Tag Archives: business climate

U.S. Companies Should Not Overlook Opportunities in Sub-Saharan Africa

A growing textile industry is among the drivers of Ghana's rapid economic growth in recent years. (Photo: Wall Street Journal.)

A growing textile industry is among the drivers of Ghana’s rapid economic growth in recent years. (Photo: Wall Street Journal.)

By Chris Braddock

Next week the U.S.-Africa Leaders Summit will bring approximately 50 heads of state to Washington, DC, for the purpose of discussing trade and investment in Africa and highlighting America’s commitment to the continent. During a recent trip in the region, I spent quite a bit of time thinking about this topic.

Over the past four months I was busy traveling in sub-Saharan Africa (SSA), meeting with businesses and academics and researching the business opportunities in five different countries. As part of this trip I had the opportunity to meet with several CIPE partners and consultants who, as representatives of the private sector, were able to speak about the enabling environment and some of the challenges and opportunities of businesses working in SSA.

Most countries in SSA have historically been seen as too unstable, too small a market, or too risky for U.S. companies to explore opportunities, so there are few American companies operating in the region. The perception of SSA for many is based on the plethora of negative stories presented by the media, but this is merely a small and decreasingly significant part of the SSA story. Growth rates are high, people are optimistic with larger disposable incomes, and foreign direct investment is flowing in larger quantities, particularly from Asia. U.S. firms are starting to get left behind.

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Businesses in Eastern Ukraine Threatened by Instability

(Photo: Kyiv Post)

(Photo: Kyiv Post)

When protesters first took to the streets in Ukraine’s largest cities in 2013, economic concerns were at the top of the agenda. As the geopolitical situation in eastern Ukraine has heated up, economic prospects in the contested regions of the country have only gotten worse. Yet average Ukrainians are still working for a more prosperous and democratic future.

Since the Maidan protests, the business climate in the Donbass, the easternmost, coal-mining region of the country, has taken a turn for the worse. Amid the turmoil, local businesses – in particular small and medium-sized firms – have suffered.  Many have been shaken down for so-called “donations,” and in some cases have been looted and ransacked.

A recent article in the local press has documented fines, bribery, and other abuses committed against local businesses by police departments and government officials. Many people have even left the region, heading either for Western Ukraine or even Russia. The owners of small businesses have left their homes and their enterprises behind. They are unsure when they can return, or whether they will find their businesses in the same condition.

As one CIPE partner in the Donbass noted, “Public sector bribes have grown by several times what they were prior to the strife, and not one Grivna [the Ukrainian currency] is going to the budget.” He confirmed that many business owners and heads of banks in the region are being forced to leave their businesses. “Because of roadblocks and military activities, there are just no opportunities to run a business,” he laments.

The pro-European, Kiev-based protests that led to the ouster of former President Viktor Yanukovich made Ukraine a hot topic in international news. Yet in many ways, the situation that set international media ablaze in early February is really a much older story.

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Ukrainian Businesses Should Use the Momentum to Speak Up

Ukr_protest_pic_early

By Iryna Fedets

In Kyiv and in other cities across Ukraine, small and medium-sized businesses were a driving force in the recent protests that resulted in the ouster of former President Viktor Yanukovich and the formation of a new Cabinet of Ministers. Entrepreneurs personally participated in the pro-European Union movement, both on the streets and in financing the demonstrations and providing food and medical supplies.

According to a poll conducted in early February 2014, business owners made up about 17 percent of the protesters, although business owners only make up 4 percent of Ukraine’s overall population. Following the 2008 recession, the former government imposed changes in the regulatory and tax structure that increased corruption and raised the burdens on small business, which helped draw them to the streets.

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Looking for local governance stories

A local district council office in Kerala State, India. (Photo: Jason Diceman via Flickr)

Do you know of a well-intentioned legal framework in your country that seeks to increase accountability, achieve greater representation or encourage efficient service delivery, but lacks effective enforcement by local governments?

Are you familiar with local government practices that contradict laws on the books?

Do you know of civil society organizations, including business associations, conducting policy advocacy campaigns for ensuring effective enforcement of the laws or leading other efforts to improve local governance?

