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The Practice of Industrial PolicyGovernment—Business Coordination in Africa and East Asia$

John Page and Finn Tarp

Print publication date: 2017

Print ISBN-13: 9780198796954

Published to Oxford Scholarship Online: April 2017

DOI: 10.1093/acprof:oso/9780198796954.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 09 December 2021

Importing Coordination

Importing Coordination

Africa’s Presidential Investors’ Advisory Councils

Chapter:
(p.275) 14 Importing Coordination
Source:
The Practice of Industrial Policy
Author(s):

John Page

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198796954.003.0014

Abstract and Keywords

Recent writing on industrial policy stresses the need for coordination between the public and private sectors. This chapter examines the performance of one public–private coordination mechanism, Presidential Investors’ Advisory Councils (PIACs), in Ethiopia, Senegal, Tanzania, and Uganda. It finds that the councils have been better at focusing attention on a donor-driven agenda of regulatory reforms than they have been at addressing the binding constraints to private investment. Notwithstanding their name, the actual level of presidential commitment to the PIACs varies quite substantially. None have established a track record of experimentation, effective implementation, and evaluation of the impact of decisions taken.

Keywords:   Ethiopia, industrial policy, public–private coordination, Senegal, Tanzania, Uganda

14.1 Introduction

When Horst Koehler, then Managing Director of the International Monetary Fund (IMF), and James Wolfensohn, then President of the World Bank, undertook their ‘Odd Couple’ joint tour of Africa in 2001, they urged the president of each country they visited to establish a Presidential Investors’ Advisory Council (PIAC). The councils were an Asian import into Africa. Modelled on the deliberation councils widely used in East Asia, they were expected to enable the Presidents to hear the views of experienced and successful business leaders and to ‘identify constraints to foreign and domestic investment, generate recommendations for concrete action and reinforce and accelerate policy reforms’ (IMF 2003: 2).

PIACs were created by the Presidents of Ghana, Tanzania, and Senegal in 2002 and in Mali and Uganda in 2004. Subsequently, councils were set up in Mauritania and Benin.1 Ethiopia launched a Public–Private Consultative Forum (PPCF)—loosely modelled on the PIAC—in 2010. In the vision shared by the Bank and the Fund, business and government were jointly to define an agenda for action, agree on accountabilities, and monitor and evaluate implementation. Not surprisingly, the World Bank became the prime sponsor of the councils. World Bank management linked the councils to the Bank’s private sector development and investment climate programmes. Whatever (p.276) the original intent of Messieurs Koehler and Wolfensohn, the councils became one of Africa’s first experiments with public–private coordination mechanisms.

Over more than a decade, the PIACs have been used with varying degrees of enthusiasm by African governments as a vehicle for public–private dialogue (PPD). This chapter examines their performance. It draws on case studies of PIACs in four countries—Ethiopia, Senegal, Tanzania, and Uganda—undertaken in 2012 by the African Development Bank (AfDB).2 Following this introduction, Section 14.2 summarizes early experience with the councils. Section 14.3 describes the current status of the PIACs in Ethiopia, Senegal, Tanzania, and Uganda. Section 14.4 sets out a framework to assess the performance of the councils, based on East Asian experience with business–government coordination mechanisms, and applies it to the African cases. Section 14.5 concludes with some lessons learned.

14.2 Early Experience, 2002–8

Rather than solicit suggestions from the countries involved regarding the appropriate membership and structure of the PIACs, the World Bank and the IMF provided a single blueprint. The councils were initially designed as a forum in which fifteen ‘corporate champions’—experienced and successful international business leaders—five government representatives, and an international financial institution representative would meet with the head of state or government on a semi-annual basis. The breakdown for the fifteen was one-third local, one-third foreign, and one-third potential foreign investors. The private sector representatives were to be both local and foreign chief executives. Despite the marked tilt towards foreign investors, both small- and large-scale domestic firms were expected to be represented.

The councils were intended to be a direct channel for dialogue between investors and political leaders at the highest possible level to ‘identify obstacles to investment and focus on a limited number of issues to generate concrete recommendations for action and/or further analysis’ (IMF 2003: 8). The business leaders in the council were to be supported by a small secretariat to assist in agenda setting and follow-up. At the World Bank’s urging all of the secretariats were located in bodies closely aligned with the office of the President.3 The costs of the council and secretariat were funded by the World Bank through its operational budget.

(p.277) In addition to the council and secretariat, the Bank–Fund blueprint called for the creation of working groups consisting of both public and private sector stakeholders. These groups were intended to identify obstacles to investment and to recommend tangible policy reforms. Technical work leading to evidence-based policy recommendations was to be done by working group members, supported by consultants and World Bank operational staff. The views of small and medium-sized enterprises (SMEs) were to be conveyed to the working groups mainly through industry associations and Chamber of Commerce representatives.

