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Public Sector and Governance

A new way to mitigate buyer risk in apparel

Mark Jones's picture
Bangladesh's share of the apparel market is increasing
The Alliance and Accord have been working over the past three years with more than 1,500 factories to help them meet new fire and building safety standards

The China sourcing conundrum
In conversations with U.S. and European retailers and brands, ELEVATE – a company formed in 2013 to support corporate social responsibility – finds that apparel buyers rate diversifying away from China as one of their top three sourcing goals.

This is not to suggest that there is a desire to exit China – which currently holds by far the largest share of global apparel trade, at 41 percent – but rather a need to significantly reduce dependence on product from China, owing to rising costs, factory closures, unenthusiastic second generation family ownership, new attitudes about working in factories, and a perception that China wants to move to higher-value manufacturing. Sourcing and procurement organizations feel uncertain, and uncertainty is not a friend of supply chains.

The problem is that for all its uncertainty, China still has a huge base of factories, a well-developed transport infrastructure, and a comprehensive eco-system that supplies cut-and-sew operations, and management that has matured with years of experience. Even if a buyer would like to give another country an opportunity, many corporate risk managers view certain countries or regions as quite challenging for doing business.

Stitches to Riches? The Potential of Apparel Manufacturing in South Asia


South Asia could seize this opportunity by better meeting requirements – besides competitive costs – that are vital to global buyers. These include: (i) quality, which is influenced by the raw materials used, skill level of the sewing machine operator, and thoroughness of the quality control team; (ii) lead time and reliability, which are greatly affected by the efficiency and availability of transportation networks and customs procedures; and (iii) social compliance and sustainability, which has become central to buyers’ sourcing decisions in response to pressure from corporate social responsibility campaigns by non-governmental organizations, compliance-conscious consumers, and, more recently, the increased number of safety incidents in apparel factories.

Surveys of global buyers show that East Asian apparel manufacturers rank well above South Asian firms along these key dimensions, as noted in a new World Bank report on apparel, jobs, trade, and economic development in South Asia, Stitches to Riches (see table). So, what can South Asia, which now accounts for only 12 percent of global apparel trade, do to become a bigger player? An encouraging recent development is that buyers have started collaborating to facilitate new sourcing possibilities – as the case of Bangladesh illustrates.

Five tools for capturing, manipulating, and visualizing data

Daniel Nogueira-Budny's picture
Data Literacy Bootcamp in Freetown, Sierra Leone. Photo: Usman Khaliq, iDT Labs


Increasing evidence suggests that, to improve accountability and promote evidence-based decision making, open access to data and data literacy skills are essential. While in-person educational opportunities can be limited in parts of the developing world, free educational tools are available online to boost data literacy skills.
 
In June 2016, Code for Africa, with support from the World Bank’s Open Government Global Solutions Group, held a Data Literacy Bootcamp in Freetown, Sierra Leone, for 55 participants, including journalists, civil society members, and private and public sector representatives. One of the Bootcamp’s primary objectives was to build data literacy skills to nurture the homegrown development of information and communication technologies (ICT) solutions to development problems.
 
Here are five tools Bootcamp participants employed to help capture, manipulate, and visualize data:

Retrofitting: A housing policy that saves lives

Luis Triveno's picture
Building earthquake-resistant housing in Peru. Photo: USAID/OFDA, Auriana Koutnik/Flickr
When a hurricane, earthquake or other natural disaster strikes a poor country, families too often suffer a double tragedy: the loss of loved ones and their most valuable (and sometimes only) asset, their home. In the aftermath of the 7.0 magnitude earthquake in Haiti in 2010, which killed more than 260,000 people, 70% of asset losses were related to housing. Ecuador faces billions of dollars in reconstruction costs from last April’s 7.8 earthquake, which killed 900 and injured almost 28,000. If Peru were hit by an 8.0-degree earthquake, an estimated 80% of potential economic losses would involve housing.
 
And while nature’s fury does not distinguish between urban and rural areas, a large majority of disaster losses are concentrated in cities, where they disproportionately affect the poor. This creates a great challenge for low and middle-income countries.  In Latin America and the Caribbean, 200 million people—1/3 of the population—live in informal settlements, where most dwellings don’t comply with construction codes and home insurance is non-existent. Perhaps unsurprisingly, LAC’s informal districts also account for the majority of disaster-related deaths in the region.
 
Yet housing policies aimed at the poor tend to focus on supporting the construction of new units instead of retrofitting existing homes to make them safer—ignoring the fact that it is mostly buildings, not earthquakes, that kill people. As a result, the deficit in housing quality is still disturbingly high: millions of families remain exposed not just to disaster risk but also to high crime rates, eviction, poor housing conditions, as well as lack of access to basic services, healthcare, schools, and job opportunities.
 
