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Regional Business Climate Survey (RBCS) Kara Rawden GTZ - Advisory Service for Private Business (ASPB) May 2006 06.07.2015 Seite 1 RBCS Strategy Gauge the climate for business and investment, encourage and attract investment The RBCS project aims at promoting advocacy and dialogue between the private and public sector within the region by providing information for Public Private Dialogue and ensuring that informed decisions are made The RBCS report addresses itself to decision makers, entrepreneurs and stakeholders in the private sector The RBCS does not rank countries but aims at weighing the business climate of the region and promoting the region as a whole. 06.07.2015 Seite 2 RBCS Important Issues How to present results, Who presents and why. Inefficient PSOs. 2005 Other 76% PSOs 24% 2006 PSOs 15% Other 85% Making use of the media to promote the results of the survey. Credibility of the survey, the need for a respected scientific institution. Branding and Identity. 06.07.2015 Seite 3 RBCS Methodology Focus on the manufacturing sector in the region Unique capacity of the manufacturing sector to provide activities with high value-addition, growth and employment potential hence its developmental capacity In this sense, mood of the manufacturing sector highly reflective of “business mood” List of respondents drawn mainly from membership lists of Private Sector Organisations [PSO’s] conducting the RBCS Additional sectors for 2005 were taken into account i.e. Primary & Service 06.07.2015 Seite 4 RBCS Products Brochure: ‘What is a Business Climate Survey’ Brochure: ‘The Results of the Business Climate Survey’ - Annual Report: ‘The Results of the Business Climate Survey’ Annual www.rbcs.info Why? Newsletter - Monthly Subscribe: [email protected] 06.07.2015 Seite 5 RBCS Steps Action Who Time Frame Approach sponsors All Partner Organisations December 2005 Database from co-operating partners available to Researchers All Partner Organisations End March 2006 Steering committee Partners / ASPB End March 2006 Questionnaire sent to cooperation partners Researchers 30 April 2006 Deadline for responses All Partner Organisations 31 May 2006 Evaluation workshop Partners / ASPB / Researchers June 2006 Final Report Spokespeople / ASPB / Researchers 3rd week July 2006 Press conference Partners/Spokespeople / ASPB August 2006 06.07.2015 06.07.2015 Seite 6 Media and Promotion Spokespeople from our Partner Institutions carry out all the live TV & Radio interviews after receiving media training with core team Press Packs and key messages are prepared for the Press Conference Our biggest article was worth approximately Euros 5,000.00 in media space Television and radio inserts ranged from Euro 100.00 to Euro 14,000.00 The value of the media coverage totaled seven times our initial investment. 06.07.2015 Seite 7 Comparison 2004/2005/2006 2004 Angola Botswana DRC Lesotho Madagascar Malawi Mauritius Mozambique Namibia RSA SwazilandTanzania Zambia Zimbabwe TBD NEPRU NA LCCI NA MCCCI MCCI AIMO NEPRU MR FSE CTI? ZACCI CZI/ZNCC 0 41 NA 13 NA 19 45 14 54 141 11 0 7 0 Namibia RSA 2005 Angola Botswana DRC Lesotho Madagascar Malawi Mauritius Mozambique UCAN MR GTZ MR MC MCCCI MCCI AIMO 51 23 111 25 3 65 5 14 NEP/NCCI CH/MR/NEP 50 51 Namibia RSA SwazilandTanzania Zambia Zimbabwe FSE MR/TCCIA MR MR/CZI 17 21 21 24 2006 Angola Botswana DRC Lesotho Madagascar Malawi Mauritius Mozambique MR MR GTZ MR MC/MR MCCCI MCCI AIMO/MR NCCI/MR CH/MR 5 22 116 12 6 44 9 15 37 72 SwazilandTanzania Zambia Zimbabwe FSE/MR TCCIA/MR 12 17 06.07.2015 MR MR 33 28 Seite 8 RBCS Challenges 2004 Obs tacles Score to bus ine ss activities in SADC Re gion: Fluctuations of the exchange rate 7.49 Crime, thef t and corruption 7.40 Lack of market inf ormation 6.79 Customs regulations, procedures and bureaucracy 6.76 Economic and regulatory policy uncertainty 6.61 6.09 Af f ordable and reliable transportation Trade tarif f s & custom charges 5.79 Lack of transparency of rules and regulations 5.46 Access to and cost of f inance (f or f oreign inv estors) 5.21 Business licensing and operating permits (f or f oreign inv estors) 5.19 5.16 Business culture Access to land (f or f oreign inv estors) 5.11 4.89 Legal env ironment (enf orcement of contractual and property rights) Communication restrictions 4.67 Visa regulations 4.00 Insurance 3.93 Import/export licensing Domestic Content requirements Phy to-sanitary and v eterinary regulations (etc.) 0 No Problem Structure 3.78 2.99 ASCCI