A legal practitioner who is currently working as a consultant with the Private Enterprises Federation (PEF) has observed that a large number of small and medium sized businesses remain informal not by choice, but because their efforts to transition into the formal sector are frustrated by delays in acquiring permits, licenses and certificates from issuing agencies.
Mrs. Clara Kasser-Tee notes that these delays, in turn, lead to corruption and high cost of formalisation, and because most small businesses, particularly locally owned ones, do not have the financial muscle to pay for the extra cost, they prefer to remain informal.
Invariably, businesses that cannot find the money to formalise, will remain in the informal sector and it’s one of the reasons our informal sector is so huge compared to the formal sector, she added.
The Private Enterprises Federation (PEF) contracted Kasser-Tee for a project that seeks to help public permit, license and certificate issuing bodies, including the Land Commission Ghana Standard Authority, Food and Drugs Authority, to implement up-to-date and workable service delivery charters.
According to the Business Development Ministry, 75 percent of businesses in Ghana fail within the first three years and those that exceed three years do not go beyond 10 years of operation. Is it any wonder then that our ‘ease of doing business’ ratings are not improving?
If the country is really serious about being the preferred investment hub in Africa and wants to attract more foreign direct investment, then it has to improve drastically on its processes of registration and issuing of licenses, permits and certificates.
More often than not, these delays are meant to induce some form of extorting extra money in order to speed up the process. It is a tactic that most of these agencies employ; but it leads to corruption and frustrates start-ups and small businesses in their bid to obtain the requisite licenses, permits and certificates when they are setting up.
In a situation like this, Ghanaian businesses suffer the most because they often do not have the extra capital to go around bribing.
Mrs. Clara Kasser-Tee indicated that they have looked at other jurisdictions and implementing service charters is one of the critical ways to revolutionise the provision of service within the public sector. To her, helping public agencies to implement service charters remains crucial.
PEF, as the umbrella body of private enterprises in the country, is keen on seeing an improved environment for business registration and documentation.