In general terms, opening a business in Mexico is not a pleasant task and it is not easy either. In most municipalities, the authorities concentrate their efforts on ensuring that micro and small businesses can start operations in a reduced number of days, as long as they comply with the stipulated requirements and make the corresponding payments. Achieving this goal is desirable and despite the advances that the authorities sometimes proclaim, the reality is that, in practice, those who dream of starting a business usually realize that the nightmare begins practically from the start of the process.
For some, the use of the Quick Business Opening System (SARE) may be an advantage, as long as this option exists in their localities and works correctly. In certain municipalities, despite having this System, people and companies are forced to face the bureaucracy with the support of managers, better known as coyotes. It is at this stage that corruption begins. A recent study carried out by Ethos reveals that, in 15 analyzed municipalities, 20 percent of entrepreneurs went to a manager to carry out procedures for opening or maintaining their business. In Tijuana and Querétaro the figure rises to approximately 33 percent. It should be noted that the fees paid to these intermediaries are disproportionate, since sometimes they are equivalent to up to ten times the original value of the procedure.
Once the businesses are already in operation, the ordeal continues, since businessmen can be victims of extortion mainly through two channels: public officials and/or organized crime. The first case refers to the officials behind the counters and the inspectors, who sometimes operate in a coordinated manner. In the municipality of Solidaridad, Quintana Roo, inspectors charge smaller businesses between 1,000 and 2,000 pesos and the amount rises to 50,000 or 100,000 pesos for larger companies. In the case of organized crime, the “floor fee” varies and the threats for not paying it can affect the physical integrity of the owners and employees. In this sense, the majority of the 2,250 entrepreneurs surveyed by Ethos, believe that insecurity is the factor that most complicates the operation of a business. Of the surveyed sample, the municipalities in which this problem is exacerbated are Zacatecas, followed by Matamoros, Torreón and Monterrey.
Once the battle of bureaucracy, the cost of paperwork and extortion has been “fought”, it is necessary to evaluate the success of the business. It should be remembered that a considerable number of people who joined the ranks of unemployment in the context of the pandemic made the decision to start a business, making use of their settlements and savings. This is how the opening of miscellaneous stores, grocery stores, stationery stores and other micro-businesses represented a lifeline for family survival. However, the difficulties described above, coupled with a precarious economic growth that affects household income and, consequently, sales, means that what could become a moderately profitable business ends up being an investment with a somewhat higher return. uncertain.
In a journalistic investigation that Ethos carried out in Zacatecas, the story of Don Hilario Alvarado is shown, who in 2019 set up a grocery store in his house. In an interview with Ethos, Don Hilario reports that the electricity bill comes to him for 1,100 pesos. He also pays around 2,500 pesos for predial and 300 for water. To meet all his obligations, he asked for a loan of 5,000 pesos, of which he only had 1,000 pesos left to stock the store. A few months ago the municipal presidency came to charge him the cost of renewing the register, it was about 450 pesos and they warned him that if he did not pay they would close the store. At the end of the conversation, Don Hilario concluded: “I only have 13 pesos, that’s all, I don’t know what to do”.
The case of Don Hilario reflects that of thousands of Mexican men and women who have made the decision to start a business. These types of stories lead us to demand that the authorities in the different areas of government stop giving “pats on the back” for minor advances in the paperwork associated with opening businesses, because in practice they pay little if it is contemplated the entire life cycle of companies. In accordance with the country’s economic conditions, which include problems such as informal employment, inadequate salaries, rising inflation, among others, it is urgent to see how to support micro and small businesses that, given the circumstances, represent a safety valve. escape for families whose options to generate income are slowly running out.
General Director of Ethos Public Policy Laboratory
guest column
Degree in International Relations (ITAM) and Master in Public Policy and Administration (London School of Economics). She collaborated in the Ministry of Finance and Public Credit where she acquired extensive experience in fiscal policy and specialized in the analysis of fiscal systems in the international arena. Likewise, she worked at Fundar in the Public Budget Area, in budget transparency and accountability. At Ethos she has coordinated work on public finances, poverty, public security and anti-corruption.