White Paper 2.86 5 Minor Problem 06.07.2015 10 Major Problem Seite 9 RBCS Challenges 2005 Fluctuations of the exchange rate Crime, theft & corruption Economic & regulatory policy uncertainty Customs regulations, procedures & bureaucracy Affordable and reliable transportation Lack of transparency of rules and regulations Lack of market information Trade tariffs & custom charges Legal environment Access to and cost of finance Business culture Business licensing & operating permits Access to land Insurance Import/export licensing Visa regulations Communication restrictions Domestic Content requirements Phyto-sanitary & veterinary regulations 7.61 6.46 5.94 5.73 5.39 5.17 5.11 5.01 4.83 4.72 4.51 4.43 4.33 3.95 3.86 3.74 Structure 3.63 3.40 ASCCI White Paper 3.14 0 5 10 06.07.2015 Seite 10 RBCS Challenges 2005 - Germany Value of Perception (0=no problem - 10=major problem) 0 1 2 3 4 5 6 7 8 9 Crime, theft and corruption Availability of qualified workforce Legal environment Customs regulations and bureaucracy Fluctuations of the exchange rate Economic and regulatory policy uncertainty Transport connections to international traffic routes Quality of financial institutions Lack of transparency of rules and regulations Trade tariffs and customs charges Affordable and reliable transportation Lack of market information Insurance Access to and cost of finance Business Culture Visa regulations Communication restrictions Import / export licensing Business licensing and operating permits Access to land Phyto-sanitary and veterinary regulations 06.07.2015 Seite 11 10 RBCS Index 2005 The survey results for both 2004 & 2005 have been utilized, to develop a Regional Business Confidence Index (RBCI). 2004 2005 94 100 06.07.2015 Seite 12 Conclusions on the Results The 2005 SADC Regional Business Climate Survey reveals a broad-based, optimistic and stable market The SADC regional firms participating in the survey remain optimistic about economic expectations over the ensuing twelve months, for the period-ending 31 March 2006. Recommendations The results should be used as a medium to transfer promotional messages to foreign investors. The key recommendation is to first focus marketing on promotion of the SADC region to attract the attention of investors before promoting individual countries 06.07.2015 Seite 13 Lessons Learned Category Cost Market Research Low PSOs High Combination - Planned Combination - Crisis PRICE Medium High The use of a market research company has the dual effect of bringing down the average cost and increasing the return rate The future involvement of the PSOs is dependant on the use of the RBCS by the PSOs themselves Changes in PSO officials has a major impact on the success of the RBCS questionnaire return rate Quality of Brand & Identity 06.07.2015 Seite 14 RBCS: A Tool to Promote PPD Regional 06.07.2015 Seite 15 Thank You! 06.07.2015 Seite 16 Business Climate Survey (BCS) Malawi Kara Rawden GTZ - Advisory Service for Private Business (ASPB) May 2006 06.07.2015 Seite 17 The Malawi Experience Malawi is the first SADC member country to translate the RBCS into a national business climate survey The aim of the national survey is to guide decisions that will promote national economic development by •Producing a neutral and factual comprehensive report making it acceptable to both the public and private sector •PPD then selects the issues and decides how to tackle them •The selection of issues for PPD then need to be guided by how much potential is present of reaching consensus •Issues for the PPD would then be followed by the partners of the PPD by preparing their own briefs. Democratic Republic of Congo and Madagascar taking up this initiative 06.07.2015 Seite 18 Economic Background Globalisation is a serious challenge for Malawi, impinging on government revenue collection and on private sector competitiveness Opportunities of globalisation require a new focus on knowledge in trade, production and services, and a new strategic positioning of the country in line with its comparative advantages Malawi benefits from being member of SADC and COMESA, and from bilateral trade agreements Malawi must ensure that its negative trade balance with SA is compensated by increased investment into production; this is also in SA’s interest 06.07.2015 06.07.2015 Seite 19 Economic Background Regional trade will not be free without harmonised standards - a highly complex task Malawi has made strides in improving the conditions for private sector development; macro-economic