To address these issues, countries will need to tackle the housing challenge from two different but complementary angles: they have to find ways of upgrading the existing housing stock, where the majority of the poor live, while making sure that new constructions comply with building regulations. After all, if floods or earthquakes do not distinguish between old or new homes, why should policy-makers? It is time for resilience to become part of the definition of “decent, affordable housing.”

Prioritizing infrastructure investments: Helping decision-makers do their job

Cledan Mandri-Perrott's picture

Government officials and PPP practitioners make difficult decisions about infrastructure projects all the time. But perhaps the choice they grapple with the most is which projects to select for implementation within a given investment period. Many factors come into play, such as government budget constraints, the relative efficiency and effectiveness of investments, as well as costs and benefits of projects to society. With so much to consider, governments need improved decision-making frameworks that are rigorous enough to accommodate multiple components but practical enough to remain feasible and affordable.

Indonesia’s structural transformation offers clues on where to find good jobs

Maria Monica Wihardja's picture



What goes up must come down.

The end of the commodities boom is a wake-up call for Indonesia, as the reversal in economic transformation has adversely impacted employment growth in recent years. How can Indonesia continue to create jobs for its growing labor force?

Jobs in manufacturing and services offer a solution, as historical patterns of job creation have shown.

In the past 20 years (excluding the economic crisis of 1997-1999), manufacturing and services have been important sources of job creation, while employment in agriculture continues to decline. From 1990 to 2015, jobs in agriculture fell to 34% from 56% of all employment, while service sector work has surged to 53% from 34%, and manufacturing jobs have increased from 10% to 13%.

Safer buildings are the key to a disaster resilient future

Ede Ijjasz-Vasquez's picture
A few months ago, a 7.8 magnitude earthquake in Ecuador claimed hundreds of lives, left almost 28,000 people injured, and caused $1 to 3 billion worth of damage. Most human and economic losses were directly linked to the collapse of buildings: the tremor caused the destruction of an estimated 10,000 structures, many of which were located in unsafe areas or did not meet minimum safety standards.
 
The tragedy in Ecuador serves as a stark reminder that, in many cases, it is not earthquakes or other disasters that kill people, but failing building structures. Therefore, improving building safety will be key in protecting communities against rising disaster and climate risk.
 
With over a billion dwelling units expected to be built between now and 2050, focusing on new construction will be particularly important, and will help mitigate the impact of natural disasters for generations to come.
 
The good news is that we have the knowledge and technology to build safe, resilient structures. But, more often than not, this knowledge is not put into practice due to insufficient or poorly-enforced regulation, as well as a lack of incentives.
 
In this video, Ede Ijjasz and Thomas Moullier explain why building safety will play a critical role in enhancing disaster resilience, and discuss concrete recommendations on how to get there.
 
If you want to learn more about this topic, we invite you to discover our latest Sustainable Communities podcast.
 
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Olympic-sized ambition: Halt the Games' economic excess by building a permanent site for the Olympics — in Greece, their historic home

Christopher Colford's picture

Build it well, build it wisely, and build it only once — How investing to create a permanent site for the Olympic Games, ideally in their historic home of Greece, could reduce waste, deliver economic stimulus, and avoid "white elephant" monuments to extravagance.


The jeering of angry taxpayers and frustrated favela-dwellers may drown out some of the cheering of sports enthusiasts this weekend, as the 2016 Olympic Games begin in Rio de Janeiro. The government of Brazil and local officials in Rio have certainly done their best to stage the Games successfully, addressing a range of challenges that include the Zika virus outbreak, the doping scandal among athletes and the country’s prolonged economic slump and political traumas. Yet an enduring scandal in international finance — the chronic design flaw in the way that the Games are planned for and paid for — has again imposed an enormous economic burden on the Olympic host city. Struggling economies can ill afford the extravagance of repeatedly building use-once-throw-away sports facilities.

It was surely startling to see the deep degree of scorn and sarcasm with which many workaday Brazilians, who are now enduring a deep economic downturn, hurled derision at the arrival of the Olympic torch in Rio this week. They evidently saw that Olympic arrival ceremony as a symbol, not just of athletic ambition, but of financial folly.

The anxieties that Brazil has endured on the road to Rio 2016 should underscore a longer-term, Olympic-sized concern: Mismanagement by the Games' promoters has now been thoroughly documented, underscoring the abusive way that the International Olympic Committee (IOC) and the global sports-industrial complex have habitually foisted reckless costs on the taxpayers of hapless host cities.

By goading Olympic-wannabe cities to make ever-more-extravagant financial commitments – stoking their dreams of a media moment of purchased publicity – the mega-event industry has helped shatter the finances of one host city after another. No wonder that so many cities are now shunning the IOC’s bidding process, dreading the deadweight losses that are almost certain to burden any Olympic host.

