INCREASING THE COMPETITIVENESS IN THE AFRICAN MIDDLE INCOME COUNTRIES STRENGTHENING THE INVESTMENT CLIMATE Sahar Nasr Senior Financial Economist by idw88707

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									 INCREASING THE COMPETITIVENESS IN THE
   AFRICAN MIDDLE INCOME COUNTRIES:
STRENGTHENING THE INVESTMENT CLIMATE



                     Sahar Nasr
              Senior Financial Economist
                     World Bank

                   Cairo, Egypt
                    March 11, 2008



 World Bank
             What is Competitiveness?

   Describes the overall performance of enterprises within
    a national business environment, particularly its level of
    productivity and its ability to export.
   Productivity—magnitude and growth in value added
    (per unit input) of firms.
   Ability of firms to operate efficiently in relation to
    others due to low cost or superior technology.
   Function of quality not just cost
   Depends on a host of factors that can be firm-specific;
    industry-specific or country-specific.


World Bank
Usually, sustained growth requires attaining
manufacturing export competitiveness...
           Figure 1.6: Manufactured exports to GDP, 1965 -2005

        Manufactured exports as a share of GDP (%)
   40

   35

   30

   25

   20

   15

   10

    5

    0
            1965     1970    1975            1980   1985         1990            1995         2000         2005




         MENA                East Asia P acific        Europe and Central Asia          Latin America Caribbean
         OECD                South Asia                Sub Saharan Africa




World Bank
 …based on growing private investment.
    Figure 1.1: Private investment as a share of GDP, 1985-2007

            Private investment (% of GDP)
       30


       25


       20


       15


       10


        5


        0
              World             Sub-Saharan       East        Europe     Latin      Middle   South
                                  Africa          Asia        Central   America     East     Asia
                                                 Pacific       Asia     Caribbean   North
                                                                                    Africa


                          1985-89      1990-94      1995-99      2000-04     2005-07



Source: Staff estimates from WDI data. Regional averages weighted by GDP.


  World Bank
       What Affect Competitiveness?
       The Firm’s Business Environment

                                   Markets openness
                                   and liberalization




                    Firm
                  Investor




                                Factor markets
World Bank
 In many ways, the World Bank Group supports
    business environment reform to enhance
               competitiveness
1. Creating policy and institutional foundations for effective
      Diagnostics/
   markets (property rights, land registration, collateral
                           Formulation
                                              Implementation
     Policy Dialogue governance, financial market
   systems, corporate       Strategy
                               and
   infrastructure).          Solution
                              Design         Policy-based
     Doing Business
2. Promoting open and competitive      markets—opening up
                                                 Loans
   entry, access to finance for promising firms, deeper
    Enterprise Surveys
                                                Investment
   bankruptcy financial markets, and exit for failing firms).
                                                  Loans
    Investment Climate
3. Initiate reform agendas, through sharing of cross-country
       Assessments                           Grants and
   experience—what works and what does not.  Trust Funds

                                            Technical
4. Ensure effective coordination with development partners.
                                                Assistance

 World Bank
In many ways, the World Bank Group supports
   business environment reform to enhance
              competitiveness

    Diagnostics/        Formulation
                                      Implementation
   Policy Dialogue       Strategy
                           and
                         Solution
                          Design       Policy-based
    Doing Business
                                           Loans

   Enterprise Surveys
                                       Investment
                                         Loans
  Investment Climate
     Assessments                       Grants and
                                       Trust Funds

                                        Technical
                                       Assistance

World Bank
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  Similar survey data is collected and analyzed for African MIC’s
  World Bank
One of the main constraints identified in the Egypt
           ICA was Access to Finance

        . . . . especially MSMEs, receive little financing
                                            Percentage of firms currently with
  Size does Matter. . .                     a loan from a financial institution
                                            40
   Only 17.4% of firms have access                                   36 %
    to bank credit                          35
                                            30
   MSMEs have more difficulty
    accessing credit: only 13% of           25
    MSMEs have access compared              20     17.4 %
    to 36% of large corporations            15                13 %
   Banks do not provide much               10
    financing to MSMEs (only 12% of         5
    MSME that have a bank account also
    borrow from banks)                      0
                                                   All       Small    Large
  World Bank                             Source: Egypt ICA   and Micro
Can these countries compete on an equal footing
  without using all of their human resources?

