agep welcome leipzig

International Alumni and Students Symposium

membership organizations: their role in

Leipzig, Germany, 29th 31th October 2014

SEPT Activities at a Glance

The Role of an Entrepreneur

Economic Leader

Political Leader

Symposium Program

2

Day 1: Wednesday, 29th October 2014 Hörsaal 8, Hörsaalgebäude, Universitätsstraße 7, 04109 Leipzig Registration 09.00

Welcome speech: Purpose and outline of the event

Prof. Dr. Utz DornbergerDirector SEPT, Leipzig University

09:30

Shaping economic policies: The role of entrepreneurs and firms

Prof. Dr. Helmut AscheUniversity of Mainz

10:00

Coffee break 11:00-‐11:30

Interplay of the private and the public sector: Obstacles and options

Oliver GriffithHead of Communications, EuropeInternational Finance Corporation (World Bank Group)

11:30

Lunch 12:30-‐14:00

Entrepreneurs in politics: Cases from different countries

The case of Thaksin in ThailandKrittiya Chuenkittivoravat

The case of Chodorkowski in RusslandEkaterina Protsko

The case of Kennedy Agyapong in GhanaLeonard Hasu

14:00

ExcursionVisit to Champagne FactoryRotkäppchen in FreyburgBus starts at Augustusplatz

15:00

Arrival to Leipzig 20.00

Symposium Program

3

Day 2: Thursday, 30th October 2014Hörsaal 8, Hörsaalgebäude, Universitätsstraße 7, 04109 LeipzigEntrepreneurs and their role in Economic Development

Public Private Dialogue: Approaches and lessons learnt in Technical Cooperation

Prof. Dr. Utz DornbergerInternational SEPT Program, Leipzig University

Alexandra OppermannGIZ, Eschborn

09:00

09:45


The role of Business Member Organisations: Cases from different countries

The case of Azazgua in GuatemalaJorge Andrés ChangThe case of Ethiopian Public Private Consultation Form (EPPCA), Tesfaye AbebeThe case of the Kampala City Traders Association (KACITA), Catherine Promise BiiraFNCCI promoting energy efficiency in NepalDr. Sanjay Prasad GorkhaliA case study of political participation of Foreign Chamber of Commerce in China, Han Li

11:00

Lunch 12:30-‐14:00

Diaspora Entrepreneurs: How can they support economic and social development?

Prof. Dr. Francis MatambalyaNordic Africa Institute 14:00


Initiatives for promoting Diaspora Entrepreneurship

Indonesian Diaspora -‐ Future assets of Indonesian economy, Dianroe DinaroeThe Case of El Salvador GlobalRodrigo Chicas

15:30-‐16:00

Alumni reception On the top of the only skyscraper in Leipzig 18:00

Alumni -‐ Day

4

Day 3: Friday, 31th October 2014 Neubau Geisteswissenschaften, Hörsaal 2.010

Initiatives for the involvement of Alumni in German activities and projects

Introduction:Prof. Dr. Utz Dornberger, Leipzig University

Partner in market developmentUwe Becher, Conoscope GmbH

iN4iN Network, www.in4in.netPeter Sommer, Leipzig University

09:00


Group work

Group 1: Training and consulting opportunities through iN4iN NetworkModerator: Peter SommerGroup 2: Partner in market developmentModerator: Uwe BecherGroup 3: Joint study programsModerator: Prof. Utz DornbergerGroup 4: Technology Transfer on cooperation between University and Private SectorModerator: Alfredo Suvelza

11:00

Lunch 12:30-‐14:00

Presentation of the group work results 14:00


Feedback and closing Evaluation of the international seminarOfficial closing of the event 16:00-‐17:00

Optional activity Visiting Leipzig by night 18:00

Shaping economic policies: The role of entrepreneurs and firms

International Alumni and Students SymposiumOctober 29, 2014Helmut Asche U Mainz, formerly U Leipzig

