and allocate responsibility for 78 The private sector interviewees believe that the equipments are useful but may not affordable at the commencement of possible reforms. business. 94  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform • The Revised ESIC should be aligned with the 6. Broker (intermediary) household goods competencies that are actually being given by 7. Other brokers (intermediary) duties the MoUDC and CIDCA. Those licenses that are 8. Domestic trade agent irrelevant should be adjusted or cut out. 9. Wholesale trade in agricultural raw materials n.e.c. • One window service should be introduced for 10. Wholesale of wool, raw hides and skins construction related licenses which could save a lot of 11. Wholesale of pickle, wet blue, crust and finished time and energy instead of going to up to 10 offices. leather 12. Wholesale trade in livestock and livestock products • Frequent amendments to the directives and licensing n.e.c. requirements should be avoided and be made on a 13. Wholesale trade in ethanol & molasses timely fashion. 14. Wholesale of bee wax • Information about the licenses should be made 15. Wholesale trade in crude rubber available through booklets and online. 16. Wholesale trade in cork, wood & pulp 17. Wholesale trade in cotton 3.6  Wholesale and Retail Trade, Repair, 18. Wholesale trade in textiles fibers and yarn Hotel and Restaurants, Import & Export 19. Wholesale trade in textile The licenses identified and discussed under this section 20. Wholesale trade in apparel and clothing are licenses which are applicable in the wholesale, retail, 21. Wholesale trade in footwear repair, import and export trade. However, licenses 22. Wholesale trade in leather and textile goods, bags in these sectors which are governed as part of other and luggage sectors, such as agriculture, health, etc. sectors are not 23. Wholesale of accessories and components that discussed under this section. This section discusses used for finishing textile and leather products wholesale, retail, repair, import and export trade 24. Wholesale of made-up textile articles, except apparel licenses which are envisaged to be verified and issued 25. Wholesale of synthetics by the MoT/BoTI as per the ESIC. The revised ESIC 26. Wholesale trade in other textile and leather assigns the MoT as the verifying body for a total of products, n.e.c. 238 licenses related to wholesale, retail, repair, import 27. Wholesale of household and office furniture, and export trade. requites, boards and appliances The MoT has been preparing a directive/guideline 28. Wholesale of households including mattresses, cushions, blankets, etc. that determines the requirements for competence 29. Wholesale of furnishings (including curtains, certification in relation to these licenses. The carpets, wallpaper) preparation of the requirements has reportedly been 30. Wholesale of crockery, cutlery and kitchen utensils in the final stage of approval. So far, the MoT (for 31. Wholesale of sponges and foam import and export related licenses) and the BoTI 32. Wholesale sanitary and sanitary accessories (for wholesale and retail related licenses) have issued 33. Wholesale flora foam the below listed business licenses without verifying 34. Wholesale of furniture, home and office competence, provided that the applicants fulfilled the furnishings and other office and household general commercial registration and business licensing equipment n.e.c. requirements. 35. Wholesale of record albums, cassette tapes, laser discs and compact discs (including VCDs, DVDs) 1. Broker (intermediary) in house renting and sailing 36. Wholesale of paper and paper products 2. Broker (intermediary) in vehicles renting and sailing 37. Wholesale of packaging materials 3. Brokers of livestock 38. Wholesale of stationery 4. Broker (intermediary) of crops, vegetables and fruits 39. Wholesale of books and magazines  roker (intermediary) of machinery and industry 5. B 40. Wholesale trade of materials used for promotion materials and advertising (continues) Detailed Analysis of Licenses   95 Continued 71. Mini market/shop 41. Wholesale of paper products packaging materials 72. Hyper market including plastic and fiber materials and stationery 73. Small shop (kiosk) n.e.c. 74. Retail trade of fabricated metals except general 42. Wholesale trade in photographic apparatus, hardware (e.g., steel pipes) equipment and supplies and optical goods 75. Retail trade of general hardware (e.g., locks, 43. Wholesale trade in iron and steel hinges, nails, tins, etc.) 44. Wholesale trade in nonferrous metals 76. Retail trade of structural clay and concrete 45. Wholesale trade in scraps products (e.g., mosaic tiles, bricks) 46. Wholesale trade in non-metallic minerals 77. Retail trade of paints (including varnishes and supplies) 47. Wholesale trade in metal, non-metals, metal ores and scraps n.e.c. 78. Retail trade of cements 48. Wholesale of fabricated metals except general 79. Retail trade of sand, gravel stone and related hardware (e.g., steel pipes) materials 49. Wholesale of general hardware (e.g., locks, hinges) 80. Retail trade of other construction materials, hardware plumbing, and health equipment and 50. Wholesale of structural clay and concrete products supplies (e.g., mosaic tiles, bricks) 81. Retail trade in men’s, boys’ and children’s clothing 51. Wholesale of paints (including varnishes, adhesives and supplies) 82. Retail trade in ladies’, girls’ and children’s clothing 52. Wholesale of cement 83. Retail trade in apparel and clothing 53. Wholesale of sand, gravel, stones and related 84. Retail trade of shoes and leather goods materials 85. Retail trade of textile products (except apparel and 54. Wholesale trade in construction materials, n.e.c. clothing) 55. Wholesale trade in basic industrial chemicals 86. Retail trade of bags, luggage and related products except fertilizers 87. Retail trade of traditional wear 56. Wholesale trade in chemical fertilizers 88. Retail trade in textiles, and leather goods n.e.c. 57. Wholesale trade in petrochemical products/Vaseline, 89. Retail trade in household and office furniture, glycerin, wastes of petrochemicals, tar, etc. requisites, boards, and appliances 58. Wholesale of dyeing, tanning and coloring materials 90. Retail trade of household materials (blanket, bed 59. Wholesale of drycell sheet, quilt and pillow) 60. Wholesale trade in chemicals and chemical 91. Retail trade of household and office furnishings products n.e.c. and decorative (curtain, carpet and wallpaper) 61. Wholesale trade in other intermediate products, 92. Retail trade of crockery, cutlery and kitchen waste and scrap of both metals and non-metals utensils 62. Wholesale trade in industrial, machinery and 93. Retail trade of sanitary and sanitary accessories equipment 94. Retail trade of household and office furnishing and 63. Wholesale trade in grain mill and its spare parts other household and office equipments n.e.c. 64. Wholesale of pesticides and agro-chemicals 95. Retail trade in glasses and glass products 65. Wholesale trade in commercial food service 96. Retail trade in books and stationery materials equipment (e.g., hotel kitchen equipment) 97. Retail trade in blank and recorded CD, VCD and 66. Wholesale trade in service establishment equipment related products and supplies (e.g., beauty salon equipment) 98. Retail trade in basic industrial chemicals except 67. Wholesale trade in security and fire-fighting fertilizers equipment 99. Wholesale trade in chemical fertilizers 68. Wholesale trade in machinery and equipment n.e.c. 100. Retail trade in petrochemical products/Vaseline, 69. Department store (mall) glycerin, wastes of petrochemicals, tar, etc. 70. Supermarket 101. Retail trade in dyeing, tanning and coloring materials 96  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 102. Retail trade in plastics in primary forms and non- 135. Import of households including mattresses, primary forms cushions, blankets, etc. 103. Retail trade of chemicals n.e.c. 136. Import of sponges and foam 104. Retail trade in outside stores 137. Import of sanitary and sanitary accessories 105. Retail trade in second-hand goods in stores 138. Import of flora foam 106. Retail trade in industrial machinery and equipment 139. Import of furniture, home and office furnishings 107. Retail trade of commercial food service equipment, and other household and office equipment n.e.c. e.g., hotel kitchen 140. Import of blank record albums, cassette tapes, laser 108. Retail trade of service establishment equipment discs and compact discs including VCDs, DVDs and supplies (e.g., beauty salon equipment) 141. Import of paper and paper products 109. Retail trade of security and firefighting equipment 142. Import of packaging materials made from plastics 110. Retail trade of materials used for promotion and and papers advertising including painting ink 143. Import of stationery 111. Retail trade of non-agricultural intermediate 144. Import of books and magazines products, waste and scrap 145. Import trade of materials and painting inks used 112. Maintenance and repair of footwear and leather for promotion and advertising products 146. Import of paper, paper and cellophane products 113. Maintenance and repair of household and office and stationery n.e.c. goods 147. Import trade in photographic apparatus, equipment 114. Maintenance of personal goods and supplies and optical goods 115. Installation and maintenance of machineries 148. Import trade in iron and steel 116. Installation and maintenance services n.e.c. 149. Import trade in nonferrous metals (aluminum, zinc, 117. Foreign trade agent silver, copper, etc.) 118. Commercial representative 150. Import trade in scraps 119. Import of wool, raw and hides, skins 151. Import trade in non-metallic minerals (clay, ceramics, gypsum, lime, and their products except 120. Import of pickle, wet blue, crust and finished cement and glass) leather 152. Import trade in glass and glasses products 121. Import trade in ethanol and molasses 153. Import trade in metal, non-metals, metal ores and 122. Import trade in cork, wood & pulp scraps n.e.c. 123. Import trade in cotton 154. Import of fabricated metals except general 124. Import trade in textile fibers and yarn hardware (e.g., steel pipes) 125. Import trade in textiles 155. Import of general hardware (e.g., locks, hinges, 126. Import trade in apparel and clothing nails, etc.) 127. Import trade in footwear and leather goods 156. Import of structural clay and concrete products 128. Import trade in bags, luggage, handbags and (e.g., mosaic tiles, bricks) related products 157. Import of paints (including varnishes, adhesive, 129. Import of accessories and components used for glues and supplies) finishing textile and leather products 158. Import of cements 130. Import trade in made-up textile articles cordage, 159. Import of heating equipment and related materials rope, twine and netting, bags, sacks, rapping & 160. Import trade in construction materials packing materials (except apparel and clothing) 161. Import trade in basic industrial chemicals except 131. Import trade in synthetic leather fertilizers 132. Import trade in other textile and leather products 162. Import trade in chemical fertilizers n.e.c. 163. Import trade in petro chemical products/Vaseline, 133. Import of household and office furniture, requisite, glycerin, tar, etc. boards and appliances 164. Import of dyeing, tanning and coloring materials 134. Import of furnishings (including curtains, carpets, (continues) wallpaper, sanitary tools, broom) Detailed Analysis of Licenses   97 Continued 198. Export of record albums, cassette tapes, laser discs and compact discs (including VCDs, DVDs) 165. Import of plastics in non-primary form and primary forms 199. Export of recreational goods n.e.c. 166. Import trade in chemicals and chemical products 200. Export of paper and paper products n.e.c. 201. Export of packaging materials made of plastics 167. Intermediate products, waste and scrap and papers 168. Import trade in industrial machinery and equipment 202. Export of stationery 169. Import trade in commercial food service equipment 203. Export of books and magazines (e.g., hotel kitchen equipment) 204. Export of paper, paper and cellophane products 170. Import trade in service establishment equipment and stationery n.e.c. and supplies (e.g., beauty salon equipment) 205. Export of sporting goods n.e.c. 171. Import trade in security and fire-fighting equipment 206. Export of photographic apparatus, equipment and 172. Import trade in candles and tewaf supplies and optical goods 173. Import trade in drycells 207. Export trade in other household goods n.e.c. 174. Import trade in torch light 208. Export trade in iron and steel 175. Import of grain mill spare parts 209. Export trade in nonferrous metals 176. Export of wool, rawhides, and skins 210. Export trade in scraps 177. Export of pickle, wet blue, crust and finished 211. Export trade in non-metallic minerals leather 212. Export trade in glass and glasses products 178. Export of ethanol and molasses 213. Export trade in metal, non-metals, metal ores and 179. Export of honey and honey products (except bee scraps n.e.c. wax) 214. Export of sawn timber, plywood and related products 180. Export of bee wax 215. Export of fabricated metals except general 181. Export trade in cork, wood & pulp hardware (e.g., steel pipes) 182. Export trade in cotton 216. Export of general hardware (e.g., locks, hinges) 183. Export trade in textile fibers and yarn 217. Export of structural clay and concrete products (e.g., mosaic tiles, bricks) 184. Export trade in textiles 218. Export of paints (including varnishes and supplies) 185. Export trade in apparel and clothing 219. Export of cements 186. Export trade in footwear and leather goods 220. Export trade in construction materials 187. Export trade in bags and luggage 221. Export of chemicals and chemical products 188. Export accessories and components that are used for leather textile products 222. Export of basic industrial chemicals except fertilizers 189. Export trade in other textile product cordage, rope, 223. Export of chemical fertilizers twine and netting, bags, sacks, rapping & packing 224. Export of petrochemical/Vaseline, glycerin, etc., materials except apparel and clothing products 190. Export trade in other textile and leather products 225. Export of dyeing, tanning and coloring materials n.e.c. 226. Export of plastics in primary forms and non-primary 191. Export of household and office furniture, requisite, forms boards, appliances 227. Export of chemicals and chemical products n.e.c. 192. Export of households (including mattresses, 228. Export of inedible animal product cushions, blanket, etc.) 229. Export of metallic scrap and wastes 193. Export of sponges and foam 230. Export of non-metallic scraps and wastes 194. Export of crockery, cutlery and kitchen utensils 231. Export trade in industrial machinery and equipment 195. Export of flora foam 232. Export trade in commercial food service equipment 196. Export of sanitary and sanitary accessories (e.g., hotel kitchen equipment). 197. Export of furniture, home furnishings and other 233. Export trade in service establishment equipment household equipment n.e.c. and supplies (e.g., beauty salon equipment) 98  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 234. Export trade in security and fire-fighting equipment driving schools and instructors. It also has responsibility 235. Import trade in candles and tewaf to do the same in case of the certification of the 236. Import trade in drycells technical competence, licensing and grading of garages 237. Import trade in torch light engaged in the repair and maintenance of vehicles.79 238. Import of grain mill spare parts Additionally, the TA registers associations established by persons and organizations engaged in cross-country Findings and international public commercial road transport; • Although the MoT is reportedly finalizing the issues directives and supervises their activities as per preparation of requirements for competence Art. 7/2/o & 7/3/e of the law. Unfortunately, distinct, certification, a valid regulatory purpose for detailed and consolidated directives on the requirements introducing competence certificates for the above for the above licenses is lacking, except for “The Dry listed business activities could not be ascertained. Freight and Liquid Transport Associations, Business • Most of the above business licenses are too specific Organizations Services Categorizations and Vehicle or too prescriptive. Competence Requirements Directive,” which clearly talks about licenses and their requirements. Recommendations • The MoT plan to introduce competence certification Accordingly, the following licenses were identified as licenses for the above listed activities should be having a basis in the Transport Proclamation. abolished, as such licenses would not have valid License 1 Driving education both in regular and by regulatory purpose. special machineries • The ESIC should be revised so as to merge most of License 2 Institutes for inspection of motor vehicles the above licenses to avoid multiple licenses. License 3 Maintenance and repair of motor vehicles parts 3.7  Transport, Storage and License 4 Taxis Communication License 5 Freight transport by container 3.7.1  Road Transport Sub-Sector License 6 Freight transport by freezing Article 19 of the Proclamation to Provide for the License 7 Import of bicycles Regulation of Transportation No. 468/2005 (Transport License 8 Import of bicycle spare parts Proclamation) proclaims that persons and enterprises License 9 Import of car decor engaged in public commercial road transport shall License 10 Import of motorcycles and tri-cycles observe laws, regulations and directives issued relating License 11 Import of motor vehicle spare parts to road transport. Even though this is limited to public License 12 Import of new motor vehicles transportation, other provisions of the Transport License 13 Import of tyres, inner tube and car batteries proclamation provide for other aspects of transport License 14 Import of used motor vehicles licensing including public transportation. Art. 7/3/d & License 15 Other passenger transport, including the renting of passenger motor vehicles with 7/2/b of the Transport Proclamation mandates the drivers Transportation Authority (TA), with respect to License 16 Transport of construction equipment road transport in cities accountable to the Federal (machineries, loading vehicles, dozer, Government, to issue certificates of competence to loader, Kato, crane, mixers, etc.) individuals and enterprises engaged in transport and License 17 Transportation of dry freight—transport of garage services, as well as persons and enterprises different vehicles by cranes or pulling or loading engaged in cross-country and international commercial (continues) road transport. Besides, under Article 7/2/k & 7/3/e 79 Apart from this, maintenance and repair service the TA has the power to issue and follow up the administered by the Addis Ababa Transport and Road implementation of directives relating to the licensing of Authority has classified these into 7 classes with 32 grades. Detailed Analysis of Licenses   99 Continued to all the licenses listed in the above table except those License 18 Transport of fuel licenses listed from 7 to15 which appear to be out of License 19 Transport of live animals the powers entrusted to the TA under the Transport License 20 Transport of office and household goods Proclamation.80 On the other hand, driving schools and License 21 Transport of vehicle and machinery technical inspection of vehicle licenses are administered carrying trucks by the Addis Ababa Road and Transport Bureau License 22 Transport of water, sewage and others while licenses for taxi services and maintenance and License 23 Transportation of dry freight— repair licenses are dealt with by sub-cities of Addis transportation of automobiles Ababa, largely through the delegation of the TA under License 24 Registration and renewal of transport Article 24 of the Transport Proclamation. association, companies and private transporters In the revised ESIC, the road transport sector largely License 25 Simple car repair and maintenance comes under the transport, storage and communication (level 1–level 5) garage chapter. The revised ESIC provides for 87 types of License 26 Medium and heavy tracks repair and business licenses related to road transport activities. maintenance (level 1–level 5) garage Despite this, the licenses/competencies that are License 27 Simple, medium and heavy tracks repair administered by the TA are the ones listed from 1–44 and maintenance (level 1 and level 2) garage above while the licenses/competencies listed below are License 28 Special cars and vehicles body repair not administered by the TA or the Addis Ababa Road (level 1–2) and Transport Bureau or not in these names. License 29 Motor vehicles body repairs and change garage License 45 Manufacture of motor vehicles License 30 Motor vehicle parts, electrical parts, repairs License 46 Manufacture of bodies (coachwork) for garage (electrical and electronics parts, motor vehicles; manufacture of trailers and repair) semi-trailers License 31 Motor vehicles parts, radiator repairs License 47 Manufacture of radiators garage (cooling section repair) License 48 Activities of specialized automotive License 32 Simple tyre repair garage engineering workshops working primarily for the motor trade License 33 General tyre repair and wheel alignment garage License 49 Manufacture of other motor vehicle parts and accessories License 34 Car battery charge & repairs (battery repair) garage License 50 Manufacture of motorcycles License 35 Maintenance and repairs motorcycle and License 51 Manufacture of bicycles and carriages tri-cycle garage License 52 Wholesale of new motor vehicles License 36 Motor repair garage License 53 Wholesale of used motor vehicles License 37 Power pass line section repair garage License 54 Wholesale of motorcycle and tricycle License 38 Benzene & fuel section repair garage License 55 Wholesale sale of bicycle License 39 Wheel and alignment section repair garage License 56 Wholesale trade in vehicle tyres, inner tube License 40 Chair and tapestry repair garage and battery License 41 Maintenance and repairs bicycle garage License 57 Wholesale trade in bodies (coachwork) for motor vehicles License 42 Emergency vehicles maintenance on street License 43 Car wash service and grease License 44 Land transport (car) consultancy 80 Although a clear connection can be made between Transport Proclamation and the licenses, there is much The TA is a competency issuing organ for these licenses, reference to the Commercial Registration and Business Licensing Proclamation No. 686/2010 as an authorizing thus businesses have to visit the MoT or the BoTI for law in subsequent directives e.g., the dry freight and liquid business licensing and registration as well as name transport associations, business organizations services categorizations and vehicle competence requirements verification. The TA’s powers correspond more or less directive. 