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How one country responded to disappointing Doing Business scores

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The following story is about how one country responded to disappointing Doing Business scores to reform its rules and regulations for its own benefit. Would discontinuation of this instrument mean its non-availability to others?

The above image is for illustration and is of iStock.

How one country responded to disappointing Doing Business scores

By Akhtar Mahmood 8 October 2021

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On September 16, 2021, the World Bank discontinued the Doing Business (DB) report, one of its flagship diagnostic products. This action follows what the World Bank called “a series of reviews and audits of the report and its methodology.”

The DB report, published each year since 2004, was one of the World Bank’s most influential reports in recent years. Every autumn, people around the world would wait eagerly and, in some cases, with some trepidation, for its release. Over time, the reports increasingly attracted the attention of heads of governments who wanted to see their countries do well in the rankings.

When the DB report came out in 2015, the Indian government was disappointed. Soon after taking office in 2014, Prime Minister Modi announced his government’s intention to bring India’s ranking into the top 50 within a few years. Several reforms were carried out in the following months, which the Indian government hoped would put India on a trajectory of rapid annual improvements in the ranking. The 2015 report (officially called “Doing Business in 2016”, since the World Bank always gave the report a forward-looking title) indicated only a modest improvement in India’s rank, from 142 to 130.

The World Bank explained to the Indian government that while several reforms may have been enacted on paper, Indian businesses did not report feeling an impact on the ground. Some responded, “What reforms?”, while others heard about the reforms but had not seen improvement on the ground. The reforms could not be officially recognized until the private sector reported real improvements. The World Bank suggested that the government put in place feedback loops to provide real-time information from businesses on whether the reforms were being well implemented. The government, instead of whining further about the scores, started working on such feedback loops. For several regulatory reforms covered by the DB indicators, it started surveying businesses on whether they felt any reform impact on the ground.

From February 2016 to May 2017, the government carried out a series of business-to-government (B2G) feedback exercises and focus group discussions (FGDs) on how much the businesses were aware of the enacted reforms and their views on the quality of reform implementation. Nine B2G feedback exercises were carried out. Topics covered construction permits (three surveys each in Delhi and Mumbai), starting a business (two surveys), and trading across borders.

The exercises revealed several implementation gaps, some major and some minor. An example is construction permitting. A business survey carried out in Delhi in March 2016 revealed the following implementation issues: a) significant lack of agency coordination—architects still need to obtain approvals from up to 10 different agencies; b) some facilities for online payment were not properly implemented and certain fees were still paid manually; c) very low awareness of the online system among users; d) no way to track the status of an application; e) information lacking on documentary and other requirements. In other words, the reforms had not gone far enough to have impact on the ground.

This feedback exercise helped generate several recommendations to address the deficiencies. These were provided to the Municipal Corporation of Delhi (MCD), and most were acted upon. Follow-up feedback exercises in October 2016 and February 2017 validated these actions while generating additional recommendations for further improvement. A similar effort was made in Mumbai.

The impact of these efforts can be seen in the trends in India’s performance on the “Dealing with Construction Permits” indicator. In the Doing Business in 2016 report, India’s ranked 183 on this indicator. Thirty-three procedures were involved taking 191 days according to the indicators. Two years later, the number of days had come down to 144 with a modest improvement in the rank to 180. The more substantial improvements came the following year when the DB report published in October 2018 indicated a reduction in the number of procedures and days required to 18 and 95 respectively. Still a long way to go but enough to propel India’s ranking on this indicator to 52. While all this improvement cannot be attributed to the feedback exercises alone, it is possible to trace a substantial part of this improvement to actions taken as a result of these exercises.

The Indian government also recognized that the DB indicators did not cover many regulatory interfaces that created problems for businesses and that the indicator measures were based on conditions in just two cities, i.e., New Delhi and Mumbai. Thus, in parallel to its efforts on the DB front, the Indian government embarked on an ambitious regulatory reform program at the state-level covering all states and union territories in the country. A long list of regulatory reforms was identified covering several regulatory areas, and state governments were instructed to carry out the reforms. Called the Business Reforms Action Plan, the program started in 2015.