Do you have a knack for writing and for producing investigative economic journalism pieces?

If you answered yes to any of those questions and are a talented journalist or practitioner, CIPE and Global Integrity invite you to share with us your local governance stories. We are interested in stories focused on the role of both non-governmental actors and governments in promoting better enforcement of laws and regulations on the books.

Your story could describe, for example, how or why local governments fail to implement laws or regulations that reduce cumbersome business procedures, and how that under-performance affects entrepreneurs. Your story could also describe efforts by non-governmental organizations to identify public procurement practices at the city or municipal level that diverge from legal mandates, thereby increasing the risk of corruption. Your story could describe a policy advocacy campaign led by a civil society organization to ensure that laws are effectively enforced.

Local governance should be the focus of your story. It is in cities and municipalities where citizens have their first and closest interaction with government officials. Similarly, local governments tend to be responsible for the provision of services, infrastructure, quality of life, and other forms of support that both local and foreign-owned firms need to effectively participate in the market. As a result, well-governed cities and municipalities that enforce laws effectively create growth opportunities for business and geographical areas that increase productivity. Businesses that grow thanks to productivity gains stemming from well-governed local governments help create jobs and growth, while also alleviating poverty.

Your story should be no more than 1,000 words. Selected stories will be incorporated into a local governance publication that CIPE and Global Integrity are planning to publish. Authors will be compensated if their stories make it into the publication. Please visit Global Integrity’s Blog to learn more about this call for stories and how to submit your contribution.

How do you get policymakers to listen?

Many economic and governance challenges cannot be solved without input from the private sector. The private sector has essential knowledge of what drives business growth. Yet all too often policymaking excludes private sector input. As a result, bureaucracy and corruption drive up operational costs and push entrepreneurs into the informal economy.

The private sector and civil society, however, can take concerted action to address such challenges and help open up the policy process. Strategies for Policy Reform, Volume 2: Engaging Entrepreneurs in Democratic Governance—from the Center for International Private Enterprise (CIPE)—explores real-world examples of successful attempts to get policymakers’ attention.

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Urgency and Legitimacy in Post-Conflict Countries

Wade Channell shares great insights on reconstructing legal structures for lasting success in his new essay, “Urgency and Legitimacy: Tensions in Rebuilding the Legal Structure for Business in Post-Conflict Countries.”

“Urgent lawmaking is not the same as urgent building projects…  Normally, laws derive from the surrounding culture and power dynamics, with strong historical underpinnings as well. Unlike a machine in which parts can simply be exchanged, the legal system is dynamic, much more akin to a human body in which parts cannot simply be exchanged because of the complexity of factors involved in the transplant… The primary victim of urgent lawmaking is legitimacy.”

Mr. Channell calls for a voice for business in post-conflict reforms in order to foster legitimate economic reforms that address urgent business priorities while building long-term stability. The essay was published by USAID’s BizCLIR (Business Climate Legal & Institutional Reform).

Google Calls China’s Bluff

It is the 21st century equivalent of a showdown at the OK Corral – Google has called out China for allegedly hacking into the email accounts of Chinese human-rights activists and engaging in disruptive cyber attacks against Western companies that do business in China.  The myth that Western and Chinese companies are treated equally in China has now thoroughly been discredited after having been damaged by the Chinese authorities disapproval of the Coca-Cola/Huiyuan merger last year.  Now news reports are coming out detailing the attacks against a law firm and companies that are suing the Chinese government like Cybersitter for infringing on it’s IP.

Google’s announcement has unleashed a firestorm of debate, claims, and counter-claims from the companies involved as well as netizens around the world.  Chinese officials have stated that perhaps Google is just not prepared to compete in the Chinese market, contrary to the fact that Google has gone from a 15% to 30% search share over the past five years all the while having to jump through more regulatory hoops than its domestic search rival Baidu.  Perhaps most tellingly is the reaction in the real world – citizens have been leaving flowers and wreaths at the entrance to Google’s China headquarters, mourning the loss of their limited freedoms.

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