100  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License 58 Wholesale sale of motor vehicles, spare for the smooth and effective implementation of the parts government’s transport policy. License 59 Wholesale sale of car décor The requirements for licenses depend on the subdivision. License 60 Wholesale sale of motor vehicles, spare For instance, the number of requirements for freight parts and parts n.e.c. transportation licenses range from 7 to 11 with License 61 Retail sale of new motor vehicles particulars consisting of: a vehicle license issued after License 62 Retail sale of used motor vehicles undergoing the necessary technical appraisal; if the License 63 Retail sale of motorcycle and tri-cycle Bajaj vehicle is subject to a bank obligation, proof from the License 64 Retail sale of bicycle bank about this; a copy of the document on third party License 65 Retail sale of automotive fuel & lubricants in gas station insurance; if the plate number of the vehicle is not License 66 Retail sale of fuel & lubricants outside gas mentioned reference of the receipt number and a letter station from the insurer to this effect; support from associations License 67 Retail sale of others n.e.c. automotive fuel & if relevant, employees documents, seal, receipts and lubricants office facilities and specifications/equipments for the License 68 Sales of new parts and accessories vehicles. Meanwhile, for importation of new and used License 69 Sales of used parts and accessories cars, parts, bicycles and tri-cycles, as well as, the licenses License 70 Retail trade of tyres car batteries that are relevant to Addis Ababa, the requirements range License 71 Retail trade of car décor from 5 to 7. For instance, for the imports, title deed/ License 72 Retail sale of motorcycle, bicycle and tri- lease agreement of business place; letter of authorization cycle (Bajaj) parts and accessories from producing company or agent; contract with the License 73 Import of bodies (coach work) for motor repair-ship in which the particular item got serviced; vehicles, trailers, and semi-trailers TIN; and educational documents of workers are License 74 Import of vehicles and spare parts n.e.c. demanded. Considering registration of associations and License 75 Import trade in vehicles testing equipment competencies for public transportation, have 6 and 9 License 76 Import trade in vehicles speedometer equipment requirements respectively. The requirements for the most License 77 Export of tires, inner tube and car battery part include: documentation, workplace and manpower License 78 Urban, suburban and inter-urban bus and specifications. As can be judged by the field, technical coach passenger lines requirements for vehicles, drivers and insurance coverage License 79 School buses play a large part in the requirements. License 80 Cargo handling The time it takes for the process is not addressed in License 81 Parking garages and parking the laws that pertain to the field. Thus the processing License 82 Transport of construction materials time is mostly laid out in the draft Citizen’s Charter (cement gravel, sand, metals, etc.) and different cereals of the TA and it ranges from 5 minutes to 5 days. The License 83 Transport of different cars by cranes or latter is for importation of new and used cars, parts, pulling or loading bicycles and tri-cycles, if there is backlog. Private sector License 84 Other freight transport by road licensees interviewed say it may take from 17 days up to License 85 Salvaging of distressed vessels and cargoes 4 months to complete the process and get the licenses. License 86 Renting of land transport (car) equipment The fees for the licenses are different in the different subcategories, ranging from ETB 15 to ETB 56,000 The objectives of the licenses are not clearly pointed without considering the trade registration and licensing out in the law. In the absence of such a statement, the fees. However, the legal basis for these fees is not clearly justification for the licenses can be discerned from the identified. preamble’s description of the purpose of the legislation, i.e., to regulate the sector to make it more competitive, A total of 1, 44, 970, 1, 7, 1 and 26 have been issued safe and efficient and to create favorable conditions for dry freight, import of new vehicles, import of used Detailed Analysis of Licenses   101 vehicles, public transportation, transportation of dry have managed transportation, a seemingly forced freight—transport of different vehicles by cranes or membership may not necessarily serve its purpose. pulling or loading, import of motorcycles and tri-cycles • There is a serious lack of centralized and coordinated and vehicles technical assessment service licenses in data on licenses in the area. 2005 E.C., respectively. The estimated administrative • A particular area provided for in the revised ESIC compliance cost for this category of licenses ranges is railway transport with specific headings of from ETB 1,678 to 96,884. Inter-urban railway transport; Railway commuter Findings services; Manufacture of Railway and Tramway • There are a lot of licenses (listed above) in the Locomotives and Rolling Stock. Perhaps because of revised ESIC that are not yet being addressed by the unlikelihood of the private sector going into the the TA despite being bestowed with the power to sector in the immediate future, there is no regulator issue competency certificates. Observation during for these licenses yet and the Ministry of Transport, interviews revealed that the TA is overwhelmed with the body that is tasked by the ESIC to do so, is not the workload, especially in renewing competencies. offering certificates of competence. • There is a regulatory purpose to most of the licenses • The suspension of 15 and warning and placing under in consideration of protecting the environment, probation of 33 institutes for inspection of motor managing public transportation and safeguarding vehicles for failing competency standards, out of the passenger and freight safety. existing 58, shows the need for re-checking of the • There is the perception that the requirements in some licensing process in the first place. of the import sectors are not up to the standard. For • Based on the view of licensees, renewal of instance with regard to the importation of used cars, competency every year by the regulator is the requirements of suitability for the climate and burdensome, especially because of the insufficient geography are not clear. manpower of the TA and the Addis Ababa bureau. • There is lack of clarity on the power to issue Recommendations competence certificates for freight transport below • The detailed dos and don’ts for the tasks pertaining 70 kg and for liquid freight below 9,000 liters. to the TA together with the Addis Ababa Road and • The requirements for the competencies are Transport Bureau should be spelled out in publicly cumbersome (with demands made for office, accessible legislation instead of in-house directives to displaying area, and manpower) and are mostly clearly identify requirements, fees, etc. subjective. • The TA and the Addis Ababa Road and Transport • There is much emphasis on forming associations in Bureau should build the necessary and relevant public and freight transportation, with a support capacity and have a transparent working system letter from one’s association being included as a so that they could avoid revocation of functioning requirement for freight competency certificates. This licenses, allegations of inefficiency and corruption. demand might force licensees to join associations • Harmonization of fields that are supposed to be without fully being convinced of it. Unlike those with given by the TA in the ESIC and what is actually a fleet of vehicles, it seems the possibility of a licensee being issued needs to be done with the consultation with a vehicle or two, successfully applying without of the private sector. being a member of an association looks bleak even • Some of the requirements for the competencies though the law does not restrict this. Whether this is are excessive and do not seem to be grounded on to seek accountability from a few association leaders the present reality, business sense, and legitimate instead of dealing with multitudes of licensees or to considerations (e.g., smoke, gas, vapor emission 102  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform from the exhaust pipes of vehicles for imports of The licenses that are identified as having proper legal cars). Thus, polishing the requirements to allow basis are the first four in the following table. consolidation and innovative ideas while at the License 1 Freight forwarding same time reflecting on present realities should be License 2 Shipping agency considered. License 3 Maritime consultancy • A one window service to process competency and License 4 Multimodal transport operator business licensing for the road transport sector needs License 5 Inland water transport to be considered to save unnecessary wastage of time License 6 Maintenance of ships and boats and energy. License 7 Harbor works • Annual renewal of competency and reproduction License 8 Renting of water transport equipment of documents should be improved by making it in License 9 Maritime training school 3–5 years since it is achieving little in its current state. The MAA gives competence certificates for freight 3.7.2  Maritime Sub-Sector forwarders, shipping agents, multimodal transport Among the powers and duties of the Maritime operators and maritime consultancy. The revised Affairs Authority (MAA) under the Maritime Sector ESIC provides for 9 types of business licenses related Administration Proclamation No. 549/2007 (Maritime to maritime activities but the MAA only addresses Proclamation) is to license and supervise sea and licenses listed 1–3 above while licenses listed from inland waterways transportation services, seafarers, 4–9 are not being issued yet. From these the MAA pilots and other persons working on board a vessel, evaluates and approves maritime training schools but dry port and vessel services and multimodal transport it has not provided for the requirements and grounds businesses. Furthermore, the MAA is given the power for this process. For inland water transport service and to regulate and supervise freight forwarders and maintenance of ships and boats, the MAA only sets shipping agents, to issue detailed directives, coordinate standards and regional states deal with the licensing. their tasks, and improve their capacity. The Maritime The MAA has not yet started issuing licenses for Proclamation does not expressly state whether the multimodal transport businesses because it has not yet MAA is the licensing or competency issuing organ for prepared a directive on the specific requirements to be the last two activities. The Freight Forwarding and Ship met and has not yet received any requests because of the Agency License Issuance Council Ministers Regulation higher level of capital and equipment needed.81 No. 37/1998 (Freight Regulation) confers the licensing The objectives for issuing the two licenses, based on task for these two services on the MoT. It can be the Maritime Proclamation is to provide an enhanced interpreted that the MAA is the competency certificate and smooth service, considering the crucial importance giving body for these activities. of existence of an efficient maritime sector for the The Freight Regulation provides for the functions, country’s development and prosperity and to implement requirements and responsibilities of freight forwarders obligations and rights of Ethiopia under international and shipping agents. Besides, the MAA has a directive maritime conventions. on freight forwarding and shipping agency. For the 81 Multimodal transport involves: the carriage of goods by competency of maritime consultancy, the legal basis for at least two different modes of transport on the basis of a it is said to come from the Maritime Proclamation but multimodal transport contract from a place at which the goods are taken in charge by the multimodal transport its application appears to start with the implementation operator to a place designated for delivery. The only of the ESIC. The MAA has not yet prepared licensee in the country, the government’s Ethiopia Shipping and Logistics Enterprise is working by a support letter requirements for this. written for it for the MoT. Detailed Analysis of Licenses   103 In terms of requirements, there are around 6; • The specific requirements for the multimodal and comprising of manpower (including a certificate of maritime consultancy are prepared for those that competence from the Ethiopian Revenue Customs want to engage in these businesses. Authority for freight forwarders) and office particulars. • The introduction of the multimodal system through Most of all, a capital of ETB 1,500,000 is needed for the Multimodal Transport of Goods Proclamation freight forwarding, ETB 1,000,000 for shipping agency No. 548/2007 has affected the renewal numbers and ETB 2,200,000 for both services. The justification of both freight forwarders and shipping agents. for the capital levels is the refusal of insurers to Although the introduction of the system is a positive insure such businesses if their capital is less than these step, it should not lead to the exit of such businesses amounts. On top of these, proof of good behavior is from the market. demanded from his/her clients. • The proof of good behavior that is demanded for The time it takes for processing these licenses is freight forwarders and shipping agents does not seem given as 3 days by the MAA but private sector to take into account newcomers that do not yet have interviewees estimate 21 days for the whole process clients and a working relationship with transitors, including business licensing. The fees for processing importers and exporters. the competency certificates are 500 ETB each for the Recommendations three competencies. While there is a reference to fees in • There should be compatibility between the ESIC and the directive mentioned above, the legal basis for the the competency certificates that the MAA gives. The amounts is not apparent. neglect some of the allocated competency certificates A total of 2, 41 and 9 licenses have been issued in face is perhaps a sign they should be accommodated 2005 EC for freight forwarding, shipping agents and in other ways. maritime consultancy respectively and the estimated • The requirements for the multimodal transport administrative compliance cost for this category of and maritime consultancy should be enacted and licenses ranges from ETB 1,786 to ETB 4,952. available for possible applicants. Findings • Requirements that are excessive and those that push • The MAA does not address competency certificates away investors as well as those that don’t consider for licenses listed from 4–9 above such as harbor newcomers should be reviewed. works and renting of water transport equipment 3.7.3  Air Transport Sub-Sector which are allocated to MAA in the revised ESIC. The Civil Aviation Proclamation No. 616/2008 under • There is a regulatory purpose to these licenses to Article 59 states that no air operator may engage in air ensure transit of goods is professionally handled in services without having a valid license issued by the line with international standards. Civil Aviation Authority (CAA). The CAA is in charge • The requirements for freight forwarding and of issuing the licenses for air operators. In particular, shipping agents, especially the capital needed seem the Civil Aviation Authority provides for licensing of: excessive in light of the fact that these services are operators of air service (Art. 60) and general aviation not only businesses but are very crucial in alleviating services (Art. 10/5), maintenance facilities (Art. 25), port congestion and easing transit of goods that are aviation training schools (Art. 25), aerodrome operating perennial problems of the import and export trade license (Art. 53), air transport service (Art. 60), aerial of the country. Other requirements seem to exclude work service (Art. 60) and private air service license investors that want to work in the field, e.g., in (Art. 60). marine consultancy the demand for the CV of the Some of the licenses have government enterprises as general manager (maritime experience included) bars lone operators because of high capital demands and individuals that want to engage in such a business by questions on readiness of government to allow private employing qualified people in the field. 104  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform operators: with regard to ground handling only the the rarely used and temporarily licensed services such Ethiopian Airlines and with regard to operation, as: banner towing, glider, flying club and parachute construction and administration of airports services rigger. only the Ethiopian Airports Enterprise. The time it takes to get all the licenses is one hour The licenses identified in this field are the following. according to the CAA which is quite different from the 1 to 2 years period the private sector licensees indicated. License 1 Renting of air transport equipment As to the fee for services, it is ETB 1,200 without License 2 Cargo air transport including trade registration costs. License 3 Ground handling License 4 Operation, construction and administration Specific figures for the licenses issued in 2005 EC of airports are not available, but the estimated administrative License 5 Passenger air transport compliance cost for this category of licenses ranges License 6 Aviation consultancy from ETB 328,277 to ETB 570,558. License 7 Aviation training school Findings The CAA is responsible for competence and licensing in • There are regulatory purposes to the licenses in this these listed fields. The CAA largely focuses on passenger field since ensuring the safety and security of civil and cargo transport because of capital limitations and aviation is of vital importance in addition to putting the little interest in most of the other licenses. in place an efficient and economic civil aviation system that conforms to international standards. The revised ESIC provides for 13 types of business • The nonavailability of the requirements for all the licenses related to civil aviation/air transportation licenses is a setback to applicants who need to get activities. Of all these, Other Activities of Air Transport licenses in the aviation industry. It becomes all the n.e.c. is not currently being administered by the CAA. more important given that such requirements and Meanwhile the following licenses are temporary licenses standards need to comply with the standards and which have not been given for some time now except recommended practices of the International Civil balloon operation which has attracted some interest in Aviation Organization, as referred to in the preamble recent times. of Civil Aviation Proclamation. • The licenses that CAA administers must be grounded License 8 Balloon operation on a strong legal basis since there is a heightened License 9 Banner towing need for technical capacity/ability to address safety in License 10 Flying club civil aviation which the Civil Aviation Proclamation License 11 Glider does not impart if resort to the latter is considered. License 12 Parachute rigger • The private sector licensees are of the view that The objectives of the licenses are better regulation the CAA does not have a clear & comprehensive of civil aviation to meet the needs for a safe, secure, directive for investors and it does not make experts regular, efficient and economic civil aviation system available to give guidance based on experience and as referred to in the preamble of the Civil Aviation knowledge. Proclamation.82 The objectives are more in line with the Recommendations mostly used passenger and cargo transport services than • Requirements for all the licenses should be enacted which are all the more important for the safety of 82 In addition to the objectives mentioned in Proc. service users and compliance with international No. 616/2008 the following are raised as objectives: to foster tourism & export trade, to create employment standards. This is one of the main areas the private opportunity, to contribute to foreign exchange earnings, to sector believes will reduce administrative costs by expand and upgrade the provision of air transport services both locally & regionally. making accurate information easily accessible. Detailed Analysis of Licenses   105 • The time the licenses take to process for the private of Ethiopia Proclamation No. 691/2010 under sector, as opposed to what has been expressed by the Article 24/1/d empowers the MOCIT to license and CAA, should be shortened to keep the field attractive regulate postal service operators on top of the other for more competition. licenses. 3.7.4  Telecommunication, Information MOCIT has issued directives describing the Technology and Computer Sub-Sector requirements and the application process for licenses The Telecommunication Proclamation No. 49/1996 under its jurisdiction including: Directive No. 1/2005 (Telecom Proclamation) under Art. 6/5 empowers for determining the requirements for competency the Ministry of Communications and Information certificates for licenses in the communication and Technology (MOCIT),83 to carry out licensing and information technology sector, the License Directive supervision of operators of telecommunication for Resale and Tele-centre in Telecommunication services.84 Furthermore, this power of the Ministry Services No. 1/2002, the License Directive for the is qualified in Article 7 of the Telecommunications Installation and Maintenance of Cable, Wireless Local (Amendment) Proclamation No. 281/2002 to include Loop, Exchange, Maintenance of Terminal Equipment licensing individuals or companies participating in Telecommunication Service No. 2/2002 and Value in: tele-centers or resale service; outside cabling or Added Service Directive No. 2/2005. wireless local loop lines installation or maintenance; Based on these laws the following licenses have been telecommunication exchange installation or identified: maintenance; in-house or building cable installation; and other similar activities to be designated by License 1 Courier activities other than national postal the directives of the Ministry. Providing these activities telecommunication services, without having a valid License 2 Tele-center license in line with these laws, results in a fine and License 3 Internet resale service imprisonment. License 4 Telecommunication inside cable installation and maintenance Moreover, the Definition of Powers and Duties of the License 5 Telecommunication outside cable Executive Organs of the Federal Democratic Republic installation and maintenance (grade one) License 6 Telecommunication outside cable 83 The powers of the previous regulator, the Ethiopian installation and maintenance (grade two) Telecommunication Agency, was transferred to the MOCIT as per articles 24/2 & 36/5 of Proc. 691/2010 License 7 Telecommunication terminal equipments on Definition of Powers and Duties of the Executive maintenance (grade one) Organs of the Federal Democratic Republic of Ethiopia. License 8 Telecommunication terminal equipments Besides, the telecommunication services is a field that was mandated to have its own licensing under Art. 30/1/f maintenance (grade two) of the Commercial Registration and Business Licensing License 9 Telecommunication value added services Proclamation No. 686/2010. 84 License 10 Telephone resale service According to Art. 2/1 of the Telecommunications (Amendment) Proclamation No. 281/2002 License 11 Telecommunication exchange installation telecommunication service is given the meaning Public and maintenance (grade one) Switched Telecommunication Service; Cellular Mobile Service; Interned Service; Satellite Telephone Service; License 12 License for telecommunication exchange Data Communication Service; Tele-centers or Resale installation and maintenance (grade two) Service; Mobile or Fixed Private Radio Service; VSAT License 13 Fax resale service (Very Small Aperture Terminal) Service; Cable Installation and Maintenance Service; Telecommunication Switches Installation and Maintenance Service; the transmission The MOCIT is responsible for licensing and certifying or reception through the agency of electricity or electromagnetism of any sounds, signs, signals, writing, competences for these activities. images or intelligence of any nature by wire, radio, optical fiber, or other electromagnetic system or any other service On the other hand, the revised ESIC provides designated as Telecommunication Service by the Ministry. for 43 types of business licenses related to It shall not include Broadcasting Service and Intercom Connections. telecommunication, information technology and 106  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform computer activities. Out of these licenses field License 35 Wholesale trade in pagers, hand phones observation reveals that competency certificates for (e.g., palmtops, smart watches, wearable licenses listed below are being issued at the moment computer and electronic books) by the MOCIT based on Directive No. 1/2005 License 36 Wholesale trade in software for determining the requirements for competency License 37 Computer network design and implementation/installation consultancy certificates for licenses in the communication and service information technology sector. License 38 Data center/hosting service License 39 Network cable installation License 14 Communication and electronics equipments installation and maintenance License 40 Training service in information and communication technology License 15 Data processing—digitization and e-filing systems work License 41 Information and communication technology consultancy License 16 Database activities License 17 Export trade in computer hardware and peripheral equipment (including accessories) Meanwhile, revised ESIC adds the licenses listed below License 18 Export trade in computers and accessories to the competence of MOCIT to issue competence License 19 Export trade in pagers, hand phones and certificates but the requirements for competency for (e.g., palmtops, smart watches, wearable these new licenses have not yet been prepared. MOCIT computer and electronic books) has also apparently a problem with regard to the License 20 Export trade in telecommunications nomenclature of these licenses and alleges that the apparatus equipment (including accessories) licenses were named without proper consultations. License 21 Import trade in computer and computer accessories and components License 42 National postal activities License 22 Import trade in computer hardware and License 43 Others postal and related courier activities peripheral equipment (including accessories) License 44 National telecommunication service License 23 Import trade in pagers, hand phones License 45 Computer network cable installation (e.g., palmtops, smart watches, wearable computer and electronic books) License 46 Manufactures of pagers, hand phones and other palmtops, smart watches, wearable License 24 Import trade in software computer and electronic books License 25 Import trade in telecommunications License 47 Wholesale trade in telecom and computers equipment equipment and accessories n.e.c. License 26 Competence for office, computation and License 48 Retail trade of telecom and computers computers maintenance service equipment and accessories n.e.c. License 27 Other computer related activities License 49 Computer and computer accessories License 28 Retail trade of pagers, hand phones maintenance (e.g., palmtops, smart watches, wearable License 50 Import trade in lifts, escalators and