Business and governments review investment climate progress at UN meeting

To coincide with this week’s UN High Level Meeting on Africa’s Development Needs, the UN Office for Partnerships and Business Action for Africa joined forces to organise a meeting to gauge progress on improving Africa’s investment climate.

A favourable investment climate is vital for economic development and African policy-makers recognise that obstacles to both domestic and international investment are seriously impeding Africa’s development.

This event, chaired by Bert Koenders, Minister for Development Cooperation of the Netherlands, served as an opportunity for heads of African governments and business leaders to explore and discuss how the business and investment climate can be improved through effective public-private cooperation frameworks.

Amir Dossal, Executive Director, UN Office for Partnerships, noted that encouraging regional growth is threatened by rising food and oil prices and instability in financial markets. At a time of global economic insecurity, Africa needed a healthy and robust private sector to help maintain productive economies and to generate greater levels of investment, trade and job creation.

Bert Koenders, Minister for Development Cooperation of the Netherlands, when framing the discussion, pointed out that business needs predictability, stability and an efficient regulatory and legal infrastructure to thrive, in addition to more regionally integrated trade infrastructure.

Comments from speakers focused around five themes:

I) Business has an important potential role to play in tackling poverty and accelerating progress towards the MDGs

Jeffrey Sturchio, Chair of Business Action for Africa noted that it is increasingly recognised that the most powerful contribution that the private sector can make to development is to do business responsibly and successfully through core business activities: through products and services, and the opportunities created for employees, suppliers, distributors, and local communities. A tangible illustration of this point is provided by data that shows Foreign Direct Investment to developing countries reaching a record $536 bn in 2007, 20% up on 2006 – compared to total Foreign Assistance by donors declining by 8.4 % to $103 bn in the same year.

II) Getting the investment and business climate right is key priority
In addition to creating strong and transparent governance standards, the need to streamline complex business regulation, accelerate regional trade integration and improve physical infrastructure were also identified as key drivers for development by Louis Michel, European Commissioner for Development and Humanitarian Aid.

A number of success stories were cited by Omari Issa, Chief Executive of the ICF, demonstrating that progress is being made. For example, as a result of work undertaken by ICF to improve efficiency and reduce the cost of doing business, it is now possible to register a business in Rwanda in 48 hrs – it had previously taken considerably longer. In addition, to make it easier to access finance in Rwanda, Burkina Faso and Sierra Leone, ICF is working to introduce land registration procedures to enable owners to use their land as collateral. ICF has also established programmes to help improve the efficiency of business legal procedures in Zambia and Tanzania, to improve customs administration in East Africa and Senegal, and also to help tackle counterfeiting and piracy.

III) Investors are responding to concerted reforms and innovative problem solving approaches

During the session, examples of successful partnership based projects and the growing attractiveness of the region for investors included Seacom, a venture that involves the laying of a new fibre optic cable that will deliver significant increases in broadband internet capacity to the region (up to 50% increased capacity). Bruce Wrobel of Sithe Global Power pointed to the fact that the project took only 12 months to go from concept to finance, with a further 18 months to implementation, with cable laying starting in June 2009.

Another example of a successful partnership based approach is the manufacturing of mosquito nets in Tanzania, provided by Hiromasa Yoneura, President and CEO of Sumitomo Chemicals. As a result of bringing together government support, local entrepreneurial flair and innovative cutting-edge technology, 10 million nets / year are currently being manufactured, which has also created jobs for 3,200 local people. The project will expand to 19 million nets / year by the end of 2008.

IV) Small scale business and agriculture key priorities
It was noted that the private sector in Africa is largely made up of small scale businesses, largely operating in the agricultural sector. Amos Namanga Ngoni, President of the Alliance for a Green Revolution in Africa, identified increasing agricultural productivity as key to poverty reduction and ensuring food security. Currently, despite the fact that 70% of the population is in the agricultural sector, only 4% of government budgets and 4% of Official Development Assistance is channeled in to supporting agriculture. There is a need for governments and the private sector to collaborate to encourage greater investment in improving agricultural productivity, through greater access to fertilizers and pesticides, in addition to providing more inclusive financial services to help farmers mitigate against the risk of uncertain weather patterns and access financing.

V) Partnerships offer the best way to make progress
It was noted that given the scale of the challenges, the need for collective action through public private partnership approaches was critical. The growing number and variety of partnerships – in areas as diverse as governance reform, water sustainability, agricultural productivity and human development and healthcare - demonstrate that it is increasingly possible to deliver successful economic and development outcomes.

