WBCSD-SNV Alliance: Creating inclusive business opportunities by linking local communities with big business

Keeping track of regulatory reforms: Doing Business 2009

The International Finance Corporation (IFC) and the World Bank recently published Doing Business 2009, an annual report that ranks 181 economies on the overall ease of doing business.

According to the report, more regulatory reforms were recorded worldwide between June 2007 and June 2008 than in any previous year: 239 reforms in 113 economies. Reformers simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit and reduced the cost of exporting and importing. The pace of reform varied across regions, with Eastern Europe and Central Asia reforming the most. In terms of countries, Singapore tops the rankings, followed by New Zealand, the United States, and Hong Kong, China.

With regard to Latin America, the geographic focus area of the WBCSD-SNV Alliance for Inclusive Business, Colombia and El Salvador stand out as key examples of regulatory reform. According to Sylvia Solf, lead author of the report, “the region’s most popular area for regulatory reform continues to be facilitating trade, followed by changes that make it easier to start a business.”

Big companies and institutional capacity building: some best practices

A report published by the Ethical Corporation Institute, Corporations, Institutions and Better Governance, considers how leading companies are addressing the issue of limited government and institutional capacity in developing nations by becoming catalysts for institutional improvements.

The focus of the report is on practical actions taken, the partners involved, and the attempts at measurement and ramification of outcomes. The report also reviews a number of cases of this emerging practice, outlining and analyzing best practice and the views of companies on the roles they – and other actors – can and should play in this important area.

Read also the article summarizing the report’s findings.

Honduras working towards freeing itself from the restraints of red tape

The environment where inclusive business activities take place is decided by policymakers. As a result, governments and international organizations play a pivotal role in the success of these business-led initiatives. For development-oriented business to be successful, support from political leaders and the establishment of optimum framework conditions are crucial.

A recent article in the Financial Times reports how the Honduran government is capitalizing on the potential of its informal economy by easing rules on licenses, with a view to speeding up the bureaucratic processes needed to formalize a business.

How are Latin American companies getting to grips with doing business with the low-income segment?

A recent article in Ethical Corporation titled Social innovation – Giving the majority a stake discusses how Latin American companies are getting to grips with doing business with the low-income segment, i.e., with what the Inter-American Development Bank (IDB) calls the “majority market” of 360 million Latin Americans earning $9/day ($3,260 a year). This population segment is both deprived of access to opportunities for wealth creation and underserved by the products and services that effective markets provide.

The article also refers to a study conducted by Innovest Strategic Value Advisors, which creates a so-called Opportunities for the Majority (OM) Index of publicly traded firms operating in the Latin American and Caribbean (LAC) region for investors. The new index rates and ranks LAC companies based on their performance and positioning on critical OM issues with regard to four criteria: strategic governance, human capital, stakeholder capital and the environment. The study involved the review of 75 publicly traded firms in Brazil, Argentina, Chile, Colombia, El Salvador, Nicaragua, Jamaica, Peru, Trinidad & Tobago, Mexico and Honduras. The companies selected operate within the following sectors: finance, telecommunications and IT, infrastructure, homebuilding and consumer goods/retail.

The importance of legal empowerment for development

A report titled Making the Law Work for Everyone (pdf, 110 pages) finds that 4 billion people – the majority of the world’s people – are excluded from the rule of law. It argues that “in the 21st century, legal empowerment of the four billion excluded is the key to unlocking vital energies needed to end poverty and build a more stable and peaceful world."

The report, by the Commission on Legal Empowerment of the Poor, a group co-chaired by former U.S. Secretary of State Madeleine K. Albright and Peruvian economist Hernando de Soto, calls on governments, international institutions and civil society to make legal empowerment a top agenda item in the fight against global poverty.

What can companies in Latin America do to help minimize the risk of corruption?

A recent survey of 900 senior executives worldwide found that, out of all regions, companies operating in Latin America saw themselves as most vulnerable to fraud and corruption (72 percent), but Latin America also showed the least investment in means of addressing fraud and corruption.

Why the gap between perceived risk and efforts to address it? What specifically can companies in Latin America do to help minimize such risk?

In this article, 3 experts argue that in order to fight corruption in Latin America, companies can ratchet up internal compliance programs, conduct due diligence on third parties (who also create liability), and train employees on applicable laws.