Turkey has radically transformed its land title registration system, and decreased the turnaround time for recording property transactions to just two hours.
I remember my first visit to the agency in 2007. The agency is heavily staffed (15,000), has more than 100 branches and its main headquarters had once almost fallen apart. In my first visit, the head of the agency gave me a nice surprise: he showed me a land book that dated back to the 18th century, and included a record of my great-great-grandfather’s land title in Palestine.
The head of the agency had great plans to transform the agency by improving land records, introducing computerization and integrating the system into the overall e-government program, and setting a time limit of one day to register land transactions. Based on that an ambitious reform agenda, we worked together over a few months’ ‘time to prepare the cadastre modernization project. The Bank partly financed this reform through a $100 million loan, while the Turkish government funded the rest of the program. The project started in 2007, and I moved on to other positions later that year.
This time I had a second surprise. The institution is completely transformed. The main office has been completely and beautifully renovated. It now resembles any other government office in the US or Europe. The agency presented its achievements. It was amazing to see what had been accomplished in 8 years. The government is about to complete the renovation of the cadastre and the computerization of all land records, including historical records from Ottoman times. Service delivery has improved dramatically, with property transactions now being registered within 2 hours. They also integrated cadastre registration into the overall e-government program, which allows any Turkish citizen to access the record of their land/property online. Above all, customer satisfaction has reached 97% — something unheard of for land agencies, often known to be among the most corrupt agencies in many countries.
When it comes to engagement in the fight against corruption, developing country governments span a wide range. Some are willing to investigate and prosecute corruption; others are more reluctant.
Some can count on a well-organized and responsive civil service; others cannot. In short, from the perspective of intergovernmental organizations interested in combatting corruption, some governments are better partners than others.
For those states unable or unwilling to be strong allies in the fight against corruption in World Bank projects, efforts must be channeled through actors other than the government. And since corrupt transactions—like a tango (it takes two) —there is always an alternative actor to address: the private sector.
To respond to client demand at this crucial moment for economic development, the World Bank Group is generating knowledge to better understand the links among competition, growth and shared prosperity, and to develop policies that promote competition. Last week, at a Bank Group event, held jointly with the Organization for Economic Cooperation and Development (OECD), experts and practitioners discussed the growing body of empirical evidence on these matters. Representatives from the WBG’s client countries, in turn, shared how WBG competition policy tools are leveraging their development impact.
Competition in the marketplace matters for economic growth and household welfare for two reasons:
- First, it fosters more productive firms and industries, allowing domestic firms to become more competitive abroad and to export more. A WBG study shows that substantially increasing competition in Tunisia would boost labor productivity growth by 5 percent.
- Second, it protects poorer households from paying too much for consumer goods, and from missing out on the benefits of trade liberalization. In Mexico, lack of competition costs the poorest households 20 percent more than richest households. In Kenya, poverty could fall by 2 percent if competition was more intense in the maize and sugar markets.
Competition is restricted by businesses practices that undermine competitive dynamics. When firms agree to fix prices, empirical evidence reveals that consumers pay on average 49 percent more, and 80 percent more when cartels are strongest. Developing economies are still frequently marked by regulations that restrict the number of firms or limit private investment; rules that increase business risks and facilitate agreements among competitors; and rules that discriminate against certain competitors or affect competitive neutrality. When new retail firms are allowed to enter the market, real household income increases by 6.2 percent.
The Client Protection Principles: Model Law and Commentary for Financial Consumer Protection (the "Model Law"), recently launched by the Microfinance CEO Working Group, has the potential to be a useful resource for the many developing and emerging economies that are seeking to design and implement international best practices in financial consumer protection, having recognized that consumer protection is a critical element in building and maintaining trust in the financial sector and achieving financial inclusion targets.
The Model Law was prepared on a pro-bono basis by the international law firm DLA Piper on the basis of the 7 Client Protection Principles of the Smart Campaign. The project, which took place over a 15-month period and was managed by Accion on behalf of the Council of Microfinance Counsels, included consultations with financial inclusion stakeholders and legal experts, who undertook a review of existing legal frameworks in various countries. Reference was also made to international best practices and principles such as the World Bank’s Good Practices on Financial Consumer Protection and the G20 High Level Principles on Financial Consumer Protection.
The Model Law is a high-level, activities-based law that is intended to apply equally to all financial-services providers. This includes “banks, credit unions, microfinance institutions, money lenders and digital financial-service providers.” The apparent aim is to ensure an equal level of protection for all consumers and a level playing field. The consumers concerned may be an individual or a micro-, small or medium-sized business, and so the law will apply equally to consumption and small-business facilities. Many of the provisions are framed in terms of principles, the detail of which would need to be filled out in related legislation.
The framework of the Model Law follows the Smart Campaign’s 7 Client Protection Principles, and so it covers the topics of appropriate product design and delivery; prevention of overindebtedness; transparency; responsible pricing; fair and respectful treatment of clients; privacy of client data; and mechanisms for complaint resolution. There is also a section covering the establishment of a dedicated supervisory authority with broad functions relating to the regulation, supervision and registration of financial-services providers, market monitoring and enforcement.
. And that’s just a start.
The use of data and technology in procurement make it possible for governments to make informed decisions to maximize development impact. At the World Bank, the Public Integrity and Openness Practice is developing a set of Transformational Engagements, one of which focuses on Data Analytics, to catalyze better outcomes from procurement processes.
The engagement will use data analytics to solve pressing developmental problems. The plan is to combine work on addressing common data problems (how to digitize paper records, how to link different data records, how to present data findings in ways that are accessible and influential) with efforts at the country level. Powered by advanced data analysis, countries can undertake empirical-based examinations of when best value is achieved via procurement, or in which cases and sectors government contracting is promoting the development of competitive and dynamic private sectors.