Record breaking year for regulatory reforms in Africa

The World Bank’s Doing Business 09 Report, released today makes encouraging reading for policy makers, businesses and investors looking for signs of an improving business climate in the Africa.

These countries should be congratulated and encouraged to renew their efforts in making their countries easier places to do business – for companies large and small.

The report tells us that Africa had a record breaking year for regulatory reforms that make it easier for companies to do business. 28 countries completed 58 business-friendly reforms and three of the world’s top 10 reformers of business regulations are in Africa this year: Senegal, Burkina Faso, and Botswana.

Senegal made it easier to start a business, register property, and trade across borders.

Burkina Faso introduced a new labor code and reforms for registering property, dealing with construction permits, and paying taxes.

Botswana cut the time to start a business, facilitated trade, and strengthened investor protections. Postconflict countries, Liberia and Sierra Leone, along with Rwanda, were among the regions’ most active reformers of business regulations.

Mauritius moved up to 24 in the global rankings on the regulatory ease of doing business and continues to provide inspiration for reform and good practices to other economies across Africa. The runner-up in these overall rankings is South Africa at 32, followed by Botswana at 38.

Accelerating regulatory reform, alongside improvements to the overall investment climate and governance standards show us that Africa is laying the foundations to ensure that economic growth can be both sustained and more widely shared.

Business Reponse to Doha Trade Talks Collapse

Business representatives of Business Action for Africa issued the following statement on this week's collapse of the Doha Trade Talks:

Business Action for Africa, an international network of over 200 businesses, business organisations and development partners, calls on global leaders, in business and in government alike, to respond to the collapse of world trade talks this week by urgently looking for pragmatic ways forward to reduce barriers to trade and to stimulate global growth and development.

As businesses operating across Africa, we know that Africa will not achieve the Millennium Development Goals to halve world poverty by 2015 if it is not allowed to increase its trade with the rest of the world. Global leaders and the WTO must act urgently to show that there is still a multilateral way forward which can deliver results quickly for the whole world economy and especially Africa.

As we know, huge progress was made in the last six years, and in the last six days of the talks. So, rather than give up all this progress for two years or more, let us implement as much as possible as soon as possible:

1. Implement the 2005 Hong Kong agreement, by developed countries and larger developing countries in a position to do so, to provide completely free market access for all products from the world’s 50 Least Developed Countries (LDCs), of which 32 are in Africa.

2. Richer countries should honour their commitment to do this by 2008 and not enforce their right to wait for the rest of the Doha agreement. This should include the commitment to simplify rules of origin to make trade easier. Developed countries should apply this to 100 per cent of exports from LDCs and waive the 3 per cent exemption negotiated in 2005, which cuts the benefits of this agreement to LDCs from $7bn a year to $1bn a year.

3. Complete the negotiations on Trade Facilitation, which is within reach. This would make all trade easier, benefiting all countries, including at the intra-regional level, and, unusually, comes with guaranteed assistance for developing countries from developed ones. The OECD estimates that by reducing export time by 4.5 days for Sub-Saharan Africa could increase exports to OECD countries by 10 per cent. Trade facilitation, alongside investment climate reform, is a key way to stimulate business investment – a key driver of growth and poverty reduction.

4. The WTO should continue through the agreements achieved so far in a ‘progressive multilateral undertaking’ to reduce trade barriers, where possible, in agriculture, manufactured goods, services and rules.

As the global economy starts to falter and progress towards the MDGs is under threat, now is not the time to take a break. It is time for hard work and hard decisions.

Joint statement issued by the following organisations, in their capacity as board members of Business Action for Africa:

De Beers Group

International Business Leaders Forum

SABMiller plc

Unilever plc

What gets measured gets done - WBCSD launches Measuring Impact Framework

In the spring of 2006, the World Business Council for Sustainable Development (WBCSD) embarked on a two-year journey to develop a framework to assess the contribution of business to the economic and broader development goals in the societies where business operates.

This grew out of a request by WBCSD member companies to develop a measurement framework that could underpin the license to operate, improve the quality of stakeholder engagement, help manage risks more effectively and identify ways to enhance the business contribution to society. Companies like Unilever, Vodafone and Anglo American, who had recently completed their own measurement tools or studies, were eager to explore common threads across sectors and build a common approach to measurement that would enhance the discussions on business impacts and role in society.

The resulting Measuring Impact Framework is designed to help companies understand their contribution to society and use this understanding to inform their operational and long-term investment decisions and have better-informed conversations with stakeholders.

The Framework includes 3 components: (1) the business case for measuring impacts entitled “Beyond the bottom line”, highlighting the experience of several WBCSD member companies; (2) a four-step methodology to identify, measure, assess, and manage impacts; (3) an Excel-based user guide that helps companies carry out an assessment.