Two reviews of the four original PIACs were conducted by the World Bank, the first in 2005 and the most recent in 2009. The 2005 World Bank review concluded that the councils were having a positive impact in terms of fast-tracking previously identified reform proposals, primarily because they created an ‘atmosphere of discipline and pressure for action in the face of government inertia’ (World Bank 2005: 2). The evaluators went on to point out that some of the councils were more successful than others at initiating new reform proposals, but that all suffered from limited government implementation of council decisions, due to ‘capacity constraints’ in the public administration (World Bank 2005). In light of this the evaluators concluded that ‘care needed to be taken to not overestimate or over promise what a council could do’(World Bank 2005: 3).

The review also identified a number of structural problems that were common to the councils. The most significant was that participation from the private sector was dominated by representatives of a fairly small number of large firms. The role and impact of local business associations—and therefore of smaller domestic enterprises—was unclear. The evidence base to support working group proposals and council decisions was found to be lacking, and the donors were criticized for failure to provide technical, research, and analytical support. The secretariats frequently lacked experienced and dynamic professionals who had a combination of economic, business, and management skills. The reviewers suggested that the councils could be made more effective by adapting their structure, composition, and processes to local circumstances (World Bank 2005).

By 2009 there was evidence of considerably more variation in performance. Ghana demonstrated what happened when a President lost interest. The Ghana PIAC had undertaken a number of initiatives up to 2006, mainly in the area regulatory reform, but from early 2006 to 2008—a period of over two and a half years—not a single council meeting was held, killing momentum and damaging relations with stakeholders. The council stopped meeting because the President was ‘not available’. Frequent changes at the ministerial level left it without a champion in government and the private sector members, frustrated by lack of action, did not press strongly to reinstate the (p.278) consultative process (World Bank 2009). National elections in 2008 further eroded support for the council since it was an initiative of the outgoing government. The council disappeared.

Table 14.1. Number of reforms attributed to PIACs

Country

Year Established

Reforms through 2009

Uganda

2004

35

Ghana

2002

18

Senegal

2002

10

Tanzania

2002

5

Source: World Bank (2009).

Judged by the number of reforms that had been introduced on the recommendation of the council, Uganda had emerged as a clear leader and Tanzania as a clear laggard (Table 14.1). The success of the Uganda Presidential Investors’ Roundtable (PIRT) was largely attributed to the care taken in designing its structure and processes and to a firm commitment from the President to take action on its recommendations. Representation of the private sector was extended beyond a small number of big business leaders to SMEs and business associations (World Bank 2009). The two leading business membership organizations in Uganda participated actively in council deliberations and engaged regularly with the secretariat. The council agenda was focused primarily on constraints to investment at the sector level and a Cabinet Implementation Committee, chaired by the prime minister, was tasked with ensuring implementation of recommendations.

Table 14.2. Themes of working groups of PIACs, 2009

Predominantly Cross-Cutting

Combination of Cross-Cutting and Sector-Specific

Predominantly Sector-Specific

Senegal

Ghana

Uganda

Administrative procedures

Financial sector

ICT

Finance and taxation

Labour

Agriculture

Infrastructure, land, production

Civil service/customs

Education

Land

Infrastructure

Human resources

Agriculture and agribusiness

Regulatory environment

Tourism

Mining

Source: World Bank (2009).

The 2009 evaluation, drawing largely on the stark contrast between Ghana and Uganda, concluded that government commitment to reform and the sustained attention of the head of state were critical to success. It also pointed to the need for a sufficient number of champions in both the public and private sectors to make reform happen and adequate attention to follow-up by the public administration. Looking across the range of themes covered by the councils and their working groups (given in Table 14.2), the reviewers urged greater focus on sector-specific reforms.4 After the initial PIACs were established (and the two authors of the idea moved on), the attention and energy of the World Bank Group shifted to International Finance Corporation (IFC)-sponsored Public Private Dialogue (PPD) mechanisms, which are now present in ten additional African countries.5

(p.279) 14.3 Where Are the Councils Today?

The councils in Senegal, Tanzania, and Uganda have evolved in different ways in terms of their structure, agenda, and impact. Ethiopia has only recently begun its experiment with a council. In all four countries, a number of common elements remain from the original blueprint set out in 2001. The councils meet infrequently—not more than twice per year—and the Head of State or Government chairs council meetings. Technical preparation for meetings is carried out by a secretariat with guidance from sector- or policy-specific working groups. Foreign and domestic investors are represented in the councils, but their proportions have shifted in every case away from the predominance of foreign investors initially recommended by the World Bank and IMF. Follow-up on decisions reached is the responsibility of the public administration.

