Click at the titles to find out more about the work of Investment Climate Advisory Services of the World Bank Group in Africa
A thriving private sector is key to Africa's economic growth. Too often, entrepreneurs are faced with legal and regulatory obstacles that prevent them from creating new businesses or growing existing ones. The World Bank Group's Investment Climate Advisory Services helps governments identify and tackle obstacles to business. During our fiscal year 2011, we were active in 44 countries in Africa through 23 country and regional projects with expenditures totaling $16 million. These projects supported the poorest countries of Africa, including 16 just emerging from conflict.
In Benin, cotton accounts for 40 percent of GDP and roughly 80 percent of exports. A more dynamic private sector would help the country diversify its sources of economic growth. The government of Benin is pursuing reforms and investments that promote competitiveness, diversification, and innovation throughout the country’s private sector. The Benin Investment Climate Program aims to build a strong business enabling environment by simplifying business entry and operations procedures. The program seeks to increase the number of registered businesses by 10 percent (over the natural growth rate of 2.7 percent) and encourage the formalization of over 3,000 new businesses. [French]
Following consultations with the World Bank Group’s Investment Climate Department, the private sector, and the top reforming countries, the Guinean government selected four key areas for reform based on the World Bank Group’s Doing Business indicators: starting a business, getting electricity, dealing with construction permits, and registering property. These priorities aim to rebuild the country and reflect the strong political will to reform Guinea’s business environment.
Supported by the World Bank Group's Investment Climate Program, Uganda has embarked on a series of investment climate reforms whose overall objective is to contribute to higher economic growth and investments. These reforms are aimed at reducing the high cost of compliance, by the private sector, to licensing and tax. Results include the launch of E-Tax mobile pay system in May 2012 by the Uganda Revenue Authority and the passage of a March 2012 law that supports the formalization of a one-person business in Uganda.
In order to assess the results of our efforts, the World Bank Group commissioned a set of four independent interim impact evaluations. The evaluations were done in countries where we have had substantial investment climate reform programs in post conflict or the poorest countries: Burkina Faso, Liberia, Rwanda and Sierra Leone. The evaluation found that IFC investment climate programs in these countries helped ease regulatory burdens, which enabled an increase of 23,000 newly registered businesses. Based on the number of new firms registered, the evaluations projected further impacts: between $75 to $90 million in private sector investments and the creation of 51,500 jobs.
Rwanda has made significant progress in reducing unnecessary regulations and establishing a legal framework that is conducive for doing business. The momentum for business reforms is very high across all government agencies in Rwanda. Rwanda is committed to address all barriers to business entry, business operation, and business expansion. In the World Bank Group’s Doing Business 2014 report, Rwanda ranks 32 out of 189 countries in the overall ease of doing business. Rwanda has also been identified as the second best place to do business in Africa and as among top reformers since 2005.
Connecting Countries in East Africa
The Investment Climate Program in East African Community (EAC) is a four-year program aims to increase trade and investment in and out of the region through targeted investment climate reforms in support of the EAC Common Market. East Africa region is characterized by small disconnected markets, high transportation costs, and cumbersome regulatory and non-tariff barriers. By widening and deepening cooperation between its partner nations, competitiveness can be strengthened, opening opportunites for private sector growth.
Over the last four years, the World Bank Group has worked with the 16 African country members of OHADA to upgrade their shared set of nine laws designed to regulate business. The goal is to revise those laws governing West Africa's business owners, and to attract more domestic and foreign investment. In December 2010, OHADA adopted two crucial revisions to its General Commercial Secured Transactions laws. As a result, lending banks now accept a much wider range of assets as collateral, rather than just real estate, to which most people lack formal title. Prior to the reform in OHADA countries, half of all African private companies seeking loans were blocked by such constraints.
Entrepreneurs and small businesses across Burkina Faso are feeling the impact of reforms that have dramatically improved the business registration process. Costs have been reduced by more than 50 percent, and the time to open a company fell from 134 days in 2004 to 13 days in 2013—more than three weeks faster than the Sub-Saharan average. According to an external evaluation, these reforms have yielded $8 million private sector investments, the formalization of 1,000 new businesses and the establishment of about 2,400 new jobs within the past three years. These reforms come as part of an investment climate program supported by the World Bank Group and the Swiss State Secretariat for Economic Affairs (SECO). Since 2006, investment climate teams have been working closely with the government of Burkina Faso to boost the country’s private sector and global economic standing. [French]
In 2006, the World Bank Group's Investment Climate team responded to the government of Cameroon's request to help create an effective dialogue with its business-minded citizens. The result was the Cameroon Business Forum, a five-year intervention to foster dialogue between the government and the private sector, cooperatively pursuing business reforms geared toward improving the country's investment climate and thereby bettering the economic prospects for all. In partnership with the Office of the Prime Minister, the Forum hosted two annual forums to engage the private and public sectors, producing recommendations for 27 business reforms. Twelve of those reforms have been implemented, with 12 additional reforms planned for adoption soon.
High unemployment, a large formal sector and a lack of infrastructure are among the many challenges facing Central Africa Republic's post-conflict environment. In support of the country's poverty reduction efforts, the Government is looking to develop an active and vocal private sector to help address these. The Central African Republic Investment Climate Program is supporting the country's public-private dialogue with on-the-ground advice in design and implementation for at least five reforms relating to property transfer and business registration. To date, the program has helped pass 8 reforms which have made it easier to do business in the country.
