Enabling Environment for Sustainable Enterprises in Honduras

What has been done:

The enabling environment for sustainable enterprises in Honduras was assessed through a careful review of secondary data, findings from the largest national enterprise survey undertaken in Honduras, in-depth interviews and focus group discussions with relevant stakeholders in Honduras, and supplementary information from published and unpublished materials. The enterprise survey was conducted between August - December 2012 by a local survey firm with the aim of identifying policy and advocacy strategies, and to inform the development of the EESE report. The assessment produced a detailed identification of barriers that discourage investment, entrepreneurship, job creation and firm competitiveness. The 2013 publications containing the assessment results are the following: (1) Assessment of the Business Environment. (2) National Enterprise Survey: analysis of results. (3) Strategy for Sustainable Enterprises: a reform proposal.

The Survey and its sample:

The National Enterprise Survey of Honduras (ENEH) was conducted nationwide in 2012, with the aim of identifying and assessing business environment factors that affect business development and job creation in the country. The survey was conducted jointly with the Honduran Council of Private Empras ( COHEP ) to investigate 17 key factors that affect the business environment. To undertake this work, the 2012 survey established sampling frames for formal businesses and informal units. For formal enterprises the sampling frame was defined using business registers of the Chambers of Commerce of Honduras. While the survey for unregistered businesses was conducted using a sampling methodology followed with geographic surveys in areas of high density of informal business activity. Coverage of the survey included all areas of the country where there are chambers of commerce, without exclusions of sectors and using three main categories of stratification by firm size, economic activity and geographic location.
The survey was conducted through direct face-to-face interviews, using questionnaires with closed questions. The survey was conducted between August and December 2012, by the survey firm Le Vote. The survey was conducted with a representative sample of 2,352 enterprises, of which 1,608 correspond to the formal sector (registered firms) and 744 the informal sector (unregistered business units).


The findings of the overall evaluation were presented, discussed and validated at workshops held in Tegucigalpa in June - September 2013. Key constraints affecting the business environment focused on administrative procedures to established new firms, tax procedures, property rights, access to credit, and business practices and entrepreneurial initiatives.

Using the business environment assessment, COHEP presented late in 2013 the widely well received, comprehensive strategy of reform to improve the business environment. The reform proposal identifies priority interventions and supporting this reform initiative will not only assist Honduras to improve the business environment but will also give more international recognition to the reform agenda that the country is pursuing. Implementing this reform programme will be beneficial to support the strong entrepreneurial spirit in the country.

So far this programme has been successful in pushing for the adoption of key reforms and some early results of the impact are very encouraging.

Based on an ILO assessment of the business enabling environment in Honduras and successful advocacy efforts of COHEP, the Parliament of Honduras approved last year a piece of legislation drastically reducing the cost of registering a new enterprise. The ILO estimated that the elimination of the mandatory use of notarial services when registering a new enterprise should lead to a yearly reduction of registration cost of USD 5 Mio and give an incentive to several thousand informal businesses to formalize. Based on latest business registration data from 2014 this is what seems to happen now. The data show an encouraging 15% increase in the number of new enterprises registered in the Central region of Honduras. They also show an 81% increase in the number of non-fixed assets that were registered to serve as business guarantees to be used as collateral for loans. The latter is a good indicator of a more optimistic outlook of enterprises. Besides positive externalities like the growth of the US economy the ambitious business environment reform program implemented since late 2013 has played a major role.

Different other pieces of reforms have been adopted and the outlook is encouraging about the contribution of these efforts to making progress for the establishment of a different and improved business environment.

COHEP recently released an interview of their President Ms Aline Flores, in the interview Ms Flores describes the impact of the National Strategy for Sustainable Business in Honduras project.