Improving the business environment by simplifying business proceedures

Our experience from 25 years has taught us that modifying business practices is not enough if the business environment is not offering favorable conditions to establish and develop a MSME.

The business environment for MSMEs in Latin America poses great obstacles at the administrative and management procedural level. The majority impede the establishment and development of businesses. The complexity of procedures discourages entrepreneurs, which leads them to running informal MSME operations outside the law, thus resulting in premature shutdowns due to lack of compliance with the legal tributary standards. 

With the Business Procedures Simplification Program (SIMTRA), FUNDES helped implement advances within the MSME business environment by introducing steps for businesses to follow in municipalities, ministries, and other institutions of the central government. The methodology includes a thorough and detailed diagnostic of the necessary measures for a business’s establishment and operation. It outlines and applies a proposal to simplify the procedures and, afterwards, provides follow-up and control to guarantee quality in the process and the business owners’ satisfaction with easier procedures.

The SIMTRA methodology has been applied to procedures for obtaining municipal operational licenses, registration, operation and municipal shutdown procedures. Within the central government, it has been implemented for business registration, procedures to obtain environmental licenses, health permits, specialized procedures for health-related establishments, export procedures and procedures for the application and granting of credit.
As part of the SIMTRA methodology, FUNDES transfers the simplification tools and instills faculties in the beneficiary institutions so that they may implement and replicate them, thereby guaranteeing the sustainability of the process beyond FUNDES’s intervention.

The program has been implemented in Guatemala, El Salvador, Costa Rica, Bolivia, Colombia and Argentina, and has benefitted close to 100 municipalities and 15 central government institutions. This has led to an 80% reduction in the waiting time for procedure resolutions by reducing 67% of the steps, 52% of the requirements and the number of visits by 50%. This, in turn, has resulted in a 30% increase in the number of registered businesses, thereby significantly impacting tax collection.

In alliance with: State Secretariat for Economic Affairs (SECO).