Key features of the Framework:

• Built by business for business – reflects the collaborative work of over 25 multinational companies over a 2-year period;


• Grounded in what business does – based around activities and processes that companies do every day;


• Moves beyond compliance – attempts to answer questions about what business contributes beyond traditional reporting;


• Encourages stakeholder engagement – supports open dialogue with stakeholders to create a shared understanding of business impacts and societal needs, and to explore what business can and cannot do to address these needs;


• Flexible - designed for any business and/or industry at any stage in its business cycle, operating anywhere in the world


• Complements existing tools – makes use of what is already out there (for example, the Global Reporting Initiative and International Finance Corporation (IFC) Performance Standards);


• Externally reviewed – reviewed by more than 15 stakeholders, ranging from non-governmental organizations to academia and government, including Oxfam, World Resources Institute, International Finance Corporation and Harvard University. The Framework is co-branded by the IFC who is currently deploying it with one of their private sector clients.

To access the Measuring Impact Framework (including the business case brief, methodology and user guide): http://www.wbcsd.org/web/measuringimpact.htm

The WBCSD and Business Action for Africa are currently exploring opportunities with their respective member companies to apply the Framework in Africa

For more information about the Framework, please contact: Jessica Davis

Business Call to Action: transforming lives through business

Today, the UK Government and the United Nations Development Programme will be hosting an event of over 80 CEO’s in London. The Business Call to Action event will bring together business leaders from around the world and challenge their companies to explore new business opportunities that use their core business expertise in a way that contributes both to the Millennium Development Goals and to their commercial success.

Last July, in a speech at the UN, the UK Prime Minister Gordon Brown called for a new global partnership to deal with what is a development emergency: the shortfall in progress in meeting the Millennium Development Goals, particularly in sub-Saharan Africa. The PM and the UN Secretary General, Ban Ki-Moon, have both made clear this is a global Call to Action which cannot be achieved by governments alone, and where the private sector has a unique role. The speech was accompanied by two statements, one by Heads of State and the other by business

The Business Call to Action Website, includes more on the event and the MDG Call to Action, speeches, a live blog from the event, video, films and photos.

I believe the event is significant for two reasons. First, it showcases the important contribution that businesses can make through their core business. The event will look at new business ideas and initiatives which go beyond philanthropy, and that will support economic growth and reduce poverty in developing countries.

Numerous other examples of this sort of good practice are highlighted by Business Action for Africa and showcased on our Google Map. The second reason that the event is important is that it implicitly recognises that growth, enterprise and employment are the only long-term solutions to poverty.

If you are interested in fighting poverty through business, I would urge you to join Business Fights Poverty – a professional network of experts and practitioners from around the world that we have just set up. The Business Call to Action event is the start of a long journey - it will take a movement of like-minded people, not just an event, to make the difference that is needed.

Making progress in the fight against poverty in Ghana

According to a UN report launched in February and circulated today – the 2007 Ghana National Human Development Report "Towards a More Inclusive Society", Ghana is set to become the first African country to meet the first Millennium Development Goal of halving poverty: if current growth rates are maintained, the poverty rate would be halved by 2009 – 6 years ahead of the target.

This is a remarkable achievement, and should be celebrated and learnt from. It is not a coincidence the Ghana also recently won recognition for being among the 10 fastest reforming countries in Africa in terms of the ease of doing business. It was also the first country to submit itself for review under the African Peer Review Mechanism – the Africa-led process for driving good governance.

But much remains to be done, not least the high level of poverty and social exclusion in the three northern regions of the country (poverty reduction has been more significant in cocoa producing regions). The challenge is to ensure all of Ghana’s people are able to participate in and benefit from the opportunities that growth brings.

DFID puts growth back at the heart of development

Douglas Alexander, Secretary of State for International Development, set a fresh, bold direction for the UK’s aid agency, the Department for International Development, on Monday. In a speech at an event co-hosted by Business Action for Africa and the Overseas Development Institute, he pointed out that economic growth has accounted for 80% of poverty reduction around the world since 1980, helping as many as half a billion people to lift themselves out of poverty.

He also recognised the important role that the private sector has to play in helping developing countries grow and fight poverty – investing, creating jobs and increasing poor people’s access to affordable goods and services.

The words are a breadth of fresh air, and the task now is to ensure that they are reflected right across DFID – its priorities, programmes and structures – as well as across the development community as a whole.

My full blog is posted on Business Fights Poverty, the new professional network for those passionate about fighting poverty through good business.