The councils differ significantly in some important respects, however. The first is in the way in which issues are identified and brought to the attention of the council. The second is in the degree to which council recommendations are both actionable and acted upon. The third is in the extent to which the council is recognized as representative of the private sector. Finally, the councils differ markedly in the types of issues that they seek to address and in the impact that they have achieved.

14.3.1 Ethiopia

The council in Ethiopia—unlike the councils in Ghana, Senegal, Tanzania, and Uganda—evolved from a domestic dialogue between the government and the private sector: one that was at times filled with acrimony and mutual incomprehension. In 2002, at the government’s initiative, a process of consultation between the private sector—represented by the Ethiopian Chambers (p.280) of Commerce and Sector Associations (ECCSA)—and the government—represented by the Ministry of Trade and Industry (MOTI)—was introduced. A ‘Government and Business Community Joint Consultation Forum’ was created and seven consultations were held between 2002 and 2004. This first attempt at business–government dialogue came to an abrupt end in 2005, when lack of government support and political unrest led to the complete abandonment of the forum process.

In 2007 new leadership of the national Chamber of Commerce committed itself to restart the national public–private consultative process. An agreement, partly brokered by the IFC, established three types of bodies at the federal level: the National Business Consultative Forum, the Federal PPCF, and Sectoral PPCFs. The National Business Consultative Forum was scheduled to be held once a year, chaired by the Prime Minister. It was intended to be an opportunity for national level issues to be raised by the private sector and addressed by the government. The two public–private fora were, like working groups, intended to create a locus for joint analysis of problems and agreement on policy and institutional reforms. A dedicated secretariat was established and tasked with giving technical and managerial support to the consultation process and with following up on implementation.

The first federal PPCF—focused mainly on tax administration—took place in 2011. Several concrete action points emerged from the meeting, but they did not receive sufficient follow-up by the National Chamber and the Revenue and Customs Authority and were not implemented. A second federal PPCF was conducted in February 2012. The major objective was to come up with a topic that could secure an ‘early win’. The ECCSA chose to make trade logistics—a broadly shared concern in landlocked Ethiopia—the central agenda item. Agreement on an action plan was reached and an initial positive reception by the government has given the consultative process some momentum (AfDB 2012d). So far, fifteen federal or sectoral dialogue forums have been held covering such topics as trade licensing and registration, government procurement, company formation and registration issues, tax appeal, and VAT refund issues.

Although the National Business Conference with the prime minster did not take place in 2012, one was held in June 2013. The second National Business Conference in 2014 brought together more than 1,000 members of the business community and the entire cabinet. No formal system is in place to follow up on agreed action points arising from the forum meetings, however, and few concrete results have come from the agreed action points of the meetings. On a more positive note, in 2013 the Council of Minsters rejected a draft customs procedures law primarily due to a concern that not enough consultations had taken place with the private sector.

(p.281) 14.3.2 Senegal

In Senegal the Conseil Présidentiel de l’Investissement (CPI) meets once a year, chaired by the Head of State. It has held eleven meetings since 2002. Following a change of government in 2012, the new President and government signalled their commitment to continue the CPI process. The most recent meeting of the council took place in June 2015. As in previous meetings, members of the government, senior civil servants, CPI members, and selected guests from the private sector, public sector, and the donor community were present.

Table 14.3. Working groups of PIACs, 2012

Senegal

Tanzania

Uganda

(1) Administrative procedures

(1) Agriculture

(1) Agricultural production and value addition (cotton, fish, food, and leather)

(2) Cost and quality of inputs, human capital finance, access to utilities and land

(2) Empowerment, entrepreneurship, and job creation

(2) Competitiveness and doing business

(3) Communication and coaching of civil servants

(3) Infrastructure, the financial sector, tourism and image, and energy

(3) E-government and creative industry

(4) High social impact investments

(4) TNBC consultative mechanism and statistics

(4) Oil and gas (petroleum)

(5) Growth and business environment

(5) Transport and logistics

(6) Human capital development

(7) Commercial hubs and manufacturing

Source: AfDB (2012a, 2012b, 2012c).

Following the Bank–Fund design, at inception CPI membership was divided into one-third domestic investors, one-third foreign investors, and one-third prospective foreign investors. As a result of the business associations’ requests to allow better representation of domestic investors, today, the CPI consists of forty-six members, of whom eight are foreign investors. Over time the membership has evolved to include more local SMEs and business associations. The organization of the CPI and the roles of its subsidiary bodies are largely unchanged from the blueprint laid down by the IMF and World Bank in 2002. The Council has set up four working groups, chaired by the private sector (Table 14.3). Membership in the working groups is not restricted to members of the CPI. The working groups can request the secretariat to carry out analytical work to guide their recommendations.

