Investment sparks growth and increases the incentive for peace.
Conflict creates economic instability, which in turn can spur further conflict. For developing countries emerging from war, it can be a self reinforcing cycle.
IFC helps such countries attract investment, reduce barriers to entry for businesses, and expand credit for small and medium enterprises—all of which can spark economic growth, thereby increasing the incentive for peace.
Post-conflict development is a priority for us. As the 2011 World Development Report noted, about 1.5 billion people live in countries afflicted by repeated cycles of political and criminal violence. Not one low-income country coping with such challenges has managed to achieve even a single Millennium Development Goal.
South Sudan—a country where millions have been affected by violence—is trying to end that cycle. Since its recent declaration of independence from the North, it has taken important steps toward political stability. Economic development must come next, and quickly. Over the past six years, IFC and its partners—including Denmark, Ireland, the Netherlands, Norway, and the United States—have committed $9 million to help South Sudan craft legislation on regulatory and business reform.
As a result of reform efforts, including the establishment of a new business registry, more than 11,000 businesses have been registered in the country since 2006. According to the World Bank Group’s Doing Business in Juba 2011 report, business start-up time is now 15 days—close to the average for the major developed countries.
The work we do can be transformative for entrepreneurs such as Peter Atem, a former soldier whose company became one of the first beneficiaries of the new business registry. Atem’s construction company, Rhino Stars, has built more infrastructure in South Sudan than any other local enterprise, handling over $8 million in contracts for roads, bridges, water lines, schools, and government buildings.
We are quick to assist countries emerging from conflict. This year, within months of the end of hostilities in Côte d’Ivoire, we invested $1 million in Advans Côte d’Ivoire to help the microfinance institution expand lending.
Typically, our involvement begins with advisory services—especially in the area of investment climate, which helps rebuild and open up markets. This year, an independent evaluation of our investment-climate work in Burkina Faso, Liberia, Rwanda, and Sierra Leone—all of which have a recent history of conflict—found that reforms we helped implement led to the establishment of nearly 12,000 businesses, generated private-sector investments of as much as $90 million, and created more than 50,000 jobs.
In addition, our joint work with the World Bank helped result in a breakthrough for the 16 countries that make up the Organization for the Harmonization of Business Law in Africa, several of which are conflict-affected. We helped OHADA harmonize key commercial laws for the first time. That will help these countries attract investment and open up opportunities for local entrepreneurs.