By Otito Greg-Obi
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?
“There is one thing the photograph must contain, the humanity of the moment.” – Robert Frank
Do you like to tell stories through photography? Then show us your best work! The first annual Center for International Private Enterprise (CIPE) Photo Competition is now open for submissions.
Open to participants of all ages, including student, amateur, and professional photographers, the inaugural photo competition will focus on the theme of Entrepreneurship.
“The work of development is too important to be left in the hands of governments alone. It is the responsibility of everyone. Especially the business community… Business, like governments, will have to be at the forefront of this change. No one can do it alone.”
In the latest Economic Reform Feature Service article, CIPE partner and Chief Executive Officer of the Kenya Association of Manufacturers (KAM) Betty Maina highlights the crucial role of multi-stakeholder platforms in an enabling business environment.
Governments around the world spend trillions on public procurement each year for everything from office supplies to military equipment to infrastructure megaprojects like this $5 billion Panama Canal expansion.
By Kirby Bryan
For over a decade, the World Bank Group’s Doing Business index has served as quintessential tool for determining how well a country’s institutional infrastructure is suited to the promotion of a productive business environment. But something was missing. Businesses and governments interact on levels beyond permitting and regulation: the public sector can also be a client.
Public procurement can provide opportunities for corruption. When seeking lucrative public contracts, companies look for any opportunity they can take advantage of that will improve their ability to secure a successful bid. Unscrupulous government officials can use their influential positions to attain favors and gifts from businesses pursuing public procurement tenders.
In March 2015, the World Bank Group, in conjunction with the George Washington University Law School, held a release event for the first installment of its Benchmarking Public Procurement Index.
“The work of development is too important to be left in the hands of governments alone. It is the responsibility of everyone. Especially the business community.” This was Betty Maina’s main point in her speech last week at the 8th Public-Private Dialogue (PPD) Workshop in Copenhagen, Denmark.
The workshop explored how the government, private sector, and civil society organizations can effectively use PPD platforms for collaborative governance and leadership in addressing difficult challenges. Through its collaborative process, PPD provides a structured, participatory, and inclusive approach to policymaking directed at reforming governance and the business climate.
As the CEO of CIPE partner the Kenya Association of Manufacturers (KAM), Maina spoke on the crucial role that multi-stakeholder PPD platforms can play in building a better enabling environment for business. Maina recognized the social, economic and environmental challenges that we face, and the important role the business community can play in tackling those challenges.
“Instinctively people recognize that [these] challenges demand a new kind of leadership, a new way of doing things,” she said. “Business, like governments, will have to be in the forefront of this change. No one can do it alone.”
One need to look no farther than Kenya as an example of the private sector’s role in solving societal problems. During the 2007 election crisis, the business community was crucial in supporting peace efforts and dialogue which helped prevent further violence. The business community was also instrumental in supporting the development of Kenya’s new constitution in 2010 and now plays a critical role in its implementation.
Fostering a strong competitive market requires the private and public sectors to understand each other’s needs. In any country, entrepreneurs look for ways to make their businesses successful while the federal and local governments deliberate how they can boost the economy by providing loans for businesses or building up infrastructure. Developing solutions to such questions involve facilitating effective public private dialogues (PPD).
At the 8th PPD Global Workshop in Copenhagen, Denmark – which was co-organized by the World Bank Group, Ministry of Foreign Affairs, and the Confederation of Danish Industry – over 300 participants from civil society organizations, companies, governments and development partners from 54 countries came together to share their experiences with PPDs. CIPE and several current and past partner organizations from Ethiopia, Jordan, Kenya, Moldova, Serbia, and Nigeria participated in this four day event.
Betty Maina, CEO of CIPE partner Kenya Association of Manufacturers, was a featured speaker and highlighted the importance of PPD for the enabling business environment. Director for Multiregional Programs Anna Nadgrodkiewicz also presented CIPE’s joint initiative with the World Bank, an interactive knowledge hub website for the global PPD community of practice (www.publicprivatedialogue.org).
The workshop focused both on successes and challenges faced by PPD practitioners when developing, implementing, and evaluating constructive dialogues in different environments. The breakout sessions were divided by range of themes such as fragile and conflict-affected states (e.g. Palestine and Guinea), politically and socially transitioning environments (e.g. Tunisia and Slovakia) and city-level versus regional-level PPDs.
By Kirby Bryan
For sustainable economic growth, developing countries must have the capacity to functionally interact with the global market. Much of the onus for building that capacity rests on a domestic commitment to reforms compatible with global trade. Many emerging markets have lofty aspirations that are unachievable given the current state of affairs, but are determined to rectify the situation. Access to foreign markets can cement reform efforts aimed at improving the local economy and sustaining economic growth.
In late February, the Center for Strategic International Studies (CSIS) released a report from their Congressional Task Force on Trade Capacity Building (TCB) on “Opportunities in Strengthening Trade Assistance.” While the report focuses primarily on US efforts to improve the effectiveness and relevance of its TCB programs, it signals a shift in international engagement and understanding of the role trade plays on the growth of a developing economy.
The shift is also indicative of a growing global development trend toward incorporating the voice of the recipient country from the beginning stages of negotiations through agreement ratification. What is interesting about the current TCB discussions is the recognition by major players in the development world of including the knowledge and expertise of the private sector. Ultimately, it is the private sector in the developing and developed countries that will bear the fruits of economic growth and trade.