Welcome as the IOC’s recent “Olympic Agenda 2020” reform proposals may be, it’s long past time to rein in the financial excesses of mega-event promoters. With a claque of financiers and flacks who are ready to manipulate the gullibility of the would-be hosts, the Olympic spirit has fallen victim to the self-interest of construction firms, property developers and publicists who seek to profit from host cities’ overspending.

An invaluable book documenting this Olympic-scale threat – discussed in detail at a World Bank’s InfoShop book-and-author seminar in June 2015 – should be top-of-mind for Olympics-watchers this week, as Rio de Janeiro enjoys its moment in the spotlight. “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup” — by Andrew Zimbalist, a professor of economics at Smith College — can help other cities avoid an impulsive rush for momentary Olympic notoriety. A video of Zimbalist’s InfoShop presentation is archived at http://web.worldbank.org/WBSITE/EXTERNAL/PUBLICATION/INFOSHOP1/0,,contentMDK:20289125~pagePK:162350~piPK:165575~theSitePK:225714,00.html 

Harvard Kennedy School and IFC team up for senior training on PPPs and project finance

Isabel Chatterton's picture

I recently had the chance to get to know dozens of forward-thinking, dynamic individuals from the public and private sectors. Despite their varied backgrounds, resumes, and perspectives, they shared one thing in common: they have all been influential in shaping the Asia Pacific PPP landscape. Our gathering was part of the IFC PPP Transaction Advisory Services Unit’s four-day Senior Training Program on PPPs and Project Finance, in collaboration with the Harvard Kennedy School in Singapore.

All of the participants – government representatives, donors, private sector clients, World Bank and MIGA staff, as well as senior IFC staff -- offered a different view on how best to combat today’s global PPP challenges. We captured a few key insights from the training program to share with others:

Breaking down barriers to competition: Unlocking Africa’s potential through a regional platform for cooperation

Klaus Tilmes's picture



The cement industry in Africa is one of the sectors that would benefit from stronger competition policies, which can help strengthen the economy by preventing anti-competitive behavior and collusive price-fixing. 
Photo by Simon Davis / DFID — U.K. Department of International Development

What determines whether a country is able to reap the benefits of deepening regional integration and the related increases in trade, cross-border investment and economic opportunities from participating in global value chains? One of the key points in this timely discussion is ensuring that the gains from integration are not nullified by anticompetitive business practices or distortive government interventions. As economies become more interconnected, it will become ever more important to allow all businesses to compete on a level playing field. Some African economies, for example, have not benefited as expected, in part because of the continued existence of barriers to competition in domestic markets.

These concerns lie at the heart of a new publication developed by the World Bank Group in partnership with the African Competition Forum (ACF). The report explores competition issues that affect the performance of key markets in Africa, and it reviews the status of competition policy and its implementation across the continent. It is the first report to take a broad regional perspective on competition issues – and the first to be built on a partnership between the World Bank Group and a regional network of government agencies and ministries responsible for competition.

Among its findings, the report shows that reforms in input sectors, such as professional services, can boost the export competitiveness of downstream firms that use those inputs intensively. However, in many cases, trade is restricted when governments impose non-tariff barriers, including product standards or testing regimes that are more restrictive than necessary, which prevent the entry of new, lower-cost products. This is the case with fertilizer markets in both East and West Africa. Even when such non-tariff barriers are removed, it is important to prevent anti-competitive behavior, such as collusive price-fixing and market-allocation agreements among competitors – as was seen in the case of cement in South Africa, Namibia and Botswana.

The report also highlights that, in some sectors in Africa, the same firms operate in many countries and some firms may locate themselves in areas that allow them to supply markets across borders. These factors hold potential efficiencies – for example, where it leads to economies of scale – but it also makes it vital to view competition dynamics through a regional lens as well as a national one.

3 ways countries can improve water supplies in small towns

Fadel Ndaw's picture

Also available in: Français

A public faucet that serves 1,000 families in
el Alto, Bolivia.
Photo credit: Stephan Bachenheimer / World Bank

Small towns* typically have not been well served by national or regional water utilities. Decentralization has become increasingly widely adopted, but even if local governments at the small town level have the power to operate a water utility, they often lack the capital and skills to do so. In response, some local governments and public institutions concentrate improvements on upgrading public utilities’ operations or strengthening community based management. In other cases, they choose to bring in the private sector knowledge of how to get clean water and sanitation services to more people more efficiently, affordably or sustainably. There is no one solution to addressing often very complex water and sanitation challenges.

There are many ways in which the public sector can leverage its own resources through partnering with the private sector. For the domestic private sector to fully realize its potential at scale in the small town sub-sector, we found they need capable and enabled public institutions to structure the market and regulate private operators.

Lessons learned from case study countries (Colombia, Bangladesh, Philippines, Uganda, Cambodia, Niger and Senegal) in a new global study published by the Water Global Practice’s Water and Sanitation Program suggest the following three key ways to support public institutions in order to build a conducive business climate for market players in small towns Water Supply and Sanitation (WSS) service delivery:


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