computer and electronic books) industrial and office air-conditioning License 29 Retail trade of software equipment License 30 Retail trade of telecommunications License 51 Manufactures of telecommunications equipment equipments and apparatus License 31 Retail trade of computer hardware License 52 Manufactures of computer equipments and and peripheral equipment (including apparatus accessories) License 53 Manufacture of telecommunications and License 32 Software design, development and computer equipment and apparatus n.e.c. implementation consultancy service License 33 Wholesale trade in telecommunications The objective of the licensing and competence equipment certificates as encapsulated under Directive No. 1/2005 License 34 Wholesale trade in computer hardware and peripheral equipment (including EC is enabling licensees in the communication and accessories) information technology field to offer acceptable service Detailed Analysis of Licenses   107 to the public by fulfilling the necessary minimum certificates for licenses in the communication and professional competencies. information technology sector. For instance, for the license of telecommunication outside cable The requirements for the licenses and certification installation and maintenance (grade one) the include general requirements (mostly related to brochure from the MOCIT demands 18 professionals basic equipment and documentation), availability while the directive asks only 5. of required professionals, availability of specific equipment, capital (up to 500,000 ETB). Art. 4/1 of • The requirements for the licenses and competency the Telecommunication Services Council of Ministers certificates are still in a state of flux. For instance Regulation No. 47/1999 lays down 90 days for issuance the previous directive for the requirements was of licenses for traditional services from the submission an April 2012 directive which is 9 months earlier of the applications. The fees for competency certificates than the latest one. The latest one, i.e., Directive is not yet set, thus it is free of cost while for the 1/2005 is also being amended. There appears to be a traditional licenses, there are fees already determined continuous change in rules and regulations which is and range from 37 ETB (traditional) to 25,000 ETB creating confusion and compromises transparency. (value added telecommunication services).85 • The licensing office is centralized and not accessible, especially for those applicants that come from A total of 3,330 licenses have been issued for wholesale regional states. and importers and 8 licenses for computer and related development, design and installation services in • Private sector interviewees have mentioned that 2005 EC. The estimated administrative compliance some of the licenses are too interrelated to be given costs for this category of licenses range from ETB 744 separately. This forces licensees to seek multiple to ETB 28,125. licenses to undertake their business. Besides, the need to renew the licenses annually has been questioned. Findings • Accessibility of information for the private sector • Although the field of telecommunication, IT and including allowing for online applications is one of computers, in general, demands a considerable the major concerns of the private sector. Together amount of capital and expertise, the requirements with this, frequent changes to requirements have also for the competency certificates and licenses troubled them. for some licenses are cumbersome, especially in telecommunication installation, design and Recommendations maintenance areas where one or more professionals, • There is a need to harmonize the revised ESIC and who may not be available in enough numbers in the the telecommunication services laws with a view to market such as: graduates in electrical, electronics, addressing the inconsistencies between the two. telecommunication, communication, computer • Frequent changes to license requirements should be engineering, ICT, computer science, management avoided to allow the private sector to function in a information system, information system, are needed. stable and predictable environment. • Although it cannot be said for all the licenses there • The requirements for competence certificates are regulatory purposes for licensing, mostly the indicated in the brochure of MOCIT should be traditional licenses, for security and efficiency revisited with a view to making them compatible reasons. with directives. • There appears to be a conflict between Directive • Enhanced information delivery to the private sector No. 1/2005 and the brochure issued by MOCIT including online application should be available for with regard to the requirements for competency private operators. 85 A total fee from all applications for 2010/2011 is ETB • The fragmentation of licensing into very particular 2.5 million, the same figure for 2011/2012 and it is ETB areas has forced licensees to seek multiple licenses for 2.3 million for 2012/2013. 108  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform interrelated services. Thus, consolidating some of the ones listed in the revised ESIC. The ESIC’s reference to licenses should be considered. General Storage remains unclear. • Requirements that are excessive should be trimmed The objective of the license for Customs Clearing Agent, down giving some room for competition and as can be deciphered from Regulation No. 108/2004 development. is to regulate the provision of quality service and • One window service is crucial for the licenses that facilitate the customs process by ensuring qualified seek competence from the MOCIT and license and agents are handling it. Similarly, the objective of the registration from MoT or BoTI. customs warehouse licenses, according to Art. 21/1 of the Customs Proclamation is to provide for the storage 3.7.5  Customs and Tax Sub-Sector of import or export goods until completion of customs The Ethiopian Revenue and Customs Authority formalities in order to facilitate the flow of goods (ERCA) has the mandate to issue licenses for customs through Customs and to safeguard the safety of goods. warehouses as per chapter two of the Customs Proclamation No. 622/2009 (Customs Proclamation). Six requirements are applicable for the licenses which The licenses could relate to general or private customs are related to manpower, equipment, office space and warehouses. The requirements for these licenses are capital.86 provided in Customs Warehouse License Issuance Processing customs warehouse licenses may take Council of Ministers Regulation No. 24/1997. ERCA up to 30 days according to Art. 4/2 of Regulation has issued Customs Warehouse Administration No. 24/1997 and it costs ETB 1250 (Art. 8). ERCA Implementation Manual No. 40/2002 to further clarify believes it takes three days but a private sector the grades, person and goods allowed in such facilities interviewee revealed the duration to be more than two and rates for the warehouses. months. In addition, the Customs Proclamation under Art. 77/1 A total of 30 licenses have been issued for customs also provides that any person who engages in clearing warehouses in 2005 EC and the estimated goods on behalf of an importer or exporter shall be administrative compliance cost for this license is required to be licensed as a customs clearing agent. 33,505 ETB. Particulars on this license have been left to a future regulation which has yet not seen the light of day. Findings Furthermore ERCA is authorized by Customs Clearing • The administration of certificates of competence for Agents Council of Ministers Regulation No. 108/2004 Customs Clearing Agents has encountered serious to issue certificates of competence for customs clearing challenges and has not been issued according to services. The regulation states the requirements to be Regulation No. 108/2004, because of cumbersome met for the competence. requirements. In particular, inclusion of at least two certified professionals, in line with Art. 10 of Based on these laws the following licenses are identified. Regulation No. 108/2004, has been found to be hard to fulfill. Several amendment proposals have License 1 Customs warehouse license License 2 Customs clearing agent 86 For the customs warehouse in particular the requirements are: equipment (including for security, office, generators) The revised ESIC has assigned three types of business and relevant personnel, while the documents needed are: title deed or lease agreement for the warehouse; site plan of licenses to ERCA: general storage and warehousing, the warehouse; documents showing that the warehouse has customs clearance, and consultancy service for tax and services like: power, telephone, water and other services; trade license; documents showing the educational and finances. work experience of the workers, including a diploma or higher educational qualification in supplies management ERCA is supposed to issue competency certificates for or similar field from a qualified college; a general customs the licenses listed above. There is thus a clear difference bond for the goods that are going to be in the warehouse; documents showing that office and security apparatuses for between the licenses based on customs laws and the the warehouse are available, e.g., fire extinguisher, etc. Detailed Analysis of Licenses   109 been made but have not managed to change the • It should be clear who issues competency certificates law. Presently, applicants are given professional with regard to general storage and warehousing and qualification after attending training as per Art. 4 & consultancy service for tax and finances. 5 of the above regulation which is used by the MoT 3.7.6  Measurement and Other Scientific to issue licenses. The current procedure by which Equipment and Services the MoT gives licenses based on the professional Regulation No. 194/2010 establishes the National qualification given by ERCA seems to undermine Metrology Institute (NMI) as an autonomous federal the fulfillment of qualifications written into government office that is accountable to the Ministry Reg. No. 108/2004. of Science and Technology. The head office is in • There is a regulatory purpose to licensing these fields, Addis Ababa and applications from all the regions are i.e., safeguarding the safety of goods in transit thus submitted here. ensuring efficiency of transit and proper delivery. The regulation specifies the powers and duties of • Some of the requirements for the customs warehouse the Institute and lists specific activities. The NMI license seem burdensome and expensive to fulfill. provides three major services: training and advice, For instance, 30 ton gantry and different kinds maintenance and certification services. The regulation of forklifts are required for warehouses that deal doesn’t say much about the certification services to with goods that come in a container. Private sector be given by the NMI and there is no Directive to interviewees also complained about the unrealistic elaborate on this. nature of the requirements and the bureaucracy in There, however, is a Users Charter prepared by the processing the competency certificates. Institute that attempts to lay down the several activities • The Revised ESIC takes ERCA to be a competency of the institute including the certification process. issuing body for customs warehouse licenses but ERCA is empowered to issue such licenses (not just According to the ESIC listing the following licenses are to issue competence certificates) by law. This is yet to be given by BoTI and the Minimum requirement again a clear case of inconsistency between the ESIC Certification by NMI. and the sector specific laws. License 1 Manufacture of legal (commercial) • There is no clear information on who issues the measuring scales certificate of competence for consultancy service for License 2 Manufacture of instruments and tax and finances. The ESIC indicates the ERCA as a appliances for measuring, checking and certifying agency but ERCA is not performing this testing of industrial process currently. License 3 Manufacture of industrial process control equipment Recommendations License 4 Other manufacture of medical appliances & • The requirements stated under the Customs instruments & appliances for measuring, Clearing Agents Council of Ministers Regulation checking, testing, navigating and for other purposes, except optical instruments No. 108/2004 should be amended taking into License 5 Wholesale trade in scientific, controlling consideration the reality and capability of possible and precision equipment applicants. License 6 Wholesale trade in laboratory equipment • The ESIC should be revised with a view to making it except medical purpose compatible with the customs-related laws. The ESIC License 7 Retail trade of professional scientific, should be adjusted to indicate the ERCA as licensing controlling and precision equipment body for customs warehousing since it is authorized License 8 Retail trade of laboratory equipment except medical purpose to do so by law. License 9 Medical equipment installation and maintenance service 110  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License 10 Import trade in scientific, controlling and compliance cost for this certification process ranges precision equipment from 145–200 ETB. License 11 Import trade of laboratory equipment Findings (except medical equipments) • The regulatory purpose that this certification serves License 12 Export trade in scientific, controlling and precision equipment is very important; however, the certification service License 13 Export trade in laboratory equipments in the NMI is not given the attention it deserves. It is (except pharmaceuticals) listed as one of its activities and there is no mention License 14 Consultancy service on scientific of the ESIC categories which would have helped in machineries selection, installation, preparing the User Charter and other guidelines. commissioning, maintenance and disposal consultancy • The institute has a website but it is not user friendly and does not have many of the forms and documents As mentioned in the table above, other than the Users that should be made available online. Charter there are no official documents from the NMI Recommendations specifically addressing the licenses in the list. This could • More attention needs to be given to the ESIC be because the office is still building its manpower and categories in the preparation of future office manuals working to fully embrace its certification authority. The at the Institute and application forms. data for 2006, and the only one available, shows that • The website needs to be upgraded and vital there are all types of businesses and associations coming information made easily accessible. for certification. They are often led to the NMI by the Ministry of Trade or BoTI. 3.7.7  Radiation Emitting Equipment and Services The Ethiopian Radiation Protection Authority Article 6(18) of the Regulation states that the Institute (ERPA) was re-established under Radiation Protection can charge fees for the services it renders in accordance Proclamation No. 571/2008. Articles 16–19 of the with the rate determined by the government. So far this Proclamation enumerate the rules and requirements for has not happened. The institute is still waiting for the issuance of a certificate of authorization. Article 16(1) Ministry of Finance to approve its proposal on service states that “No practice shall be adopted, introduced, fees. Therefore, at the moment all its certification conducted, discontinued or ceased except in accordance services are rendered free of charge. with the requirements established by the Authority The certification process is fairly simple. It involves unless the exposure to such practice is excluded or the filling out and submitting an application form, practice is exempted from the requirements, including deliberation by the committee/council, a field visit for the requirements of notification and authorization.” inspection and then a decision. The competence certificate will be issued or a letter of The documents to be attached to an application are the notification be accepted by the ERPA. following: Trade registration from MoT, the resume of The following is a list of the licenses to be issued by the an in-house technical expert, a rent/lease agreement, ERPA as has been listed under the ESIC. and an authorization/certification from the Foreign company they work with (for importers). License 1 Activities for control of natural radio- nuclides After an application has been submitted to the NMI, License 2 Prospecting and developing of uranium a certificate will be issued within an average of and thorium minerals 12 days. It has only been a year since the NMI began License 3 Manufacture of radiation emitting work so the information we have is for the year of equipment & radioactive sources 2013–14 or 2006 E.C. In that year the NMI has License 4 Wholesale of radiation emitting equipment & radioactive sources issued 13 certificates and the estimated administrative (continues) Detailed Analysis of Licenses   111 Continued The time it takes to obtain a certificate/license from License 5 Retail trade radiation emitting equipment & ERPA is not specified in the proclamation and as radioactive sources mentioned above since we don’t have a specific License 6 Radiation emitting equipments installation, regulation the authority determines the time on a case- commissioning, maintenance by-case basis. And that is the response we received License 7 Import of radiation emitting equipments & for our question regarding time. It will depend on the radioactive sources applicant institution and the type of work they do. License 8 Export radiation emitting equipment & According to information obtained from the private radioactive sources sector, the time it takes for certification from ERPA The BoTI and MoT are listed as the licensing bodies ranges from ten days to one month. for the licenses to be issued under the Protection from A total of 414 licenses have been issued in 2005 EC and radiation title. Wholesale, Import and Export are to the estimated administrative compliance cost for this be handled by the MoT; the remaining titles are left to category of licenses ranges from 500 to 3,000 ETB. BoTI. The verification authority, ERPA, is sometimes Findings listed as RPA (Radiation Protection Authority) but it • The only legal framework available for the should be ERPA. verification process of a license for all kinds of The proclamation assumes the enactment of a activities related to radiation is Proclamation supporting regulation and directive. As far as we are No. 571/2008. The proclamation sets down the aware the authority uses the proclamation and other general principles and procedural framework for supporting, in-office, documents to discharge its Authority. A detailed regulation and directive is licensing duties. No regulation has been enacted by the envisioned. But there is no regulation or directive Council of Ministers. so far. Article 18(3)(a) of Proclamation 571/2008 states that • The absence of a detailed legal framework has an applicant must submit all the required documents created an inconsistent practice that leaves room for and pay the appropriate license fees in order to have a abuse by those in position of power. There are no license processed. fees required with the application for a license but there is something called an “inspection cost” which The required documents for application in this case is not applied uniformly. are an application letter, application forms, renewed trade registration, health office certification, TIN • ERPA has a user friendly website that provides for number, floor plan of the radiology room, ISO/ all the necessary information an applicant needs to IEC certificate, calibration certificate, machine test know and fulfill. report, date of manufacturing, the purchase contracts Recommendations of the machine & related documents, Ministry of • A more detailed regulation to implement the Health professional certification license, educational proclamation needs to be enacted. information (resume), safety assessment report and, if • If the enactment is going to take time the Ministry items are imported, shipping documents, bill of loading of Trade should come up with a temporary guideline and airway bill, and commercial invoices. that specifies the fees that can be collected by the The amount of fee required has not been specified in the Authority in order to avoid inconsistent practices. proclamation. As is the case in many other institutions • The present good practices at the authority should be until the fee is determined by a regulation no fees maintained and promoted. apply. We discovered during our interviews that some institutions are required to pay “inspection costs” of more than 2,000 ETB. 112  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform 3.8  Financial Intermediation, Insurance, The other licenses included in the Insurance Real Estate and Business Services Proclamation are the licenses for insurance auxiliaries, 3.8.1  Banking, Insurance, Capital Goods Finance i.e., insurance agents, insurance brokers, loss assessors and Microfinance or insurance surveyors and the license for actuaries. The It is prohibited to transact banking business in Ethiopia NBE has issued specific requirements for the auxiliary without obtaining a banking business license from the insurance services and insurance actuaries through National Bank of Ethiopia (NBE) according to Art. 3/1 the following directives: Directive No. SIB/12/1996 of Banking Business Proclamation No. 592/2008 on Licensing of Insurance Loss Assessors and Loss (Banking Proclamation). The same applies to Adjustors; Directive No. SIB/31/2010 on Licensing transaction of insurance business, insurance auxiliary of Insurance Brokers; Directive No. sib/22/2002 services, actuary services, micro-financing business and on Licensing of Insurance Surveyors; and Directive capital goods finance businesses.87 No. SIB/11/1996 on licensing of insurance actuary. The Banking Proclamation bestows the NBE with the In addition, the Micro-Financing Business Proclamation mandate to license banking businesses while at the same No. 626/2009 (Microfinance Proclamation) time laying out the requirements, responsibilities and mandates the NBE to issue micro-financing business rules governing the service. Details on the requirements licenses. Particulars on the requirements of micro on banking services are laid out in the Requirements for finance institutions are outlined in the Licensing Licensing and Renewal of Banking Business Directives and Supervision of the Business of Micro Finance No. SBB/56/2013. Banking business associated permits Institutions Directive No. MFI/01/96 and Licensing such as a permit to purchase of foreign exchange, and Supervision of the Business of Micro Finance License for Foreign exchange bureau services, Permit Institutions Directive No. MFI/04/96. for banks for express transfer services and Permit for Lastly, the NBE also administers capital goods leasing branch opening for banks and inception of service are business licenses as per the Capital Goods Leasing necessary for the operation of banks and are considered Business Proclamation No. 103/1998 and the Capital part of the banking business. Goods Leasing Business (Amendment) Proclamation The Insurance Business Proclamation No. 746/2012 No. 807/2013. Art. 4/4 of Proc. 807/2013 gives the (Insurance Proclamation), on its part, provides for NBE the mandate to issue criteria to be fulfilled to the requirements for the licensing of the main classes obtain capital goods finance business licenses which it of insurance businesses which consists of long term has done by issuing Directive No. CGFB/02/2013 on insurance business or general insurance business and Requirements for Licensing of Capital Goods Finance any other activity ancillary to the particular insurance Business. business. Long term insurance business on its part Based on this legislation the following licenses have comprises life insurance, annuity, pension, permanent been identified: health insurance and personal accident or sickness insurance. The NBE has issued the “Requirements License 1 Composite long term and general for Licensing Insurance Business Directive insurance business license No. SIB/33/2013” outlining particular requirements on License 2 General insurance business license the main insurance services. License 3 Long term insurance business license License 4 Permit for branch opening for insurance 87 business As per Art. 3/1, 39/1 & 43/1 of Insurance Business Proclamation No. 746/2012, Art. 4/1 of Micro-Financing License 5 License for insurance actuary Business Proclamation No. 626/2009 and Art. 3 of Capital License 6 License for insurance loss adjustor Goods Leasing Business (Amendment) Proclamation No. 807/2013. License 7 License for insurance loss assessors (continues) Detailed Analysis of Licenses   113 Continued microfinance and 15 for capitals goods leasing). The License 8 License for insurance broker requirements mostly comprise documentation, capital, License 9 License for insurance surveyor learned manpower, office space and relevant equipment. License 10 License for banking services The time it takes for processing the main activities of License 11 Permit to purchase of foreign exchange banking, insurance and capital goods leasing is up to License 12 License for