The agenda of the CPI has been driven largely by the World Bank. A 1999 study Senegal Investor’s Roadmap by the Foreign Investment Advisory Service (FIAS 1999) and the annual Doing Business surveys have been used to set the agenda on barriers to investment.6 CPI activities have been funded under the World Bank’s Private Investment Promotion Project (PIPP).7 Most of the reforms undertaken by the council are related to regulations and administrative procedures. Success in implementation of the reform agenda is benchmarked by the secretariat to the Doing Business report.

In spite of an apparently high-profile oversight and monitoring framework (at the presidential and ministerial levels), implementation of reforms has been weak. In a self-assessment conducted in 2011 the council found that: ‘Reforms are moving slowly and Senegal is still behind its potential performance in terms of improvement of its business climate’ (AfDB 2012a: 32). This was particularly true in such areas as tax reforms, access to land, and getting construction permits. The council blamed weaknesses in the civil service’s capacity to implement reforms for its lack of success in achieving results.

(p.282) 14.3.3 Tanzania

Founded in 2002, the Tanzania National Business Council (TNBC) is the umbrella organization that acts as Tanzania’s Investors’ Advisory Council. Its membership consists of representatives drawn equally from the business community and the public sector, under the chairmanship of the President. Discussion of proposed reforms is primarily undertaken by two subordinate bodies: a Local Investors’ Round Table and an International Investors’ Round Table, which meet both individually and jointly. The TNBC has met eight times since 2002 while the two investors’ round tables have met eighty-four times. A majority (fifty-one) of the investors’ round tables have been conducted jointly.

Initially, the TNBC created eight working groups, structured along sectoral lines: finance, agriculture, tourism, human capital development, technology, manufacturing, agro-processing, and infrastructure. At a later stage the working groups were reduced to four—public–private partnerships (PPP), private sector development, land, and the business environment—and restructured to reflect a sharper focus on the investment climate. The agendas of both the National Business Council and the investors’ round tables have been structured mainly on thematic lines (Table 14.3). There is a mismatch between the council’s recommendations and action plans and practice. Many of the proposed investments and policy changes at the sector level have been delayed or not undertaken.

(p.283) The council agenda in Tanzania derives from two sources. The main source has been the council’s primary sponsor, the World Bank. A number of measures have been taken to improve Tanzania’s scores on Doing Business. For example, measures to reduce the cost and time of business start-ups, improve processes to acquire construction permits, register property, improve access to credit, and protect investors were adopted with the specific objective of boosting Tanzania’s ranking in the Doing Business report. Implementation of these ‘stroke of the pen’ reforms has lagged. In addition, elements of the national development agenda—as expressed in the National Vision Statement and the five-year plan—are placed before the round tables and the council for discussion and endorsement by the business community (United Republic of Tanzania 2011a, 2011b). This approach was used in discussions of Kilimo Kwanza (‘Agriculture First’) and information and communications technology (ICT), when the council endorsed government initiatives to reform land tenure and promote the development of agricultural value chains and to develop ICT backbone infrastructure.

14.3.4 Uganda

The PIRT in Uganda was established in 2004 with a mandate to advise the government on how to make Uganda a more competitive investment destination and to increase its share of international, regional and local investments. The council has worked in four cycles, and there have been sixteen PIRT meetings with the President. Council meetings are held approximately every six months, and are also attended by the prime minister, cabinet ministers, and permanent secretaries. The council had an initial membership of fifteen investors, divided into thirds among existing and potential foreign investors and domestic investors. By its third phase (2009–11) the PIRT had grown to twenty-five members, thirteen from Uganda’s private sector and twelve from the international business community. Membership on the council is for a period of two years and has changed with each phase of implementation. SMEs are represented through industry associations.

The Uganda council has taken a sector-based approach in defining areas for analysis and public action. Recommendations are developed by technical working groups composed of PIRT members and invited participants. The number of working groups is determined by the number of priority sectors (Table 14.3). The council has attempted to address both policy and institutional constraints to performance—as well as infrastructure and skill needs—at a detailed level in such sectors as agribusiness, ICT, business process outsourcing, and tourism (AfDB 2012b). It has devoted less time and attention than other councils to implementing the Doing Business list of reforms.

(p.284) In the course of its last two business cycles the council in Uganda has established working groups on infrastructure constraints, ICT and business process outsourcing, and tourism. The council is credited with a number of significant reforms at the sector level, such as eliminating export taxes on agribusiness, allowing duty-free imports of packaging materials for agro-export products, and the appointment of private sector representatives to public bodies in the agribusiness sector. In ICT the council supported the National Backbone Infrastructure project and the East African Submarine Cable System (EASSY) Protocol. At the council’s recommendation, an Energy Equity Fund of USD100 million was created for the construction of the Bujagali power station (AfDB 2012b).

