In Ukraine, thousands of companies are still owned and operated by the government — a legacy of Soviet central planning that bleeds money from the already strained state budget. With the country in economic crisis, there have been renewed calls for Ukraine to speed up its privatization process and sell these firms to private owners who can restructure them and run them more efficiently.
However, focusing on the pace rather than the quality of privatization will likely result in a botched privatization process — which will undermine the little bit of faith Ukrainians have left in the free market and state institutions, potentially leading to the growth of populist movements and destabilizing the current government.
Ukrainian state-owned enterprises (SOEs) remain a drag on the national budget. They serve as incubators for corruption and gray market deals and in some cases serve as piggy banks for Ukrainian politicians. While I agree with Abromavicius that “simplicity, clarity, and transparency,” must be maintained in order to successfully privatize Ukrainian state owned enterprises, his concept of creating a simplified privatization procedure (without advisers) through an online auction of over 1,000 smaller SOEs will likely lead to public anger over a process that would surely enrich insiders.
Without independent advisors overseeing the due diligence process and hiring independent auditors, bidders will not have transparent access to information about the companies listed. This would, in effect, be like buying from an unrated seller on eBay with only a vague description of what is for sale – something that would not inspire confidence in potential buyers.
A lack of independent advisors–and the transparency and investor assurances they would bring to an auction—can lead to lower realized prices for the Ukrainian government, attracting only those bidders with inside knowledge of the true status of the enterprises for sale.
Posted on10 May, 2016byCIPE Staff|Comments Off on Democracy that Delivers Podcast #15: Business Development Expert Toki Mabogunje on How Small and Medium-Sized Businesses Are Faring in Nigeria Today
Podcast hosts Ken Jaques and Julie Johnson with guest Toki Mabogunje (right)
Business development consultant Toki Mabogunje (Twitter: @tmc_nig) talks about the current business climate in Nigeria, how the new government is tackling economic, security, and corruption challenges – and the private sector response – and how Nigerian entrepreneurs find ways to thrive in even the most difficult circumstances. Mabogunje also talks about how her American school education still shapes the way she approaches issues today. Visit her website.
Presentation of the Herat PBA in Herat City. (Photo: CIPE Afghanistan)
In many respects, 2015 was the most significant year in Afghanistan since the beginning of the international military presence in 2001, as Afghan National Security Forces took full control of counterinsurgency operations, and the National Unity Government (NUG) of President Ashraf Ghani and CEO Abdullah Abdullah assumed power. However, the year ended on a bleak note, with civilian casualties reaching an all-time high, the Taliban regaining control of the most territory they have held since November 2001, and political infighting continuing to paralyze the NUG’s proposed economic reform program.
In November of last year, the Asia Foundation released its annual Survey of the Afghan People, which compiles the views of more than 75,000 Afghan men and women on major issues key to the country’s social, economic, and political development. The results reflect the immense levels of upheaval and change the country has gone through in the past year, with only 36.7 percent of respondents stating that they believed their country was moving in the right direction, the lowest level of optimism over the past decade.
While the increased levels of violence, and the resurgence of the Taliban and other armed opposition groups have certainly been a key contributing factor in this loss of confidence, the most frequently cited local problem among those surveyed was not insecurity, but unemployment and lack of economic opportunity.
In Beirut during Lebanon’s civil war, people continued to go to school and attend theater performances. One woman once told me how, to get to her university, she would take a taxi to the line between East and West Beirut, dash to the other side behind overturned trash dumpsters to avoid snipers, and then catch another ride to university — always with a change of clothing in case she could not get home again for a while.
Not every war sees people able to defiantly and bravely continue school and go to the theater, but the story underscores an important point left out of most news reports: conflict is not a permanent state…even during conflict.
Media reports show the most bullet-ridden, shell resounding, civilian-fleeing dramatic moments, but even in situations of all-out war, pockets of fighting revolve and front lines move. Whenever there is a lull in violence, civilians generally try to make life go on as much as they can, however they can. And that includes the economy. Farmers will return to their fields and factories will resume operation as often as possible, and people will buy, sell, and barter what they need to survive. And yes, sometimes they even study for exams by candle in hallways lined with mattresses during shelling (another story I once heard from another Lebanese).
Recently, a group of CIPE staff with experience in conflict-affected settings formed a task force to do some more thinking about CIPE’s own projects in conflict-affected areas. We found it interesting that we work with local groups in areas that range from unstable to war-torn, but that we rarely think of them as “conflict projects” per se. So we started throwing around a lot of questions: is it worth even thinking of our projects through a conflict lens ? (Short answer: yes.) What is our approach to conflict and is it unique? What are the various ways CIPE has either reacted programmatically to conflict, or designed programs to be conflict sensitive?
We’re still thinking, but we have started to articulate what we think we know (more on that at the end of this post). So here it goes…
Participants at the ITCILO training in Turin. (Photo: ITCILO)
As many previous CIPE blog pieces have pointed out, empowering women entrepreneurs leads to inclusive economic growth around the world. This point was further explored in a recent McKinsey report, The power of parity: How advancing women’s equality can add $12 trillion to global growth:
“We consider a “full-potential” scenario in which women participate in the economy identically to men, and find that it would add up to $28 trillion, or 26 percent, to annual global GDP in 2025 compared with a business-as-usual scenario.”
One way to increase the number of women entrepreneurs is by addressing the bottlenecks that prevent women from becoming business owners or circumstances that prevent them from expanding their businesses. And this can be done through policy reforms via business associations and chambers. To this end, CIPE and the International Training Centre of the International Labour Organization (ITC-ILO) held a joint week-long training-of-trainers session “Women Empowerment through Business Member Organizations (BMOs)” at the ITC-ILO campus in Turin.
Learn more about the private sector’s role in reducing insecurity in Tijuana with this short video (10 minutes, Spanish with English subtitles)
Between 2007 and 2010, Tijuana was one of the most violent cities on the planet. Kidnapping, extortion, and homicide became commonplace occurrences, and the notorious Tijuana Cartel, which had been gathering strength during the 1990s, dominated large swaths of the city.
The city’s main thoroughfare, Avenida Revolución, which had previously been full of street vendors hawking their merchandise and U.S. tourists, was deserted. Citizens stayed in their houses after dark and the city’s renowned nightlife ground to a halt. The Mexican government sent troops to the city in a bid to restore order, leading to violent confrontations with criminal elements.
It was with this image of a violent and crime-ridden city that I traveled to Tijuana in April 2015. Instead, however, I was surprised by what I found. Tourists were slowly starting to trickle back to Tijuana, families with young children enjoyed evening strolls in the balmy weather, and federal troops were absent from view. What led to such a drastic change in a mere five years?
Afghanistan, being a landlocked country, depends on its trading route with neighboring Pakistan to get its exports to world markets. However, these two countries have an unstable political relationship.
Due to increase in political instability between the two countries in the last couple of months, Pakistan’s top foreign policy adviser Sartaj Aziz paid a visit to Afghanistan in order to reduce the ongoing friction between the two countries.
The foreign affairs adviser to the prime minister visited the Afghan capital Kabul on September 4 for a regional economic conference and also held meetings with the president, foreign minister and national security adviser.
In his statement on state television about his meeting with Ghani, he said, “The main thing that the both side agreed upon was to restore trust, end the blame game against each other and create a positive atmosphere.”
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.