Outline

Entrepreneurs in development economics: a short review of not very muchThe 3 stages of state market, aka: government firm relationsEnd of stage 3: entrepreneurship in DCs still treated as a givenAnd: taking part in policy shaping not consideredYet: arguably a core function of modern business

w/ ref to (a) institutions, (b) process, (c) content

I. opaque model of state private firm collusionII. theoretical model of perfect strategic dialogueIII. practical hybrids, in-between. Question: where to slot actual cases, incl those discussed here

Helmut Asche, U Mainz, Oct 29 2014 2

Outline II

Emerging consensus on New Industrial Policy (NIP) provides insightson process and contents of private sector inputs into policies and whatfirms get in return. On process:

Collective search of public authorities and firms for investmentopportunities + obstacles to realise them (= market + state failuresto be remedied) Instead of top-down planning + governments picking winnersResulting in smart support for firmsPlus iterating policy cycles based on continuous M&E

On likely contents:1. Helping to identify most binding constraints for enterprise dev and

economic growth, see decision-making tree:

Helmut Asche, U Mainz 3

Growth Diagnostics (following Hausmann/Rodrik)


Outline III2. General economic policy signalling by private sector

(case: on optimal exchange rate)3. Strat. reasoning on sector policy + suitability for private sector4. Advice on specific inputs needed: inter-industry or public goods

like tailor-made market information, research, training

Most of the topics are triple-S specific -)sectors, spaces, (firm) size matter.


Outline IV

Finally: constraints for private sector shaping of economic policies in developing countries?

Dearth of entrepreneurs and their capacity to fulfil second ordertasks like policy shapingDepending on firm-internal resources, and on degree of extra-firmorganisation: role of business associationsPossible remedies for small of entrepreneurs: e.g. involveforeign investors and diaspora in more targeted wayAlso banks, if financial sector had not own problem of taking part in strategic dialogue


Conclusion

Role of entrepreneurs and firm management in economic policy-shaping still largely underexploredSame for related capacity building needs

Hence looking very much forward to this symposium and its results!

Thank you for listening.


1

October 29, 2014

INTERPLAY OF THE PRIVATE AND PUBLIC SECTORSOBSTACLES AND OPTIONS

Oliver GriffithHead of Communications

IFC Western EuropeLeipzig University

Falling Finance to Developing Countries Has Made Development Banks More Critical

8

-‐200

0

200

400

600

800

1000

1200

2005 2006 2007 2008 2009 2010 2011e 2012f 2013f

FDI Portfolio equityM/L term bonds M/L term bank lendingShort term debt

Capital Flows as % GDP(right scale)

2

4

6

8

$Billions

Percent

9

0

5

10

15

20

25

30

35

40

45

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

US$ Billion

Other MDBs EDFI OPIC EIB EBRD IFC

IFI Financial Commitments to the Private Sector Have Grown Significantly in Recent Years

From the Growth Commission, the Common Characteristics of High, Sustained Growth Include Both

Essential Public and Private Sector Activities

10

Common Characteristics

of High, Sustained Growth

provides the environment for growth, but it is the private sector that invests and creates wealth for

(Quoted in the Growth Commission Report)

The Investment Climate Must Often Be Improved To Accompany Increased Private Sector Activity

Important Investment Climate Areas

Stability and security including property rights, contract enforcement and reducing crimeRegulation and taxation including streamlining procedures, reducing barriers to entry and exitEffective finance and infrastructure Skilled and adaptive worker and labor markets

11

But the Public Sector Cannot Act Alone: The Private Sector Drives Growth and Creates Jobs

12Source: Paths Out of Poverty

Drives growth via higher productivity and knowledge transferProvides over 90 percent of jobs in developing countries Also helps improve public servicesAnd ultimately provides most of the tax revenues the public sector needs

13

Source: World Development Indicators. Povcalnet

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

-‐0.5% 1.5% 3.5% 5.5% 7.5% 9.5%

Poverty Reduction vs Growth 1981-‐2005

GDP per capita growth per annum

E Asia

India

SSA

China

S Asia

M East

Lat Am

Headcount Poverty Reduction pa ($1.25)

Poverty Reduction vs. Growth for 92 Countries, 1980 2005*

*Source: Martin Ravallion, World Bank Policy Research Working Paper 4947, June 2009. Note: Chart shows rate of change in $2/day poverty for 92 countries based on earliest and latest household surveys available over 1980 to about 2005. Average years between surveys is 13.