The PIRT has also experienced a number of setbacks. Despite calls for action, there has been slow progress in updating commercial laws, computerization of the land registry, pension reforms, and reform of the national identify card system. In the agribusiness sector land availability for large-scale commercial agriculture remains problematic. Slow progress made in implementing action plans arising from previous phases has been identified by some private sector observers as a major problem.

14.4 An East Asian Perspective on PIACs

The recent histories of the PIACs in Ethiopia, Ghana, Senegal, Tanzania, and Uganda paint a mixed picture of their relevance and impact. The bookends remain, as they were six years ago, Ghana and Uganda. Ghana has abandoned its council while the PIRT in Uganda continues to receive relatively high marks from both public officials and businessmen. Ethiopia, Senegal, and Tanzania fall between the two extremes. In general the councils have been best at accelerating previously identified reforms and have performed poorly at identifying specific new constraints to investment and the public actions to relieve them. Follow up by the civil service on council recommendations has been sporadic. With the possible exception of Uganda, the business community has expressed disappointment at the level of ambition of the councils and their impact.

The PIACs were an East Asian ‘import’ into Africa. The initial one-size-fits-all blueprint of the IMF and World Bank reads like it was lifted from a history of the practice of industrial policy in Korea during its rapid growth period and given a small facelift to reflect the prevailing fashions in PPD at the turn of the 21st century. An appropriate perspective from which to view their performance might, therefore, be to consider the extent to which the councils have been able to replicate some of the critical elements of success that characterized business–government coordination in East Asia.

(p.285) Writing on the implementation of industrial policy in Asia has emphasized four elements of effective coordination processes in rapidly growing Asian economies: commitment, focus, ownership and feedback (Amsden 1989; Wade 1990; World Bank 1993; Campos and Root 1996; Rodrik 2007; Harrison and Rodriguez-Claire 2010; Dinh 2013a, 2013b). To a large extent the substantial differences in performance of PIACs across Africa reflect differences in how the councils have dealt with these aspects of public–private coordination.

14.4.1 Commitment

In Asian economies, ranging from Japan to Viet Nam, senior members of the political and government elite were publicly committed to a high level of engagement with the private sector. In the cases of Indonesia, Korea, Malaysia, Singapore, and Taiwan the champion was the head of state or government (World Bank 1993). Indeed, the famous ‘Blue House’ meetings between President Park and Korea’s powerful industrialists may well have been at the back of the minds of Messrs Koehler and Wolfensohn as they made their African tour. In China and Viet Nam, party and government officials at all levels ranging from the national to the municipal are actively engaged in the industrial development agenda and judged on results achieved (Dinh 2013a, 2013b).

As a signal of highest level commitment, the IMF and World Bank called for the councils to be chaired by the senior political leader in each country—either the head of state or head of government. However, the extent to which each President or Prime Minister has demonstrated their commitment to the council process has varied widely. Ghana, of course, is the extreme case. Because President Kufuor could not find time in his schedule to conduct a meeting in more than two years, the council was abandoned and written off as a failure. To a lesser degree, the top political leadership in Ethiopia, Senegal, and Tanzania have shown tolerance of, but marked lack of enthusiasm for, the councils. At the most basic level this is demonstrated by the fact that no head of state or government in those countries has chosen to hold council meetings more frequently than once a year.

In the case of Ethiopia, the late Prime Minister Meles Zenawi sent strongly mixed signals by engaging with much greater enthusiasm directly with private investors at the sector or industry level. While the 2012 meeting of the newly designed council was not held, investors in priority sectors—such as cut flowers—and exporters had easy access to policy makers and a commitment from the Prime Minister to solve problems. Meetings with investors in these sectors were frequent and conducted on schedule. Deliberations on policy and regulatory matters were based on issues raised by the industry private (p.286) sector organizations. Actions were agreed and followed up (Gebreeyesus and Iizuka 2010).

President Museveni of Uganda has shown the greatest sustained commitment to the council process. From the beginning, council meetings have been held on average twice per year. The President is actively involved in vetting proposed council members and has drawn several private sector council members into senior levels of government at the end of their council membership cycle, including as Minister of Finance, Planning and Economic Development and as the Chairman of the Uganda Investment Authority. The President not only attends PIRT meetings, he also has a track record of demanding progress reports on implementation of the decisions taken (AfDB 2012b).

