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Four Arab Countries Among World’s Top 10 Business Climate Improvers

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Economies in the Middle East and North Africa region implemented the most reforms on record to ease doing business for domestic small and medium-sized enterprises and hosted four of the countries that improved the most world-wide, according to the World Bank Group’s Doing Business 2020 study.

Economies of the region put in place 57 business regulatory reforms in the 12 months to May1, up from 43 during the previous 12-month period covered by the study. Thirteen of the region’s 20 economies carried out reforms and the region’s average ease of doing business score improved by 1.8.          

Economies of the Gulf region have been particularly active, implementing 35 business-climate-improving measures in the past year.

This year, the region hosts four of the world’s top 10 improvers: Saudi Arabia, Jordan, Bahrain, and Kuwait. These countries account for almost half of the region’s reforms. The United Arab Emirates remained the strongest performer overall in the region, placing 16th (out of 190) on the ease of doing business rankings.

“It is a year of records for economies in the Middle East and North Africa, and we are committed to continuing our support to all countries in the region ” said Ferid Belhaj, World Bank Regional Vice President for the Middle East and North Africa.The next generation of reforms should focus on transparency, fair competition and good governance to make MENA open for business and attract investments needed to create jobs for youth and women.”

Jordan joins the top reformers for the first time – with three reforms. The economy strengthened access to credit by introducing a new secured transactions law, amending the insolvency law and launching a unified, modern and notice-based collateral registry, among other measures.

Bahrain, with nine reforms, led both the region and the world in number of reforms implemented. The country recently introduced a new bankruptcy law, strengthened the rights of minority shareholders and revamped the process of obtaining building permits through a new online platform. Enforcing contracts was also made easier by creating a specialized commercial court, establishing time standards for key court events and allowing electronic service of the summons.

Saudi Arabia, this year’s top improver (based on the increase in its overall ease of doing business score), carried out a record of eight reforms in the past year. It established a one-stop shop for company incorporation and eliminated the requirement for married women to provide additional documentation when applying for a national identity card. It also made importing and exporting faster by enhancing the electronic trade single window, enabling risk-based inspections, launching an online platform for certification of imported goods, and upgrading infrastructure at Jeddah Port. Other reforms led to improving access to credit, strengthening minority investor protections and facilitating the resolution of insolvency.

Kuwait also earned a spot in the top 10 improvers for the first time with seven reforms. Building permitting was streamlined by integrating additional authorities into the electronic permitting platform and enhancing inter-agency communication. The country also made trading across borders easier by enhancing the customs risk management system and implementing a new electronic clearance system.

Morocco carried out six reforms: strengthening minority investor protections; reducing the corporate income tax rate; and introducing e-payment of port fees. The United Arab Emirates, Egypt, and Oman implemented four reforms each. All three strengthened the rights of minority investors, streamlined business registration processes and made it easier for businesses to import and export goods.

Collectively, the region’s economies focused their reforms on getting electricity and protecting minority investors, with 40% of the countries in the region reforming in these areas (eight reforms in each).

Overall, the region performs the best in the areas of paying taxes, getting electricity, and dealing with construction permits. Obtaining a building permit takes on average 124 days, 28 days less than among OECD high-income economies. Similarly, entrepreneurs in the region need to complete 16.5 payments on average to comply with their fiscal requirement compared to 23 globally. Bahrain is the best performer globally in tax compliance time, requiring just 22.5 hours per year to file and pay taxes.

However, some economies in the region still fall short. Libya has not implemented any reforms since the inception of Doing Business, while Iraq has improved on only four indicators. Lebanon has made one reform to improve its business climate in the last five years and seven reforms since the first launch of the Doing Business study in 2003. It ranks 143rd globally, and especially underperforms in the areas of starting a business and dealing with construction permits.

Getting credit in the Middle East and North Africa remains harder than anywhere else in the world, partly due to insufficient protections for lenders and borrowers in collateral and bankruptcy laws. The region also underperforms in the areas of trading across borders and resolving insolvency. The cost of complying with border requirements for exporting averages $442 and takes 53 hours, three and four times more than the averages among OECD high-income economies. In bankruptcy, the average recovery rate in the region is 27 cents on the dollar, compared with 70 cents in OECD high-income ones.