And Recent Research Points to Characteristics for More Inclusive Growth

Greater equality of income, opportunities, assets, and access to services helps ability of poor to participateGeographic and sectoral patterns of growth matter, e.g. growth where poor people live and sectors where they workSuccessful growth usually means many poor people moving to places/sectors where there are jobs, often in urban settings.

There is growing recognition that private businesses can play an important role in providing products, services and economic opportunities tailored to the poor

14

The Private Sector Is Also Important For Access to Essential Services, Providing Global Goods, and

Generating Tax Revenues

Energy

Telecom

TransportWater and sewerage

-‐0.1%0.0%0.1%0.2%0.3%0.4%0.5%0.6%0.7%0.8%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Private Participation in Infrastructure by Sector(% GDP)

Source: PPI database

15

Global Goods: Addressing Food Security, Climate Change, and Environmental SustainabilityTax revenues from firms and employees

Overall, There is an Important Private Sector, Public Sector Synergy

(3)Entrepreneurial

Culture Increased Financial

Intermediation(4)

Dynamic Private Sector

Increased Private

Investment

(5) Increased

Productivity Economic Growth

(6) Wealth

Formation

(7) Government Revenues

(10)Higher

Education Civic

Engagement

(2)Conducive Business

Environment Institutional reforms

(8) Public

Investment in Physical and

Social Infrastructure

(1) Better Public Governance

Greater Public-‐Private Cooperation

(9)Human Capital Development

Economic Inclusion

Indicative Virtuous Circle: Government Enables More Effective Private Sector

Private Sector Enables More Effective Government

Enterprise Surveys Indicate Top Obstacles for Firm Growth Include Access to Finance, Infrastructure,

Investment Climate, and Worker Skills

17

Percent of Firms Indicating the Item is a Top Obstacle to Firm Operation and Growth

Obstacles are Greater in Lower Income Countries and the More Difficult Environments

Where Poor People Often Live and Work

18

Percent of Firms Viewing Access to Finance as a Major Obstacle

Source: World Bank Enterprise Surveys

0

10

20

30

40

50

60

70

Low Income Middle Income High Income

Major Constraint -‐ Electricity

small(<20) medium(20-‐99) large(100 and over)

0

5

10

15

20

25

30

35

40

45

50

Low Income Middle Income High Income

Small (<20 employees) Medium (20-‐99) Large (100 and over)

Percent of Firms Viewing Access to Electricity as a Major Obstacle

Doing Business

19

Methodology. There are ten key methodologies examined in Doing Business reports. These include:

Starting a Business Dealing with Construction Permits

Getting Electricity Registering Property

Getting Credit Protecting Investors

Paying Taxes Trading Across Borders

Enforcing Contracts Resolving Insolvency

Visit the Doing Business website, www.doingbusiness.org, for information on the questionnaire instruments behind each methodology and for Doing Business 2015 results, released today.

Doing Business 2014

20

Economy Rankings. Economies are ranked on their ease of doing business, from 1 189. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2013. (Germany ranked 21)Top Ten Economies 2014 Bottom Ten Economies 2014

1. Singapore 180. Guinea-‐Bissau

2. Hong Kong SAR, China 181. Venezuela, RB

3. New Zealand 182. Myanmar

4. United States 183. Congo, Dem. Rep.

5. Denmark 184. Eritrea

6. Malaysia 185. Congo, Rep.

7. Korea, Rep. 186. South Sudan

8. Georgia 187. Libya

9. Norway 188. Central African Republic

10. United Kingdom 189. Chad

Private Sector IFIs Address The Private Sector Gaps In These Difficult Environments By Providing Finance and

