Since the Edelman company began tracking trust with its Trust Barometer, never has the world seen such an “implosion of trust.” In 2017, two-thirds of countries fell into “distruster” territory with trust levels of below 50 percent. Governments are now distrusted by investors in 75 percent of countries, and the same is the case for business in 46 percent.
Private Sector Development
Editor's Note: Below is a viewpoint from Chapter 6 of the Foresight Africa 2018 report, which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Read the full chapter on the changing nature of Africa's external relationships here.
. The compact brings together interested African countries with the World Bank Group, the International Monetary Fund, the African Development Bank, and other multilateral and bilateral partners to develop and support policies and actions that are essential for attracting private investment. To date, 10 countries have signed up for the initiative and outlined their aspirations and reform programs under a framework adopted by the G-20 finance ministers in March 2017.
Business plan competitions have increasingly become one policy option used to identify and support high-growth potential businesses. For example, the World Bank has helped design and support these programs in a number of sub-Saharan African countries, including Côte d’Ivoire, Gabon, Guinea-Bissau, Kenya, Nigeria, Rwanda, Senegal, Somalia, South Sudan, Tanzania, and Uganda. These competitions often attract large numbers of applications, raising the question of how do you identify which business owners are most likely to succeed?
In a recent working paper, Dario Sansone and I compare three different approaches to answering this question, in the context of Nigeria’s YouWiN! program. Nigerians aged 18 to 40 could apply with either a new or existing business. The first year of this program attracted almost 24,000 applications, and the third year over 100,000 applications. After a preliminary screening and scoring, the top 6,000 were invited to a 4-day business plan training workshop, and then could submit business plans, with 1,200 winners each chosen to receive an average of US$50,000 each. We use data from the first year of this program, together with follow-up surveys over three years, to determine how well different approaches would do in predicting which entrants will have the most successful businesses.
Photo: Scaling Solar project in Zambia
What is a common thread between Argentina, Maldives, and Zambia? In each of these countries, the World Bank provided guarantees to support transparent auctions for renewable energy. Through these, I have seen how the Bank’s involvement helped increase private investors’ confidence, attract world-class developers, and ultimately reduce tariffs.
Drawing on 10 years of diverse experience in the power sector in both public and private organizations, my role is to help bridge the divide between public and private parties and help each side better understand the other. The World Bank is ideally positioned for this. Both sides understand the World Bank carries out a detailed due diligence and ensures the auction meets international standards. Both sides appreciate the World Bank will be an honest broker if issues arise. Because of its long term and continuous involvement in our client countries, the World Bank can help identify and solve issues early on. As such, no World Bank project-based guarantee has ever been called.
Fulmati Mijar, a mother of three living in Nuwakot district in Nepal, used to earn her living from daily wage labor along with her husband.
On April 25, 2015, their lives took a turn for the worse when a magnitude 7.8 earthquake struck Nepal, killing 8,790 people and affecting 8 million more—or nearly a third of the country’s population.
The catastrophe destroyed Fulmati’s house and made her family more vulnerable.
Yet, it did not dent her resolve.
When housing reconstruction started through the Earthquake Housing Reconstruction Project (EHRP), Fulmari joined her village’s Community Organization (CO), supported by the Poverty Alleviation Fund (PAF) and learned carpentry and earthquake-resistant techniques for housing reconstruction.
She initially received a NPR18,000 ($176) loan to invest in a small furniture enterprise. With the funds, her family started making windows, doors, and kitchen racks, which were in high demand. After repaying the loan, she received another loan to upgrade their furniture enterprise, where today she and her family make their living.
At the time of the 2015 earthquake, full recovery was estimated to cost $8.2 billion, with the housing recovery component amounting to $3.8 billion. The World Bank immediately pledged $500 million to support the emergency response. During the reconstruction phase, the most urgent—and largest—need was to rebuild nearly 750,000 houses.
More than two years since the earthquake, restoring lost or affected livelihoods has become more important.
