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Private sector engagement is key to success on gender equity

Anabel Gonzalez's picture

Photo: Visual News Associates / The World Bank

As we celebrate International Women’s Day, if there is one concept to keep in mind above all others, it’s that gender equity is vital 24-7-365, and not just as a once-a-year observance.

You have heard the argument before and you will hear it again: Economies cannot reach their full potential if half the population is systematically blocked from full participation. This fundamental idea motivates the World Bank Group as it redoubles its efforts to address gaps in gender equality.

Our deepening work to close key gender gaps shows that the issues go far beyond economic inequity. Barriers to women’s full economic participation also impose moral, emotional and at times even physical costs.

We see this in the laws that prevent wives from making autonomous decisions about their careers. We see it in instances of violence against women in the workplace. We see this when harassment occurs at rural border crossings where women traders can encounter threats, and worse, from border guards.

In developing and developed countries alike, women face obstacles to starting and managing a business, to accessing finance, to earning equal pay for equal work, and to owning land or other assets. Many countries maintain laws and regulations that advantage men while discriminating against women, often relegating them to the status of a legal minor.

As Emeritus Professor Linda Scott of Oxford University’s Saïd Business School told us recently, “Women are economically disadvantaged in every country on the planet” and “women’s economic exclusion imposes a significant drag on world economies and societies.”

A key part of the Bank Group’s gender effort revolves around the importance of leveraging the private sector to ensure that reform goes beyond policy statements and creates real economic benefits for women and men. The Bank Group’s Trade & Competitiveness Global Practice (T&C) has developed an approach to gender equity that focuses on expanding market opportunities, enabling private initiative, and developing dynamic economies.

The work we are doing recognizes the entrenched nature of the obstacles to fuller economic empowerment for women. Achieving results at scale will require sustained commitment. But we also understand the importance of realizing near-term progress to catalyze change, and we recognize how interventions in particular countries can show the way forward elsewhere.

The concept is simple: Good results generate more good results.

Why gender equality in doing business makes good economic sense

Cecile Fruman's picture

Photo Credit: Stephan Bachenheimer / The World Bank

Women today represent about 50 percent of the world’s population and, for the past two decades, about 50 percent of the labor force. Yet there are stark differences in the outcomes they achieve: Women are only half as likely as men to have a full-time wage-earning job. The women who do have paid jobs earn as much as one-third less than men. Fewer women than men are involved in trade or own registered companies. And women are more likely to work in low-productivity activities or informal employment.

There are many reasons for these outcomes, including socio-cultural norms, access to high-quality jobs, the lack of transport and the lack of child-care facilities. In many countries, such differences also continue to be written in the law. 
 
For the first time since it was launched in 2002, the World Bank Group’s annual Doing Business report this year added a gender dimension to its measures, including to the annual ranking on each country's ease of doing business. This is good news, since the report attracts the attention of policymakers worldwide. Global benchmarks and indicators are a powerful tool to raise awareness, motivate policy dialogue and, above all, inspire action by policymakers.
 
Ensuring that women have the same economic opportunities by law and in practice is not only a basic human right, it makes economic sense. A recent study estimates that achieving equality in economic opportunities for women and men could spur $28 trillion in world GDP growth by 2025 – about the equivalent of the size of the Chinese and U.S. economies combined.
 
Looking at gender differences when it comes to starting a business, registering property or enforcing contracts, Doing Business shows that 23 countries impose more procedures for women than men to start a business. Sixteen countries limit women’s ability to own, use and transfer property. And in 17 economies, the civil courts do not value a woman’s testimony the same way as a man’s.

This pattern might give the impression that such legal differences are really only an issue in a selected group of countries.  But Doing Business’ sister publication – Women, Business and the Law  tells us otherwise. The report analyzes gender parity in accessing institutions, using property, getting a job, providing incentives to work, building credit, going to court and, most recently, protecting women from violence. It finds that 90 percent of the 173 countries measured have at least one law impeding women’s economic opportunities. In 30 economies, there are 10 or more legal differences between men and women, predominantly across the Middle East and North Africa.
 
To counter this, there is ample evidence that those countries that have integrated women more rapidly into the workforce have improved their international competitiveness by developing export-oriented manufacturing industries that tend to favor the employment of women. Legal gender disparities are also associated with lower female school enrollment and labor-force participation.
 
There is some good news. The Women, Business and the Law 2016 report shows that, between 2013 and 2015, 65 economies made 94 reforms increasing gender parity. The World Bank Group’s Trade & Competitiveness Global Practice (T&C) – a joint practice of the World Bank and the International Finance Corporation (IFC) – works across the world to support governments as they design gender-informed and gender-neutral policies, and in many cases implement gender-targeted interventions to improve the business environment and expand market opportunities for women.