foreign exchange bureau 90 days and it is 42 days in the Citizens Charter of services the NBE Associated businesses take from hours to a License 13 Permit for banks for express transfer few days. Views from the private sector licensees are services contrary to these stipulations and claim that the actual License 14 Permit for branch opening for banks and inception of service period it takes to go through the process is from 10 License 15 License for micro finance institutions to 12 months for banking and insurance. Of course, License 16 License for capital goods finance business the time it takes shareholders all to sign shareholder documents at the Document Authentication and The revised ESIC establishes 18 types of business Registration Office (DARO) plays a large part in this. licenses related to banking, insurance, capital goods The fees for the main activities, as described in the finance and microfinance activities that are associated Citizens Charter and directives are as follows: for the with the NBE. However, the licenses listed below have banking service 5,500 ETB; for insurance businesses been assigned to the NBE in the ESIC but are not from 6,000 to 6,500 ETB; for insurance auxiliaries and operational at the moment. actuary from 550–1,550 ETB; for capital goods finance business 10,000 ETB; and for micro-finance institutions License 17 Other monetary intermediation 2,000 ETB. License 18 Other lease granting License 19 Reinsurance institutions It has been difficult to get the data of the total licenses License 20 Other insurance n.e.c. issued in 2005 EC and to estimate the compliance costs License 21 Other activities auxiliary to insurance and in these areas. pension funding n.e.c. Findings License 22 Discount houses and commercial and other banking • The overall picture of the licensing process, especially for banking involves pre-application procedures The objectives for licenses in the insurance businesses including a pre-filing meeting with the NBE and are to ensure the safety and soundness of the sector letter to open blocked account at the NBE. Other and to establish clear, objective and transparent than this, investigation of the proposed managers requirements for licensing and renewal for licenses in is also part of the process. All in all, the process is the area. Similarly the statutory objective of licensing in quite intricate and involves close collaboration with the banking business is to ensure safety, soundness and the NBE. A lesser complicated but similar procedure, stability of the banking system. With regard to licenses except pre-application meeting, is the case in the in the microfinance area the objective is to regulate main insurance licensing. the development and soundness of the micro-financing • There is a regulatory purpose to license these fields business. Ensuring the safety and soundness of capital for reasons of safety, soundness and stability of the goods finance business by establishing clear, objective financial sector. and transparent requirements for licensing is the • The branch offices at BoTI have problems of declared objective in the capital goods leasing area. registering auxiliary insurance services and have A long list of requirements needs to be complied usually forced applicants to go to the MoT itself with for each type of license (16 for insurance; 12 for registration. This problem still persists despite for insurance auxiliaries; 34 for banking; 15 for repeated efforts to solve it. 114  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform • A major problem of the private sector licensees in the value of encouraging compliance with international this category include: the lack of updated and precise standards. information on the part of the NBE (even though the In addition to this, ENAO performs accreditation laws and directives of the bank are available online). services for the MoT in specific areas requiring In addition, the private sector criticized the inability inspection and expert evaluation. This certification to give timely decisions which to some degree duty was delegated to ENAO by the MoT and after emanates from the centralized decision making the assessment the office writes a letter to the Ministry process at the bank. stating that an applicant has fulfilled the requirements • Another challenging issue for banks and insurance or not. It is only then that a business license will be companies is the demand that all shareholders (no issued or renewed. The office undertakes research, matter how small their share is), have to sign at field inspection and if a business fulfills the minimum DARO for the share company to be launched which requirements a certificate will be issued. takes a lot of time and expenses. Here is the list of licenses the ENAO has identified as Recommendations the verifying body for under ESIC. • A one window service has to be implemented by the NBE and the MoT for processing trade registration License 1 Inspection (89110) and licensing to reduce time and energy wasted by License 2 Testing laboratories (89120) going to different places. License 3 Product certification (89130) • The signature demanded at DARO by the NBE to License 4 System certification (89140) launch the banks and insurance companies have License 5 Person certification (89150) been a severely limiting obstacle on the timely License 6 Calibration of laboratories (89160) commencement of these businesses. There is a need License 7 Verification (89170) to reconsider this. In the meantime, delegation of The objective is to professionally evaluate if minimum authentication services to respected attorneys in rural requirements for the performance of a certain business settings could save substantial expenses and time. have been fulfilled. It is to ensure the quality of service • The NBE and the MoT should address the given so that the public gets an acceptable level of incompatibility between the licenses that are service. Regulation 275/2012 provides for the fees supposed to be licensed by the NBE and what are for accreditation services by ENAO. The minimum being issued. requirement inspection services are given under a 3.8.2  Accreditation and Conformity Memorandum of Understanding signed between Certification Services Ministry of Trade and ENAO. The fee for “Checking of The Ethiopian National Accreditation Office (ENAO) Requirements” is then determined to be 2000 ETB. And is one of the newly established institutions to undertake this has also been confirmed by information obtained the many activities that used to be under the Ethiopian from the private sector. Quality and Standards Office. ENAO provides all the information on its activities and Regulation No. 195/2003 provides for the requirements for obtaining a ‘minimum requirement establishment and mission of the office. The main certification’ on a very good and user friendly webpage. task of the ENAO is to give accreditation services to In addition to filling out the form that is available businesses that voluntarily want to have a certificate online an applicant has to bring a Business registration showing they have fulfilled international standards. certificate and a data of at least 6 months to evaluate Not many people/businesses are aware of the existence compliance. and relevance of this practice. As a result the office is The office maintains that if applicants submit all the currently engaged in giving trainings and promoting required documents and make the payment on time, Detailed Analysis of Licenses   115 the inspection and decision process should not take Second, the enterprise would ensure imported products more than 15 days. Information collected from the are in line with National, International and legal private sector has confirmed this. The time it takes standards in place. from application to collection of certifying letter is An applicant is required to fill out a standard form, 10–15 days. attach a copy of business registration certificate, system In 2013 the office has given 12 companies accreditation and product flow chart, and for products certification services and there are a few more applications pending. service there should be a first phase production for The estimated administrative compliance cost for this assessment. category of certification services ranges from ETB 2,200 The time that a given certification process will take to ETB 3,300. has not be identified in the regulation and therefore it Findings begins as soon as required documents and materials • None of the private sector participants knew about have been submitted to the ECAE and ends whenever the office or the minimum requirement procedures the office finishes work. This makes it difficult to hold until their application at the MoT was rejected and the office accountable. But the ECAE stated that the they were sent to ENAO with very little information. certificate is issued immediately if applicants furnish • Inspection and evaluation of application takes about required information and attachments. However, 10 days because they process multiple applications at information obtained from the private sector indicated the same time and they will have to allocate available that actual processing and inspection took more than experts and other officials accordingly. 10 days. Submission of application and collection of license were said to take almost no time but there was a Recommendations week long wait and inspection that took about 4 days. • The MoT and even ENAO should inform the public about the requirements and relevant application Renewal of license, known as re-certification takes place deadlines to avoid confusion and resulting fines on every three years. But there is an annual procedure businesses. known as maintenance. • Additional manpower and better facilities would help Due to its nature as a public enterprise, ECAE refused reduce the processing time and compliance cost. to discuss details of its fee structure. And formation gathered from Private sector and official registration Ethiopian Conformity Assessment Enterprise (ECAE) forms from the ECAE office indicate that there are was established in 2011 as a federally owned public no fees to be paid except for one application form for enterprise to be governed by the Ministry of Science and product Certification Service. On that form it is stated Technology. Regulation No. 196/2010 establishes the that along with the application form an applicant Enterprise and states that it will work under the Public should pay 500 ETB. This fee is not indicated in the Enterprises Proclamation No. 251/92. There is no Regulation or any other document. Directive issued to implement the Regulation. In 2012 a total of 12 certificates were issued and The ECAE issues three types of certifications: Product, most of them are product certification services and Systems and Personnel Certification. And the coverage the estimated administrative compliance cost for this is nationwide. certification process ranges from 1000 to 3000 ETB. Among the several listed objectives of the ECAE listed Findings in Regulation No. 196/2010 two are most relevant. • The time the certification process takes has not been First, presence of a robust certification and inspection specified be it in the Regulation or other official process is to ensure that local products are made documents. according to National and International Standards. 116  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform • Information about fees is not easily accessible and we The Food, Medicine and Health Care Administration only learned about it through information gathered and Control Authority (the FMHACA) established by from the private sector. the Council of Ministers Regulation No. 189/2010 is • The data found in the files of the enterprise has not the regulating authority for this sector. Article 4(2) of been disaggregated and thus one is forced to make the Food, Medicine and Health Care Administration general statements instead of specific observations. and Control Proclamation No. 661/2009 (FMHACA Newly issued and renewed certificates are all found Proclamation) empowers the FMHACA to issue, renew in the same category when they are available. and revoke certificate of competence for specialized health institutions, food and medicine processing Recommendations plants, quality control laboratories, bioequivalence • Fees are an important part of a compliance process so centers, importers, exporters, storage and distributors there should be transparency about that to customers and trans-regional health institutions. The FMHACA and the general public. This and specifying the time has issued different directives setting requirements/ a certification and recertification is estimated to take standards which must be fulfilled by businesses can easily be handled by enacting a Directive. applying for competence certificates. The objective of • There should be a better filing and data compilation issuing competence certification as stated in the various system since it will be even more difficult as the directives is to make sure that business persons have office and its national reach grows. the necessary organizational capacity and ensure the quality and safety of products and services offered to 3.9  Community, Social and Personal the public. The FMHACA issues competence certificates Services not for each specific food, medicine, cosmetics or The community, social and personal services sector is tobacco product or license as it appears in the ESIC one of the 10 major industrial classification categories listing, but one general competence certificate for established by the ESIC. Under this category, the import, export and wholesale, and distribution of food, ESIC lists business licenses related to services in the medicine and medical supplies, cosmetics and sanitary education, health and social work, recreational, culture products and tobacco product. Competence certificates and sporting sub-sectors, while licenses related to for manufacturing of food and medicine are issued manufacturing and transaction activities involving these separately. sectors are listed in the manufacturing and commerce 3.9.1.1  Food and Food Products (wholesale, retail, import and export) major sectors The FMHACA is the federal regulatory body which of the ESIC. However, for the purpose of proper and issues competence certificates for businesses engaged in logical analysis, this section discusses all licenses related manufacturing, export, import and wholesale of food to the manufacture, transaction and service activities in and food products. As mentioned above the licenses the community, social and personal sectors. are scattered over several categories of the ESIC. 3.9.1 Health Sector (Food, Medicine and Medical There are 148 food and food related licenses in the Supplies, Cosmetics and Sanitary Products, manufacturing, export, import, wholesale and retail Tobacco and Tobacco Products, Health Facility/ trade categories of ESIC. These are the following: Institution Related Licenses) There are a total of 210 food, medicine and medical License 1 Manufacture of prepared and preserved supplies, cosmetics and sanitary, tobacco and health meat, including sausage facility related licenses scattered over the manufacturing License 2 Production of lard and other edible fats (60 licenses), import (38), export (39), wholesale License 3 Other production, processing and (43) and retail (22) business categories of the ESIC. preserving of meat and meat products Competence certificates are required for all the licenses License 4 Processing and preserving of fish and fish products which must be issued by the appropriate regulatory authorities. (continues) Detailed Analysis of Licenses   117 Continued License 30 Manufacture of spices, condiments, License 5 Manufacture of canned, preserved and vinegar, yeast, egg products, soups and processed fish and similar foods other food products n.e.c. License 6 Other manufacture of canned, preserved License 31 Distilling, rectifying and blending of spirits; and processed fish and similar foods ethyl alcohol production from fermented License 7 Manufacture of canned, preserved, materials; manufacture of wine processed and dehydrated fruit and License 32 Manufacture of beer and other malt liquors vegetables including fruit juices, juice and malt extracts and potato flour meal License 33 Manufacture of wine License 8 Other processing and preserving of fruit License 34 Manufacture of alcoholic drink and vegetables License 35 Manufacture of traditional liquors and License 9 Manufacture of crude edible oil drinks License 10 Manufacture of compound cooking fats, License 36 Manufacture of soft drinks margarine and edible oils License 37 Production of mineral waters License 11 Other manufacture of vegetable and animal License 38 Manufacture of bottled water by recycling oils and fats License 39 Manufacture of other beverages License 12 Processing of fresh milk (pasteurizing, homogenizing, sterilizing and vitaminzing) License 40 Manufacture of edible salts License 13 Manufacture of butter and cheese License 41 Manufacture of pharmaceuticals, medicinal chemicals and botanical products for License 14 Manufacture of ice cream and other edible human use ice, whether or not containing cream or chocolate License 42 Manufacture of chemicals used for medical manufacture, food and medicine including License 15 Manufacture of milk powder, condensed precursor chemicals milk and other edible milk products, e.g., ghee, casein or lactose License 43 Manufacture of perfumes, cosmetics, essential oils and resinous License 16 Other manufacture of dairy products License 44 Manufacturing of incense License 17 Manufacture of flour and grain mill products, including rice and vegetable License 45 Collection, purification and distribution of milling; grain mill residues water including bottled water License 18 Manufacture of semi-processed grain mill License 46 Wholesale of pepper and spices License 19 Manufacture of breakfast foods License 47 Wholesale of fruits & vegetables License 20 Manufacture of starches and starch License 48 Wholesale trade in dairy products & birds products eggs License 21 Other manufacture of grain mill products, License 49 Wholesale trade in meat & poultry starches and starch products and prepared License 50 Wholesale trade in edible oils & fats animal feeds License 51 Wholesale trade in edible salt License 22 Manufacture of bakery products License 52 Wholesale trade in sugar License 23 Manufacture of sugar, including golden License 53 Wholesale trade in processed fruits & syrup and castor sugar vegetables License 24 Manufacture of confectionery, including License 54 Wholesale of fish cocoa and chocolate License 55 Wholesale of bakery products, License 25 Manufacture of pasta, macaroni, noodles, confectionery, including cocoa and chocolate couscous and similar farinaceous products License 56 Wholesale trade in food n.e.c. License 26 Manufacture of honey products License 57 Wholesale trade in beverages License 27 Manufacture of coffee, coffee substitutes License 58 Wholesale trade in bottled water and tea License 59 Wholesale trade in soft drink License 28 Manufacture of nut/groundnut/foods License 60 Wholesale trade in beer License 29 Manufacture of fast foods 118  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License 61 Wholesale trade in alcoholic drinks License 99 Import of bakery products, including License 62 Wholesale trade in traditional beverages confectionery, including cocoa and chocolate License 63 Wholesale trade in beverages n.e.c. License 100 Import trade in food n.e.c. License 64 Wholesale trade in processed agricultural License 101 Import trade in bottled water products License 102 Import trade in soft drinks License 65 Wholesale trade in processed cereals License 103 Import trade in beer License 66 Wholesale trade in processed oilseeds License 104 Import trade in alcoholic drinks License 67 Wholesale trade in processed pulses License 105 Import trade in wine License 68 Whole sale trade in processed spices and License 106 Import trade in beverages n.e.c. pepper License 107 Import of tea License 69 Whole sale trade in processed coffee License 108 Import of honey and honey products License 70 Wholesale trade in flour (except bee wax) License 71 Others wholesale trade in processed License 109 Import trade in pasta, macaroni, noodle agricultural products and alike products License 72 Wholesale of tea License 110 Import trade in food additives License 73 Wholesale sale of honey and honey License 111 Import trade in food supplements products (except bee wax) License 112 Import trade in processed cereals License 74 Wholesale of flour products License 113 Import s trade in processed oil seeds License 75 Wholesale of pasta, macaroni, noodle and License 114 Import trade in processed traditional foods alike products License 115 Import trade in processed spices and pepper License 76 Retail trade in pepper & spices License 116 Import trade in processed coffee License 77 Retail trade in fruits & vegetables License 117 Import trade in flour License 78 Retail trade in dairy products License 118 Others processed agricultural products n.e.c. License 79 Retail trade in meat & meat products, poultry License 119 Import trade in incense License 80 Retail trade in edible oils & fats License 120 Export trade in dairy products & birds eggs License 81 Retail trade of edible salts License 121 Export trade in meat & poultry License 82 Retail trade in sugar License 122 Export trade in edible oils & fats License 83 Retail trade in processed fruits & License 123 Export trade in edible salt vegetables License 124 Export trade in sugar License 84 Retail trade in fish License 125 Export trade in processed fruits & License 85 Retail trade in bakery products, vegetables confectionery, including cocoa and chocolate License 126 Export of fish License 86 Retail trade of honey and honey products License 127 Export of injera, bakery products, License 87 Retail trade of flour including confectionery, including cocoa License 88 Retail trade of house made food products and chocolate, candy, chewing gum License 89 Retail trade of mobile fast foods License 128 Export trade in food n.e.c. License 90 Retail trade in beverages (bottle stores) License 129 Export trade in bottled water License 91 Import of fruits & vegetables License 130 Export trade in soft drinks License 92 Import trade in dairy products & birds eggs License 131 Export trade in beer License 93 Import trade in meat & poultry License 132 Export trade in alcoholic drinks License 94 Import trade in edible oils & fats License 133 Export trade in traditional drinks License 95 Import trade in edible salt License 134 Export of wine License 96 Import trade in sugar License 135 Export trade in beverages n.e.c. License 97 Import trade in processed fruits & vegetables License 136 Export trade in processed cereals License 98 Import of fish (continues) Detailed Analysis of Licenses   119 Continued The FMHACA charges no fee to issue or renew License 137 Export trade in processed oilseeds competence certificates for import, export and License 138 Export trade in processed traditional foods wholesale of food and food related products but the License 139 Exports trade in processed spices and regular licenses application and renewal fees apply. pepper It takes the FMHACA 8 hours to three working License 140 Exports trade in processed coffee days to issue or renew the certificate depending on License 141 Exports trade in flour circumstances. However, private sector businesses state License 142 Other exports of processed agricultural that in reality the process may take up to one month products n.e.c. to issue new certificates. According to private sector License 143 Export of tea business, the time it takes to renew existing licenses is License 144 Export trade in pasta, macaroni, noodle relatively shorter than getting new licenses. It usually and alike products takes half the time needed to get new licenses. There is License 145 Export trade in other flour products a huge difference regarding compliance time in what License 146 Export of food additives the regulatory authority claims on the one hand and the License 147 Export of food supplements private sector’s experience. This huge difference could License 148 Import trade in Incense be the result of many factors which must be explained in the joint forums of business and regulators. Any person must have a certificate of competence before engaging in the business of manufacturing, A separate competence certificate is required for food import, export or wholesale or distribution of food manufacturers. There is a Directive issued in June 2011 and food products. The competence certificate for food by the FMHACA to determine the requirements for exporters, importers or wholesalers refers to an official food manufacturing establishments. According to the written document issued by the FMHACA relating Directive, food manufacturers in respective of which to the details of the safety related status of food in manufacturing competence certificate is issued are compliance with a Directive issued in August 2011. The divided into three. Directive mainly entails the level of fitness of the food 1. High risk foods for special nutritional purpose for human consumption and other safety standards manufacturers, including the manufacturing competence, conditions of 2. High risk foods for general purpose manufacturers, storage, transport and disposal, professional, technical and and nontechnical personnel employed by the business. 