The deep desire for change across the MENA region, rooted in economic disenfranchisement, has dramatically altered the political landscape. Foreign reserves, investment flows, and fiscal balances have since deteriorated, while unemployment has risen.
The private sector can play a key role in addressing these issues. It has the potential to boost employment, investments, exports, and fiscal revenues. But it is hampered by excessive red tape, uneven implementation, corruption, and weak institutions – a poor investment climate.
IFC’s Investment Climate business line facilitates reforms that foster more open, productive, and competitive markets and unlock sustainable private investments in key sectors that contribute to economic development, and poverty reduction.
The Investment Climate business line:
Designs, catalyzes, and supports the implementation of business regulatory reforms in a transparent and sustainable manner;
Creates a better environment for solving commercial disputes through alternative dispute resolution and modern bankruptcy systems;
Unlocks investment opportunities by improving investment policies and removing regulatory and market constraints in key sectors;
Supports public-private dialogue that aims to bridge the gap between the private sector, civil society and government, and help realize a shared vision for reform.
IFC’s Investment Climate business line operates three programs in the MENA region:
Business Environment: This program helps improve the economy-wide regulatory framework for doing business to reduce the compliance burden on businesses and attract investments. Simplification of administrative processes can help create new entrepreneurs, spur competition, increase investments, and help broaden the tax base.
Trade and Industry: This program helps remove obstacles stifling the private sector in employment-creating industries such as education, logistics, and renewable energy. It does so by helping clients modernize regulations, build support institutions, and attract anchor investors. It also helps builds efficient trade logistics systems.
Commercial Justice: This program helps create sound loan recovery, restructuring, and insolvency systems. These allow unviable firms to exit efficiently, and viable, but financially distressed firms to reorganize operations and debt, thereby saving jobs. It also encourages mediation in resolving commercial disputes, to release assets locked up in disputes and increase private sector savings.
The Investment Climate business line is active across the Middle East and North Africa
In Morocco, we launched a project to develop quality assurance frameworks for the tourism and logistics sectors. The initiative is expected to improve the employability of 10,000 Moroccan youth within five years. We also supported dispute resolution and, following legislation, 1,645 cases were resolved with more than $200 million in funds released, generating $160 million in private sector savings.
In Tunisia, we engaged with the government on a comprehensive review of business regulations and procedures, to increase transparency and reduce the room for discretion. Additionally, IFC provides technical assistance to review the investment code.
In Egypt, we worked to reduce the cost of doing business by streamlining business registration, and by helping settle commercial disputes more quickly through alternative dispute resolution. Our institutional support led to a law regulating both judicial and private mediation, helping to release more than $25 million in funds and generating almost $5 million dollars in private sector savings.
In the West Bank and Gaza, IFC helped the Palestinian National Authority streamline and reform business registration for companies.
In Lebanon, we helped establish two mediation centers with 35 accredited mediators. Meanwhile, we are supporting reforms to simplify business registration and licensing for the tourism sector, and modernize the current bankruptcy legislation.
In Jordan, we helped improve debt resolution by enhancing the skills of insolvency practitioners, and introduced a new tool to resolve debt issues outside the court system. We also helped 14 government agencies improve their inspection regimes, and worked with the state to foster a more dynamic private sector.
In Pakistan we signed an agreement with the government of Punjab to simplify sales tax regulations, and assisted the energy department in reviewing a draft electricity law. We are planning to address licensing and construction permit regulatory bottlenecks. We also started promoting a transparent legal and regulatory framework for decentralized energy generation, including captive power. Finally, we are reducing the time and cost of trading by helping to simplify trade procedures, and introducing risk management.
In cooperation with the government of Iraq at a national and regional level, IFC is working on creating a simplified regulatory framework to reduce the time and cost of obtaining construction permits while safeguarding health and safety requirements.
Across the region, we launched ICT skills development work in countries like Jordan, Tunisia, and Egypt. This work aims to provide potential employees with the skills demanded by the industry.