The degree of commitment at the top is mirrored at lower levels of government in the extent of implementation of council decisions. A consistent theme running through the evaluations of the councils is the slow pace of implementation of council decisions. Most frequently this failure is ascribed to ‘capacity constraints in the public administration’ (World Bank 2005, 2009). But it also reflects a perception on the part of senior government officials and civil servants that they will not be held to account for lack of action. The most extreme case may be Ethiopia, where the council secretariat has struggled to implement the decisions reached at the national public–private investors’ fora, even within the coordinating Ministry of Trade. At the same time, decisions reached in meetings with priority sectors or exporters were implemented with minimal delay (AfDB 2012d). In Senegal and Tanzania formal oversight mechanisms are in place, but a significant number of council decisions—some dating back several years—have not yet been implemented (AfDB 2012a, 2012c).

Follow-up has been most effective in Uganda. A Cabinet Implementation Committee, chaired by the Prime Minister was established, and the Prime Minister’s Office is responsible for ensuring follow-through in implementing the council’s recommendations. This provides a clear institutional structure and accountability mechanism linking recommendations by the PIRT with the regular business of the public sector. Yet, even in Uganda, private sector representatives complain that council decisions are not implemented quickly enough (AfDB 2012b).

14.4.2 Focus

In East Asia one way in which the flow of information between the public and private sectors was encouraged was by focusing policy decisions and actions on specific constraints to firm-level performance. They were in effect attempting to address failures of collective action. These types of industrial development problems proved to be best dealt with at the level of a specific sector or (p.287) industry. The key elements of the process were agreement with major players in the private sector on the specific constraint and the proposed course of action. A timetable for resolution of the problem was announced, the public officials charged with the programme were sufficiently senior to make the decisions needed for implementation and progress was monitored and reported.

The work of the councils in Africa on the other hand has largely centred on an economy-wide agenda of ‘investment climate’ reforms drawn from the World Bank private sector development playbook.8 To a great extent this reflects the role played by the World Bank in setting up and funding the councils. Rather than focusing attention and resources on the diagnosis of sector specific constraints, the councils became captives of the World Bank’s private sector development agenda and its Doing Business machine. This focus on a donor-driven agenda fundamentally contradicts the rationale for creating a public–private coordination mechanism in the first place. Doing Business was invented in Washington, not Dakar or Dar es Salaam, and it is unlikely to reflect the constraints actually faced by firms in Africa.9

Apart from regulatory reforms, the councils have attempted to address a wide range of issues; perhaps too wide a range. In Senegal a working group was created in 2011 to explore ways in which private investment could contribute to the welfare of vulnerable groups. The council is also attempting to set out an action agenda in such areas as access to health care and renewable energy. In Tanzania the council has set out reform objectives in fourteen areas ranging from agriculture to empowerment of an indigenous middle class. In Uganda the secretariat lists fifty-one actionable recommendations in sectors ranging from agri-business to petroleum. The councils in Tanzania and Uganda have been used to advise and endorse several broad development initiatives put forward by the government.

These agenda items fall more under the rubric of PPD than coordination. The focus has been mainly on exchange of information and building of mutual trust rather than on solving specific problems. While such engagements have been assessed as useful by the private sector participants—particularly in building private sector consensus for such programs as Kilimo Kwanza in Tanzania and the ICT strategy in Uganda—they have not been regarded as highly productive. The contrast between the outcomes of the industry- and sector-specific coordination processes in Ethiopia and the national forum is particularly instructive. Because they do not regard the (p.288) forum as an effective venue in which to pursue problem-solving with the relevant government bodies, investors in the priority sectors have largely operated their coordination mechanisms with the government separately.

14.4.3 Ownership

A key attribute of the East Asian deliberation councils was the extent to which the agenda of the councils and the policy initiatives adopted by them derived from a national process of PPD. Public actions were developed and the results—measured in terms of specific outcomes—were carefully observed. Policies that failed to achieve their objectives were often abandoned. Put in the jargon of 21st-century aid policy, the Asian coordination mechanisms ‘owned’ their policy reform agenda.

In Africa the work of the councils has more often than not reflected donor rather than national priorities. In Senegal and Tanzania the councils have explicitly benchmarked their performance to the World Bank’s Doing Business indicators. Indeed, they have given themselves (or been given) improving the national ranking on Doing Business as an explicit objective (AfDB 2012a, 2012c). The council in Senegal in particular has chosen to focus on progress in Doing Business as its main measure of success. The councils in Ethiopia and Uganda have shown less inclination to use the Doing Business indicators to set their reform agenda, but both have been urged by the World Bank and other donors to focus on ‘low-hanging fruit’ in terms of the regulatory reform agenda.

