The Community of Democracies was founded in 2000 as an intergovernmental coalition specifically focused on promoting democracy and democratic ideals (at the time, only 68 of 189 UN member states were democracies; today the number has risen to 84). This year’s Ministerial, which took place on July 22-24 in El Salvador, gathered representatives of civil society, parliaments, the private sector, and youth in the capital of San Salvador. The leading theme for El Salvador’s 2013-2015 presidency of the organization was “Democracy and Development.” About 800 participants from more than 70 countries attended.
“There is no development that can be done if it’s not budgeted for.” These are the words of Edwin Kiprono, the president of Kerio Community Trust Fund, explaining the importance of citizen’s alternative budgets in Kenya.
In 2010, Kenya adopted a new constitution, establishing a system of devolution in which more control and responsibility was shifted from the national government to newly-created county-level governments. These governments, which began operating in 2013, now oversee certain aspects of local health care, infrastructure, and education. For the first time, the counties are now expected to raise their own revenue through taxes and fees and establish their own budgets for spending that revenue.
Such a move provides great opportunity for local development to be taken into the hands of local citizens – but it also requires citizens to be engaged and provide input and feedback to their local governments.
Throughout Kenya, CIPE has been working with local partners to develop citizen’s alternative budgets – a system of participatory budgeting made possible through the devolved government system. One of the counties CIPE has been working in is Elgeyo Marakwet – a diverse county in which citizens have various and competing concerns and opinions on what the priorities of their county should be when developing a budget and spending its resources.
Major global trends are changing the way we approach international assistance and policy reform. Private sector-led growth has produced enormous opportunities, even as market freedom and access to opportunity remain uneven. Political upheaval has raised hopes for democratic freedoms, yet freedom too often is undermined by poor governance.
Governance reforms must adjust to these shifting circumstances. As a rule, effective reforms tap the power of free markets and the strength of citizen engagement. Each country requires distinctive sets of solutions that reflect local capabilities and needs. These solutions take shape through policy coalitions forged by local partners. Often, they benefit from international experience in convening dialogue and mobilizing support.
Strategies for Policy Reform illustrates CIPE’s approach to improving governance in cooperation with local entrepreneurial leaders. This international case collection shares program experiences and results achieved across CIPE’s four focus areas: Enterprise Ecosystems, Business Advocacy, Democratic Governance, and Anti-corruption & Ethics.
Forbes estimates that 90 percent of startup businesses will fail. However, the entrepreneurship ecosystem – that is the enabling environment that is more or less conducive for startups – varies drastically throughout the world.
This year the World Bank Group’s Ease of Doing Business report rated Serbia and Nicaragua as the 91st and 119th easiest countries for doing business out of 189 countries, respectively. The Global Entrepreneurship Index ranked Serbia as the 78th and Nicaragua as the 87th most entrepreneurial countries out of 130 according to their index. These rankings highlight the progress albeit continued uphill battle entrepreneurs face in operating a business in these countries.
More accurately, the 2015 Female Entrepreneurship Index (FEI) elucidates the unique institutions impacting women in starting and operating a business: a provision for childcare services, work-family conflicts, limitations to freedom to work and travel due to traditional family and religious norms, and equal legal rights, in addition to meeting expectations and gaining access to education, capital, and networks.
In a unique mentorship structure aimed at maximizing the number of beneficiaries of the project, CIPE partners the Association of Business Women in Serbia (ABW) and Red de Empresarias de Nicaragua (REN) linked successful women entrepreneurs with emerging micro-entrepreneurs for one-year mentorship programs. Though FEI reports a nine percent increase in the number of female entrepreneurs who have participated in some form of post-secondary education, factors such as lack of confidence or practical know-how still prevent young women from actually acting on their business ideas and subsequently making it through the first few years of operation. To account for this in Nicaragua, REN linked each mentor-mentee pair with a female university student studying business at the top universities in Managua. Seeing first-hand how a real business operates and a microenterprise can scale allowed interns to apply the skills learned in their coursework.
This month’s Economic Reform Feature Service articles on the case studies of Serbia and Nicaragua outline the mentorship structure of each respective program and bring to light the power of women-to-women mentorship in building leadership and confidence, considering long term career goals, and creating a nurturing and supportive network to rely on when navigating difficult professional and even personal decisions. Women’s business associations like ABW and REN aren’t waiting for an enabling environment for women entrepreneurs but rather are creating their own.
Stephanie Bandyk is the Program Assistant for Global Programs at CIPE.
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On May 20th, 2015 the lights went out in Nigeria, Africa’s biggest oil producer. Nigeria suffers from a phenomenon known as the curse of oil which is a subset of a larger issue known as the resource curse. The idea behind the curse of oil is that countries with large oil reserves cannot seem to manage revenues in a way that benefits the majority of the population economically and socially. Some of the symptoms of the curse of oil include lack of economic diversification, revenue volatility, inability to provide public goods and services, corruption, government inefficiency and the Dutch Disease.
As soon as the massive fuel shortage in Nigeria struck, numerous businesses and banks shut down. Power outages also affected common households because neighborhoods are typically powered by individually owned generators due to inconsistent provision of public utilities. As soon as licensed gas stations closed down, black market vendors looking to make a quick Naira (Nigeria’s currency) began selling low quality oil at exorbitant prices. The shortage exemplifies the curse of oil by revealing an inability to provide a crucial public good. Furthermore, the shortage unveils the existence of corruption in black market practices.
Oil importers shut down operations claiming that the government owed them $2 billion. Nigeria’s Minister of Finance Okonjo-Iweala countered that importers misrepresented the debt in an attempt to recover lost revenue from the recent decrease in value of the Naira due to global declining oil prices. The global decrease of oil prices is a perfect example of the volatility that comes with the curse of oil and how it can complicate economic transactions between the governments and oil corporations.
Fortunately, oil suppliers and distributors eventually met with the government for negotiations that put an end to the crisis. The specifics of the negotiations have not been revealed but it appears that the crisis has been averted for now. But as global oil prices continue to decline, economic shocks are imminent. What will the government do to thwart the curse of oil?
Mary Shirley delivering her speech at the “The Next Generation of Discovery: Research and Policy Change Inspired by Ronald Coase” conference in March 2015.
“Ronald Coase would often say that if Darwin were to come back to earth today, he would be amazed at how much biology has progressed since The Origin of Species. Whereas if Adam Smith came back today and looked at economics, he would be amazed at how little has changed since he wrote The Wealth of Nations.”
– Mary Shirley, President of the Ronald Coase Institute
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.