Work undertaken within the Bank will be informed by the concurrent efforts of others who are exploring different approaches and different techniques to using data and data analytics to drive improved performance. The World Bank seeks to play a constructive role within a community of initiatives to harness the power of information to change how governments function, the relationship between government and non-governmental actors, and the lives of people. Committed to an inclusive process of learning-by-doing, the World Bank is dedicated to building partnerships with researchers, government officials, the private sector, and civil society.
- The World Region
- Public Sector and Governance
- Private Sector Development
- Information and Communication Technologies
- Open Governance; Open Data; Public Finance Management; Public Procurement; Information and Communication Technology; Public Integrity and Openness Practice; Transformational Engagements; Data Analytics; Private Sector Development; Citizen Participation
I recently spent three days in Hargeisa, Somaliland. An eye-opening experience, as much as one that strengthens my conviction that World Bank Group is doing the right thing by engaging in this fragile country.
Somaliland is business unusual. Imagine among others, sitting in a mandatory security brief and specifying your blood type straight off the plane, going to meetings in armored cars, wearing the hijab – a veil worn by Muslim women in the presence of adult males – scheduling meetings around prayers and the time of Iftar, the evening meal when Muslims end their daily fast during Ramadan.
The business environment in Somaliland is characterized by a fragile state, poor public service delivery, a weak legal and regulatory regime, inefficient and costly trade logistics, and a fragmented private sector with limited structured engagement with the government. Although the private sector accounts for more than 90 percent of GDP (an anomaly in Africa), it has poor access to finance and lacks an organized voice.
Meeting with the President of the Republic of Somaliland.
During my mission, I met with key Ministers, entrepreneurs and development partners and discussed the challenges and opportunities linked to the ongoing economic development agenda, notably the development of infrastructure and the energy sector. The exchanges highlighted how the World Bank Group's program in Somaliland is laying a foundation to create job opportunities and to accelerate the pace of economic development by fostering business reforms and SME engagement. In this light, the set-up of a high-level taskforce – reporting directly to the President – to implement Doing Business reforms compiled in a Doing Business memo, is a milestone and a strong sign of client buy-in. That is always crucial for the World Bank Group's programs to reach their objectives.
Last, I participated in the presentation of the pilot Reform Champion Program, which aims to develop the capacity of government officials and some representatives of the private sector to implement key reforms that will address constraints to economic growth and development. The project is expected to help trained reform champions implement at least five reforms to improve government-to-business services by July 2016.
Sub-Saharan Africa’s (SSA) impressive growth over the past decade or so has been matched by its equally impressive showing on the World Bank Group's "Doing Business" index. In 2012, one-third of the world’s top reformers on the index were from the continent, and every year its countries feature in the top 10 most active reformers. In 2014, five of the top 10 were from SSA.
Doing Business tracks progress in reforms that support a firm through its life-cycle, from start-up, through to raising capital, to potential closure. Through a mix of wide geographic coverage and rankings that generate a lot of public attention (not all of it wholly positive), the report has been a powerful motivator of investment climate reform, with the data serving as a useful means to measure progress made.
Doing Business as a start
While a large appeal of Doing Business as a measure of a country’s business environment is that it focuses on tangible business activities to which the private sector and policymakers can directly relate, its indicators are limited in scope. They are therefore intended to be used mainly as a litmus test of the state of a country’s investment climate. Therefore, while Doing Business's accessibility and global profile can be very useful in generating momentum for private sector reform, it ought to mainly serve as a starting point for a country to then engage in both broader reaching and deeper investment climate change. (This approach to the use of Doing Business has largely underpinned investment climate reform efforts in SSA by the Bank Group’s Trade and Competitiveness Global Practice.)
So, if Doing Business is a starting point and is used as such, is there evidence to support the assumption that it triggers wider and deeper private sector reform? Or is movement on Doing Businesses a starting point and, unintentionally, an ending point too?
Linkages to wider competitiveness reform data
One of the most comprehensive measures of the state of different countries’ business environments is the World Economic Forum’s (WEF) Global Competitiveness Index (GCI), a data set of over 110 variables that looks at the current state of, and tracks changes in, competitiveness across the world. The data set is structured under 12 pillars that cover measures from institutional development to technology and innovation.
Using GCI as a good measure of competitiveness, and interpreting changes in it as a reflection of a country’s effectiveness in engaging in wider competitiveness reform, we can look at the relationship between GCI and Doing Business and, significantly, the extent of movement on the two indices.
A high-level review of the relationship between changes in GCI and Doing Business for different regions between 2007 and 2013 shows SSA to have performed comparatively well on both indices, performing similarly to countries of Eastern and Central Europe and surpassing the world average. However, looking beyond averages to GCI’s specific pillars, SSA’s performance has been variable, advancing as a region in some areas more than others. Figure 1, below, shows GCI pillars where SSA has improved the most and the least, highlighting the top and bottom three.
Figure 1: Variations within competitiveness
(SSA score on GCI, total and select pillars)
Of particular interest is Pillar 6, Goods Market Efficiency, because many of the areas that this pillar tracks are also areas where the Bank Group has focused its investment climate reform interventions, from business entry and competition, to taxes, trade and investment. (Two of the 16 indicators in this pillar actually comprise Doing Business data – the number of procedures and days required to start a business.)
Pillar 6 is one of the top three GCI pillars that have the greatest upward pull on SSA’s overall performance on GCI, countering the areas where SSA has slipped in its scores.
Ending abuse of power by the ruling elites was one of the chief demands of those who took to the streets during the Arab Spring protests. Our new research paper unveils the scale of such abuse.