More than a trend: Africa is becoming better by the year at reforming its business environment

Cemile Hacibeyoglu's picture

"Doing Business 2017: Equal Opportunity For All" was released on October 25, and it marked record progress for the business environment reform agenda in Sub-Saharan Africa. Implementing 80 of the 283 reforms recorded globally, Sub-Saharan Africa once again claims the status of the world's top reforming region. Beyond the record reform count, this year is also marked as the year with the highest number of countries in the region having passed reforms (37 out of 48), confirming that more and more economies in Africa are putting private-sector-led growth at the heart of their development agendas.




There is actual transformation tied to those rankings. For example: It now takes 156 days to build a warehouse in Mauritius, compared to 183 days in France and 222 days in Austria. Rwanda ranks second globally on the Getting Credit indicator, not to mention that, years ago, it used to take 370 days to transfer a property in Kigali, while today it takes only 12 days.
 
But, beyond the figures, a few additional thoughts come to mind.

How has Africa become not only better at reforming, but also become home to some good practice that inspires many to reform?

First, one should mention the unique momentum for reform. Most African countries’ development strategies place the private sector as the engine of their growth, and recognize that creating enabling business environments is a key pre-requisite to attract investments and encourages business expansion. That is a timely move from African governments, especially in the context of the present commodity-price fall, which calls on African countries notably to move away from an exclusive dependence on minerals and to diversify their growth models.
 
Then, Africa countries are simply getting better at reforming. A good sign of this is that reforming today costs less in Sub-Saharan Africa. Recent analysis shows that it costs on average of $310,000 to implement a reform today, versus $730,000 merely four years ago. That is a clear sign of increased efficiency. The capacity-building and hands-on assistance of World Bank Group teams to governments and implementing agencies throughout the region is beginning to bear fruit.

Easy business exit is as important as easy business entry

Simon Bell's picture



How to identify and support fast-growing firms that can take off, create jobs, and yield significant value in a short period of time is one of our biggest dilemmas in nurturing private sector development in emerging markets. 
 
The Sustainable Development Goals (#8) include the need for decent jobs as an important developmental priority, and small and medium size enterprises (SMEs) are expected to create most jobs required to absorb the growing global workforce.
 
But many young firms will fail; by some accounts more than half of new firms won’t make it to their second birthday. 
 
However, despite the high rate of firm failure, research from the US and evidence from India, Morocco, Lebanon, Canada and Europe shows that it’s largely young firms that create the bulk of net new jobs (net jobs are jobs created minus jobs lost) and lasting employment opportunities.
 
In addition, even when a firm survives beyond the first two years of operation, there are no assurances it will become a fast-growing firm -- a gazelle. 
 
Although estimates vary widely, the share of gazelles -- fast-growing firms that generate a lot of value-added and jobs -- is thought to be only between 4% to 6% of all SMEs, and, possibly, even less in many emerging countries.
 
All this makes creating favorable conditions for entrepreneurship a priority. 
 
Easing business entry -- the time and cost involved in establishing a new enterprise -- is extremely important.  As the annual Doing Business report shows, many countries have made a lot of progress on this indicator over the past decade.  
 
But business exit is an equally critical piece of the puzzle.

Why Juba?

Jean Lubega-Kyazze's picture
Construction in Juba
 
The World Bank Group continues to engage in South Sudan despite the odds, and for good reason

Tell people you work in Juba – capital of South Sudan and now the newest member of the East African Community – and more often than not they won’t know where to find it on a map. Those of us who know are often met with doubtful stares when we talk about enhancing trade and competitiveness in a country that is struggling to emerge from decades of grueling civil war, not to mention a 98 percent illiteracy rate, inadequate capacity, a maternal mortality rate of 254 for every 100,000 births and a 250 out of 1,000 infant mortality rate.

Fact is, Juba is situated in the heart of Africa, where such challenges, and the daunting figures that go along with them, exist. But look deeper and you see commitment, potential, and signs of the World Bank Group’s positive impact. In short, you see opportunity.

The reforms behind the Doing Business rankings

Cecile Fruman's picture



In Mozambique in 2003, it took an entrepreneur 168 days to start a business. Today, it takes only 19 days. That kind of transformation has major implications for ambitious men and women who are seeking to make a mark in business, or, as is often the case in Africa, seeking to move beyond a life in agriculture. In economies with sensible, streamlined regulations, all it takes is a good idea, and a couple of weeks, and an entrepreneur is in business.

This week, the World Bank Group launched its annual Doing Business 2016 report, which benchmarks countries based on their progress undertaking business reforms that make it easier for local businesses to start up and operate.

