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Driving Business Environment Reforms throughPrivate Sector Development Strategies

The Cases of Ghana and Namibia

Marita Broemmelmeier, Tobias Gerster, and Julius SpatzGerman Technical Cooperation (GTZ)

Africa Consultative Conference on“Creating Better Business Environments for Enterprise Development”

Accra, 05-07 November 2007

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Structure

Obstacles to Business Environment Reforms

The Rationale for PSD Strategies

The Case of Namibia

The Case of Ghana

Success Factors and Lessons Learnt for Donor Support

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Obstacles to Business Environment Reforms

Policy makers and bureaucrats question the ability ofentrepreneurs to modernize the economy

Policy makers often favour “quick-fix solutions” overbusiness environment reforms

Cross-cutting nature of private sector developmentrequires the coordination of a large number ofstakeholders

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The Rationale for PSD Strategies

Establish a shared long-term vision for private sectordevelopment as well as a coherent and prioritized policyframework

Mainstream PSD in government and strengthen the inter-agency dialogue and cooperation

Clarify the division of labour between government andprivate sector and promote public private dialogue

Vehicle for donor harmonization

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The Case of Namibia – The Process

Preparation Analysis

E 2007Adoption by cabinet

12.2006Stakeholderworkshop

Request of supportby GTZ indeveloping newSME, industry, tradeand export policies

Consensus on- ToR- Intern. Consultant- Process- Time frame

Contracting

11.2006Governmentworkshop

06.2006Stakeholderworkshop

Draftingand adoption

Implementationand monitoring

Interviews/work-shops, e.g. with- Other ministries- Local Authorities- Membership

organizations(chamber,associations,trade unions)

- Consultants andInstitutes

- Banks/Investors- SME

Analyzing docu-ments and data

Agreeing on- Rationale, ele-

ments, structure ofthe policy

- Key policystatements

- Definition of SME Linking to existing

government policies Editing and

publishing

PlanningImplementation(matrix)

Priorities andresources

Monitoringprocesses andresponsibilities

05.2006Agreement onPSD approach

02.2006Request forsupport

Cabinet re-shuffle in08.2007!

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The Case of Namibia – The Content

B. Integrating Namibiainto the Regional &

Global Economy

C. SupportingUnderserved

Economic Actors

A. Improving theBusiness and Investment

Climate

A. Improving theBusiness and Investment

Climate

1. Reducing the Legal and Regulatory Costs of Doing Business2. Ensuring Namibia is a Competitive Country in which to do Business3. Increasing the Availability of Land and Land Rights for Investment and

Development4. Increasing Registration of Informal Sector Enterprises5. Ensuring Fair Competition and a Level Playing-field6. Reforming the Public Sector to Promote Private Sector Development7. Aligning Labour Markets with the Needs of a Growing Private Sector8. Modernizing the Information and Communication Technology Infrastructure9. Offering Attractive, Effective and Transparent Investment Incentives10. Strengthening and Formalizing the Public-Private Dialogue

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The Case of Namibia – The Content

A. Improving theBusiness and Investment

Climate

B. Integrating Namibiainto the Regional &

Global Economy

C. SupportingUnderserved

Economic Actors

11. Building a Large and Diverse Base of Namibian Exporters

12. Attracting and Retaining Quality Foreign Investors

13. Opening up New Markets for Namibian Products and Services

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The Case of Namibia – The Content

A. Improving theBusiness and Investment

Climate

B. Integrating Namibiainto the Regional &

Global Economy

C. SupportingUnderserved

Economic Actors

14. Assisting Micro Enterprises to Grow

15. Supporting Small and Medium Enterprises

16. Promoting Black Economic Empowerment

17. Increasing Competitiveness of Underserved Economic Actors

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The Case of Ghana – The Design

The Process: A team of international and Ghanaian consultants was hired to

support policy formulation A high-level public private Oversight Committee was established

to monitor & evaluate the implementation progress An MoU defines the cooperation between Government of Ghana

and the development partners

The Content: Ghana’s Position in Global and Regional Markets is Enhanced Efficiency and Accessibility of National Markets Is Improved Competence and Capacity at the Firm Level is Increased Government’s Private Sector Policy Formulation, Implementation

and M&E Are Strengthened

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The Case of Ghana – The Implementation

Challenges Ministerial merger temporarily absorbed significant resources and

created a role conflict in the new lead ministry The initial set up of the PSD Strategy Pooled Fund imposed a

huge extra work load

... and the Way Forward A Policy Support Bureau facilitates the inter-agency cooperation

and the dialogue with the private sector and the developmentpartners

Ongoing preparations to move to a more flexible 3-year annualwork plan

Emergence of a “mixed” aid architecture

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The Case of Ghana – Results

Ghana was ranked top reformer in Sub-Sahara Africa fortwo years in a row in the 2007 and 2008 World BankDoing Business Report.

Ghana’s CPIA Index rose from “medium performer” in1998 to “strong performer” in 2005.

The 2006 and 2007 results of the AGI Business ClimateSurvey show strong confidence of the Ghanaianentrepreneurs in the business and investment climate.

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Success Factors and Lessons Learnt for DonorSupport

The design and implementation of a PSD Policy is a complex andtime-consuming joint learning exercise with some teething problemsfor all stakeholders involved.

This exercise needs to be driven by a strong national champion withstrong in-house capacities.

To take into account the cross cutting nature of PSD, it has to bemainstreamed within government, and the inter-agency cooperationhas to be strengthened

A structured and results-oriented public private dialogue is importantat all stages of the reform cycle.

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Thank you very much for yourattention!