Progress was monitored through annual indicators that ranked states according to their performance on implementing the reforms. The first such indicators, published in 2015, did not take into account business feedback. However, seeing the usefulness of the feedback exercises carried out as part of the DB program, the government changed the state-level reform indicators in 2018 by making a substantial part of the indicator scores dependent on business feedback.

The powerful demonstration effect of such feedback exercises had touched individual state governments too. In 2018, four state governments, Chhattisgarh, Jharkhand, Orissa, and Rajasthan, expressed an interest in knowing why there was poor uptake of self-certification and third-party certification options provided in business inspection reforms carried out by these states. At their request, the World Bank carried out an independent feedback exercise that could help design corrective actions to improve uptake.

The Indian experience from 2016 onward is a good example of what the DB indicators can lead to if governments use them well. First, the government refocused its attention from reforms on paper to reforms on the ground. Second, it recognized the importance of consulting with the private sector, which knows best where the shoe pinched, and designed corrective actions based on the feedback. This iterative process helped improve reform implementation quality. Third, the government recognized that while the DB indicators were useful, they were not adequate to diagnose the myriad of regulatory issues that businesses all over India faced. Thus, the government embarked on a more comprehensive, state-level, reform program, and, inspired by the power of indicators, underpinned this program by a set of performance indicators. Finally, once the pioneering DB-related feedback exercises proved useful, they created a demonstration effect, first within the central government, which replicated such exercises for the state-level reform program, and then on individual state governments.

BROOKINGS

Akhtar Mahmood, Former Lead Private Sector Specialist – World Bank Group

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To address inequalities we need a new vision for trade

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Usman Ahmed, Senior Director; Head, Global Public Policy and Research, PayPal with Aditi Sara Verghese, Policy Analyst, International Trade and Investment, World Economic Forum Geneva elaborate in This article as part of the Sustainable Development Impact Summit, on how in order To address inequalities we need a new vision for trade.

The above Image is of Etienne Girardet on Unsplash

To address inequalities we need a new vision for trade

21 Sep 2021

  • A new vision for the global trading system must encompass equitable access to the benefits of trade for all of society, and some nations have signalled support in this regard.
  • Reforms to trade policy could have a meaningful impact on domestic economic inequality if a range of concrete steps are taken.
  • The WTO, and trade policy and practice more generally, can be reframed to reflect the notion of economic justice, and the time to make this shift is now.

Divides and discrimination within countries along the lines of race, ethnicity, gender and Indigenous identity have resulted in longstanding social, economic and political challenges. The COVID-19 pandemic has further laid bare the stark inequalities among societal groups.

Yet resistance and restorative action have spread too. Social movements for racial justice in the United States have inspired similar initiatives in other countries. The #MeToo movement spotlighted sexual abuse and harassment and catalysed broader conversations about women’s participation in economic, social and political life. Meanwhile, some governments are coming to terms with their historical and current treatment of Indigenous peoples.

In this context, a new vision for the global trading system must encompass equitable access to the benefits of trade for all sections of society. This is an important aspect of building support for trade, as emerging research indicates that minority groups are often either negatively affected by trade shocks or do not have equitable access to the opportunities it provides.

Some countries have signalled support in this regard. For the first time, the US’s trade agenda includes the goal of racial equity. Canada, Chile and New Zealand signed a Global Trade and Gender Arrangement in August 2020. The relationship between trade and the rights of Indigenous peoples has been increasingly recognized in international economic agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Canada-United States-Mexico Agreement (CUSMA).

Image: Usman Ahmed and Aditi Sara Verghese (2021)

Understanding the problem

The effect of trade on inequalities between countries is well covered in economic literature. Differential trade impacts within countries among different income groups, between small and large firms, and on labour is well studied and discussed.