In 2010, it took an entrepreneur 75 days, 13 procedures, more than 225% income per capita and involved more than seven agencies to start a business in Chad. The country's private sector has identified business registration reform as a top priority and the Government has pledged to improve it. The Chad Business Entry Program, operated by the World Bank Group, is working with the Government to simplify and streamline procedures and operationalize a one-stop shop for business registration. The program has already helped the government implement reforms which lowered business start-up costs by 8 percent and reduced the time required to start a business to 66 days.
Like other fragile economies which have suffered political instability, Guinea-Bissau is faced with a low growth rate and high unemployment. To reduce the risk of further unrest, the country is looking to develop a vibrant private sector to create job opportunities. The Investment Climate Reform Program in Guinea-Bissau, in collaboration with the World Bank, is supporting the government in its efforts to create a better business environment. The program will reduce the number of procedures required to start a business as well as the time to import and export. We are also helping simplify the tax regime and leverage new legislation which will expand access to credit for small businesses.
In 2007, the World Bank Group Investment Climate Advisory Services responded to the government of Kenya's request to help reform the country's business and investment climate, while upgrading its ranking in the measures tracked by the World Bank-IFC's Doing Business report. One of the results of that collaboration was the Kenya Investment Climate Program which has focused on regulatory reform, contributing towards the government's 2013 target of reducing regulatory burdens for selected businesses by 25 percent. Results to date include a one-stop shop for business registration, digitization of the company registry, and increased inspection reforms.
At the request of the Liberian government, in 2006, the World Bank Group launched a program to support the creation of more businesses and to help attract more private sector investment. Between 2008 and 2010, reforms supported by the program have led to private sector savings of almost $5 million; the formalization of more than 3,000 businesses; the creation of more than 16,000 jobs; and the generation of more than $11 million in private sector investment.
Malawi is a landlocked country in East Africa with an economy founded largely on subsistence agriculture. Many Malawians seeking a more prosperous life suffer certain barriers to developing their business—barriers that the government of Malawi and the World Bank Group have been working to remove. One of the outstanding impediments to economic development in Malawi is the lack of accessible, affordable credit. And one of the keys to the credit deficit is collateral. As a result, up to 80 percent of businesses in Malawi, particular the smaller enterprises, are unable to secure the loans they need to grow. Malawi's Ministry of Trade and Industry and the World Bank Group are collaborating to free the flow of credit to Malawian private businesses and consumers, by way of movable property collateral. Malawi's now modernized laws are expected to attract new lending companies, bring in more money for loans, more competition, lower interest rates, more accessible credit, more borrowers, and ultimately more business and prosperity.
In 2008, the government of Mali requested the World Bank Group Investment Climate team to create a program to support a number of the most pressing business reforms and increased investment. To help spearhead this effort, the government also created a Ministry of Industry, Investments and Commerce in charge of improving the business environment. The Mali Investment Climate Program quickly produced results. In the World Bank IFC's Doing Business 2011, Mali's ranking jumped 13 spots in only three years. Implementing reforms in five of ten areas measured by the report, Mali ranked third highest among sub-Saharan countries after Rwanda and Mauritius.
While obstacles remain to doing business in Sierra Leone, the country has recorded major improvements in recent years, thanks to the collaboration and support from many stakeholders, including the World Bank Group's Removing Administrative Barriers to Investment program. Results have been significant. Sierra Leone has been steadily making progress and has ranked second, behind Burkina Faso, among the Economic Community of West African States in number of improvements recorded by the World Bank-IFC's Doing Business report—a remarkable turnaround only seven years after a civil war had all but destroyed the economy.
Following the signing of the peace agreement in 2005, the government of South Sudan requested the assistance of the World Bank Group to help develop a viable private sector. Since that time, Investment Climate Advsiory Services in Africa has supported the government in establishing a legal and regulatory framework for investment. As a result, the Investment Promotion Act was established and another six laws were enacted to support business entry, operations, and exit. With World Bank Group support, these efforts have led to a stronger business registry and a streamlined registration process, resulting in more than 10,800 new business registrations by the end of December 2010, the graduation of the Southern Sudan Investment Authority to an actual ministry, and a strengthened legislative drafting team.
The World Bank Group's Investment Climate Advisory Services was called upon by the Government of Ethiopia to assist in creating a viable public-private dialogue to help establish a more enticing investment climate as a cornerstone to the country's economic growth plan. As part of this initiative, the Ethiopian Public Private Consultative Forum, or EPPCF, was established in July 2010. The Forum is a vehicle led by Ethiopian businesses to bring together the private sector and government officials in face-to-face dialogue. In addition to supporting the creation of the EPPCF, the World Bank Group is also helping the Government of Ethiopia create a more competitive business environment.
Zambia's growth trajectory is projected to average between 6 and 7%, which will not be sufficient to attain the Government's objective of achieving middle income status by 2030. Few Zambian industries are internationally competitive, with only 12% of the labor force employed in the formal private sector. Meanwhile rural poverty is increasing. Legal and regulatory inefficiencies continue to inhibit private sector growth and competitiveness constraining an increase in productivity of both the formal and informal sectors. Starting in 2008, the World Bank Group Zambia Investment Climate Reform is providing the Government with technical and financial support to enable implementation of investment climate reforms, including: business licensing simplification, doing business reform and public-private dialogue.