3. Low risk foods manufacturers. In addition to having the appropriate level of education and training, employees must take appropriate medical There are as many as 40 detailed requirements that examinations and have health certificates which must must be fulfilled by the manufacturers in the above be renewed every six months. mentioned three categories to get a competence certificate. The purpose of the certificate of competence The applicant must fill out a standard form and attach is to ensure that the manufacturer follow good several documents as specified in the Directive with manufacturing practice so as to ensure the safety and respect to the store building design and location, quality of food produced. According to the Directive, to storage condition and design, necessary equipments get a certificate of competence, any food manufacturer and inputs, technical and non-technical personnel with must at least fulfill 60% of the requirements (including necessary qualification and experience. those described as fundamental under Article 10 of A total of 802 licenses have been issued in 2005 EC for the Directive) during inspection by the authority’s import, export and wholesale of food and drink and inspectors and sign undertaking to fulfill the remaining related products and the estimated compliance cost for requirements within a specific period of time to be the licenses ranges from ETB 4,000 to ETB 13,000. agreed with the Authority. The FMHACA charges 120  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform ETB 800 for issuing new and ETB 400 for renewing for revenue rising not for legitimate regulatory competence certificates. It takes the FMHACA up purposes. Those who are not charging fees currently to two months to complete the process of reviewing are in the process of introducing fees while others documents, site/premise inspection and related matters are in the process of revising existing fees with the before issuing a competence certificate for applicants. objective of increasing existing fee structure. The renewal process takes at least half the time needed • Setting very high standards and too many for processing new licenses. requirements by competence verification bodies A total of 33 new food and drink manufacturing which cannot be easily meet by business. licenses have been issued in 2005 E.C. The estimated • Lack of clarity in describing license types in the compliance cost per license ranges from ETB 7,500 to ESIC, e.g., items listed in the ESIC as “other activities ETB 38,000 depending on circumstances including the n.e.c.” create problem and confusion for competence size of the manufacturing establishment and the type verification bodies to exactly determine which and variety of products produced. activity fall under it and what type of requirement need to be prepared. Findings Considering the human health issue involved in food • Understaffing of competencies verifying bodies and drink products processing and transaction, the resulting in delays in processing applications and regulatory measure to ex-ante certify the competence of poor organization of the work of competence business engaged in these activities could be considered certification. as having valid regulatory purpose. However, the Recommendations competence certification process in this sector faces • Avoid very high and unattainable requirements different challenges, including the following major ones: which open the way for corruption and make clear • Absences of properly organized data from provision for small scale and traditional business competence verification bodies for each license type. establishments when setting requirements. • Luck of proper division of function between agencies • There is a need to make the ESIC in conformity with resulting in a duplication of effort and absence the licenses actually handled by the FMHACA. of common and uniform practice on competence • The overlaps of mandates between or among verification, e.g., FMHACA vs. Culture and Tourism licensing agencies should be rectified. Bureau. 3.9.1.2  Medicine and Medical Supplies • Absence of clear delimitation of responsibility Businesses must be registered and approved for between the Federal regulatory body and its regional their competency to manufacture, export, import, counterparts regarding issuing of competence supply and distribute medicines and medical supplies. certificates for certain licenses, e.g., Federal The FMHACA is the regulatory authority which FMHACA and Addis Ababa Health Bureau. issues competence certification and licensing for • Designating more than one agency as competence businesses engaged in the manufacturing, import, verification body for one license type, e.g., MoI export, wholesale and distribution of medicine, and FMHACA, FMHACA and MOWE, MoCT medical equipments and supplies. Article 3 and 4 and MOWE are jointly designated as competence of Proclamation No. 661/2009 cumulative with verifying bodies for one license type. This has Article 6(1) of Regulation No. 189/2010 empowers resulted in duplication of effort and makes the the FMHACA to license and regulate the production, process cumbersome to applicants. import, export, distribution, promotion and storage of medicine. The FMHACA provides licensing • Absence of uniform practice regarding license fee service by verifying their competency level based on paid by business during competence verification. the competency criteria set out for manufacturers, Some regulatory authorities are trying to use licenses Detailed Analysis of Licenses   121 exporters, importers and wholesalers of medicines and The conditions/requirements attached to issue certificate medical supplies. of competence for export, import and wholesale of medicine and medical equipments and supplies are as There are 18 medicine and medical supplies related follows: To get the service, the applicant must fill out an licenses in the manufacturing, export, import, wholesale application form for Certification of Competence and and retail trade categories of the ESIC. They are the attach several documents including the following: following: • Memorandum and article of association, if the License 1 Manufacture of pharmaceuticals, medicinal organization is share company; chemicals and botanical products for human use • Premise lease contract, if the company uses leased License 2 Manufacture of chemicals used for medical office; manufacture, food and medicine including • Evidence showing the academic status of precursor chemicals professionals employed by the company; and License 3 Manufacture of medical and surgical equipment and orthopedic appliances • Evidence of work experience of professionals License 4 Manufacture of artificial orthopedic products employed by the company including a medical License 5 Wholesale of chemicals used for medical report which proves that the professional is not manufacture, food and medicine including handicapped, mentally ill and is free from alcoholic precursor chemicals and narcotic and psychotropic addiction. License 6 Wholesale of medicines and medical equipments Upon receiving the application, the FMHACA will License 7 Retail trade in medical equipments, assess the applicant’s competence from professional pharmaceutical, cosmetics, perfumery and and institutional requirements perspective as detailed sanitary articles in the Directive issued in December 2012. Regarding License 8 Retail trade in chemicals used for medical professional requirements, the Authority must be manufacture, food and medicine including satisfied that the applicant has employed sufficient precursor chemicals professional, technical and nontechnical personnel License 9 Import trade in medicines as determined by the Directive. From an institutional License 10 Import trade in chemicals used for medical manufacture of food and medicine perspective, all exporters, importers and wholesalers including precursor chemicals of medicine and medical equipments and supplies must License 11 Export of medicines have proper building and storage facility in accordance License 12 Export of chemicals used for medical with the standard set out by the authority as detailed in manufacture of food and medicine the Directive. including precursor chemicals License 13 Export trade in pharmaceuticals, medical It takes the FMHACA approximately one day to verify equipments the documents and issue the certificate provided that License 14 Research and experimental development a complete document is submitted by the applicant. on human health, medicine and medical Private sector businesses however, do not agree with process this claim. According to the business, it takes them License 15 Research and experimental development over a month to get a new competence certificate and on chemistry and biology at least 15 days to renew existing ones. There are also License 16 Research and experimental development on psychology instances where applicants have to re-submit their License 17 Certificate of competence for product applications for different reasons which could increase registration/market authorization (not listed the time for completing the process. Competence in the ESIC) certification Authorities do not keep statistics on License 18 Certificate of competence for medical the frequency of occurrences where re-submission of representative for medicine promotion (not applications has been required or when applicants are listed in the ESIC) being asked to provide additional information by the 122  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform FMHACA. In some of the directives or regulations of the certificate of competence is to ensure that the which set requirements, there is a blanket provision manufacturer follow good manufacturing practice so which says “other documents which the competence as to assure safety, quality and efficacy of medicine verification or licensing authority deems necessary.” produced. The Directive states that an applicant with A similar process is followed to renew competence valid manufacturing certificate of competence and with certificates. The FMHACA charges ETB 600 for successful completion of development, stability and issuing new and ETB 300 for renewing competence process validation shall apply for a certificate of Good certificates. Manufacturing Practice (GMP) which must be issued in accordance with another Directive on GMP issued by In case of product registration or market authorization the authority. The Directive on medicine manufacturing certificate for new products, the processing time is much contains very detailed requirements. Hence before longer and a different fee structure is applied. Product starting the manufacture of medicine the firm shall registration/market authorization is a very important fulfill the requirement of the Directive on: step that must be completed for local manufacturers and importers alike. Depending on the product for • Premises design suitability; which registration and market authorization is sought, • Material and personnel flow direction including between USD 500 and USD 800 is paid for first time controlled areas; application and between USD 100 and USD 250 is • Clean area classification; paid for renewal and variations. Businesses allege • Equipment design and location; that although the FMHACA claims to complete the process of reviewing all documents relating to the • Source and quality of water including its design, product intended to be imported and conduct the treatment, storage, distribution and monitoring; necessary laboratory testing within three to six months, • Air Handling Unit design; Heating, Ventilation and in reality it takes up to two years to complete the Air Conditioning component, air supply and exhaust process depending on the number and type of products system for each processing area and its suitability for imported and the level and type of laboratory test the intended purpose; carried out by the FMHACA. Some even alleged that • Quality control and laboratory testing; the sample they provide to the authority for testing • Waste management and treatment system; and expires before it is tested which forces them to import • Other requirements as described under Annex III of samples for the second time resulting in significantly the Directive. increasing the cost of doing business. The FMHACA, through an authorized inspection A total of 52 new licenses have been issued in team, shall verify whether or not the above listed 2005 E.C. for import, export and wholesale of medicine requirements are in place and suited for the intended and medical supplies. The estimated compliance cost purpose. The manufacturer shall have an adequate per license ranges from ETB 14,400 to ETB 17,800. number of personnel with the necessary qualifications The FMHACA issues two separate certificates for and practical experience as determined in the Directive. medicine manufacturers. These are: According to the Directive, manufacturing certificate • Medicines manufacturing certificate of competence, of competence issued once shall remain valid provided and that the premises start to operate business within six (6) months following the approval, premises have been • Certificate of good manufacturing practice (GMP). maintained and remained in conditions which led to its According to Directive No. 12/2013 issued by the initial licensing and there is no change of ownership, FMHACA in April 2013, it shall be mandatory to business name or location. The GMP certificate shall get a certificate of competence for any person to however, be renewed every two years unless suspended, engage in the manufacture of medicine. The purpose cancelled or revoked by the FMHACA. Detailed Analysis of Licenses   123 A total of only one medicine manufacturing license License 1 Manufacture of perfumes, cosmetics, has been issued in the year 2005 E.C. The FMHACA essential oils and resinous charges ETB 800 per license for issuing new competence License 2 Manufacture of sanitary napkin (pad) and certificate and ETB 400 for renewal purposes. diapers The compliance cost per license is estimated to be License 3 Manufacturing of toilet tissue and napkin ETB 34,624. paper License 4 Wholesale of cosmetics, essential oils Findings and resinous, perfume and chemicals for Considering the human health issue involved in perfumes medicine and medical supplies activities, the regulatory License 5 Wholesale of soaps, detergents, toiletries, measure to ex-ante certify the competence of business chemicals for cleansing, other polishing and cleansing engaged in these activities could be considered as having License 6 Retail trade in medical equipment, valid regulatory purpose. However, the competence pharmaceutical, cosmetics, perfumery and certification process for these activities faces different sanitary articles challenges, which includes the following: License 7 Import of cosmetics, essential oils and • Very poor data environment in almost all license resinous, perfume and chemicals for perfumes types for which competence certification is granted. License 8 Retail trade in cosmetics, essential oils • Absence of clear delimitation of responsibility and resinous, perfume and chemicals for between the Federal regulating authority and perfumes its regional counterparts regarding issuing of License 9 Export of cosmetics, essential oils and competence certificates for certain licenses. resinous, perfume and chemicals for perfumes • Absence of uniform practice regarding license fee paid by business during competence verification. The FMHACA has prepared and issued a Directive • Absence of proper coordination and communication in June 2011 which defines the requirements to be between federal agencies which sets requirements and fulfilled for issuance of competence certificate for sector institutions at the state level who actually issue import, export and wholesale of cosmetics and sanitary the permits and certificates. items. Like other licenses, the above listed licenses Recommendations are scattered in the manufacturing, import, export, • The regulators especially FMHACA must have wholesale and retail trade categories of the ESIC. The sufficient well qualified, and accountable staff. conditions, processes to be followed and requirements attached to the issuance of competence certificate for • Properly organized working system and record export, import and wholesale of cosmetics and sanitary keeping alleviating the problem of accessing up-to- items are more or less similar to import, export and date and reliable data. wholesale of medicine and medical equipments and • The division of power and responsibility between supplies described above. Hence, to get a license or the Federal Government and the Regional states competence certificate, applicants must comply with with regard to competence certificates need to be the detailed requirements provided for in the Directive articulated. issued in June 2010 by the FMHACA with respect to 3.9.1.3  Cosmetics and Sanitary Items building design and location, storage condition and The revised ESIC provides for the following nine design, necessary equipments and inputs, technical and licenses related to cosmetics and sanitary products. non-technical personnel with necessary qualification and experience for the establishment and maintenance of a business for import, export and wholesale of 124  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform cosmetics and sanitary products. There are 4 general The National Tobacco Enterprise S.C. issues the licenses and 24 detailed requirements that must be fulfilled by for the following items. And this is consistent with the applicants before a competence certificate is issued. The list under ESIC. Directive states that its objective is to make sure that businesses engaged in the cosmetics and sanitary products License 1 Manufacture of tobacco products have the necessary organizational capacity and ensure the License 2 Wholesale trade in processed tobacco quality and safety of products offered to the public. License 3 Wholesale trade in tobacco License 4 Wholesale trade in tobacco products A total of 75 new licenses have been issued in the year License 5 Other wholesale trade in tobacco and 2005 E.C related to trade in cosmetics and sanitary tobacco products products. Compliance time is estimated to 28 days License 6 Import trade in tobacco for new licenses and 14 days for renewing existing License 7 Import trade in tobacco products licenses. The authority charges no fees for issuing new License 8 Import of tea competence certificate or renewing existing ones, but regular licensing fees applies for business engaged in the An applicant for any of the above listed licenses is area. The compliance cost for each license is estimated required to submit. Newly issued or renewed business to be ETB 13. A total of ETB 983,525 is estimated to be registration certificate, Bank statement (capital)—this is collected in the in 2005 E.C. as license fee on cosmetics important because the NTE s.c. works with companies and sanitary products. with a capital of 300,000 ETB and above, a certified contract of lease (rent), Taxpayers Identification Finding Number (TIN) and Tax clearance letter. • No major finding specific to this particular sub- sector are identified. However, cross-cutting issues An application for a permit, to participate in any of the or Findings identified above for the other health sub- activities listed above, according to our conversation sectors apply here. with an official in the NTE takes 1–3 months to 3.9.1.4  Tobacco and Tobacco Products complete. And our private sector interviews have also Proclamation No. 181/99 transfers the monopoly confirmed this. It takes an average of a month and half rights of the National Tobacco Enterprise to the and a number of visits to follow up to obtain a license. National Tobacco Enterprise Share Company (NTE The process begins with a visit to the sales office at the s.c.). The purpose and content of the proclamation Enterprise. There isn’t a separate office to handle license doesn’t go any further. This means that we do not have or certificate issues. regulations or directives that guide the certification Proclamation No. 661/2009 (Article 4/13) mandates process for the various activities the Enterprise is made the FMHACA to regulate the content, manufacture, responsible for under ESIC. NTE is the licensing body import, export, distribution, sales, use, packaging and for all tobacco related licenses. As for verification, labeling, advertisement and promotion and disposal of ESIC provides that FMHACA will grant the tobacco products. The authority has issued a Directive certification for fulfillment of minimum requirements in September 2011 that defines the requirements of except in the case of ‘Wholesale of tobacco’ where professional competence to be satisfied by businesses NTE performs both roles. that engage in manufacturing, import, export and The objectives of the license as can be derived from the wholesale of tobacco and tobacco products. requirements and inspection procedures is the ensuring According to Article 3(1) of the Directive no one can a safe production, storage and distribution of tobacco be engaged in the business of import, export and to the public at large. wholesale of tobacco products without first obtaining Detailed Analysis of Licenses   125 a competence certificate from the Authority. The • A specific directive needs to be enacted that clearly Directive provides for detailed requirements to be sets out the objective of the license, the documents fulfilled by applicants for obtaining a competence required and the fees for new licenses and renewals. certificate. According to Article 5 of the Directive, there • The time and procedures for obtaining a license need are 21 detailed requirements relating to the building to be shortened and simplified respectively. design and location, storage condition and design, 3.9.1.5  Health Institutions/Facilities necessary equipment and inputs, technical and non- The revised ESIC also identifies the following personnel with necessary qualification and experience 17 licenses in relation to health institutions/facilities. for the establishment and maintenance of the business of import, export and wholesale of tobacco products. License 1 Specialized hospital After a completed application is submitted an inspection License 2 General hospital team of the Authority comprising 2–3 members will License 3 Primary hospital make a site visit to make sure that all the requirements License 4 Primary clinic are actually fulfilled and in place. License 5 Specialty clinic License 6 Medical/specialty center The amount of Fee for obtaining a new license and License 7 Health center renewal is the same 200 ETB. In the year 2012 the License 8 Diagnostic imaging majority of applications processed were renewals of License 9 Diagnostic laboratory already existing licenses. Our private sector interviews License 10 Kela health station revealed that some applicants have paid more than the License 11 Supplementary health services or required amount of 200 ETB when they applied for a paramedical staff (practitioners) new license. License 12 Clinics and related healthcare services In 2012 there were a total of 69 licenses and out of License 13 Nursing services these only 7 were new, the rest were renewals. The License 14 Middle clinic estimated administrative compliance cost for this License 15 Day care services category of licenses ranges from 350 to 900 ETB. License 16 Traditional medical service License 17 Other medical and health services n.e.c. Findings • There are no specific directives or guidelines at Article 4(2) of the Food, Medicine and Health the National Tobacco Enterprise that are publicly Care Administration and Control Proclamation accessible. It is not clear where the rules on fees and No. 661/2009 empowers the FMHACA to issue, other requirements came from. The NTE does not renew and revoke certificate of competence for have a website or an alternative means of obtaining specialized heath institutions, quality control information or forms by customers. laboratories, bioequivalence centers and trans- • Even though these forms and requirements are not regional health institutions. Currently FMHACA readily accessible—customers get the services by issues certificate of competence only for specialized coming to the sales office of the NTE. hospitals, specialty centers and trans-regional health • A renewal process for a simple license should not institutions. Competence certificates for the remaining take more than one month to process. Our private licenses are given by the relevant regional state or city sector interviews revealed that many find the process administration health authorities. In Addis Ababa both exhausting and unnecessarily drawn out. the City’s health bureau and the City’s Food, Medicine and Health Care Administration and Control Authority Recommendations which established recently claim to have authority • The Enterprise needs to have a separate office for to issue competence certificate for health institutions processing this license. which are outside of the FMHACA’s jurisdiction. 