The effects of trade on different societal groups within countries – whether based on race, ethnicity, nationality, Indigenous identity or gender – has received less attention. This may be because domestic policies are considered the most direct way to tackle these inequalities. However, trade constitutes 58% of global GDP and is an important aspect of economic empowerment. And, while domestic policies can help with inequities created by trade if properly designed, reforms to trade policy could also have a meaningful impact on domestic economic inequality if a range of concrete steps are taken.

Developing and implementing inclusive policy

Better policymaking begins with better data. Governments should understand the industries that underserved populations are most likely to own and work in or rely on for inputs and final products. For instance, in 2016, minority-owned businesses represented 19% of US firms, but only 12.8% of US manufacturing firms. Governments should examine tariff lines to determine if they are discriminatory against those sectors that have a disproportionate representation of minority businesses and workers.

Underrepresented groups must be actively invited to participate in developing trade policy and negotiating positions. The advantages of such engagement were apparent in the provisions for Indigenous peoples in Canada’s trade agreements, for instance. New Zealand has carved out exceptions in their agreements to respect commitments made to Māori.

Trade agreements can also improve labour standards and remove discrimination against minority, migrant and female workers through labour chapters. These should include commitments by advanced economies to support and build capacity for the implementation of the necessary domestic reforms by trading partners.

Technical assistance and capacity building efforts that often accompany trade agreements must take into account equity considerations. Organizations should actively measure impacts of their initiatives on women and minority groups.

Inclusive trade in practice

Businesses also have an important role to play in enabling inclusive trade. Many have stepped up to publicly support movements for minority rights and inclusion. Investments in minority businesses can help raise the overall wellbeing of underserved communities. Supplier diversity programmes can support women-owned, minority-owned and Indigenous businesses to meet procurement standards, access financing and comply with export and import requirements.

Access to trade finance for micro-, small- and medium-sized enterprises (MSMEs) could result in major gains for those underrepresented groups and for the broader economy. The IFC estimates that 70% of women-owned formal MSMEs in developing countries are unserved (or underserved) by financial institutions, with an estimated funding gap of $285 billion.

New technologies and digitalization can also make trade more inclusive – whether by enabling MSMEs to connect and transact with international buyers, providing natural language processing for translation, or automating trade processes that might otherwise lend themselves to discriminatory practices.

Public-private partnership for economic inclusion

Active engagement by all stakeholders at all stages of the process – from research, consultation and policy development to implementation and capacity-building – will be essential in realising a truly inclusive approach to trade.

Businesses and civil society organizations have an opportunity to voice support for government action through the World Trade Organization on these issues in the runup to the 12th Ministerial Conference. Moreover, governments can work with the private sector and civil society organizations to create programs like trade finance guarantees targeting underserved populations.

What is the World Economic Forum’s Sustainable Development Impact summit?

It’s an annual meeting featuring top examples of public-private cooperation and Fourth Industrial Revolution technologies being used to develop the sustainable development agenda.

It runs alongside the United Nations General Assembly, which this year features a one-day climate summit. This is timely given rising public fears – and citizen action – over weather conditions, pollution, ocean health and dwindling wildlife. It also reflects the understanding of the growing business case for action.

The UN’s Strategic Development Goals and the Paris Agreement provide the architecture for resolving many of these challenges. But to achieve this, we need to change the patterns of production, operation and consumption.

The World Economic Forum’s work is key, with the summit offering the opportunity to debate, discuss and engage on these issues at a global policy level.

International trade has done yeoman’s work in lifting millions out of poverty, driving economic growth and encouraging economic integration that reduced incentives for armed conflict between nations. There are green shoots that make the current moment an ideal time for trade to address domestic socio-economic divides.

We believe that the World Trade Organization, and trade policy and practice more generally, can be reframed to reflect the notion of economic justice and that the time to make this shift is now.