Knowledge and Catalyzing OthersProviding finance to private companies that lack sufficient access to private capitalProviding related advisory products to bring in scarce knowledge

improve the investment climateimprove project performance and impactfacilitate privatizationenhance environmental, social and corporate governance effectiveness

Providing comfort in difficult environments to bring in other investorsDemonstrating the viability of private solutions in difficult or new areas

21

IFI Private Sector Finance Tends to Be Concentrated Where Private Capital is Scarce

Percent

IFI 2009 Regional Private Sector Commitments as a Percent of Regional Gross Equity and Long Term Debt Flows to the Private Sector*

0

2

4

6

8

10

12

Africa M East/N Africa All Regions

*For this chart trade finance is not includedSource: IFI private sector database, Global Development Finance

And In Products With Longer Maturities -‐-‐ Often Beyond the Risk Appetite of Private Capital

23

Percent of International Syndications to the Private Sector in Developing Countries Where an IFI Participated, by Country Income Level and Maturity, 2007-‐2010

051015202530354045

1 up to 5 years 5 up to 10 years 10 or more years

LowerLower MiddleUpper MiddleBRICT*

Maturity

Percent

Country Income

Analyzed from Loanware data. *Includes Turkey

IFI Finance is Particularly Needed in Times of Crisis When Private Capital Retreats

24

0

5

10

15

20

25

30

35

40

45

50

2005 2006 2007 2008 20090

200

400

600

800

1000

1200

1400$Billions $Billions

All IFIs(Left Scale)

Global Flows (Right Scale)

Private Sector Development Institutions Commitments to the Private Sector and Global Gross Flows to the Private Sector

Source: IFI private sector database, Global Development Finance

IFIs Help Bring in Other Finance, and Contribute Knowledge and Risk Mitigation Beyond That Provided by

Commercial Institutions

-‐10% 0% 10% 20% 30% 40% 50%

Local presence

Speed of Processing

Competitiveness of funding package

Financial structuring and innovation

Technical expertise of staff

The maturity of the financing provided

Perceived stamp of approval overall

Ability to provide financing not readily available elsewhere

Ability to mobilize capital from additional sources

Government relationships

Global Knowledge

Environmental, social issues input

Percent of clients rating IFI performance above average or high compared to commercial bank 25

Performance of IFIs versus Commercial Banks for Private Sector Clients

Source: IFC Survey

IFIs Also Promote High Business Standards

26

Example: IFC Equator PrinciplesDescription: Voluntary guidelines for banks to manage environmental and social issues with borrowers.IFI Additionality: IFC initiated and led drafting and implementation of guidelinesResults:70 financial institutions have adopted the principles, 17 from emerging markets.About 53% of project finance debt in emerging markets in 2009 was subject to Equator Principles.

IFC Performance Standards

Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts

Performance Standard 2: Labor and Working Conditions

Performance Standard 3: Resource Efficiency and Pollution Prevention

Performance Standard 4: Community Health, Safety, and Security

Performance Standard 5: Land Acquisition and Involuntary Resettlement

Performance Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

Performance Standard 7: Indigenous Peoples

Performance Standard 8: Cultural Heritage

27

Together, the eight Performance Standards establish standards that the client1 is to meet throughout the life of an investment by IFC:

A Few Case Studies From the IFI Report of How IFIs Help Development

Extending mobile phone to rural areas of Papua New GuineaPPPs in Senegal fostering essential infrastructure for growth, including airport, power, toll road, portMortgages to expand home ownership to low-‐income families in JordanEquity investments to create jobs in EgyptInsurance and finance for small farmers in South AfricaSlum redevelopment with free housing for slum dwellers in IndiaMicroloans and training for street vendors in BrazilThe first geothermal power project in Africa

28

Annex: Details of Case Studies Mentioned in This Presentation

29

30

Description: Digicel Ltd. will expand mobile network to 500 sites from 400, mostly rural. IFI Investment: $18 million loanIFI Additionality: Finance to region that lacks investment in key sectors of the economyResults:

Connecting communities that have had no access to telecommunicationsImproving safety through better natural disaster alerts; improving schooling as teachers avoid traveling large distances to banks

ADB: Communication, Papua New Guinea

31

Description: Simultaneous development and financing of infrastructure PPP projects in Dakar: Blaise-‐Diagne Airport, Power Project, Toll Road, and Container TerminalIFI Investment: 190 mil, with 50 mil from the African Dev. Fund, 494 mil from DFIs and commercial banks (Total cost: 1.2 billion)

IFI Additionality: Enhance financial & economic viability of projects at height of financial crisis; optimize transaction costs for the country, sponsors, and co-‐financiersResults:

Airport: Meets forecast air traffic demand, enhances trade & regional integration, creates 1,000 direct construction jobs & 400 during operations, taxesPower plant: Increases by 40% the electricity generation in Senegal, decreases by 20% the generation costsToll road: Reduces transport costs, improves urban mobility, improves environment for 300,000 people, serves as base for Trans-‐West African HighwayPort: Access to global supply chains, improves efficiency and lowers the prices of imported and exported goods

AfDB: Senegal Integrated Infrastructure Approach

32

Description: Enabling three banks in Jordan to expand home ownership for low-‐income families. JV by the Middle East Investment Initiative and the Cooperative Housing Foundation is the sponsorIFI Investment: $250 million over the three banksIFI Additionality: The sponsor will provide technical oversight, working with the banks to review policies and origination and servicing proceduresResults: Will enable the banks to introduce 25-‐year, fixed-‐rate mortgages to lower-‐income households in Jordan.

OPIC: Mortgage Facilities for Families, Jordan

33

Description: First private equity fund for Egyptian companies in distress or default or in need of restructuringIFI Investment: $31 million out of $57 millionIFI Additionality: IFI presence critical in catalyzing other fundingResults:

Create value by restructuring companies that otherwise would likely be liquidatedStrong pipeline and first investment completed in pharmaceutical sector with an expected 1,150 jobs created

EIB: Sphinx Turnaround Fund, Egypt

34

Description: Farmsecure Holdings to provide finance for farmers, including insurance and innovative securities structure for the banks involved; TA for land use, production and marketing; part of Agro-‐Africa Initiative with Standard Chartered BankIFI Investment: Guarantee to a maximum of Euro 9 millionIFI Additionality: Innovative financing solutions for farmers where capital is scarceResults:

Farmers and agricultural businesses can increase competitivenessEuro 7 million in government revenues and 1,500 employees

DEG: Finance for Rural Agriculture, South Africa

Description:Real estate company in Pune participating in slum rehabilitation scheme Part of the slum area will be used to build high-‐rise blocks to house existing slum dwellers without chargeOther parts will be used to build commercial houses and offices

IFI Investment: $30 millionIFI Additionality: Company could tap into long-‐term offshore funding and DFIs for $50 millionResults:

Improved living conditions of at least 25,000 people with delivery of 4,700 free housesImprovement in environmental and social performance with focus on resettlement and working conditions

FMO: Kumar Urban Development Limited, India

36

Description:offering microloans and training to help food entrepreneurs access supplies and knowledge IFI Investment: $10 million loan for microloan program and $270,000 grant for trainingIFI Additionality: Finance and training not readily accessibleResults:

An estimated 55,000-‐90,000 micro-‐entrepreneurs will participate in state of Sao PauloModel is potentially replicable with retailers throughout the region and in other sectors

IDB: Microloans and Training for Street Vendors and Other Informal Food Sellers, Brazil

37

Description: Geothermal power plant expansion from 13 to 48 MW. This is the only privately owned geothermal power plant in AfricaIFI Investment: $40 million loan; also arranging debt financing of $105 million; Emerging Africa Infrastructure Fund, FMO, Proparco, KfW and EFP also participateIFI Additionality: Facilitates innovative technology in Africa, pioneering new marketsResults:

Demonstrates technology with promise of supplying energy for 12 African countriesReduced dependence on carbon fuels

DEG Climate Change Case: Geothermal Power Plant, Kenya