126  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform The conditions/requirements attached to the issuance Depending on circumstances, the total compliance time of certificate of competence for health institutions for getting new licenses range from three to fifteen days. are described in the various health facility National Findings Standards prepared under the auspices of the Ethiopian • In some cases the name of the license in the ESIC Standards Agency and approved in 2012. The standards and the name of the standard or the institution it cover the minimum requirements with respect to addresses do not match. practices, premises, professionals and products or • The standards for most of the health facility materials put into use for the establishment and establishments are too detailed and very high. maintenance of the health institution for which the minimum standard is set. The list of health institutions • There is absence of national standard for some types for which standards are prepared and approved and of health institutions/facilities. the list of licenses in the revised ESIC do not match. 3.9.2  Culture and Tourism As described above there are seventeen licenses in A total of 111 business licenses are identified in the the ESIC list. Working with FMHACA the Ethiopian culture and tourism sub-sector. The revised ESIC Standards Agency has prepared and approved only identifies 101 licenses related to this sub-sector. The twelve standards. No standard or directive is prepared remaining 10 licenses identified are not in the ESIC list, for licenses like traditional medical services, day but licensing/regulating authorities issue these licenses care services and supplementary health services by or competence certificates. Of the total 111 licenses, paramedical practitioners. 75 are in the art and culture sector. The remaining National Standards which set out the minimum 36 licenses are in the tourism sector. The licenses in requirements for the establishment and maintenance the culture and tourism sector are scattered over the of a health facility are prepared and approved by the various major divisions of the ESIC including in the Ethiopian Standards Agency for the following health manufacturing, wholesale, retail, transport, community, institutions: social and personal services divisions. 3.9.2.1  Licenses in the Tourism Sector • Advanced medical laboratory, Based on the ESIC and the practice of regulatory • General hospital, bodies, the following 36 licenses are identified for • Health post, tourism related businesses. • Nursing home, License 1 Star designated hotels • Primary hospital, License 2 Hotels (higher, medium and small) • Specialty center, License 3 Caravan parks and camping sites • Basic medical laboratory, License 4 Guest-houses and youth hostel • Health center, License 5 Pensions • Medium clinic, License 6 Guest-farms/winter houses/home stays License 7 Boatel • Primary clinic, License 8 Other hotels, camping sites and other • Specialized hospital, and provision of short and long stay • Specialty clinic. accommodation License 8 Star motel A total of 30 licenses have been issued in the year 2005 License 9 Star lodge E.C. The federal regulatory authority (FMHACA) has License 10 Star traditional restaurant issued competence certificates to four of the 30 new License 11 Motels licenses. The remaining ones have been issued by the License 12 Lodges Addis Ababa City health authorities. The compliance License 13 Traditional restaurants cost for these licenses range from ETB 7,962 to 14,186. (continues) Detailed Analysis of Licenses   127 Continued hotels, lodges and restaurants can be summarized as License 14 Snack and kettle coffee houses follows: License 15 Motels, lodges and traditional restaurants • The premises in respect of which the application n.e.c. is made are structurally adapted externally and License 16 Hotel management company internally for use as a hotel and comply with the License 17 International restaurants requirements set under the Ethiopian building License 18 Restaurants without liquor license proclamation and building control regulations of License 19 Cafeteria 2009; License 20 Bars & night clubs • Proper provision has been made for the sanitation License 21 Take-away counters of the hotel and meet all the requirements relating License 22 Catering to the quality and standard of materials, equipments License 23 Traditional drink serving houses and inputs which must be available in reception, License 24 Other catering services n.e.c. guest rooms, common rooms, etc.; License 25 Safaris and sightseeing services License 26 Tourist transport service • Proper provision has been made for the hotel to be License 27 Tour operators managed in an efficient manner by appropriate hotel License 28 Travel agent professionals; License 29 Tour operators and travel agents • Proper provision has been made for the storage, License 30 Tourism promotion preparation, cooking and serving of food in the hotel License 31 Travel agency and related services n.e.c. and that bars, restaurants and related facilities are License 32 Event organizers properly in place; License 33 Hotel & tourism consultancy • Proper provision has been made for the welfare, License 34 Steam and hot water supply safety and security of guests; License 35 Individual tour guide (not listed in ESIC) • Proper assurance is given by relevant authorities License 36 Tourist car rental (not listed in ESIC) that the products or services of the hotel do not pose adverse impact for health and safety and a certificate The requirements for competence certification to that effect is produced; and in the culture and tourism sector are set by the • The application meets such additional requirements Federal Ministry of Culture and Tourism (MoCT) relating to quality control and inspection system, in a Directive issued in March 2011. Article 31 of personnel administration, staff training, etc. Proclamation No. 691/2010 which defines the powers and responsibilities of the MoCT and Article 30(3) Until recently both the MoCT and the Addis Ababa of the BRLP No. 686/2010 are cited as the legal Culture and Tourism Bureau have been issuing basis for power of the MoCT to issue this Directive. competence certificates for star designated hotel However, closer look into Article 31 of Proclamation establishments. Currently the MoCT has delegated the No. 691/2010 indicates that issuing licenses or responsibility to regional Culture and Tourism Bureaus competence certificates to businesses engaged in the including the Addis Ababa Administration. culture and tourism sector is not clearly included in the A total of 53 licenses have been issued for business powers and responsibilities of the Ministry. engaged in hotel, lodge and restaurant with star A.  Star Designated Hotels, Motels, Lodges designated status in the year 2005 E.C. The Addis and Restaurants Ababa Culture and Tourism Bureau charges ETB The conditions/main requirements attached to the 2000 per license for issuing and renewing competence issuance of competence certificate to star designated certificates for star designated hotels, lodges and 128  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform restaurants. The competence certification fee/service issued guidelines setting requirements. Currently both charge payable by hotels and other businesses in issue competence certificates for these businesses. the culture and tourism sector is clearly indicated in It looks like there is a clear overlap of function and Regulation No. 54/2013 issued by the Addis Ababa duplication of effort in this regard. The Culture and City government. The compliance cost for these licenses Tourism Bureau charge fees when rendering competence range from ETB 15,363 to 33,240 depending on the size verification to the above businesses ranging from ETB and star status of the hotel. The total compliance time 300 to 1,000. FMHACA charges a flat rate of ETB 50 for the licenses including site visit made by designated per license. officer/s to physically inspect the premise and facilities A total of 456 new licenses have been issued in the also varies from 8 to 32 working days. 2005 E.C. and the estimated compliance cost for B. Other Hotels, Lodges, Restaurants, Guest the licenses ranges from ETB 5,130 to 9,250. The Houses, Pensions, Bars, Night Clubs, Cafes, compliance time for new licenses also varies from 12 Takeaways, Caterings, Traditional Drink Serving to 22 working days. Most business are of the view that Houses, etc. compliance time for renewal may be less by half which The conditions and requirements attached to the in this case means 6 to 11 days are required to renew issuance of competence certificates to the above existing licenses. mentioned establishments are also provided in the Directive issued by the MoCT. The requirements C.  Tour and Travel, Tourism Promotion, Tour relate to the management, safety, security, hygiene and Guide Hotel and Tourism Consultancy, Tourist Transport/Car Rental, Safari and Sightseeing, etc. sanitation, professional training of employees, and such The requirements as defined in the Directive issued by other requirements relating to the welfare of users or the Federal MoCT for the above mentioned licenses guests. relate to such matters as how the services should be The MoCT does not issue competence certificates to the organized and managed including office facilities above establishments except for those which are star and equipments, personnel and professional training, designated as described above. It is the responsibility type and nature of transport vehicles and facilities, of the relevant agency of regional states or city communication equipments, media, and common administrations to regulate the activities of the above requirements like adequate capital, trade registration, businesses. Hence, a competence certificate is issued tax registration, etc. by the regional or city administration health or culture The Federal MoCT and the Addis Ababa Culture and tourism authorities. In case of Addis Ababa, both and Tourism Bureau issue competence certificates the city’s FMHACA and the city’s culture and tourism for business engaged in these areas. The division of bureau claim to have regulatory power.88 Both have responsibility between the two is not however clearly 88 Article 7 of the Addis Ababa City Government Culture & defined by the directive. The Federal MoCT does not Tourism Service Providers Licensing and Registration. charge fees for the competence certification services it Regulation No. 54/2013 provides that the culture and tourism bureau has the power to issue professional license renders. On the other hand the Addis Ababa Culture and criteria to cultural and tourism service providers. and Tourism Bureau charge fees ranging from ETB 300 On the other hand the Addis Ababa Food Medicine Healthcare Administration and Control Authority to 1000 per license. (FMHACA Addis Ababa) believes that issuing professional license and ensuring hygiene and environmental health A total of 67189 new licenses been issued to businesses protection are two different functions and insist that engaged in tourism promotion, tourist transport issuing competence certificates to hotels and other food and drink establishments subject to health and related control, must be the responsibility of the health authorities. 89 The licenses are distributed as follows: tourist transport: They invoke federal law on food, medicine and healthcare 60,119, tour operation: 119, tour operation and travel administration and control (Proc. No. 661/2009, agent: 240, tourism promotion: 5, event organization: 19, Regulation No. 189/2010, and the hotels, other food and hotel and tourism consultancy: 14 and individual tour drink establishments and cottage industries hygiene and guides: 208. As of late 2013 competence verification and environmental health control requirement directive issued licensing of the event organizers is under the responsibility by the Addis Ababa Health Bureau in 2010. of the MoT. Detailed Analysis of Licenses   129 services, tour operation, tour & travel agency, event 3.9.2.2  Licenses in the Art and Culture Sector organization, hotel and tourism consultancy and tour A total of 75 licenses listed below are identified in the guide services. The compliance cost for these licenses art and culture business. Out of these, 68 are already range from ETB 1,386 to 17,319 per license and listed in the revised ESIC. The remaining 7 licenses are the compliance time for new licenses vary from 5 to not listed in the ESIC but the Addis Ababa Culture and 23 working days. Tourism Bureau issues competence certificates for these licenses. Findings • Big disparity between the list of licenses under the License 1 Printing of books, brochures, musical ESIC and those at the MoCT. books and others • Very poor data environment regarding licenses issued License 2 Manufacture of musical instruments and or renewed every year. scores License 3 Manufacture of souvenirs, artifacts and • Clear overlap of function and duplication of effort artificial jewelry between competence verification agencies. License 4 Manufacture of toys and games • Very general and subjective criteria regarding License 5 Manufacture of computer games (including requirements to be fulfilled by hotels and other food electronic games and video game consoles) and drink establishments. License 6 Manufacture of blank cassette tapes, laser discs and compact discs • Designation of agencies as competence verification License 7 Manufacture of other recreational goods bodies for licenses which does not fall within License 8 Wholesale of musical instruments and their competence or function, e.g., competence for scores manufacturing license, export and import licenses are License 9 Wholesale of toys and computer games given to the MoCT. License 10 Wholesale of electronic games and video • Absence of proper division of function between game consoles agencies resulting in a duplication of effort and License 11 Wholesale of souvenirs and artifacts absence of common and uniform practice on License 12 Retail trade in toys, computer and competence verification, e.g., Addis Ababa Culture electronic video games and Tourism Bureaus, food, medicine and healthcare License 13 Retail trade of souvenirs, artifact and artificial jewelry administration and control Authority, Federal License 14 Import of musical instruments and scores Ministry of Culture and Tourism and its counter (film, theater and other related instruments) parts in the regional states. License 15 Import of toys and games • Absence of proper coordination and communication License 16 Import of computer games (including between federal agencies which sets requirements and electronic games and video game sector institutions at the state level who actually issue consoles) the permits and certificates. License 17 Import of other recreational goods n.e.c. License 18 Export of musical instruments and scores • Lack of clarity in describing license types in the License 19 Export of toys and games ESIC, e.g., items listed in the ESIC as “other License 20 Export of computer games (including activities n.e.c.” creates problem and confusion for electronic games and video game competence verification bodies to exactly determine consoles) which activity fall under it and what type of License 21 Export of souvenirs, artifacts and artificial requirement need to be prepared. jewelry • Existence of licenses which are not listed in the ESIC. License 22 Consultancy service for social affairs License 23 Art & culture consultancy • Confusion relating to certain licenses as to who is the License 24 Theater, music, film modeling, dance, proper competence certification body, e.g., licenses video & photograph, design school, etc.) relating to event organization. License 25 Body circus school 130  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License 26 Motion picture, theatre and video License 60 Botanical and zoological gardens and production and distribution nature reserve activities License 27 Related activities—film and tape renting License 61 Topographic beauty to other industries, booking, delivery and License 62 Circus group storage License 63 Decorating activities License 28 Motion picture, theatre and video License 64 Fashion and beauty contest services production and distribution (audio visual production and distribution/radio and TV/ License 65 Research and experimental development and related arts) n.e.c. on culture and sociology License 29 Motion picture projection by cinemas License 66 Research and experimental development on linguistics and literature License 30 Motion picture projection by driver in house License 67 Consultancy service for social affairs License 31 Other motion picture projection License 68 Symphony orchestra (not listed in ESIC) License 32 Rental of musical instruments (music, film, License 69 Art promotion (not listed in ESIC) theatre and other arts) License 70 Theater promotion (not listed in ESIC) License 33 Player of musical instruments (DJ) License 71 Pair promotion (not listed in ESIC) License 34 Arts gallery License 72 Music promotion (not listed in ESIC) License 35 Arts studio License 73 Literature promotion (not listed in ESIC) License 36 Arts contest and awards (music, film, License 74 Sculpture promotion (not listed in ESIC) theatre, gallery and other) License 75 Animation film studio (not listed in ESIC) License 37 Arts festival (music, film, theatre, gallery and other) The Directive issued by the MoCT in March 2011 License 38 Other dramatic arts, music and other arts and adapted by the Addis Ababa Culture and Tourism activities n.e.c. Bureau enumerates 13 common requirements including License 39 Music band trade registration, tax registration, complete office License 40 Mini cultural band facility, appropriate professionals, etc. that apply to License 41 Medium cultural band all of the above listed licenses and from 5–19 specific License 42 General cultural band conditions/requirements for each of the licenses. Over License 43 Mini modern band 95 percent of the competence certification work for License 44 Medium modern band the above licenses in Addis Ababa is done by the Addis License 45 General modern band Ababa Culture and Tourism Bureau. The MoCT is not License 46 Classical music modern band actively working in this area. A competence certificate License 47 Jazz modern band is given by the MoCT on a temporary basis by way of License 48 Dance team writing a support letter to the MoT or the Addis Ababa License 49 Film production Bureau of Trade and Industry (BoTI). According to License 50 Cinema hall officers at the MoCT, by doing so they are trying to License 51 Film studio help individuals or firms renew their business license License 52 Film capturing and ease the difficulty they are currently facing due License 53 Theatre production to the confusion created in implementing the new License 54 Library activities business licensing system based on the ESIC. They are License 55 Archives activities of the view that once they prepare requirements for License 56 Library and archives activities n.e.c. competence certification, it is not their responsibility License 57 Preservation of historical sites and to actually issue new or renew existing licenses of buildings businesses engaged in the sector. Actual certification License 58 Cultural center service work must be done by regional states or City License 59 Museum activities and preservation of historical sites & buildings (arts center) administrations. n.e.c. Detailed Analysis of Licenses   131 A total of 347 licenses have been issued in 205 E.C. income generating activities which are consistent with and the estimated compliance cost for the licenses range their objectives with a view to meet their financial from ETB 1,818 to 16,130. The compliance time for requirements. By way of discharging the duties in new licenses also varies between 8 days to 25 days per that proclamation and the specific requirement under license. the Commercial Registration and Business Licensing Proclamation Article 30(3) the Commission has enacted Findings a Directive to provide for the requirements to obtain • Too many licenses for very related businesses. a license for sporting activities. The commission is • For most of the licenses identified in this sub- considering amending this directive and coming up with sector, the regulatory requirement for competence a more comprehensive one, but as things stand now that certification does not seem to have valid or strong is the binding legal requirement for all those seeking a regulatory purpose. license in sporting activities. The Commission serves as • Very general and subjective criteria for competence the verification body (issues competence certificates) for verification. the licenses to be issued by either Bureau of Trade and • Existence of many licenses which are not listed in the Industry or Ministry of Trade. The two main objectives ESIC. of the directive and the competence certificate to be • Absences of clear legal mandate to perform issued by the Commission are protecting the sporting competence verification work. Some of the licenses in activity in the country from unethical (inappropriate) the ESIC list for which the Ministry of Culture and activities and creating a conducive environment for Tourism is designated as competence Certification sporting activities. authority is outside of its mandate. Moreover, The revised ESIC identifies the following licenses in competence certification work at the MoCT relation to the production and transaction of sporting especially in the culture sector is conducted on equipments and the provision of sports related services. temporary basis by way of writing a support letter to It further authorizes the Sports Commission to issue the MoT or BoTI. competence certificates for these licenses. Recommendations License 1 Manufacture of sports goods • The general, vague and in some cases unrealistic License 2 Wholesale of other recreational and requirements should be clarified and simplified in the musical goods n.e.c. Directive to avoid subjectivity and promote business. License 3 Wholesale of sporting goods and • The mandate of the Ministry of culture and tourism equipment (including healthcare equipment) regarding competence certification should be clarified License 4 Wholesale of sporting goods n.e.c. in the directive. License 5 Retail trade of sporting goods and equipment (including healthcare equipment) • Overlapping of function of competence verification License 6 Retail trade of recreational and musical institutions should be clarified to avoid inconsistency goods and unnecessary competition among government License 7 Import of sporting goods and equipment institutions. (including healthcare equipment) 3.9.3  Sporting Sub-Sector License 8 Import of other sporting goods n.e.c. Sports Commission Establishment Proclamation License 9 Export of sporting goods and equipment (including healthcare equipment) No. 692/2010 mandates the Sports Commission License 10 Research and experimental development to issue directives governing the establishment of on physical science sports associations as well as to register and support License 11 Activities of sports associations (licensing associations operating at the national level. The on activities of sport association) Proclamation also mandates the Commission to issue License 12 Sporting services authorization to sports associations to engage in License 13 Pool and billiard houses 132  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform License 14 Places for game sports costs. In addition to administrative costs the businesses License 15 Sports enrichment centers are required to provide transportation services for the License 16 Other sporting and recreational activities Commission experts to perform inspection on their businesses. However, the following is the list of categories and A total of 22 licenses have been issued in 2012 and activities identified in the directive for certification to be the estimated administrative compliance cost for this issued by the office of the Sports Commission (only 7 of category of licenses ranges from 500 to 1,500 ETB. the 16 licenses provided for by the ESIC). Findings License 1 Manufacture of sporting goods • From the above licenses, only the licensing of License 2 Wholesale of sporting goods and sports associations by the Sports Commission has equipment (including healthcare equipment) a sufficient legal basis, as this is expressly included License 3 Activities of sports associations (licensing in the mandate of the Commission under its on activities of sport association) establishment Proclamation. License 4 Other sporting and recreational activities • The regulatory requirement to certify (ex-ante) the License 5 Pool and billiard houses competence of businesses who want to obtain the License 6 Place of game sports above listed licenses (except for the license of sports License 7 Retail of sporting goods associations) does not serve a valid and strong Directive No. 2/2003 specifies the documents that regulatory purpose. applicants should submit for a successful completion • There is a clear inconsistency between the Directive of their application process: a Registration certificate, and the ESIC. passport (Renewed ID), a 3 3 4 photo, proof showing Recommendations applicant is a tax payer (TIN number), lease agreement • Amending Directive No. 2/2003 to address issues of or a blue print of the property to be used, bank coverage and consistency with ESIC lists, fees and statement showing business capital, certification of time for issuance of competence certificate. This will assessment, document mentioning distribution channel reduce costs