Transcript STRENGTHENING THE INVESTMENT CLIMATE

INCREASING THE COMPETITIVENESS IN THE
AFRICAN MIDDLE INCOME COUNTRIES:
STRENGTHENING THE INVESTMENT CLIMATE
Sahar Nasr
Senior Financial Economist
World Bank
Cairo, Egypt
March 11, 2008
World Bank
What is Competitiveness?

Describes the overall performance of enterprises within
a national business environment, particularly its level of
productivity and its ability to export.

Productivity—magnitude and growth in value added
(per unit input) of firms.

Ability of firms to operate efficiently in relation to
others due to low cost or superior technology.

Function of quality not just cost

Depends on a host of factors that can be firm-specific;
industry-specific or country-specific.
World Bank
Usually, sustained growth requires attaining
manufacturing export competitiveness...
Figure 1.6: Manufactured exports to GDP, 1965-2005
Manufactured exports as a share of GDP (%)
40
35
30
25
20
15
10
5
0
1965
MENA
OECD
World Bank
1970
1975
1980
East Asia P acific
South Asia
1985
1990
Europe and Central Asia
Sub Saharan Africa
1995
2000
2005
Latin America Caribbean
…based on growing private investment.
Figure 1.1: Private investment as a share of GDP, 1985-2007
Private investment (% of GDP)
30
25
20
15
10
5
0
World
Sub-Saharan
Africa
1985-89
1990-94
East
Asia
Pacific
1995-99
Europe
Central
Asia
Latin
America
Caribbean
2000-04
Source: Staff estimates from WDI data. Regional averages weighted by GDP.
World Bank
Middle
East
North
Africa
2005-07
South
Asia
What Affect Competitiveness?
The Firm’s Business Environment
Markets openness
and liberalization
Firm
Investor
World Bank
Factor markets
In many ways, the World Bank Group supports
business environment reform to enhance
competitiveness
1. Creating policy and institutional foundations for effective
Diagnostics/
markets
(property rights,Formulation
land registration,Implementation
collateral
Strategy
Policy Dialogue
systems,
corporate governance,
financial market
and
infrastructure).
Solution
Doing Business
Design
Policy-based
Loans
markets—opening
up
2. Promoting open and competitive
entry,
access to finance for promising firms, deeper
Enterprise Surveys
Investment
bankruptcy financial markets, and exit for failing
firms).
Loans
Investment
Climate
3. Initiate
reform
agendas, through sharing ofGrants
cross-country
and
Assessments
experience—what works and what does not.Trust Funds
Technical
4. Ensure effective coordination with development
partners.
Assistance
World Bank
In many ways, the World Bank Group supports
business environment reform to enhance
competitiveness
Diagnostics/
Policy Dialogue
Doing Business
Enterprise Surveys
Investment Climate
Assessments
Formulation
Strategy
and
Solution
Design
Implementation
Policy-based
Loans
Investment
Loans
Grants and
Trust Funds
Technical
Assistance
World Bank
World Bank
nd
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World Bank ICA work allows us to learn
from entrepreneurs their key costs and constraints.
Leading Constraints to MENA Firms
(simple average of country averages from World Bank Enteprise Surveys)
60
49.8
42.5
35.9
33.6
30
30.1
30.1
20
10
0
World Bank ICA work allows us to learn
from entrepreneurs their key costs and constraints.
Leading Constraints to MENA Firms
(simple average of country averages from World Bank Enteprise Surveys)
60
49.8
50
45.1
43.7
42.5
38.9
40
37.2
35.9
35.9
33.6
30.7
30.1
30.1
30
20
10
or
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Similar survey data is collected and analyzed for African MIC’s
World Bank
One of the main constraints identified in the Egypt
ICA was Access to Finance
. . . . especially MSMEs, receive little financing
Size does Matter. . .
Percentage of firms currently with
a loan from a financial institution
 Only 17.4% of firms have access
to bank credit
40
 MSMEs have more difficulty
accessing credit: only 13% of
MSMEs have access compared
to 36% of large corporations
30
 Banks do not provide much
financing to MSMEs (only 12% of
10
MSME that have a bank account also
borrow from banks)
36 %
35
25
20
17.4 %
13 %
15
5
0
All
World Bank
Source: Egypt ICA
Small
Large
and Micro
Can these countries compete on an equal footing
without using all of their human resources?
Region
South Asia
Middle East &
North Africa
Eastern Europe
& Central Asia
East Asia &
Pacific
Sub-Saharan
Africa
OECD
Latin America
& Caribbean
World Bank
% of Firms With Female
Participation in
Ownership
% of Full Time
Female Workers*
% of Women in
Senior Positions*
12.6
18.78
1.56
19.67
14.92
3.26
26.04
45.52
8.27
27.41
41.31
8.7
28.75
20.15
7.44
31.71
35.76
31.62
12.64
Doingbusiness Indicators

