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This is Africa
May 9, 2013
Opinion: Matt Andrews, Associate Professor of Public Policy
The World Economic Forum is meeting in Cape Town to address the theme Delivering on Africa’s Promise. The meeting will focus on employment creation and private sector development, which always leads to a discussion about governance reforms. This discussion often fosters talk about indicator scores and 'best practice' interventions. I had such engagement a few years ago when working on economic development in an African country that had recently emerged from conflict. In a meeting with a minister I asked: "What is your government doing to facilitate business creation?" He answered without hesitation: "We have risen from 160th to 135th in the Doing Business Indicators produced by the World Bank." I responded: “Did any of the steps you took to improve the Doing Business scores address problems faced by entrepreneurs in your country?" He seemed annoyed at the question and answered curtly: "Of course…these are the reforms international experts proposed for us. They are the reforms business wants to see us doing."
Unfortunately, five years after this meeting, the country is still struggling to establish even a marginally functional private sector, and unemployment is growing rapidly. Government continues to focus on decreasing regulatory barriers to creating new businesses or building new warehouses; but these steps do not solve problems that firms actually struggle with. Businesses — especially small operators — have to deal with more tangible public sector dysfunction that results in a lack of running water and trash collection, an absence of security and electricity, and a host of other basic service and infrastructure failures. Government officials are less focused on solving these problems than they are on improving their Doing Business scores (which do not capture such things and cannot be adjusted to reflect the different constraints to doing business in different contexts). While governance reforms make the governments look better, real governance and growth gaps persist and undermine progress.