and make some level of accountability and a completed application form. possible. The directive does include other details that will • Licenses not foreseen by the Commission eventually be used during inspection to businesses establishment proclamation need to be eliminated applying for the different types of activities. And the as they do not have a legal basis and regulatory requirements are almost identical for the different purposes. categories. • The office needs to computerize it services and train The directive does not specify how long an application its personnel to match the level of service customers for a competence certificate will take. The officers demand and deserve. we spoke to at the commission indicated that it 3.9.4  Education Sector often takes a very short time. And private sector The ESIC enumerates 17 different licenses in the field Findings confirmed that it takes 2 to 3 days to apply of education for which the Ministry of Education for, go through the inspection process and receive a (MoE) and specialized agencies under it like the Higher competence certificate. Education Relevance and Quality Agency (HERQA) Directive No. 2/2003 does not specify the fees that and the Technical, Vocational Education and Training need to be paid for this process. As a result except for Agency (TVETA) are designated as competence one business all the respondents of our private sector verification bodies. survey indicated that they did not pay any money for fees. This however, doesn’t mean that there aren’t other Detailed Analysis of Licenses   133 given by the woreda and sub-city education offices License 1 Pre-primary education and activities of after-school centre respectively. On the other hand competency of License 2 Primary and secondary education business engaged in distance secondary education License 3 Consultancy on education (grades 5–10) and consultancy on education including License 4 Cross boundary higher education tutorial are verified and licensed by the Education License 5 Regular higher education bureau itself. License 6 Regular distance higher education A total of 39 licenses have been issued in 205 E.C. License 7 Education by technical colleges and and the estimated compliance cost for the licenses technical institutions range from ETB 4,392 to 11,839. The compliance License 8 Education by techniques (TVET) and time needed to get new licenses varies between 10 and training (including short-term training) 27 working days. License 9 Short term language study and training License 10 Manufacture of crayons, chalk, pens and Higher education and TVET: Setting minimum pencils standards for education and training institutions, and License 11 Manufacture of educational support expanding higher education including technical and equipments vocational education and training is the responsibility License 12 Wholesale of educational equipments of the MoE as provided under Article 28(2), (d)28(3) License 13 Import trade in educational support and 28(6) of Proclamation No. 691/2010. The MoE equipments exercises overall leadership in policy, implementation, License 14 Retail trade of education equipments and monitoring of higher education in Ethiopia. License 15 Export trade in education support equipments Specialized agencies like HERQA and TVETA do the License 16 Other educational services including tuition actual accreditation and licensing work. License 17 Other education related services n.e.c. HERQA issues pre-accreditation, accreditation and re- accreditation licenses to businesses engaged in: Pre-primary, primary and secondary education: Under the ESIC, the MoE is designated as the competence • Regular higher education; verification body for 11 of the above licenses, while • Distance higher education; and HERQA and TVETA are designated as competence • Cross border higher education. verification bodies for three licenses each. Currently Proclamation No. 350/2009 empowers HERQA, the MoE does not issue a competence certificate for which operates under the MoE as an autonomous business engaged in manufacturing, export, import, agency established in 2003 to ensure, and enhance the wholesale and retail trade of educational materials quality, standards, and relevancy of higher education and equipments. The Ministry believes that it is in Ethiopia. As one of the key bodies responsible for outside of its legal mandate and area of expertise regulating the higher education in Ethiopia, HERQA to regulate these businesses. In accordance with was charged with developing and implementing a Regulation No. 206/1995, licensing private pre- National Quality Assurance System, an Institutional primary, primary and secondary education institutions Audit System, assessment standards, and accreditation/ is the responsibility of regional states. Competence licensing criteria and procedures. Private higher verification for schools in Addis Ababa is therefore education institutions must comply with the general being done by the Addis Ababa Education Bureau and requirements and criteria for the establishment its structures at the sub-city and woreda level. The and accreditation of higher education institutions. Bureau has issued directives setting requirements to be The criteria are set forth in the Higher Education fulfilled by individuals/firms for the establishment and Proclamation No. 350/2009 and the detailed guidelines maintenance of schools at various levels. Accordingly, developed by HERQA. competence certificates for businesses engaged in pre-primary, primary and secondary education, are 134  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform A complete application for pre-accreditation or an conclusions and recommendations, and forwards the accreditation license should contain an application report to HERQA Director. If the Director believes that letter, a bank receipt confirming the payment of the applicant satisfies requirements for accreditation, the application fee, and a package of duly signed he/she approves the report and submits it to the MoE, documents that correspond to the HERQA program which then signs the letter of permit and sends it to the pre-accreditation, accreditation and re-accreditation applicant. The initial accreditation permit is valid for application checklist. Applicants can access the checklist three years, while renewal and subsequent permits are online. ETB 3000 (three thousand ETB) shall be paid valid for five years. an application/accreditation license fee for the first If the application for accreditation license is rejected, four programs and ETB 500 (five hundred ETB) for applicant must be notified in writing about the grounds every additional program. The Standards/requirements for this decision. The applicant may choose to make governing the accreditation/licensing of private higher the necessary changes based on the rejection report education institutions may be summarized as follows: and reapply for accreditation within 90 days from the • institutional requirements, including the applicant date of the rejection notice. If the second application higher education institution name and address, its is rejected, it must wait a year before submitting a new vision, mission, objectives, and financial capacity, application, accompanied by a new application fee. The names and addresses of owners, organizational applicant whose application is rejected may also appeal structure and governance system, registration HERQA’s decision to the MoE within 30 days of the document, investment permit, academic profile receipt of the decision. The MoE’s appeal committee and outlines of programs of study, and a five year reviews the decision and may recommend further development plan; action. It takes HERQA three months to complete • program curriculum requirements, including the evaluation and review an application before an curriculum description and objectives, program accreditation license is issued. structure, modes of delivery and assessment, and list On the other hand the TVET Agency, established of prescribed and reference texts; by Regulation No. 198/2009, has the power and • educational and research facilities, including number responsibility to regulate technical and vocational and size of classrooms, libraries (and their holdings), education and training through registration and computer centers, language and science laboratories, accreditation and licensing of TVET institutions. workshops, and program offices, as well as any The TVET Agency licenses technical and vocational available equipment in these facilities; education and training institutions established by • academic and administrative staffing, including their federal government agencies, foreign investors and numbers, academic ranks, and qualifications, along institutions established by NGOs incorporated under with supporting documentation; and the laws of foreign countries. The TVET Agency has issued a directive in 2011 setting detail requirements • institutional rules and regulations, such as that must be fulfilled for the establishment and information on the status, rights, and responsibilities maintenance of TVET institutions. More specifically, of the academic community, including staff TVET institutions must have adequate location and recruitment, professional development, promotion physical facilities, curriculum, number of permanent evaluation, and dismissal, as well as student academic staff per program, teacher to student ratio, admission policies. workshop as per the standard set in the directive, A complete application will be evaluated by an library facilities and materials, recreational places, and evaluation and assessment team assigned by HERQA. either evidence of ownership, or a lease, of a building The evaluation includes document review and a site visit for the utilization by the program. Depending on to the institution. Upon completion of the assessment, the level of program the TVET institution offers, the the accreditation team prepares a report containing its procedure utilized by the TVET Agency for review and Detailed Analysis of Licenses   135 evaluation of applications for accreditation licenses is License 4 Occupational safety & health control more or less similar to that of HERQA. consultancy License 5 Psycho-social support service A total of 99 licenses have been issued in 2005 E.C. for License 6 Research and intervention (research & business engaged in higher education and vocational experiment) and technical education and the estimated compliance cost for the licenses range from ETB 14,567 to 30,303. Issuing licenses or competence certificates to businesses The compliance time it takes to get new licenses also in relation to the above listed licenses except regulating varies between 15 and 47 working days. employment exchange services in accordance Findings with employment exchange services Proclamation • Designation of agencies as competence verification No. 632/2009 is, however, not included in the powers bodies for licenses which does not fall within their and responsibilities of MOLSA that are listed under competence or function resulting in refusal accepting Article 30 of Proclamation No. 691/2010. MOLSA competence certification as responsibility or working has issued a Directive in August 2012 which sets without clear legal mandate. For example, the requirements for competence certification for firms or Ministry of Education has taken a position that individuals who could engage in businesses relating to competence certification work for manufacturing, the above license types. import, export, wholesale and retail business is On the other hand it is the power of MOLSA to outside of its mandate and area of expertise, and regulate businesses engaged in employment exchange therefore, do not issue any competence license in this services. Article 5 of Proclamation No. 662/2009 area. On the other hand the Ministry of Trade insists provides that any person who wishes to operate a that the MoE must change its position and accept its private employment agency shall have to obtain a responsibility as competence verification authority license from the MOLSA where the employment and prepare requirements for the licenses listed in service is to hire and send abroad Ethiopian worker the ESIC. to a third party or from appropriate regional • The very requirement to ex-ante certify the authority responsible for the employment service if the competence of businesses engaged in the employment service is rendered within a region. manufacture, import, export, wholesale and retail The preconditions and requirements that must be trade of educational materials does not seem to have fulfilled by private employment agencies to obtain a valid or strong regulatory purpose. licenses are provided in the Proclamation and • Unpredictability and instability of government policy elaborated in a Directive issued by MOLSA in March and curriculum on TVET education and training has 2012. The objective of the license is to strengthen the caused a lot of problems for the training institutions mechanism for monitoring, and regulating domestic and and students alike. overseas employment exchange services and to protect 3.9.5  Labor and Industrial Relations the rights, safety and dignity of Ethiopians going There are the following six licenses in the revised ESIC abroad for employment. As provided under Article 7 of for which the Ministry of Labor and Social Affairs Proclamation No. 632/2009, any person who applies (MOLSA) is designated as a licensing/competence for a license to operate a private employment agency verification body. shall present: • an application; License 1 Labor recruitment and provision of staff License 2 Abroad activities of employment agencies • a document that shows he has a business registration; and recruiting organizations • clearance from police to show that the applicant or License 3 Consultancy service on social welfare members where the agency is owned by partnership, share company or private limited company, have 136  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform never engaged in an illegal employment activity or The fee for issuance of new and renewal of existing human trafficking; licenses is ETB 300 and 200 per license respectively. The • pay a license fee; amount of license fee very recently increased to ETB 3,000 for issuing new and ETB 2,000 for renewal of • documents that show the organizational structure existing licenses. Both MOLSA and the A.A. Bureau of and the list of members involved in the employment Labor and Social Affairs do not have service standard in service activities; terms of the time it takes to issue or renew licenses. • evidence that show ownership the business premise and residence of the applicant and his agent or in A total of 163 licenses have been issued in 2005 E.C. case of lease, contract of the lease; relating to the above license types. Over 95 percent of these are issued for private employment agencies both • evidence that shows the deployment of the required foreign and local. The estimated compliance cost for staff to supervise the office and provide a service of these licenses range from ETB 1,260 to 3,780. occupational orientation; • other relevant documents as may be required by the Finding competent authority as specified by the directives. • Except licenses related to employment exchange services, most of the licenses listed in the ESIC for An applicant who wishes to operate a private which the Ministry of Labor and Social Affairs is employment agency that engages in overseas designated as competence verification authority are employment exchange shall in addition to the above new licenses which are not practiced. submit: 3.9.6  Accounting and Auditing Services • authenticated document showing that he has There are two licenses in the ESIC relating to appointed a representative in the country where accounting and auditing services. These are: he sends workers and that appointed person has a license to engage in employment exchange service License 1 Authorized auditor license activity; License 2 Authorized accountant license • evidence verified by the embassy or consular office in the country to which the applicant sends workers The Office of the Federal Auditor General (OFAG) showing the existence of office and facility that is empowered by law to regulate the activities of provides temporary food and sheltering services; individuals or firms engaged in the business of accounting and auditing services. Article 5(16) of • evidence showing the existence of a fully equipped Proclamation 669/2010 provides that the Office of the office within the country, a place to provide a service Federal Auditor General shall have the power to issue, of pre-employment and pre-recruitment orientation; renew, suspend and cancel certificates of competence • money guarantee in a blocked bank account as of auditors and accountants who provide auditing and specified under Article 23 of the Proclamation. accounting services. The OFAG has issued a directive Incomplete application is automatically rejected. A in March 2011 which sets the general and specific complete application for license that fulfils the above requirements of competence for authorized auditors and requirements and additional requirements specified authorized accountants. and elaborated in the directive shall be reviewed and The general requirements relating to education, evaluated and a license shall be issued to the applicant. professional competence and experience for auditors The license must be renewed every year upon fulfilling and accountants specified in the directive are more requirements for renewal of licenses provided for in or less similar. Anyone who has attended the age of the directive and specified under Article 10 of the 25 years, has a minimum of first degree in accounting Proclamation. Detailed Analysis of Licenses   137 from a recognized institution of higher education, is for authorized auditors. The compliance cost for these a member of a recognized professional accounting licenses is estimated at ETB 5,884 on average per association, has a practicing certificate from the license. association and has work experience for a given number Findings of years as auditor or accountant as specified in the • The accounting and auditing licenses serve valid directive can apply for a license to work as authorized regulatory purposes. auditor or authorized accountant in Ethiopia. • The requirements to obtain the licenses are largely Other requirements that must be fulfilled during reasonable. application include: 3.9.7  The Legal Profession/Legal Practice • evidence showing that the applicant has paid the Lawyers are not regarded as traders or business required application fee; persons as defined under Article 5 of the Commercial • letter from his former employer regarding the Code of 1960 and the CRBLP. Hence, a legal practice applicant’s conduct or performance; license is not a business license. The legal profession is • if applicant is a foreign national, evidence showing therefore, regulated differently. The legal profession in that he has obtained work and residence permit from Ethiopia is regulated by Proclamation No. 199/2000 appropriate authority; and Council of Ministers Regulation No. 57/2000. The power to regulate the legal profession is the • if application is for license as authorized audit firm, responsibility of the Ministry of Justice (MoJ). Article evidence showing the employment of appropriate 17(12) of Proclamation No. 691/2010 provides that professionals; the MoJ licenses and supervises advocates practicing • evidence showing that the applicant has cover of before federal courts. As per Articles 3(1) and 11(1) of professional liability insurance; Proclamation No. 199/2000, only Ethiopian nationals • office and essential office facilities and equipments. can be licensed to practice law in Ethiopia. Applicants have to fill an application form and submit The objectives of the license as stated in Proclamation the form for OFAG together with all documents No. 199/2000 and Regulation No. 57/2000 are described above. There is a relatively long waiting harmonizing the professional competence & promoting time before the applicant gets a response. One month respect for the rule of law and the attainment of justice. for auditors and two months for accountants are the As per Proclamation No. 199/2000 and Regulation official waiting periods. No. 57/200, there are three types of advocacy licenses. A response will be communicated to the applicant after These are: his application is reviewed by a committee which meets once every fifteen days. For all approved applications, License 1 Federal first instance courts advocacy the applicant is notified immediately and an authorized license auditor’s or authorized accountants license is issued. License 2 All federal courts advocacy license License 3 All federal courts special advocacy license The OFAG charges 350 for application and issuance of new licenses and ETB 150 for renewal of existing Requirements for License licenses of authorized auditors. On the other hand Any applicant shall submit the following documents to ETB 200 for new license and ETB 150 renewal fee the licensing department of MoJ: is paid for competence certificate of authorized • Academic credentials (law degree from recognized accountants. university); A total of 142 licenses have been issued in 2005 E.C. • Letter from his former employer regarding the relating to the above license types. 129 of these are applicant’s conduct or performance; for authorized accountants and the remaining 13 are 138  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform • Evidence showing that the applicant has passed the generally are related to radio and television services.90 entry examination set for the license he/she applies By the same token, the Advertisement Proclamation for; No. 759/2012 (Advertising Proclamation) provides • Evidence showing that the applicant has paid the that any person or disseminator who wants to engage required fee; in the activities of an advertising agent or who wants to engage in the production of advertisement shall • Certificate from police regarding any criminal record; have to obtain an advertising business license from • Citizenship identification card or passport to verify the appropriate governmental body. The Broadcasting applicant’s nationality; and Proclamation empowers the BA to issue competency • Any other information as deemed necessary by the requirements in consultation with the appropriate Ministry. bodies for the licenses. The licensing department verifies that all relevant In order to give details on requirements for the licenses documents are presented and then forwards them to in these laws and address other competencies that the licensing committee, which usually meets once a are assigned to it in the revised ESIC, the BA has month. The licensing committee considers applications produced, the Directive on Competence of Mass Media for license to practice as an advocate. The committee and Related Commercial Activities No. 03/2003. deliberates on the applications, and if no deficiency On the other hand, Art. 17/1/h of the Broadcasting exists it recommends to the MoJ that the license be Proclamation authorizes the BA to issue licenses on issued. If the Minister approves the recommendation other broadcasting services prescribed by itself. This of the committee, the license will be issued. ETB 500 makes it vague as to what kind of licenses may be shall be paid by the applicant as license fee. The license issued under this provision. must be renewed every budget year upon payment of Based on the laws described above the following ETB 400 renewal fee. Only tax clearance is required licenses have been identified: to renew the license; thus a license renewal takes a few hours of work. License 1 Advertising A total of 397 licenses have been issued in 2005 E.C. License 2 Air time rent competence by the Ministry of Justice in the first two licensing License 3 Import of broadcasting equipment/radio categories. The third license type has never been given and television sets and sound reproducing and recording equipment and supplies, in practice so far. The compliance cost for these licenses dish, decoder, set top box, etc. is estimated at ETB 1,100 on average per license. License 4 Export of broadcast equipment/radio Findings and television sets, sound reproducing and recording equipment, supplies dish, • Advocacy licenses serve valid regulatory purposes. decoder and components • The requirements to obtain the licenses are largely License 5 News service activities reasonable. License 6 Media consultancy service (continues) 3.9.8  Media and Communication Sub-Sector 90 Broadcasting services according to Art. 17/1 of the The Broadcasting Service Proclamation No. 533/2007 legislation are: a. terrestrial to air free radio broadcasting (the Broadcasting Proclamation) declares no person service; b. terrestrial to air free television broadcasting may undertake broadcasting service without obtaining service; c. satellite radio broadcasting service; d. satellite television broadcasting service; e. satellite broadcasting a broadcasting service license from the Broadcasting service provided to customers for fee; f. receiving and Authority (BA). Furthermore, Art. 7/2 of the same broadcasting foreign programs to customers for fee; and g. cable television broadcasting service provided proclamation confers the power to issue licenses to customers for