Measures of business regulations and their
enforcement across 178 countries.

Doing Business is a guide for evaluating regulations
that directly impact economic growth, making
cross-country comparisons, and identifying good
practice reforms.

Regulations affecting 10 stages of a business’s life
are measured: starting a business, dealing with
licenses, employing workers, registering property,
getting credit, protecting investors, paying taxes,
trading across borders, enforcing contracts and
closing a business.
World Bank
Doingbusiness Indicators
2004
2005
2006
•Regulation of
Entry
•Corporate
Governance
• Business
•Labor
Regulations
• Property
registration
• Taxation
• Trade
• Contract
Enforcement
Infrastructure
• Transport
• Customs
•Standards
• Credit
Markets
• Credit
information
•Bankruptcy
Licensing
•Updates
of ‘04
topics
2007
2008
•Starting a
business
•Dealing with
licenses
•Employing
workers
•Protecting
investors
•Getting credit
•Updates of
‘04 and ‘05
•Closing a business
•Updates of
‘06 and ‘07
Products: Report, academic papers, country summaries, website database
World Bank
www.doingbusiness.org
What does Doing Business 2008 say about the
business environment in Africa’s MIC countries ?
World Bank
Doing Business Sub-National



Measures the ways in which government regulations
enhance business activity or restrain it at the sub
national level.
Highlights good practices within the country that
can be replicated easily in other cities.
Focuses on three Doing Business topics:
1. Starting a business
2. Dealing with licenses
3. Registering property

Deals with three Governorates:
1. Alexandria
2. Assiut
3. Cairo

World Bank
Provides information on other Governorates’ reform
efforts, including getting credit, protecting
investors, paying taxes, and trading across borders.
EXAMPLE
Financial Sector Development Policy Loan
WB and AfDB, along with other development partners supported the
Government’s “Financial Sector Reform Program” (2004–2008)
Objectives
Main
Components of
the Program
Implementing
Agencies
World Bank
Improve the soundness and efficiency of the financial sector
through comprehensive structural and financial reform, to
enhance financial intermediation.
1.
Reforming the Banking Sector (consolidation, privatization, mergers)
2.
Restructuring the Insurance Sector (mergers, restructuring, privatization)
3.
Deepening the Capital Market
4.
Developing a Well-functioning Mortgage Market
5.
Strengthening the Regulatory and Supervisory Authorities
6.
Improving the Institutional Infrastructure (credit bureau, payments
system, etc.)
Ministry of Investment and Central Bank of Egypt (CBE)
Financial Sector Development Policy Loan
World Bank
In what ways and areas, could WBG
support your countries better?
1. Encourage Dialogue?
2. Technical Advise and Analytical Work?
3. Developing New Strategy?
4. Identifying Priority Areas of Reform?
5. Sharing of Cross-country Experience?
6. Providing New Products?
7. Other Delivery Mechanisms?
World Bank
Increasing the Competitiveness in the African
Middle Income Countries:
Strengthening the Investment Climate
Thank you!
World Bank Financial Products and Services for
Improving the Investment Climate
World Bank