Read the Global Future Council on Trade and Investment paper on “International Trade and Economic Justice” here.

Have you read?

The anxiety list for MENA entrepreneurs is long, as is the one curing it

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Hadi Khatib on AMEInfo of 18 September 2021 came up with this deep statement on the anxiety list for MENA entrepreneurs that is long, as is the one curing it

The anxiety list for MENA entrepreneurs is long, as is the one curing it

A research report on the mental health challenges and wellbeing of entrepreneurs due to COVID-19 in the MENA region revealed anxiety has several facets in the minds of these leaders. But all of these insecurities have cures.

  • 55% of startup founders said that raising investment has caused the most stress.
  • More than 95% of entrepreneurs view co-founders as family members and/or friends.
  • Research finds that entrepreneurs are happier than people in jobs.

EMPWR, a UAE-based digital media agency dedicated to mental health and an exclusive mental health partner for WAMDA and Microsoft for startups, published a research report on the mental health challenges and wellbeing of entrepreneurs due to COVID-19 in the MENA region.

The research indicated that startup founders undergo higher levels of stress than the rest of the region, with twice the likelihood of developing depression issues.

55% of startup founders said that raising investment has caused the most stress; the pandemic was the second most-cited reason cited by 33.7% of respondents.   44.2% spend at least 2 hours a week trying to de-stress. 

Other insights, uncovered by the report, include:

  • A good relationship between co-founders can help startups navigate the pandemic-hit market. More than 95% of entrepreneurs view co-founders as family members and/or friends
  • Many entrepreneurs live well below their means to fund their ventures, leading to stress that is detrimental to their health

With only 2% of healthcare budgets in the MENA region currently spent on addressing mental health, the impact of the COVID-19 pandemic on young entrepreneurs and achievers could lead to an economic burden of $1 trillion, by 2030, according to the report.

EMPWR’s MENA partners shared special offers on their mental health services for the region’s entrepreneur community.

From Saudi Arabia:

Labayh is offering the technology ecosystem a 20% discount on their online mental health services for 2 months. Promo code: empwr, with the offer valid until October 29.

From Egypt:

O7 Therapy are offering 50% off their online mental health services, for 50 Entrepreneurs in the MENA region. Promo code: Entrepreneur50, valid until December 1, 2021.

From the UAE:

My Wellbeing Lab is offering 20 one-on-one coaching sessions to entrepreneurs that wish to be coached and helped; alongside unlimited access for any entrepreneur to their “Discovery Lab”, a platform that gives entrepreneurs and leaders insights into their mental wellbeing as well as their teams. Promo code: MWL21.

Takalam is offering 10% off for 3 months. Promo code: Impact.

Mindtales is offering the MENA ecosystem 50% off their services for one month. Their App can be downloaded here.

H.A.D Consultants is offering 20 one on one coaching sessions to entrepreneurs. Promo code: HAD_SME01.

From Oman:

Nafas, a meditation app focused on reducing stress, anxiety, and help with insomnia, is offering access to its platform. Register as a user via this link to redeem benefits. 

Entrepreneurs’ mixed emotions

Entrepreneurs must grapple with uncertainty and being personally responsible for any decision they make. They likely have the longest working hours of any occupational group and need to rapidly develop expertise across all areas of management while managing day-to-day business.

Yet despite all this, research finds that entrepreneurs are happier than people in jobs.

To understand this, a comprehensive and systematic review of 144 empirical studies of this topic, covering 50 years revealed:

1. It’s not all about pay

Work on the economics of entrepreneurship traditionally assumed that entrepreneurs bear all the stresses and uncertainties in the hope that over the long term they can expect high financial rewards for their effort. It’s false.

2. Highly stressful, but…

High workload and work intensity, as well as financial problems facing their business, are at the top of the entrepreneurs’ stress list.