conditions have considerably improved The institutional landscape to support the development of the private sector is fragmented and weak The MCCCI has become self-sustaining and stronger in membership and acceptance as the private sector voice 06.07.2015 06.07.2015 Seite 20 Malawi’s Competitive Position The 2004 WEF Africa Competitiveness Report ranks Malawi 12th of 25, positively pointing out its lower crime and corruption levels as well as its judicial independence The 2006 WB ”Doing Business in Malawi” report shows positive rankings for employment flexibility, contract enforcement and other areas Malawi is performing better than others with regard to a number of human development benchmarks in the group of low human development countries 06.07.2015 06.07.2015 Seite 21 Current and Expected Performance 50% Survey results Current Performance The current performance is positive; expectations for the future are even better Investment and employment plans support this optimism Investments are geared towards modernisation, productivity gains and expansions Expected Performance 40% 30% 20% 10% 0% Very Good Good Fair Expected Investment Poor Expected Employment Increase a lot Increase a lot Increase Increase Remain Same Remain Same Decrease Decrease Decrease a lot Decrease a lot 0% 20% 40% 60% Very Poor 80% 0% 20% 40% 60% 06.07.2015 06.07.2015 Seite 22 Major Obstacles to Doing Business in Malawi 8,3 Fluctuations of Exchange Rate Custom Regulations, Procedures and Bureaucracies 7,4 Composition of Public Spending 7,3 Lack of Market Information 7,2 Economic and Regulatory Policy Uncertainty Effectiveness of Parliament 7,0 6,9 Access to and Cost of Finance 6,7 Affordable and Reliable Transportation 6,5 Trade Tariffs and Custom Charges 6,5 Crime, Theft and Corruption 6,1 Access to Land 6,1 Lack of Transparency of Rules and Regulations 5,9 5,8 Technologically Aware Workforce Legal Framework for PS to settle Disputes 5,4 Business Licensing and Operating Permits 5,4 Legal Environment 5,3 Business Culture 4,8 SPS 4,5 Govt Policy on Procurement of ICT 4,4 Insurance 4,1 4,1 Communication Restrictions Import/Export Licensing 3,8 3,7 Visa Regulations 3,6 Domestic Content 0 1 2 No Problem 3 4 5 6 Minor Problem 7 8 Survey results Exchange rate fluctuations, customs regulations, public spending and policy uncertainty are important obstacles to doing business in Malawi Market information, access to finance, reliable transportation and access to land are important direct needs 9 10 Major Problem 06.07.2015 06.07.2015 Seite 23 Conclusions Dynamics in public-private sector interaction have substantially grown, but much more must be done to meet the global challenges; lack of action is already causing frustration The survey revealed optimism as well as readiness to invest and to create employment Greater integration of SME into the economy is possible, but a much stronger institutional infrastructure is needed Many problems are structural, but a number of issues can be dealt with, even with the limited available resources 06.07.2015 06.07.2015 Seite 24 Conclusions Strengths Weaknesses Improved macro economic environment Good will for economic development Good policy documents Public-private dialogue going on (NAG, MCCCI) Optimistic, diversified industrial sector MCCCI being strengthened Relatively good security situation Opportunities Threats Domestic market opportunities Regional and global market opportunities Regional investments Fragility of present political situation Weak infrastructure (e.g. electricity) Weak institutions Landlocked situation affects competitiveness Low skill base Fragmentation of the private sector Inadequate response of regulatory and fiscal system to globalisation 06.07.2015 06.07.2015 Seite 25 Possible Strategies A clear economic development vision, shared by the public and private sectors, would contribute to political stability Strengthening the institutional and physical infrastructure must be a key objective Attracting foreign investment will strengthen the domestic private sector; Malawi must prepare itself in time to point out its advantages to SA investors The need to adapt the fiscal and regulatory system to the requirements of globalisation is immediate. The PPD needs to be directed towards this The landlocked situation of Malawi could be an opportunity, in particular if linkages between Malawian industries are strengthened The fragmentation of the Malawian private sector needs to be overcome 06.07.2015 06.07.2015 Seite 26 06.07.2015 06.07.2015 Seite 27