With a rapidly increasing share of the world's poor now living in countries and territories classified as fragile or conflict-affected states, improving the conditions for private sector development can be one way for these countries to generate economic growth. This is an emerging priority of the Bank, and was a focus of much of the Investment Climate department’s work last year.
In highlighting the challenges of countries affected by fragility or prolonged violence, the World Bank's World Development Report 2011: Conflict, Security and Development report recognized that lack of economic opportunities and high unemployment as key drivers of further fragility. Since the report was published, the World Bank Group has committed to operationalizing its findings by supporting private sector development and creating employment opportunities. More broadly, there is a growing awareness that fragile and conflict states will remain the focus of international aid.
While the number of poor in today’s middle-income countries is expected to decrease through high economic growth and falling population growth in most middle-income countries, income stagnation and high fertility rates in low-income and fragile countries will establish them as the main locations of global poverty. This is clearly the group of countries that needs the help of the development community now.
In light of these developments, the Investment Climate Department has made fragile and conflict states a priority area for its engagement, via the Facility for Investment Climate
Advisory Services (FIAS).
In South Sudan for example, we worked to enable the government to move forward on attracting business investment. Six laws have been enacted in FY12 facilitating investments and improving standards for consumer products. An investment promotion agency was set up. More than 2,000 businesses were registered between January and June 2012, a 44-percent increase over registrations in the same period last year; business registration was also decentralized to the regions. In December 2011, the government, supported by the World Bank Group and the United States Department of State, held an international investor conference in Washington, D.C. A number of investment inquiries followed, including several in the agribusiness, power, manufacturing, and oil production sectors; three investment leads are being pursued.
Of the 46 reforms supported via FIAS, 28 (61 percent) were introduced in the world’s poorest countries, 11 (24 percent) in fragile and conflict-affected states, and 19 (41 percent) in Sub-Saharan Africa- a testament to the fact that the World Bank Group's commitment to the world's poorest remains strong.
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