RESTRUCTURING

REDUCING OUR REGULATORY EXPOSURE

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Ease of doing business:  the bottom 20

(see p. 4 of the Doing Business 2018 report)

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The World Bank's annual "Doing Business" report assesses the regulatory environment of each country in the world.  DR Congo doesn't come out very well, so we have to take every measure possible to minimize our regulatory profile.  Click the image to view the full report.

Making the 9th most difficult country a bit less difficult

The World Bank's "Doing Business 2018" report lists DR Congo as the 9th most difficult country in the world for doing business.

 

The report measures the official regulatory environment of each country. DRC's worst scores were in the areas of "paying taxes" and "trading across borders" (see DRC country table on p. 154). For us, that pinpoints two of our biggest challenges: a complex array of taxes with high rates and predatory enforcement; and a slow, expensive and corrupt process of customs clearing when importing the curriculum our clients demand.

A way to make it easier and less costly

These burdens are less onerous for registered "non-governmental organizations" or "NGOs", the functional equivalent of US non-profits and 501(c)(3) tax-exempt entities. 

Education is a qualifying purpose for NGO status. By putting our outward-facing activity into a registered NGO, we are able to reduce our exposure to taxes, customs duties and obstacles in the area of labor regulation.

 

NGO status also helps with our other major bureaucratic challenge: obtaining visas for expat teachers. Since our American staff members receive no cash compensation, they can apply for visas as volunteer teachers/trainers for the NGO. This gives them a more favorable profile for obtaining entry visas as compared to entering to work at a for-profit company.

Accel Academies of Congo ASBL

Taking all this into account, we formed an NGO called "Accel Academies of Congo ASBL" (ASBL is the French abbreviation for "not-for-profit association"). Our direct educational activities are being operated through Accel Academies. Congo American LC has an administrative services contract under which it provides services for Accel Academies.

As a private company, Congo American is entitled to earn a profit from its activities, just as any contractor in the US or DRC is able to earn a profit while providing services for tax-exempt entities such as governments, churches, schools and volunteer organizations.  

This diagram outlines the relationships:

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Ensuring operational control

 

Unlike in the US, there is no prohibition in DRC against an NGO doing business with a for-profit that is controlled by the same people. So for now, there is some overlap between Accel Congo's board of directors and the officers of Congo American.  Our key executives are thus able to direct Accel Academies ASBL in providing quality education to our patrons at a fair price while also directing Congo American as it provides administrative and managerial support under contract with Accel Academies, earning a fair profit so long as it works very efficiently. 

The value of the brands

Another consideration with this arrangement has to do with the ownership of the brand names, such as ALI/American Language Institute; Accel Academy, etc. These are the property of Congo American, which licenses them to the non-profit ASBL.  This keeps the commercial value of the names within the control of Congo American.  This would be important if future DRC regulations require a greater separation between the non-profit Accel Academies and the for-profit Congo American, or in the event that Congo American's owners might someday find it advantageous to sell any of its education properties in a third-party acquisition transaction. 

Accel Academies of Congo ASBL is a non-profit educational organization supported by Congo American, a for-profit administrative services company. 

©  2019 Congo American LC