Doing Business finds that barriers against women are still widespread in the Middle East and North Africa, with 13 of the region’s economies imposing additional procedures for female entrepreneurs to start a business.

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Development

Widodo emphasizes importance of G20 focus on resilient health systems,

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The G20 and advanced economies must work together to create a more resilient and responsive global health architecture to face future threats and pandemics, said President Joko Widodo of Indonesia in his address to the Davos Agenda 2022.

He said the International Monetary Fund should be tasked to mobilize resources to revitalize global health architecture. This should include a global contingency fund for medical supplies, building capacity in developing countries to manufacture vaccines and the creation of global health protocols and standards.

“The costs will be much lower than the losses we sustained due to the vulnerability of the system during the pandemic,” he said.

In discussion with Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, Widodo highlighted that “the G20 will play an important role in mobilizing the development of this global health architecture” and added: “I trust that advanced economies will not object to supporting such initiatives.”

Widodo – whose country holds the presidency of the G20 during 2022 – invited all global business leaders to contribute their ideas to the G20’s three key goals for 2022: creating a more resilient global health system; optimizing digital technology to support societal transformation; and driving a fair and affordable transition to clean energy and a circular economy. “The benefits must be felt by wider society,” he said, adding that six of Indonesia’s sectors are “wide open” for foreign investment – export-oriented labour-intensive industries (including health), renewable energy, infrastructure, automotive (especially electric vehicles), tourism and value-added mining.

In response to a question on how Indonesia – a nation heavily dependent on coal-fired power – could accelerate its own energy transition, Widodo said that developing countries need technology transfer and financial support from advanced economies to ensure the transition does not burden their citizens. Indonesia needs $50 billion for its renewable power sector and a further $37 billion for forestry, land use and marine sectors. “Concrete outcomes can only be achieved through strong cooperation,” he said. “Technology and financing will be key.”

The president pointed out that, as part of its roadmap to reach net zero by 2060, Indonesia had slashed the coverage area of forest fires sevenfold, from 1.7 million hectares in 2014 to 229,000 hectares in 2021. The number of hotspots fell over the same period from 89,000 to just 1,300. The country has restored 3.74 million hectares of peatlands since 2016 and rehabilitated 50,000 hectares of mangrove forests in the past year. Its mangrove-rehabilitation target is 600,000 hectares by 2024 – the most ambitious such programme in the world, providing, he said, a “carbon sink equivalent to four tropical forests”.

To finance the green transition, Widodo has initiated a carbon trading system that will deliver “results-based payments” for actions that reduce carbon emissions as well as a carbon tax on coal-fired power plants, due to start in April.

“Indonesia has the potential to be a global market leader in carbon trading and is predicted to surpass the carbon trade potential of Peru, Kenya and Brazil, as countries with the same tropical forest cover,” he said. The government also plans to raise capital by issuing environmental and social bonds, and through REDD+ projects that reduce deforestation and promote sustainable forest management.

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Development

Davos Agenda Session on Space and Climate Opens Up New Frontiers

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European Space Agency astronaut Matthias Maurer connected live to a session on Thursday at the Davos Agenda 2022 from the International Space Station, somewhere high above the Pacific, to discuss how space research can improve life on Earth.

While in orbit on a six-month mission with the European Space Agency (ESA), Maurer will support a wide range of science experiments and technological research, including those that address transmissions of disease, the reduction of carbon emissions and human health-related activities. Knowledge gained through his mission will contribute to development that benefits life on Earth.

“We have worked hard in the past few weeks and months to send back cargo that we harvested for scientists to analyse all these samples that we produced in space, and to produce science and knowledge for humanity out of it,” he said.

He added that the cross-country and international collaboration aboard the space station should also be a model for how the world tackles major challenges, such as climate change. From his view, Maurer described the beauty of the planet, but also pointed out that he could see the impact of climate change from space.

“When we fly around the Earth (16 times a day), we cross over areas that are very arid and dry and I can see scars on the planet where people are digging deep to extract resources. So we are actively reshaping the planet. We are cutting down trees and burning down rainforests. I see the flames. I also see the flooding.”

Back on Earth, Al Gore, Vice-President of the United States (1993-2001); Chairman and Co-Founder, Generation Investment Management, explained how space technology and artificial intelligence can help address climate action. He highlighted the work of Climate TRACE, a global coalition created to make meaningful climate action faster and easier by independently tracking greenhouse gas emissions with unprecedented detail and speed.