Under the World Bank–IMF blueprint for the African councils, working groups were intended to be the engine of new, nationally owned ideas. In the working groups, members of the council were expected to engage with public officials and other relevant parties to identify, analyse, and recommend public actions to relax investment constraints. Over time, the working groups have evolved in different ways. In Ethiopia the national Public–Private Forum and the sectoral fora are intended to function in the place of the working groups. In Senegal there are four working groups covering very broad themes such as ‘administrative procedures’. Initially the council in Tanzania created eight sector working groups. At a later stage the number was reduced to four and the focus shifted to thematic areas, more closely aligned to the World Bank driven private sector development agenda. In Uganda, working groups are established at the beginning of each two-year council cycle, based on government priorities, but it is unclear what the role the private sector has in setting out priorities for the new business cycle.

For the working groups to function as a source of ownership it is critical that they represent a broad spectrum of firms. The designers of the councils attempted to address the problem of representativeness by encouraging governments to (p.289) include other national bodies of private investors in the working groups. Uganda has made an effort to include business associations representing SMEs in the working groups, although some private sector associations within the country continue to argue that the council process is not representative of the private sector as a whole (AfDB 2012b). In Senegal more local SMEs and business associations have been drawn into the working groups, and in Tanzania the breadth of representation of stakeholders has increased due to the creation of the regional and district business councils. In each country, however, local business groups, especially those representing SMEs, have argued that the large enterprise bias of the council membership limits their participation in meaningful dialogue with the government.

14.4.4 Feedback

Feedback was an essential element of the East Asian policy-making process. Often this was done by measurement of observable outcomes, for example the rate of growth of jobs or exports. It was also a central objective of the deliberation councils, themselves. Feedback is perhaps the least satisfactory aspect of council performance in all four economies. With the exception of the annual Doing Business reports, the councils in Senegal, Tanzania, and Uganda have not put in place systematic monitoring and evaluation frameworks. There are no examples of cases where councils have attempted to measure the impact of reforms on the cost of doing business or the decision to invest.10

In Tanzania the council uses the network of regional and district councils to collect information on the impact of its decisions, but evaluation studies have not been undertaken regularly. The Kilimo Kwanza programme, for example, has not been evaluated since its inception in 2009. Uganda has no formal mechanism for monitoring and evaluating the performance of its council. The government has argued that the PIRT is self-monitoring, but no monitoring framework is in place and the extent to which individual council members can follow up on initiatives is limited by the changing membership in each two-year cycle. The council in Ethiopia is still sufficiently new that its experience with monitoring outcomes cannot be assessed, but the fact that the secretariat is having difficulty getting council decisions implemented at the ministry level does not augur well and contrasts sharply with the direct feedback provided by investors to senior government officials, including the Prime Minister, in priority sectors.

(p.290) Put bluntly, with the exception of the quantitative feedback provided by the Doing Business surveys, none of the councils have a systematic means of assessing the impact of their decisions on firm performance, investment, and growth.11 This lack of feedback is closely linked to the councils’ lack of focus in agenda setting. Where the reform agenda has been pre-cooked—usually by the donor community—the councils have proved moderately effective in accelerating implementation and have been able to measure progress. In other areas, whether at the sector level or in such cross-cutting areas as infrastructure and skills development, lack of feedback on prior council recommendations has limited the scope for understanding what works and what does not. This in turn has resulted in a ‘shotgun’ approach by councils—advocating a wide range of reforms in the hope that some will have impact.

14.5 Conclusions

The PIACs were an unintended experiment in the conduct of industrial policy. Neither the IMF nor the World Bank was prepared in 2001 to allow the words ‘industrial policy’ to be uttered within its walls. The councils were surely seen by their creators as a place for dialogue between domestic and foreign investors and senior government officials, and as a tangible expression of the commitment of the head of state or government to the development of the private sector. Once the operational staff of the World Bank and the IMF linked the activities of the councils to the private sector development operations of the World Bank and to the policy agenda of the government, however, the councils became—at least in principle—policy-setting institutions. Business and government were to define jointly an agenda for action, agree on accountabilities, and monitor and evaluate implementation. In short, the councils morphed from ‘chat shops’ into coordination mechanisms.

Over slightly more than a decade, the councils have evolved in different ways, both in terms of their mandate and structure and in terms of their impact. Ghana’s council disappeared, while Ethiopia, which had a history of deep distrust between business and government, felt the need to introduce a council in 2010. Uganda’s council has been judged by external evaluators to have been the most successful; a judgement validated by the generally high marks given to the council by private investors in the country. The councils in (p.291) Senegal and Tanzania have had some impact, but fall between Ghana at one extreme and Uganda at the other in terms of their performance.

Seen through the lens of public–private coordination in East Asia, the councils have a number of shortcomings. While the senior political leadership in each country has remained as the chair of the council, the actual level of high-level commitment varies quite substantially. Uganda is the only country in which the president has found time to hold more than one council meeting a year, and in which he has a reputation for following up on council deliberations. Ghana and Ethiopia represent the other extreme. In Ghana the president quickly lost interest and the council lost momentum. In Ethiopia the prime minister, who had a track record of close engagement with private investors at the sector and industry level, failed to call for a national meeting of the newly created council.

