Sector Based Business Environment Reform

The Client

My client was the Donor Committee for Enterprise Development (DCED). I have worked closely with this organisation and its members (i.e., international donor and development agencies engaged in private sector development) over a number of years. Most of my work is with the DCED Business Environment Working Group.

The Challenge

Most business environment reform programmes focus on reforms that affect the general conditions for private enterprise growth. These are sometimes referred to as “horizontal reforms” because they typically affect all businesses. However, there has been an observable trend in recent years toward sector-based or “vertical reforms”, which focus on a specific sector or sub-sector. The challenge was to explore the work agencies were doing to support vertical business environment reforms and to better understand the ways this differs in practice from horizontal reforms. The DCED was interested in learning if there were differences in approach and what the good practices in this field are.

The Process

I undertook a review of agency programmes designed to support sector-focused business environment reform. Four sectors were examined, each with a particular perspective on the issues facing sector development and reform: pharmaceuticals sector (focusing on the local production of essential medicines), the renewable energy sector (focusing on the generation and distribution of on-grid-renewable energy, such as solar, wind and tidal power), mining and small-scale suppliers (focusing on the development of small-scale suppliers to mining activities), and horticulture, specifically fruit and vegetables.

Four key questions guided the review:

  • What specific elements of the business environment should be addressed to improve sector performance?
  • How are these reforms pursued?
  • Are there good examples of targeted reforms in the selected sectors?
  • What actions should key stakeholders (i.e., government, business, donors) take when promoting reforms that will improve sector performance?

This was largely a desktop review of documents and a survey of people who have experience in business environment reform in the selected sectors and sub-sectors. Most respondents were identified by the sponsoring agencies. These people were a mix of specialists from development agencies, government policy makers and industry representatives. In some cases, respondents submitted a completed questionnaire; in other cases respondents were interviewed via telephone or Skype. Typically, these interviews ran for one hour each.

I presented a draft technical report in Copenhagen, Denmark, which was discussed by sector specialists and DCED members. This provided a general validation of the research findings. The report was then revised, and second report prepared providing guidance to agencies on best practices in this field.

The Outcome

In the first instance, the technical report provided the evidence used to produce the guidance document. The guidance document has been adopted by the DCED and provides official advice to agencies on how best to support sector-based business environment reform. I have been the principle author of a series of guidance documents produced by the DCED. These documents present a multi-agency perspective on how best to support and monitor business environment and investment climate reform programmes.

Lessons Learned

Focusing on a new field of research in a topic such as this requires a high-degree of consultation with agencies. It was important to select a range of different sectors to achieve a diverse spread of experiences and to ensure participants were committed to the findings of the research.

It can be difficult to ensure the research findings, and the guidance that stems from these findings, are based on evidence. It may be easy to make general statements about policy, but focusing on the role policy has played, for example, takes deeper investigation.

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