Better business environments for all

October 31st, 2014

The relevance of business environments may not be the first thing that comes to mind when considering the universal development goals and targets designed to end global poverty. They will replace the MDGs, which finish in 2015, so the debate on what’s in and what’s out is gradually heading towards a conclusion. A staggering 17 goals and 169 targets are proposed, a number viewed by many as far too ambitious for countries to measure.

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We can expect some horse trading in early 2015 and hopefully some paring down. Whatever the outcome it would be surprising if a goal on economic development did not make the cut. The ‘economy’ goal in the current proposal has no less than 10 targets, one of which focuses on the policy environment for enterprise and jobs.

The Donor Committee on Enterprise Development (DCED) are asking development practitioners like Practical Action to get involved in a discussion about whether including such a target is important and if so how we think it should be measured. They are getting ahead of the laborious UN process by proposing an indicator on the Business Environment. By inviting the development community to comment on these proposals they are hoping to open up the topic, stimulate interest and generate practical suggestions.

So, what do we think? We know business environments are important, a key part of the systems that are critical to people living in poverty.  Global learning communities, like SEEP/MAFI, highlight their relevance and many of us through our programme work  are all too familiar with the negative impacts of ‘disabling’ business environments. Whether laws and regulations or informal ‘rules’ we see the effect these issues have on the incomes and employment opportunities of some of the most marginalised. It’s likely that most development practitioners would agree, in principle at least, that it is beneficial for governments to get a deeper understanding the positive and negative effects of the environment for business.

The difficult part though is deciding what to measure. Our experience is that ‘a rising tide does not lift all boats’. In DCED’s own words “A further question for debate is whose business environment we would be aiming to improve”. We think this is not so much a “further question” but a critical issue that needs to be front and central of any discussion about this indicator. Beyond2015, a coalition of over 1000 CSOs in 130 countries, have issued Red Flags for the proposed Goals and Targets. One Red Flag asks for an “explicit commitment that no target should be considered met unless it is met for all social and economic groups”. This would mean that a target on the business environment delivers a measurably improved situation for all, which includes micro-enterprises and those working in informal sectors. This is particularly significant in order to improve the economic participation of women. The target could guide governments to focus efforts on what needs to change in key sectors that can have a direct impact on poverty, such as agriculture, energy, water and sanitation.

Consensus on the target is likely to depend on the issue of what data is collected and the proposed mechanisms. DCED are keen to move discussion from the abstract to the practical and have put forward four options for comment. This is quite a challenge for those of us with little expertise on the technicalities of global data measurement. That said the limitations of their first three suggestions appear to be significant enough to direct attention and resources towards investigating the fourth option i.e. to design a measure specifically for the purpose. This has the considerable advantage of being deliberate and intentional in the links between this measure and the fundamental objectives of the universal development goals.

DCED’s ‘cons’ for this option, that it will be costly and difficult to have yet another measure, require some creative thinking. Innovative, new ways of collecting and analysing data are emerging continually in the current ‘data revolution’ which is giving rise to the emergence of exciting players like datakind who could bring an important perspective to this conversation.

What does seem clear is a need to invest in quality learning conversations to move this on. DCED’s website ‘comments format’ can get things started by stimulating interest but it is limited. Virtual and/or in person roundtables, perhaps regionally, are ways to host engagements that could take it deeper. Practitioners, entrepreneurs, researchers and policy makers, particularly those in the global South could come together to consider whether a new measure is the best option and to suggest creative ways of gathering data that is both cost effective and illuminating for governments. Perhaps one step of many to create better business environments for all.

Alison Griffith, Senior Policy and Practical Advisor – Markets and Private Sector, Practical Action

Co-Chair Bond Private Sector working group.



2 responses to “Better business environments for all”

  1. Sarah Montgomery Says:

    A great piece and an important discussion. “What does seem clear is a need to invest in quality learning conversations to move this on”…. this certainly sounds like a useful idea – i’d be very interested in hearing others’ thoughts and learning. Some reflections from CAFOD are also available here:

  2. Charlotte Wilson Says:

    Hello, fantastic recommendation and an fascinating article, it is going to be
    fascinating if this is still the situation in a few
    years time

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