But some stressors have an upside. While they require more effort in the here and now, they may lead to positive consequences such as business growth in the long term. Some entrepreneurs appear to interpret their long working hours as a challenge and therefore turn them into a positive signal.

3. Autonomy is both good and bad

The autonomy that comes with being an entrepreneur can be a double-edged sword. Entrepreneurs can make decisions about when and what they work on – and with whom they work. But recent research into how entrepreneurs experience their autonomy suggests that, at times, they struggle profoundly with it. The sheer number of decisions to make and the uncertainty about what is the best way forward can be overwhelming.

4. An addictive mix

The evidence review confirms that, by any stretch of imagination, entrepreneurs’ work is highly demanding and challenging. This, along with the positive aspects of being their own boss coupled with an often competitive personality, can lead entrepreneurs to be so engaged with their work that it can become obsessive.

So the most critical skill of entrepreneurs is perhaps how they are able to manage themselves and allow time for recovery.  

Stress management tips for entrepreneurs

Identify what the actual source of your stress is. Is it tight deadlines, procurement issues, raising capital, managing investors’ expectations, building a talented team, or delay in landing the first sale for your new startup business?

Even if numbering more than a few, break them down because unmanageable tasks look simpler when broken down into smaller segments. Then, list down how you plan to successfully tackle each issue. Meanwhile, exercising multiple times a week has been rated as one of the best tactics for managing stress.  

Another technique for handling stress is to take a break. Rest as much as you can before going back to continue with the tasks.  It’s also a good idea to reach out to friends, family, and social networks because they are likely to understand what you’re going through and offer words of wisdom and courage.

Stay away from energy-sapping junk food. Eating healthy keeps you fueled for the next challenge. Finally, get enough sleep, and power naps. Sleep helps your body and mind recover.   

Hadi Khatib is a business editor with more than 15 years of experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about them. He can be reached at:  hadi.khatib@thewickfirm.com

Heimdal: Startup for the Environment

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This article by Tech Times written by Isaiah Richard is about how Heimdal: a Startup for the Environment aiming at a high level of sustainability, is proposing to help in the carbon-free industrial materials like cement, concrete, limestone, and more. from extraction to production. Here it is.

(Photo: Photo by Lukas Schulze/Getty Images)

Steam and exhaust rise from the steel mill HKM Huettenwerke Krupp Mannesmann GmbH on a cold winter day on January 6, 2017 in Duisburg, Germany. According to a report released by the European Copernicus Climate Change Service, 2016 is likely to have been the hottest year since global temperatures were recorded in the 19th century.

Heimdal describes themselves as “decarbonizing industries and the world,” and the main goal of the company is to create materials that people can use without guilt or worries. Why is that? Because its industrial products would be carbon-negative or carbon-free.

This is something that has been achieved before, but what Heimdal aims to debut is the novel.

Heimdal’s focus is to extract different raw materials from the Earth using their renewable energy source and creating what people need without leaving any carbon footprint. Cement and concrete production are known to be major contributors of greenhouse gases in the world, something which startups try to change.

There is a lot of focus which the company aims to venture on, and according to Tech Crunch, it would potentially help in preserving the environment with its efforts. Heimdal demonstrates a high level of sustainability from its extraction to production, something which is not widely that practised in the industry. 

Heimdal Carbon-Free Industrial Materials

Erik Millar and Marcus Lima founded Heimdal, and this is something that the duo has brought with them upon completing their studies at Oxford University, United Kingdom. Heimdal aims to bring carbon-free industrial materials like cement, concrete, limestone, and more. 

Its main focus of using seawater and CO2 can help in bringing these said industrial materials, which aims to remove the dangerous greenhouse gas from the equation. The company engineers are working on ways to do this, particularly with a design from the founders to extract energy from seawater. 

Heimdal Renewable Energy

(Photo : Jason Weeks from Pixabay)

One of Heimdal’s main focuses as well is to extract energy from seawater, and it would alter the components to several stages such as making it alkalinized. After which, several gases are extracted, and here, they return seawater to its source.

