21 March 2006

21 March 2006 Minutes

Private Sector Working Group Meeting, March 21, 2006, Minutes

Agenda

The agenda items are covered below in the order discussed, as follows:

1. Labor Law & CASP update (CTA)

2. Doing Business – using it for indicators (WB)

3. Joint Review Input comments (Tim Born)

4. Status of Business Registration project (Manuel Malunga)

5. ITC Presentation (Patricia Sennequier)

6. TOR for PSWG

7. AOB

Minutes

1. Labor Law & CASP update (CTA)

Sergio Chitará provided an update of the progress of the labor law. It is now in the discussion phase of the “last draft", as negotiated by the CCT. The major remaining issues are: (a) leave, with unions pressing for 30 days a year and the employers proposing a day per month worked, or 12 a year; and (b) foreign workers, with CTA requesting for a blanket authority to hire foreigners up to a certain percentage (the industrial zones get 15%) of the workforce while the government and unions favor the status quo; case-by-case approval of individuals. Ramón Ynaraja asked if the question of arbitration of individual cases had been decided between these two alternatives: (a) arbitration allowed and binding; or (b) arbitration allowed but with recourse to the court system if one of the parties not satisfied with result. Chitará said that CTA’s legal advisors (SAL/Caldeira) had reviewed the clause as now agreed and found it to be good. Ramón also asked if MIC had been active in the labor law negotiations. Macaringue explained that as the Ministry responsible for ensuring that the interests of business and the economy, MIC was following the process carefully but not participating directly in the negotiations.

The CASP is scheduled for May 4th and 5th, with the morning of the first day devoted to two subjects: taking advantage of globalization, and how to achieve development from the bottom up. The morning will be chaired by the prime minister, with a the globalization panel consisting of (subject to confirmation): Frank Flatters, a trade expert, Steve Radelet, who spoke last year, ex-President Chissano, and SADC Executive Director Tomáz Salomão; and a local development panel consisting of (also subject to confirmation): Magid Osman (BCI), Luis Pereira (Dunavent, a cotton company), and a district administrator. The afternoon of the first day and the morning of the second will focus on the private sector matrix, especially red tape, financing, infrastructure, and property rights (including land). Prime Minister Diogo will lead the government team on the morning of the first day; President Guebuza will attend the afternoon of the second.

Gilberto de Barros pointed out that the four themes were really many more than four – red tape alone is a “Pandora’s Box". He suggested narrowing down the scope. Chitará pointed out the importance of placing the matrix discussions in a more general international context. Steven Dils suggested the overview be followed by a focus on transport and tourism.

2. Doing Business – using it for indicators (WB)

James Emery of PepAfrica made a presentation of the Doing Business 2006 report, with a focus on its value as a tool for measuring progress and inspiring action. A copy of the presentation, which includes a schedule for improving Mozambique’s rank to match the top two or three in SADC by 2015, is attached.

Emery pointed out that for a full picture of what is going on it is important to use not only Doing Business, but also the Investment Climate Assessments and Enterprise Surveys, which the World Bank did for Mozambique in 2003 and will repeat every three to four years.

Jay Knott asked if the targets took into account the likelihood that other countries would also improve – for this exercise the Bank had assumed the others will not improve. Tim Born mentioned that the data lag of a year (six months in special circumstances) made Doing Business not very useful as an indicator for the success of our programs, which generally require more timely information.

There was a discussion of transport costs (included, along with electricity costs among the Doing Business targets for 2015), and the use of the DB indicators in the PARPA. Gilberto suggested again a narrow focus – on labor; registration; and cross-border trading in the context of PARPA discussions, based on their importance and the fact that at least the first two could, with effort, be completed this year. Tim Born pointed out that other things, such as tax administration and fines/inspections were also important, and Gilberto agreed.

In response to Ramon’s question on what the government was doing to follow up on the Doing Business report, Marcaringue said there would be a presentation to the Conselho de Ministros soon.

3. Joint Review Input comments (Tim Born)

I gave a brief presentation of the paper, requesting only general comments and specific recommendations by e-mail by Thursday COB. This will give time for translation and submission by the deadline of March 31. The paper will include a discussion of priorities, or at least of prioritization. Gilberto found the paper too positive, while João Macaringue felt it was too negative.

4. Status of Business Registration project (Manuel Malunga)

Manuel Malunga (Ministry of Justice) described progress on the NORAD-funded project to speed up business registration. The project will dramatically shorten the time it takes by: a) eliminating the requirement to wait for publication in the Boletim da Republica before launch (though the publication requirement remains); b) eliminating escritura publica (a trip to the notary to confirm all papers involved in the process); c) computerization, which, among other things, will eliminate the need for the certidão negativa, which confirms that your company’s name is unique. The system will be tested in Maputo in May, piloted in Maputo in August, and extended to other provinces in 2007. Registration time should fall to less than a week.

Chitará said CTA had made three recommendation related to the start-up of businesses: that licensing (not covered under the MOJ/NORAD project) should be limited to cases where there is a proven need (consumer safety, environment, use of a scarce resource, etc.); that there should be no requirement for notarization (Malunga said this was already done under his new system); and that the law should allow publication of statutes in the press rather than only in the Boletim da Republica (Malunga said that the law required publication by the government, but it would no longer delay registration and that an official web site was being considered).

Freidrich Kauffman asked why the tax number (NUIT) was not being provided along with the registration. Malunga and Macaringue explained that (a) Finance was unwilling to join the system while still suffering problems themselves; and (b) easy registry is supposed to attract some movement from the informal to the formal sector, and the informal businesses might be put off by the prospect of being captured by the tax system.

5. ITC Presentation (Patricia Sennequier)

Patricia Sennequier gave the attached presentation on the ITC program in Mozambique – PACT, JITAP, Africa to Africa, export-led poverty reduction (tourism in the south and ethical fashion in Sofala). This is part of a global program to increase the trade of LDCs, which has had great success with aloe in the Eastern Cape.

6. TOR for PSWG

Discussion of the terms of reference for the Private Sector Working was postponed by the chair until next month. Liz Jones, who had placed this on the agenda, asked the group to think about: (a) the make-up of the group’s leadership after the joint review (one of the TORs rotates the chair after the joint review); and (b) inviting MIC to be one of the co-chairs as DfID steps down. Another suggestion made by Gilberto Barros, was that MIC take over the chair. This will be the first agenda item for the next PSWG.

7. AOB

The next meeting will be Tuesday, April 25th, 8th floor USAID.

Links

Minutes 03 21 06

PSWG List of Participants 03-21-06

Doing Business and Reform Moz Mar 06

Commercial Registration Presentation

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