“Some things you can see directly from space, like methane, but the difficulty of measuring CO2 emissions against a highly varied CO2 background on the Earth make it necessary to use AI to get precision we need,” he said. He added that if you consider something like GPS, it is clear how quickly the opportunities offered by space tech and space exploration can become integrated into our lives.

But the data and knowledge that is gained from space should not be limited to those who own satellites, said Sarah Al Amiri, Minister of State for Advanced Technology, Ministry of Industry and Advanced Technology of the United Arab Emirates. “If only countries with access to satellites get access to the data, we deny other countries the opportunity to benefit from that knowledge,” she said.

According to the World Economic Forum’s Global Risks Report 2022, space is increasingly crowded and commercialized. While the diversification of actors is for many an exciting development, dated space governance frameworks are coming under considerable pressure, exposing fault lines between the ambitions of different players and the acceptability of their actions.

Echoing this message, Josef Aschbacher, Director-General of the ESA, noted that the volume of satellites indicates that regulation is important.

However, it will have to keep up with a fast-changing industry, which, according to Chris Kemp, the Founder, Chairman and Chief Executive Officer of Astra, is currently seeing a revolution of sorts. “Access is increasing all the time thanks to significant falls in the cost of putting satellites into space and this has enabled a new generation of entrepreneurs to build companies, to take these companies public and provide new capabilities.”

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Africa Today

Osinbajo Demands Right for Africa to Manufacture its Own Vaccines

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Access to COVID-19 vaccines continues to pose a serious problem for Africa, with fewer than 10% of populations fully vaccinated in most countries, said Yemi Osinbajo, Vice-President of Nigeria, in his address to the Davos Agenda 2022. He called for patent waivers to permit African countries to manufacture vaccines locally.

Osinbajo complimented COVAX and other global vaccine alliances for their contribution but noted that the price tag for vaccinating the entire world is just $50 billion, according to the Organisation for Economic Co-operation and Development. “This is affordable, he said, but we should not allow this opportunity “to slip through the cracks”.

“Now is a good time to test global will,” he said, in building international cooperation to prepare for new, possibly worse pandemics to come.

He called for natural gas – which Africa has in abundance – to be accepted as a transitional fuel. Africa is the continent that contributes least to climate change yet has been most negatively affected by it, he said. This situation cannot be compounded by rules that hamper Africa from adapting.

“For many gas-rich African countries, one of the biggest shocks is the notion that fossil fuels including gas should be defunded, especially by international financial institutions.” He added: “We think that gas as a transition fuel is absolutely crucial, not just for an effective transition but also for our economies.” He made it clear that gas is “without doubt the only pathway” for Africa to transition out of more hazardous fuels such as coal and heavy oil.

Osinbajo claimed that Nigeria is “probably the first country in Africa to develop an energy transition plan and to cost it out”. The plan, which he said will be launched in the next couple of weeks, includes connecting 5 million homes to solar power, requiring more foreign investment in manufacturing panels and components.

He said there is a “unique opportunity” for companies to invest in Nigerian renewable energy and that the government is providing debt for those who wish to do business in the sector. He also called on developed economies to honour their long-standing pledge to provide $100 billion annually in climate finance to developing countries.

Peace and security on the continent are seriously threatened by global terrorist franchises from the Sahel to the Horn to Southern Africa, Osinbajo said. As with coronavirus, “terrorism anywhere is a threat to peace everywhere” and he warned global partners not to sit by and allow Africa to be overrun by such extremists. “It is imperative for the international community to make more robust interventions to clear terrorists from Africa just as it did in the Middle East.”

Despite the enormous challenges of tackling COVID-19, climate change and terrorism, Osinbajo remained upbeat about economic prospects for Africa and Nigeria. The sub-Saharan economy grew by 3.7% in 2021 and is projected to continue this trajectory into 2022. Nigeria’s National Development Plan 2021-2025 envisages investments totalling $840 billion, of which 86% is expected to come from the private sector.

In the next three decades, the global population will swell by 2 billion people; 1 billion of those will come from Africa, which now has the world’s fastest growing working-age population. “Africa has the potential to become the factory of the world,” he said.

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