From this process, Heimdal can collect the raw materials it needs to start on its limestone making while using clean and renewable sources of energy to do so. The venture of the company hits two birds with one stone, and can potentially reduce significant uses of raw materials in the environment. 

Related Article: ‘Green Steel,’ aka Carbon-Free Steel, Has Come Sooner than Expected

Read Also: Solar, Wind Power Now Cheaper than Coal, Renewable Energy Revolution Against Climate Change

To Address the MENA Region’s Most Pressing Issues

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You’re reading Entrepreneur Middle East, an international franchise of Entrepreneur Media looking at how to Address the MENA Region’s Most Pressing Issues.

To Address The MENA Region’s Most Pressing Issues, Startups And Their Larger Business Counterparts Need To Come Together

By Roberto Croci, Managing Director, Middle East and Africa, Microsoft for Startups

In a world without assistance, some of humanity’s best ideas would never see the light of day. Those that can guide the next generation of innovators to success have an obligation to do so.

In 2019, the UAE Ministry of Economy revealed that 95% of the country’s private sector were SMEs or startups. With an estimated economic contribution of 40% of GDP, these smaller enterprises employ 42% of the workforce, and they routinely bring the exact kind of innovations needed for a sustainable future.  

The rest of the region, and indeed the world, tells a similar story. We now live on a planet that cries out more loudly than ever for out-of-the-box thinking. For example, the World Resources Institute tells us that one in every four humans live in a country that faces the highest category of water stress. 12 of these 17 countries are in the Middle East and North Africa, and they need ideas, fast. And across the region, governments and businesses that are just starting to extricate themselves from the clutches of the global COVID-19 pandemic are wondering what they can do to mitigate the impact of possible future crises. 

Large enterprises have the economies, positioning, and scale to meet these challenges and others, but they may lack the conceptual spark found in entrepreneurs and their newly formed businesses. While startups will continue to be an important part of all economies, the impact they can make will be greatly amplified by strategic partnerships with bigger businesses. 

It is the ideal meeting of minds. Smaller businesses are traditionally where we look for job creation and bold ideas, but larger businesses have been around long enough to have better understandings of issues such as market strategy, best practice, and compliance. Where startups may face difficulties finding financial backing, technology, or mentorship, larger players can help– if not directly, then by putting founders in touch with the right people. 

Related: How Corporates And Universities Can Work Together To Bring Scientific Innovation To Commercial Markets

In return, B2B startups can help large corporates to extend their capabilities. Together, businesses of different scales can solve societal and commercial challenges. This potential is not exclusive to an individual industry, nor is it confined to a specific nation. Communities everywhere can share in the progress and sustainability delivered by large and small businesses working together. 

But to create such an environment will require input from all parties– government entities, private enterprises, and startups. We need to ensure self-perpetuating environments that allow businesses to fail, learn, create, and then scale. Any incubation initiative –either by government or private enterprise– that accelerates time to market is welcome. We need to create a system that guarantees the success not just of this generation of viable startups, but of all those that come after. 

In the region, the Abu Dhabi Investment Office (ADIO) is one entity that has dedicated itself to working with corporate partners to foment a vibrant startup ecosystem. My enterprise, Microsoft for Startups, works with ADIO to bridge the gap between viable new businesses and those that can help them succeed. With programs like GrowthX Accelerator and Highway to 100 Unicorns, we work to empower entrepreneurs with access to technology, market guidance, and meet with potential investors and large enterprises to demonstrate their value proposition. https://0a129d5710c3eaf47270288d47690651.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

Opportunities like this are important for startups and corporates. In a world without assistance, some of humanity’s best ideas would never see the light of day. Those that can guide the next generation of innovators to success have an obligation to do so. And as they do, they should be aware that when large- and small-scale operators work together, everybody wins.