In general, the councils have been better at focusing attention and provoking action on a donor-driven agenda of previously identified reforms than they have been at setting their own agenda. Ethiopia is the only country in which the council has not used the World Bank regulatory reform menu as a basis for action. Most of the ‘successes’ of the councils in Senegal, Tanzania, and Uganda consist of accelerating regulatory reforms. Especially in Senegal and Tanzania, the regulatory reform agenda has been aligned to the nine Doing Business indicators, and impact has been judged by movements in the country’s relative ranking. Before it collapsed, the reform agenda of the council in Ghana was similarly structured.

Outside of regulatory reform, councils have chosen to take a broad-based approach, rather than focusing on a limited number of specific constraints to firm performance and attempting to resolve them. In Senegal, Tanzania, and Uganda they have been used as sounding boards to test the reaction of the private sector to national development initiatives. This has led to multiple recommendations for action—often unsupported by analysis—that, for the most part, have failed to be taken up.

None of the councils have established a track record of strong ownership. This derives from two sources. The first is the agenda-setting role of the World Bank and the broader donor community. From the perspective of the donors, the councils are often seen as an implementation mechanism for their own policy reform agenda. The second limit to ownership comes from the restrictive membership of the councils. While in all cases membership has shifted to include more domestic investors, there is a still a distinctly large-scale bias. With the possible exception of Uganda, the working groups do not appear to have made sufficient efforts to include members with the knowledge and interest to suggest innovative solutions to problems.

One of the key reasons to develop coordination mechanisms is to provide feedback on the impact of prior public actions. Where these do not have their (p.292) intended outcomes, mid-course corrections can be made or bad policies can be abandoned. The African councils have failed to put in place adequate feedback mechanisms. In the first instance, the secretariats have often lacked the capacity to follow up recommendations of the councils. This has led to delays in implementation or simply lack of action. The monitoring and evaluation capacity of the councils is similarly poor. No council has made a systematic effort to monitor and evaluate the impact of decisions taken.

To Horst Koehler and Jim Wolfensohn, getting leading private investors together with the president or prime minister must have seemed a common-sense approach to improving mutual understanding and signalling a commitment to private sector development. That the framework developed by their staffs to support the idea might become a policy setting institution—a coordination mechanism—would undoubtedly have come as a shock. Whether intended or not, the PIACs became an experiment in using Asian-style public–private coordination in Africa. They certainly provide a cautionary tale with respect to importing wholesale an institutional structure that worked successfully in one context into another. The councils also provide another cautionary tale: institutional capture is not unique to the private sector. In the case of the PIACs the coordination mechanism was captured by the donors.

Acknowledgements

An earlier version of this chapter was presented at the UNU-WIDER conference Learning to Compete: Industrial Development and Policy in Africa, Helsinki, 24–25 June 2013. The research was supported by the AfDB under its project Vision for Accelerating Growth and Structural Transformation in Africa.

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Notes:

(1) The names of the PIACs have adapted to local circumstances. In the text that follows the term ‘councils’ will be used generically to describe the investors’ advisory group that is chaired by the head of state or head of government.

(2) No case study was done in Ghana because the PIAC there had been moribund for several years.

(3) In Senegal and Uganda the secretariat was located in the Investment Promotion Agency. In Ghana it was situated in the Ministry of Private Sector Development in the President’s Office, and in Tanzania it was made part of the National Business Council, a private sector body with links to the presidency.

(4) Notably, no data were given for Tanzania.

(5) The structure of the IFC-supported PPDs is strikingly similar to the councils, yet, despite the similarity, there has been no further systematic effort by the World Bank Group to learn lessons from the PIACs since 2009.

(6) Doing Business is the World Bank’s highly publicized annual survey of business regulations in more than 140 countries. It measures ‘stroke of the pen’ changes in nine regulatory areas.

(7) FIAS is a part of the World Bank Group.

(8) This is despite the advice of the Bank’s own Independent Evaluation Office in 2009 to shift the focus of Council deliberations towards sector issues and constraints.

(9) For an assessment of the relevance of Doing Business to industrial development in Africa see Page (2012).

(10) The World Bank’s 2005 review noted that while it was possible to link specific individual reforms to actions by the councils, there was no evidence of a direct link between those actions and increases in private investment (World Bank 2005).

(11) Unfortunately, Doing Business is very likely monitoring the wrong things. Studies using the Doing Business indicators to attempt to explain variations in investment and growth across countries yield ambiguous results and suffer from the same econometric woes as all other cross-country growth regressions (World Bank 2008; Page 2012).