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Measuring the Results of Donor Supported Business Registration and Licensing

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Title: Measuring the Results of Donor Supported Business Registration and Licensing


1
Business Environment info_at_casestudyhelp.in91
94220-28822
2
  • Business Environment
  •  
  • Case Studies
  • CASE STUDY (20Marks)
  • Measuring the Results of Donor Supported
    Business Registration and Licensing The case of
    Minas Gerais in Brazil Minas Geraisis one of
    Brazils 26 states. It is the fourth largest
    state in the country and the second most
    populous. The states capital and largestcity,
    Belo Horizonte, is a major urban and finance
    centre in Latin America and is the sixth largest
    urban agglomeration in Brazil. The government
    Descomplicar initiative, meaning uncomplicate,
    was launched in 2007 to promote a policy
    environment that is conducive to economic
    development.

3
  • The program had four goals Improve
    relationship between state and private sector
    Simplify regulation and reduce bureaucracy
    Encourage firm formalization and Promote
    economic development. The Descomplicar initiative
    established a series of working groups around
    specific program themes 1. Information campaign
    This theme sought to promote the importance of
    business registration through education campaigns
    and the distribution of booklets to informal
    business owners. The media campaign also involved
    direct work in schools and universities. 2.
    Bureaucracy reduction This theme sought to
    simplify the procedures for starting, maintaining
    and closing a business, with an emphasis on small
    and medium enterprises. It included support to
    all the municipalities in Minas Gerais in the
    creation of a synchronized business database.

4
  • 3. Tax guidelines This theme developed
    material that described the different conditions
    for the small and medium enterprises, showing the
    benefits that businesses receive from government
    and serves as an enticement to formalization.
    Government considered it especially important to
    disclose information on the origin and
    destination of taxes collected and to create
    awareness among entrepreneurs of their importance
    to society. 4. Increased surveillance Attention
    was given to educating informal employers about
    their extralegal status. State and local
    governments improved their surveillance of the
    informal sector and distributed the
    abovementioned booklets on the importance of
    formalization and its benefits for the business
    and for society. 5. Financial barriers reduction
    Attention was also given to facilitating access
    to government supported credit lines in an
    attempt to improve access to credit. Given high
    levels of informality among firms, a goal of
    Descomplicar was to encourage firm formalization.

5
  • To this end, the program conducted a survey
    of informal firms to obtain information on the
    barriers to formality from the firm perspective.
    The most frequently reported barriers identified
    through this survey were High tax burden Too
    much bureaucracy High costs of firms
    registration Lack of financing and Lack of
    information about benefits of being formal. One
    of the first reforms was to simplify business
    registration through the creation of a one stop
    shop for completing municipal, state, and federal
    registration procedures at the same time and at
    the same place (known as Minas Fácil).
    Different layers of government mean municipal
    inspectors dont enforce state and federal
    registration. Thus, firms can be partially
    formal, i.e., complying with local laws, but not
    state or federal laws. However, through the one
    stop shop, firms automatically obtain state and
    federal registration when they obtain a municipal
    operating license.

6
  • Answer the following question.
  •  
  • Q1. What was Descomplicar initiative? Explain
  •  
  • Q2. What were the specific program themes to
    uncomplicated various issues.
  •  
  • Q3. What were the most frequently reported
    barriers identified through the survey.
  •  
  • Q4. Explain the interventions chosen for
    encouraging firm formalization.

7
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