Synthesis documents

Supporting Business Environment Reform. Practical Guidance for Donor and Development Agencies, DCED, 2008

    This document represents the consolidated views of DCED member agencies on the key dimensions and principles of business environment reform support and summarises a number of contested issues. It has been informed by three major conferences and a series of donor meetings.

    Summary of results
    i. A healthy business environment is essential for growth and poverty reduction. Business environment reform is needed where inappropriate regulation, excessive taxation, lack of fair competition, lack of voice and an unstable policy environment restrict investment and the development of markets, stifle entrepreneurship and force many businesses to operate in the informal economy.

    ii. Business environment reform is complex, operating on many levels and involving a very wide range of stakeholders. Development agencies should therefore ensure a thorough diagnostic analysis and maintain, as far as possible, a systemic approach and an understanding of the broader causal picture.

    iii. Business environment reform is always political and development agencies should therefore take care to analyse the political context. They should have strategies to build coalitions of support and to engage with those who wish to protect the status quo.

    iv. Government should lead and own reform; donors should support them. The right balance between international and local expertise must also be found.
    v. Development agencies should ensure that the inputs and participation of all stakeholders, including politicians, officials, the formal and informal private sector, and civil society, are reflected in the reform process. Reform interventions should be designed to enhance stakeholder capacity for ongoing and future reforms.

    vi. Development agencies should ensure that systems are in place for donor coordination and take responsibility for the quality and consistency of the advice and assistance they provide.

    vii. Development agencies should sequence reforms according to context. “Quick wins” and taking advantage of ad hoc opportunities such as changes of government, may build reform momentum. However, a long-term perspective is essential to ensure sustainability.

    viii. Development agencies should understand and manage the implementation gap typically found between the adoption of regulation or principles, and changing practice and enforcing regulations on the ground.

    ix. Development agencies should ensure the reform process has a strong communication programme so that all stakeholders are engaged and made aware of the benefits of reform.

    Associated Activities and Documents
    Synthesis documents
    »Annex to the Practical Guidance on Supporting Business Environment Reforms: How Business Environment Reform Can Promote Formalisation, DCED, 2011
    »Systems Change in the Business Enabling Environment. Investment Climate Practice Note, Miguel Laric, DFID, 2012