For the second straight year, Singapore topped the list, with New Zealand, Denmark, the Republic of Korea, and Hong Kong SAR, China, coming in closely behind.

In the developing world, standouts included Kenya and Costa Rica, both of which rose 21 positions; Mauritius, Sub-Saharan Africa’s top-ranked economy; Kazakhstan, which moved up 12 places to rank 41st among all countries; and Bhutan, which topped South Asia’s list of reformers. In the Middle East and North Africa, 11 of the region’s 20 economies achieved 21 reforms despite the challenges caused by a number of civil and interstate conflicts.
 
The reforms tracked by Doing Business are implemented by governments, but the results show up most in the private sector, which is critical to driving a country’s competitiveness and to creating jobs. Ensuring an enabling environment in which the private sector can operate effectively is an important marker of how well an economy is positioned to compete globally. 
 
For those of us working with governments to help improve their investment climates – and to create a policy environment in which business regulatory costs are reasonable, access to finance is open, technology is shared, and trade flows within and across borders – the real work begins long before the Doing Business rankings are published.

In the World Bank Group’s Trade and Competitiveness Global Practice (T&C), our mandate is to work with developing countries to unleash the power of their private sector for growth. Much of this work involves reforms in the very areas measured in the Doing Business report: starting a business, dealing with construction formalities, or trading across borders, among other factors.

Our experience working with clients confirms one of this year’s key findings: Regulatory efficiency and quality go hand-in-hand. A good investment climate requires well-designed regulations that protect property rights and facilitate business operations while safeguarding other people’s rights as well as their health, their safety and the environment.

The impact of investment climate reform in Africa: How has 'Doing Business' reform promoted broader competitiveness?

Aref Adamali's picture

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.[1] 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.

Inclusive Growth as the Path Toward Sustainable Development: A New Initiative on 'Equality of Opportunity in Global Prosperity'

Elaine R.E. Panter's picture

The correlation is simple: Job creation is the hinge connecting the three pivotal elements of economic development: living standards, productivity gains, and social cohesion. Promoting access to the labor market for all, including traditionally marginalized groups, is therefore paramount to achieving real, sustainable growth.
 
Following the success story of "Women, Business and the Law," which focuses on legislative gender discrimination and its impact on the economy, the World Bank Group is now launching a new initiative that will develop a set of indicators measuring discriminatory legislation on the basis of racial and ethnic origin, religion and sexual orientation. The project was presented externally for the first time on November 11 by Federica Saliola, Program Manager and Task Team Leader of the project, speaking at Sexual Orientation and Gender Identity & Development: International Human and Economic Development, LGBT Rights and Related Fields conference, organized by The Williams Institute at UCLA.
 
In her speech, Ms. Saliola reminded the audience that, despite the rapid growth in emerging economies, not all sectors of society have benefitted equally, income inequality has risen, and 1 billion people are still left under the poverty line. In the coming three years, the new project will thus expand the knowledge base of laws, regulations and institutions that discriminate against ethnic, racial, religious and sexual minorities and will collect data across a number of economies covered by the Global Indicators Group. 

Fostering Private Sector Development in Fragile States: A Piece of Cake?

Steve Utterwulghe's picture
Private sector development (PSD) plays a crucial role in post-conflict economic development and poverty alleviation. Fragile states, however, face major challenges, such as difficult access to finance, power and markets; poor infrastructure; high levels of corruption; and a lack of transparency in the regulatory environment. 

The private sector has demonstrated its resilience in the face of conflict and fragility, operating at the informal level and delivering services that are traditionally the mandate of public institutions. However, in post-conflict situations, PSD can have predatory aspects, thriving on the institutional and regulatory vacuum that prevails. The private sector will need to create 90 percent of jobs worldwide to meet the international community’s antipoverty goals, so pro-poor and pro-growth strategies need to focus on strengthening the positive aspects of PSD, even while tackling its negative aspects.

Is Rwanda the next big thing in Africa?

Mohammad Amin's picture


Does Rwanda's impressive growth tell the whole story? (Credit: CIAT, Flickr Creative Commons)

Over the last few years, a lot of optimism has been built around Rwanda being the next big thing in Africa. I guess one reason for this optimism is Rwanda’s impressive list of business friendly reforms and its equally impressive growth performance. Between 2006 and 2011, per capita income in Rwanda grew at an average rate of 5.1 percent per annum, fifth highest in Sub-Saharan Africa (SSA) region and much better than the regional average rate of 2.4 percent. Moreover, Rwanda currently ranks third in the region in the quality of the business environment as measured by the World Bank Group’s Ease of Doing Business index. So, is Rwanda really the next big thing in Africa?

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