     Region        % of Firms With Female    % of Full Time    % of Women in
                       Participation in     Female Workers*   Senior Positions*
                         Ownership
  South Asia                         12.6             18.78                1.56
  Middle East &                     19.67             14.92                3.26
  North Africa
  Eastern Europe                    26.04             45.52                8.27
  & Central Asia
  East Asia &                       27.41             41.31                 8.7
  Pacific
  Sub-Saharan                       28.75             20.15                7.44
  Africa
  OECD                              31.71
  Latin America                     35.76             31.62              12.64
  & Caribbean



  World Bank
              Doingbusiness Indicators

            Measures of business regulations and their
             enforcement across 178 countries.

            Doing Business is a guide for evaluating regulations
             that directly impact economic growth, making
             cross-country comparisons, and identifying good
             practice reforms.

            Regulations affecting 10 stages of a business’s life
             are measured: starting a business, dealing with
             licenses, employing workers, registering property,
             getting credit, protecting investors, paying taxes,
             trading across borders, enforcing contracts and
             closing a business.

World Bank
                     Doingbusiness Indicators


2004               2005                  2006                   2007                 2008
•Regulation of     •Corporate            • Business
                   Governance                                   •Starting a
Entry                                    Licensing              business
•Labor             • Property
                   registration          • Taxation             •Dealing with
Regulations
                                                                licenses
• Contract                               • Trade
Enforcement                              Infrastructure         •Employing
                                           • Transport          workers
• Credit                                   • Customs
Markets                                                         •Protecting
                                           •Standards           investors
• Credit
information                                                     •Getting credit
                   •Updates
•Bankruptcy                              •Updates of            •Closing a business
                   of ‘04
                                         ‘04 and ‘05
                   topics                                       •Updates of
                                                                „06 and „07
            Products: Report, academic papers, country summaries, website database
     World Bank                    www.doingbusiness.org
  What does Doing Business 2008 say about the
business environment in Africa’s MIC countries ?




  World Bank
              Doing Business Sub-National

            Measures the ways in which government regulations
             enhance business activity or restrain it at the sub
             national level.
            Highlights good practices within the country that
             can be replicated easily in other cities.
            Focuses on three Doing Business topics:
                 1. Starting a business
                 2. Dealing with licenses
                 3. Registering property
            Deals with three Governorates:
                 1. Alexandria
                 2. Assiut
                 3. Cairo
            Provides information on other Governorates’ reform
             efforts, including getting credit, protecting
             investors, paying taxes, and trading across borders.
World Bank
                   EXAMPLE
   Financial Sector Development Policy Loan

WB and AfDB, along with other development partners supported the
Government’s “Financial Sector Reform Program” (2004–2008)
                Improve the soundness and efficiency of the financial sector
  Objectives    through comprehensive structural and financial reform, to
                enhance financial intermediation.

                1.     Reforming the Banking Sector (consolidation, privatization, mergers)
                2.     Restructuring the Insurance Sector (mergers, restructuring, privatization)
     Main
                3.     Deepening the Capital Market
Components of
                4.     Developing a Well-functioning Mortgage Market
 the Program
                5.     Strengthening the Regulatory and Supervisory Authorities
                6.     Improving the Institutional Infrastructure (credit bureau, payments
                       system, etc.)

Implementing
                     Ministry of Investment and Central Bank of Egypt (CBE)
  Agencies

  World Bank
      Financial Sector Development Policy Loan




World Bank
   In what ways and areas, could WBG
      support your countries better?

 1. Encourage Dialogue?
 2. Technical Advise and Analytical Work?
 3. Developing New Strategy?
 4. Identifying Priority Areas of Reform?
 5. Sharing of Cross-country Experience?
 6. Providing New Products?
 7. Other Delivery Mechanisms?
World Bank
Increasing the Competitiveness in the African
         Middle Income Countries:
   Strengthening the Investment Climate


                  Thank you!


      World Bank Financial Products and Services for
            Improving the Investment Climate

World Bank

								
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