fee. These are further categorized into for broadcasting services on the BA. These services public, community and commercial. The latter one is, of course, what is relevant for the task at hand. Detailed Analysis of Licenses   139 Continued The objective for the broadcasting licenses is to ensure License 7 Printing of newspapers, journals and proper and fair utilization of the limited radio wave periodicals wealth of the country; and to ensure the expansion License 8 Wholesale of broadcasting equipment/ of a high standard, prompt and reliable broadcasting radio and television sets and sound service that can contribute to political, social and reproducing and recording equipment and economic development. Establishing a healthy market supplies, dish, decoder, set top box, etc. competition and the necessity to clearly define the rights License 9 License for subscription services and obligations of advertising agents, advertisement License 10 Manufacture of broadcast equipments (television and radio receivers, sound or disseminators and advertisers are objectives for licenses video recording or reproducing apparatus in advertisement. and associated goods) The requirements for the licenses and certificates given License 11 Manufacture of television and radio transmission apparatus by the BA have 5 general requirements such as: Trade License 12 Radio and television activities registration certificate, ID card, memorandum and License 13 Advertisement and promotion Articles of Association, and bank statement to show License 14 Media and communication capital. The specific prerequisites range from 4 to 9 including requirements on manpower, equipment and According to the above laws and the revised ESIC, the working space. On top of these, there is a commitment licensing authority with regard to license 5 and license made by applicants to fulfill 3 to 8 matters once 12 above is the BA and the MoT and BoTI are the they are given the license.91 Unlike the others, media licensing agencies for licenses 1, 3, 4, 7, 8, 10 and 11 consultancy service does not have requirements yet. The (BA competence certifying agency). The Addis Ababa Addis requirements are from 4 to 5 that mainly focus City Communication Affairs Bureau issues competency on manpower experience and education. certificates for licenses 13 and 14 above. The licenses The time it takes to get the competency certificates is administered by Addis Ababa City Communication stated to be within 10 in Directive 3/2003 while the BA Affairs Bureau are based on the Art. 48/17 of Addis gives durations of under 40 minutes except for licenses Ababa City Government Executive and Municipal on Media Consultancy Service and radio and television Service Organs Re-establishment Proclamation activities which take 3 hours and 15 days respectively. No. 35/2012 and is particularly issued for services Most private sector interviewees on competencies that are disseminated within the boundary of the City have mentioned more days for processing but this also Government. includes trade registration and licensing. The revised ESIC provides for 9 types of business licenses There are no fees yet for the competency certificates related to media and communication activities but the and other licenses except for radio and television following licenses listed in the revised ESIC and allocated activities and license for subscription services which to the BA are not being administered by the BA. range from 10,000 to 150,000 ETB plus processing fee between 450 to 500 ETB. This does not include trade License 1 Electronics printing registration costs. License 2 Retail trade of broadcasting equipment/ radio, television sets sound reproducing A total of 118 and 66 competency certificates licenses and recording equipment and supplies have been issued in 2005 E.C. by the BA and the Addis dish, decoder, etc. Ababa City Communication Affairs Bureau respectively, License 3 Export trade of materials that are used for promotion and advertising and the estimated administrative compliance cost License 4 Newspapers, journals and periodicals publisher License 5 Newspapers, journals and periodicals 91 The BA also demands letters from the Environmental distributer Protection Authority for licenses in the manufacturing fields. 140  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform for this category of licenses ranges from ETB 567 to • Private sector interviewees have stressed the lack of ETB 82,856 per license. information flow (including on requirements) from the BA to applicants, capacity limitations at the BA Findings and the excessive requirements and rigid working • The capital needs of broadcasting services are not system of the BA. indicated in the legal documents but in brochures which might confuse applicants on its actual legal Recommendations status. • A one window service for applicants for both • There is a regulatory purpose for licensing competency certificates and licenses and a networked broadcasting services and related services for security computerized system to manage the difficulties and social well-being reasons though the regulation witnessed by licensees. should not be heavy as in the case mentioned above. • Requirements like capital need to be made clearer For the rest which are outside of print, advertisement and available for applicants and at the same time the regulatory purpose does not seem convincing. reduce reliance on subjective decisions. • The licensing for broadcasting services is too • The competencies that are being given by the Addis restrictive and could lead to subjective decisions Ababa Communication Affairs Bureau should be on the part of the BA. The process starts with an joined with the BA to do away with duplication. invitation by the BA for interested applicants. The • The legal standards for licensing broadcasting services criteria for assessing the applications apart from should be made less subjective and more competitive. capital and technology include: the applicant’s 3.9.9  Security and Public Order Sub-Sector organizational capacity and knowledge and The Ethiopian Federal Police Commission Establishment experience to render the service and the contents Proclamation No. 720/2011 (under Article 6) mandates of the program submitted by the applicant and the Federal Police Commission to issue: permits for social needs covered by the program. These grounds the possession, use, import, sale and repair of weapons indicate that the decision to grant the licenses and explosives; certificates of competence to private largely depends on the BA. Besides, the list of people institutions wishing to engage in providing security restricted from these licenses is too broad including: service; and certificates of competence to persons having a political organization’s supreme leadership wishing to engage in providing forensic investigation as a shareholder or member of management at any service. On the other hand, the National Intelligence level and involvement in any other media service. and Security Service Re-establishment Proclamation • Having due regard to its licensing powers, the BA No. 804/2013 (under Article 9) authorizes the Service has assumed broad powers to allow or prevent to issue: permits for the production, possession, applicants. use, import, sale, repair and disposal of explosives; • Although the power of the Addis Ababa security clearance for private security organizations Communication Affairs Bureau is for services that and their employees; and licenses for the importation, are disseminated within Addis Ababa, its power exportation, sale, movement, possession, production seems to overlap with the BA, given the difficulty of and disposal of intelligence and security equipments limiting the services within city perimeters. and devices. Accordingly, there is a mandate overlap • The capital required for non-broadcasting services is between the Federal Police Commission (FPC) and the not indicated in the authoritative documents except National Intelligence and Security Service (NISS) in a reference that these will be set in the future. Such relation to issuing licenses for businesses in explosives conditions create uncertainty for businessmen. transactions and private security service provision. Based • The equipment requirements, given the cost of the on Proclamation No. 720/2011 and Proclamation technology in the field, look cumbersome although No. 804/2013, the following licenses related to security there is room to rent some of these. activities can be identified. Detailed Analysis of Licenses   141 issuance of all permits and certificates falling under License 1 Weapons possession permit its mandate as per the ESIC. However, the issuance License 2 Weapons use permit of Proclamation No. 804/2013 created overlap and License 3 Weapons import permit uncertainty as to the respective mandates of the FPC License 4 Weapons sale permit and the NISS on business licensing. Accordingly, License 5 Weapons repair permit the FPC has suspended its work on developing License 6 Private security organization license requirements for the issuance of permits and certificates License 7 Forensic investigation service license for the business licenses falling under its mandate as License 8 Explosives production permit per the ESIC until the mandate issue between it and the License 9 Explosives possession permit NISS is clarified. License 10 Explosives use permit License 11 Explosives import permit In practice, the FPC has been issuing weapon possession License 12 Explosives sale permit and use permits based on requirements it developed. It License 13 Explosives repair permit has also been issuing competence certificates to private License 14 Explosives disposal permit security organizations based on a Directive it issued in License 15 Intelligence and security equipments and August 2010. The Directive classified private security devices importation license agencies into Grades 1 & 2 and determined the fee License 16 Intelligence and security equipments and charged to issue competence certificate (issuance of devices exportation license new license: Grade 1—ETB 1,050, Grade 2—ETB 760; License 17 Intelligence and security equipments and renewal: Grade 1—ETB 250, Grade 2—ETB 200). devices sale license Apart from issuing competence certificates to private License 18 Intelligence and security equipments and devices movement license security agencies and permits for weapon possession License 19 Intelligence and security equipments and and use, the FPC has not started issuing permits devices possession license or certificates for other licenses it is mandated by License 20 Intelligence and security equipments and Proclamation No. 720/2011 or the ESIC. devices production license The processing of a private security agency licenses may License 21 Intelligence and security equipments and devices disposal license take from 3–5 weeks and would cost about ETB 7,500. Findings The revised ESIC also identifies 14 licenses for business • The licenses and permits established under activities related to the provision of security service Proclamation No. 720/2011 and Proclamation and the production and transaction of weapons and No. 804/2013 in relation to use, possession and explosives. Most of these licenses could fall under transactions in weapons, explosives, security the above licenses established by Proclamation equipment and provision of security services are No. 720/2011 and Proclamation No. 804/2013. considered to have valid regulatory purpose. However, forensic investigation service license is • The mandate overlap between the FPC and the not identified in the ESIC. Moreover, in relation to NISS in relation to issuing permits and certificates intelligence and security equipments and devices, the for businesses in explosives transactions and private ESIC is more specific and indentifies only licenses for security service provision has created confusion and trade in security camera. affected the licensing process for these licenses. The ESIC authorized the FPC to issue competence • Licenses listed in the ESIC for business activities certificates in relation to business licenses for trade related to the provision of security service and the in weapons, explosives, security cameras and private production and transaction of weapons, explosives security service. Recently, the FPC started to develop and security equipment do not directly match with guideline/directive to determine requirements for the 142  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform those established under Proclamation No. 720/2011 for trans-boundary hazardous material and waste and Proclamation No. 804/2013. movement based on requirements set out in the Basel, • The ESIC does not recognize the mandate of the Stockholm and Rotterdam conventions, which are NISS to issue permits and certificates for trade in ratified by Ethiopia. explosives, security equipment and security services, Environmental impact assessment: Environmental while the NISS is legally mandated to do so under Impact Assessment Proclamation No. 299/2002 Proclamation No. 804/2013. provides that no person shall commence Recommendation implementation of any project that requires • The legal overlap and contradiction on the regulating environmental impact assessment (EIA) without licenses and permits related to security equipment obtaining a permit. The MoEF issued EIA Directives and services should be addressed. and EIA Review Procedural Guidelines and based on these documents issues EIA permits. 3.9.10  Environment Sub-Sector Genetically Modified Organisms (GMO): The Professional competency certificate: The MoEF had Biosafety Proclamation No. 655/2009 provides that been issuing professional competence certificates in no person shall engage in any GMO transaction the field of environmental impact assessment and obtaining an advance informed agreement from the environmental audit by setting out provisional criteria. Environmental Protection Authority (EPA). The EPA However, the establishment proclamation of the issued six Directives in 2009 for the implementation MoEF (Proclamation No. 803/3013) does not give this of the Biosafety Proclamation. Directive 1/2009 mandate to the Ministry. But, the revised ESIC identifies determines requirements for applications to obtain a license of consultancy service for environmental advance informed agreement to undertake transactions auditing and environmental protection and authorizes involving GMOs, while Directive 6/2009 determines the MoEF to issue competence certificates for this requirements to obtain advance informed agreement to license. The MoEF has suspended issuing professional engage in storing and processing of modified organisms. competency certificates since April 2013, allegedly Proclamation No. 655/2009 allows any person to label until it issues permanent requirements for competence a product as GMO free if it is proved so. Accordingly, certification for the license it is authorized under the EPA, now the Ministry of Environment and Forestry the ESIC. (MoEF), has been issuing GMO free certificates for Based on the discussion above, the following licenses crop products (42, 31 and 18 certificates in 2010/11, are identified in the environmental sector: 2011/12 and 2012/13, respectively). Based on the Proclamation No. 655/2009 and Directives issued License 1 Advance informed agreement/permit to under it, the following three licenses are identified for undertake transactions in GMO transactions related to GMOs. License 2 Advance informed agreement/permit to engage in storing and processing of Carbon projects permit: The MoEF has been issuing modified organisms approvals/permits for carbon projects based on License 3 GMO free certificate for crops requirements set out in its internal document titled License 4 Carbon projects permit “Criteria for Approval CDM Project Approval.” It has License 5 Trans-boundary hazardous material and issued 9, 7, 8 permits for carbon projects in 2010/11, waste movement permit 2011/12 and 2012/13, respectively. License 6 Environmental impact assessment License 7 Consultancy service for environmental Trans-boundary hazardous material and waste auditing and environmental protection movement: The MoEF has been issuing permits Detailed Analysis of Licenses   143 Findings • The requirements set out to obtain the above licenses • Considering the environmental concern, the licenses are largely considered necessary and reasonable. related to GMO, trans-boundary hazardous material • The fact that certifying the competence of businesses and waste, carbon projects and environmental engaged in consultancy service for environmental impact assessment are considered to serve a valid auditing and environmental protection is not regulatory purpose. included in the mandate of the MoEF in its establishment law could be considered as a legal gap. 144  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Annexes Methodology Classification (ESIC).92 Within each sector, respondents were selected for interviews in such a way as to The following major methodological approaches were guarantee representation of diverse businesses, based on employed to obtain the necessary information for the following criteria: the comprehensive inventory of business licenses in Ethiopia: • Size (micro, small, medium and large enterprises); • Type of organization (sole businesses, private limited Document review: During the inception phase, the companies, share companies); relevant proclamations, regulations, directives and legal notices governing business licensing in Ethiopia were • Location (different sub-cities, kifleketemas) in Addis collected and reviewed systematically and in depth. Ababa; and Also, the team collected and reviewed relevant and • Ownership (foreign and domestic). available literature on business licensing in Ethiopia as Data processing and calculation of compliance well as on international trends and practices in business costs: Data collected for each license has been coded licensing. in electronic format using Microsoft Excel. This Data collection from regulatory authorities: Following includes also, to the extent available, data on the the identification of licenses and the licensing agencies, number of licenses issues as well as on license fees and consultations with licensing agencies were undertaken, private sector compliance costs. For calculating total and information on each license was gathered using compliance costs, the IFC methodology (Standard the data collection format developed by the Client. The Cost Model, SCM)93 has been applied to the extent data collection from regulatory authorities covered more than 35 federal level regulatory agencies and their 92 ESIC distinguishes ten broad sectors of which one counterparts in the Addis Ababa City Administration, (Sector 10) refers to households and government representations; this sector has therefore been excluded where applicable. from the inventory. 93 See IFC/MIGA/World Bank (2010), “Here is Your Data collection from the private sector: Data from Money: Using the Standard Cost Model to Measure the private sector was collected using interviews. The Regulatory Compliance Costs in Developing Countries,” Washington: World Bank Group; Nijsen, André (2009), main criterion for the selection of the respondents SCM to Measure Compliance Costs, in: A Nijsen was to ensure broad coverage of the different sectors et al. (eds.), Business Regulation and Public Policy, International Studies in Entrepreneurship 20, DOI as identified in the Ethiopian Standard Industrial 10.1007/978-0-387-77678-1_5. 145 possible. However, it should be noted that lack of data Fertilizer Manufacturing and Trade Proclamation availability has been a major constraint; further details No. 137/1998 are provided in the Summary Report which presents the Fisheries Development and Utilization Proclamation overall Findings and Recommendations. No. 315/2003 Forest Development, Conservation and Utilization Proclamation No. 542/2007 List of Laws related to Insurance Business Proclamation No. 746/2012 Licensing Investment Proclamation No. 769/2012 Proclamations Micro-Financing Business Proclamation No. 626/2009 A Proclamation to provide for the regulation of transport (in Mining Operations Proclamation No. 678/2010 short Transportation Proclamation) No. 468/2005 Ministry of Environment and Forestry Establishment Addis Ababa City Government Executive and Municipal Proclamation No. 803/2013 Service Organs Re-establishment Proclamation No. 35/2012 Multimodal Transport of Goods Proclamation No. 548/2007 Advertisement Proclamation No. 759/2012 National Intelligence and Security Service Re-establishment Proclamation No. 804/2013 Apiculture Resources Development and Protection Proclamation No. 660/2009 Pesticide Registration and Control Proclamation No. 674/2010 Banking Business Proclamation No. 592/2008 Petroleum Operations Proclamation No. 295/1986 Bio-safety Proclamation No. 655/2009 Plant Seed Proclamation No. 782/2013 Broadcasting Service Proclamation No. 533/2007 Proc. No. 199/2000, a Proclamation to Provide for the Capital Goods Leasing Business (Amendment) Proclamation Licensing of Advocates Practicing before Federal Courts No. 807/2013 Proc. No. 632/2009, Employment Exchange Services Capital Goods Leasing Business Proclamation No. 103/1998 Proclamation Civil Aviation Proclamation No. 616/2008 Proc. No. 650/2009, Higher Education Proclamation Coffee Quality Control and Marketing Proclamation Proc. No. 661/2009, Food, Medicine and Health Care No. 602/2008 Administration and Control Proclamation Commercial Registration and Business Licensing Proclamation Proc. No. 669/2010, Office of the Federal Auditor General No. 686/2010 Establishment (Amendment) Proclamation Customs Proclamation No. 622/2009 Proclamation No. 181/99 transfers the monopoly rights of Definition of Powers and Duties of the Executive Organs of the National Tobacco Enterprise to the National Tobacco the Federal Democratic Republic of Ethiopia Proclamation Enterprise Share Company No. 4/1995 Radiation Protection Proclamation No. 571/2008 Development, Conservation and Utilization of Wildlife Sports Commission Establishment Proclamation No. 692/2010 Proclamation No. 541/2007 Telecommunication Proclamation No. 49/1996 Electricity Proclamation No. 86/1997 Telecommunications (Amendment) Proclamation Environmental Impact Assessment Proclamation No. 281/2002 No. 299/2002 The Definition of Powers and Duties of the Executive Ethiopian Commodity Exchange Proclamation No. 550/2007 Organs of the Federal Democratic Republic of Ethiopia, Ethiopian Federal Police Commission Establishment Proclamation No. 691/2010 Proclamation No. 720/2011 The Maritime Sector Administration Proclamation Ethiopian Water Resources Management Proclamation No. 549/2007 No. 197/2000 Transaction of Precious Minerals Proclamation No. 651/2009 Ethiopian Wildlife Conservation Authority Proclamation Veterinary Drug and Feed Administration and Control No. 575/2008 Proclamation No. 728/2011 146  The Cost of Business Registration and Licensing in Ethiopia and Options for Reform Council of Ministers Regulations Regulation No. 206/1995, Licensing and Supervision of Private Educational Institutions Council of Ministers Regulation No. 161/2009, Coffee Quality Control and Regulations Transaction Regulation No. 245/2011, Technical and Vocational Regulation No. 270/2012, Investment Incentives and Education and Training Institute Establishment Council of Investment Areas Reserved for Domestic Investors Council Ministers Regulations of Ministers Regulations Regulation No. 272/2012, Veterinary Drug and Feed Regulation No. 57/1999, Federal Court Advocates’ Code of Administration and Control Authority Council of Conduct Council of Ministers Regulations Ministers Regulation Regulation No. 115/2005, Ethiopian Water Resources Regulation No. 37/1998, The Freight Forwarding and Ship Management Agency License Issuance Council Ministers Regulation Regulation No. 163/2008, Wildlife Development, Regulation No. 4/2002, E.C, Authorized Auditors and Conservation and Utilization Council of Ministers Authorized Accountants Professional Certification Regulation and Registration Regulation of the House of People’s Regulation No. 173/2009, Council of Ministers Regulations Representatives on Classification of Tourist Facilities Regulation No. 47/1999, Telecommunication Services Council Regulation No. 178/2010, Sesame and White Pea Beans of Ministers Regulation Transaction Council of Ministers Regulation Regulation No. 54/2012, Addis Ababa City Government Regulation No. 182/1994, Mining Operations Council of Culture and Tourism Service Providers Licensing and Ministers Regulations Registration Regulations Regulation No. 189/2010, Ethiopian Food, Medicine and Regulation No. 82/2003, Ethiopian Airports Enterprise Health Care Administration and Control Authority Establishment Establishment Council of Ministers Regulations Regulation No. 108/2004, Customs Clearing Agents Regulation No. 194/2010, Establishment of the National Regulation No. 24/1997, Customs Warehouse License Metrology Institute Issuance Regulation No. 195/2003, Establishment of Ethiopian Regulation No. 49/1999, Electricity Operations National Accreditation Office Regulation No. 81/2003, Ethiopian Airlines Enterprise Regulation No. 196/2010, Establishment of Ethiopian Establishment (Amendment) Conformity Assessment Enterprise Regulation No. 198/2009, Federal TVET Agency Establishment Council of Ministers Regulations Annexes  147