Beyond Doing Business

Once every year the World Bank produces its Annual Doing Business Report that ranks countries in the world by their ease of doing business. The report uses several measures in arriving at a rank for each country.

Although the report focuses on business, there seems to be a direct relationship between the countries that score high in their ranking in the World Bank Annual Doing Business Report and the countries where the quality of life of their people are high while on the contrary the countries ranking low in the report are the ones with the lowest quality of life.

In the case of Grenada, the movement from a rank 68 (2011) to 135 (2015) is directly related to the fall in quality of life on the island as a result of austerity measures enforced by the Government and the IMF.

This uncanny relationship leaps out at you when you look at the report. Of the 189 countries, those at the top of the pile include; Singapore (1), New Zealand (2), Denmark (3), Sweden (8), Norway (9) and Canada (14); at the bottom Grenada (135) is hanging out with friends like Burkina Faso (143), Iraq (161), Myanmar (167), Afghanistan (177) and Chad (183) some of the most latrine and war-torn countries of the world.

The report makes it clear that it does not measure several indicators within an economy such as; the state of the financial system, level of training and skill of the labour force prevalence of bribery and corruption and market size. It is beyond contention that the inclusion of these additional variables would not improve the lot of the sub 100 ranking countries.

Some of the variables included in the report include: the ease of starting a business, registering property, paying taxes, trading across borders, enforcing contracts and labour market regulations. As one examines these factors it becomes clear that they go beyond the way business is done but venture into the very heart of what makes a society tick.

The report looks at the procedures, the time and the costs involved in setting up a business. For most people interested in running a small to medium sized business these are sometimes insurmountable. Even when that person or group succeeds in overcoming the set up barriers there is no system in place to ensure their survival.

The report examines the procedures involved in doing business. Several of these procedures are also relevant in conducting one’s affairs on a daily basis even at the level of your personal business. Institutions set up procedures that are contrary to reason and law and only serve to inhibit persons from doing business.

Orders of the court are not respected and are set aside in place of in-house procedures. Sometimes the very enforcement of the internal procedure itself is nonsensical and opens the way for fraud.

Time is another important factor examined in the report. Imagine that after presenting a court order to the relevant officer in an institution and after you are informed that the institution’s internal procedures hinder his compliance you agree to his request to wait provided that the length of the delay can be estimated. However, he then informs you that he does not know how long his procedure will take.

If you were the victim of an accident in Grenada recently and you have had to await payment from an insurance company, you will realise that time is of no meaning to them. One can easily be made to wait for five years to be paid.

The report looks at tax from the standpoint of the burden of taxation on a small to medium sized company and the nature of the tax regulations. On a personal level this is also a matter of contention. When the array of taxes is taken in context one might very well find that more than 70% of one’s income goes to the government in taxes.

In terms of registering property, the quality of the administration of the system is important. Can you imagine if everyone in the United Kingdom who buys or sells a vehicle were required to go to the Drivers and Vehicle Licensing Authority (DVLA) to personally record that change of ownership? In Grenada both parties to the transaction regarding the transfer of a vehicle must go to the Inland Revenue Department in person to effect the transfer. In the United Kingdom it was always possible to perform the transfer by post. These days it can be done online via the DVLA website.

Under the enforcement of contracts, the report examines the time it takes to resolve disputes, the cost of dispute resolution and the quality of the judicial process. In Grenada it has become the norm for insurance companies to advise their customers not to accept liability in the event of an accident even if they were liable.

This practice results in the driver being taken to court and sometimes fined or confined. Only the insurance company benefits since this process can take several years while the victim of the accident remains distressed.

The report also looks at labour market regulation from the standpoint of employment regulation flexibility and aspects of job quality.

There is no doubt that as a country’s ease of doing business breaks down so too does the living conditions of its citizens. In only four years Grenada has fallen more than sixty points in the World Bank Report rankings. In like manner everything in the country has become more problematic from day to day on a personal level using a barrage of indicators ranging from starting a business to keeping that business open to resolving conflicts in a civil and sociable manner.

Garvey Louison

Tagged , . Bookmark the permalink.

Comments are closed.