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Photo: Dominic Chavez / International Finance Corporation
In the early 1990s, Colombia’s road infrastructure was a maze of poorly maintained roads and bad highways. Difficult geography—the Pacific coast jungle and the Andes branching out into three chains—made it harder to improve road conditions and connect isolated communities. Conflict, corruption, and short-term political priorities contributed to the problems plaguing Colombia’s road system. But just as influential were the problems with the nation’s existing concession contracts that had wrong incentives, created opportunities for renegotiating signed contracts, and assigned unproportioned demand risk to the Government of Colombia.
Exponential progress in how we collect, process and use data is fundamentally changing our societies and economies. But the new digital economy depends fundamentally on a very physical enabler. Amazon and Alibaba would not exist without efficient ways to deliver products worldwide, be it by road or ship or drone. The job you applied for through Skype may require travel to London or Dubai, where you’ll expect to get around easily.
In fact, as the backbone of globalization, digitization is increasing the need to move people and goods around the planet. Mounting pressure on transportation as economies grow is leading to unsustainable environmental and safety trends. Transport needs are increasingly being met at the cost of future generations.
Can the digital revolution, which depends so much on efficient global and local mobility, also help us rethink transportation itself? To be a part of the solution to issues such as climate change, poverty, health, public safety, and the empowerment of women, the answer must be yes. Transport must go beyond being an enabler of the digital economy to itself harnessing the power of technology.
- Transforming Transportation
- sustainable transport
- sustainable mobility
- Sustainable Communities
- Urban Development
- Public Sector and Governance
- Private Sector Development
- Law and Regulation
- Labor and Social Protection
- Information and Communication Technologies
- Global Economy
- Climate Change
A major factor hindering infrastructure implementation and delivery is the absence of good governance, according to the 130 delegates from 27 countries who came together for the first Regional Roundtable on Infrastructure Governance in Cape Town in November.
There’s no denying infrastructure is crucial to Africa’s growth prospects. Nor can one ignore the ever-growing need for infrastructure on the continent—in Sub-Saharan Africa, only 35% of the population has access to electricity, and 23% still lack access to safe water and sanitation. Despite an estimated shortfall of nearly $100 billion in infrastructure investment in Africa, lack of financing is not the biggest problem.
The landmark Roundtable brought together representatives from African governments, the global private sector, multilateral and international organizations, civil society organizations and other development partners, for a discussion on the challenges and practical solutions to the governance impeding successful infrastructure delivery in Africa.
Photo: DFID | Flickr Creative Commons
Health is one of the United Nation’s Sustainable Development Goals (SDGs). However, it is not feasible for any country, rich or poor, to provide its entire population with all needed health services. Accordingly, the private sector has an important role to play in closing the healthcare gap, as it contributes financial resources, innovation, and expertise.
The managed equipment services (MES) arrangement, used in Kenya, is one way to do this. MES is a business model emerging in Kenya’s healthcare system involving partnerships between the private sector and public healthcare providers that offers solutions to some of the challenges posed by the dynamic healthcare industry.
Photo: User 377053 | Pixabay
The Argentinian presidency of the G20 opens this month and will be marked by a focus on infrastructure investment. The G20 and Organisation for Economic Co-operation and Development (OECD) have already announced a widescale data collection initiative to create benchmarks to monitor the risk-adjusted financial performance of private infrastructure debt and equity investments.
It’s about time.
Investors have hit a roadblock when investing in infrastructure. Until now, none of the metrics needed by investors were documented in a robust manner, if at all, for privately held infrastructure equity or debt. This has left investors frustrated and wary. In a 2016 survey of major asset owners by the EDHEC Infrastructure Institute (EDHECinfra) and the Global Infrastructure Hub, more than half declared they did not trust the valuations reported by infrastructure asset managers. How, under such conditions, can the vast increases in long-term investment in infrastructure by institutional players envisaged by the G20 take place?