PSWG Activities 2007 by jsD36d4

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									              Mozambique:
    Business and Trade Policy
      Reform Program (TIP)

Nelson Guilaze          Pretoria, March 2010
USAID/ Mozambique




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Outline


 1. Background

 2. Program Overview

 3. Program achievements

 4. Problems and Challanges




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Background
 •   GDP Growth: 7.5% per year last decade
 •   Source of Growth: megaprojects, donor’s
     inflows and agriculture
 •   Inflation: 10% last decade
 •   Employment: 7% (formal) & 67% (informal)
 •   2010 DB ranking: #135 out 183
 •   DB 2010 ranking: Labor (156), Construction
     Licensing (159), Trade (136)
 •   2010 ICA: informality, finance, crime and tax
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Program Overview

 •   Objective:
     – Improve the enabling environment for
       business
     – Increase market access for Mozambique
       products
 •   Counterparts
     – Ministry of Industry and Commerce (MIC)
     – Confederation of Mozambican Business
       Associations (CTA)
 •   Funding:$ 13M (2005-10)
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Program Overview

•       MIC
    –Provides LTA to build the capacity to
     negotiate/ implement FTA
  – Supports in-depth studies and analysis of
     key trade and investment issues
  – TA and capacity building to GOM on trade
     and investment policy formulation and
     implementation
  – “Competitive Fund” for studies
• TA to key public institutions: Export
   Agency, SME Institute, Tax Authority & others
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Program Overview: CTA
  – Is an umbrella federation of all business
    associations (not individual companies)
  – Established officially in 1999
  – Is the voice of the private sector in the
    policy reform
  – Has had two five-years cooperative
    agreements with USAID (1999-2004) and
    (2005-2010)
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Program Overview: CTA
 – Provides LTA to promote investment climate
  improvements
 – Supports in-depth studies of key trade and
  investment issues that serve as a strong
  analytical basis for policy making and
  formulation
 – Supports the private public dialogue and
  consultative mechanism
 – Supports CTA’s operational costs
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CTA: Consultative Mechanism
 – Annual CASP w/ Head of the State;
 – Semi-annual Meeting w/ Prime Minister
 – Monthly Working Groups meeting w/ relevant
  Ministries
 – Annual Regional Meetings w/ local governors
 – PSWG meeting (including quarterly w/ MIC)




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CTA lobbied the GOM to:

  – Establish a solid consultative mechanism with
    GOM on policy reform
  – Consult private sector before implementing
    business environment policy reforms
  – Adopt the WB Doing Business Report as
    benchmark to measure progress
  – Design the country’s business environment
    strategy and set the goal to have the best DB
    ranking in SADC by 2015
  – Implement the SADC FTA
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ACHIEVEMENTS

• New Commercial Code
  – Reduced time to start a business from 153 to
    26 days (as reported by World Bank)
  – Eliminated the minimum capital requirement
    (from 122.5% of GDP pp);
  – Improved Mozambique’s DB ranking in
    Protecting Investors to #38 (out of 181
    countries)
  – Allowed establishment of Simplified Licensing
    Regime, which eliminated over 100 onerous
    licensing requirements;
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ACHIEVEMENTS
• New Labor Law :
  – reduced significantly severance pay from 45 to
    15/10/3 days per year (depending on the salary
    range)
  – introduced automatic approvals for hiring
    expatriate labor (10/8/5% depending on nr. of
    employees)
  – Allowed SMEs to offer annual fixed term
    contracts during their first 10 years of
    operations
  – Overtime hours employees allowed to work
    increased from 100 hours to 200 hours per year
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Problems and Challenges

•   CTA was created top-down: no good associations
    basis
•   CTA fully supported by donors: not responding to
    its member direct interests
•   PPD and Consultative Mechanism not legally
    institutionalized
•   Lack of implementation of approved policy
•   Changing laws does not mean reforming

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    Problems and Challenges

•    Lack of power from MIC to lead across-cutting
     issues: doing business reform
•    Overall competitiveness versus WB DB indicator
•    CTA: risks of having only one private sector
     voice
•    Slow pace of reform: from 110/145 in 2005 DB
     to 135/183 in 2010 DB: net improve of 13 places
     5 years…
•    USAID/Moz’s new PS program: SPEED!
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For more information: www.tipmoz.com



             • Obrigado!
            • Thank you!




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