Regional Business Climate Survey (RBCS)

1. Regional Business Climate Survey (RBCS) Kara Rawden GTZ - Advisory Service for Private Business (ASPB) May 2006

2. RBCS Strategy • Gauge the climate for business and investment, encourage and attract investment • The RBCS project aims at promoting advocacy and dialogue between the private and public sector within the region by providing information for Public Private Dialogue and ensuring that informed decisions are made • The RBCS report addresses itself to decision makers, entrepreneurs and stakeholders in the private sector • The RBCS does not rank countries but aims at weighing the business climate of the region and promoting the region as a whole.

3. RBCS Important Issues • How to present results, Who presents and why. • Inefficient PSOs. • Making use of the media to promote the results of the survey. • Credibility of the survey, the need for a respected scientific institution. • Branding and Identity. 2006 2005

4. RBCS Methodology • Focus on the manufacturing sector in the region • Unique capacity of the manufacturing sector to provide activities with high value-addition, growth and employment potential hence its developmental capacity • In this sense, mood of the manufacturing sector highly reflective of “business mood” • List of respondents drawn mainly from membership lists of Private Sector Organisations [PSO’s] conducting the RBCS • Additional sectors for 2005 were taken into account i.e. Primary & Service

5. RBCS Products Brochure: ‘What is a Business Climate Survey’ Brochure: ‘The Results of the Business Climate Survey’ - Annual Why? Report: ‘The Results of the Business Climate Survey’ - Annual Newsletter - Monthly Subscribe: Manager@aspb-sadc.co.za www.rbcs.info

6. RBCS Steps

7. Media and Promotion • Spokespeople from our Partner Institutions carry out all the live TV & Radio interviews after receiving media training with core team • Press Packs and key messages are prepared for the Press Conference • Our biggest article was worth approximately Euros 5,000.00 in media space • Television and radio inserts ranged from Euro 100.00 to Euro 14,000.00 • The value of the media coverage totaled seven times our initial investment.

8. Comparison 2004/2005/2006

9. RBCS Challenges 2004 Structure ASCCI White Paper

10. RBCS Challenges 2005 Structure ASCCI White Paper

11. RBCS Challenges 2005 - Germany

12. 2004 2005 94 100 • RBCS Index 2005 • The survey results for both 2004 & 2005 have been utilized, to develop a Regional Business Confidence Index (RBCI).

13. Conclusions on the Results • The 2005 SADC Regional Business Climate Survey reveals a broad-based, optimistic and stable market • The SADC regional firms participating in the survey remain optimistic about economic expectations over the ensuing twelve months, for the period-ending 31 March 2006. • Recommendations • The results should be used as a medium to transfer promotional messages to foreign investors. • The key recommendation is to first focus marketing on promotion of the SADC region to attract the attention of investors before promoting individual countries

14. Lessons Learned • The use of a market research company has the dual effect of bringing down the average cost and increasing the return rate • The future involvement of the PSOs is dependant on the use of the RBCS by the PSOs themselves • Changes in PSO officials has a major impact on the success of the RBCS questionnaire return rate • Quality of Brand & Identity PRICE

15. RBCS: A Tool to Promote PPD Regional

16. Thank You!

17. Business Climate Survey (BCS) Malawi Kara Rawden GTZ - Advisory Service for Private Business (ASPB) May 2006

18. The Malawi Experience • Malawi is the first SADC member country to translate the RBCS into a national business climate survey • The aim of the national survey is to guide decisions that will promote national economic development by • Producing a neutral and factual comprehensive report making it acceptable to both the public and private sector • PPD then selects the issues and decides how to tackle them • The selection of issues for PPD then need to be guided by how much potential is present of reaching consensus • Issues for the PPD would then be followed by the partners of the PPD by preparing their own briefs. • Democratic Republic of Congo and Madagascar taking up this initiative

19. Economic Background Globalisation is a serious challenge for Malawi, impinging on government revenue collection and on private sector competitiveness Opportunities of globalisation require a new focus on knowledge in trade, production and services, and a new strategic positioning of the country in line with its comparative advantages Malawi benefits from being member of SADC and COMESA, and from bilateral trade agreements Malawi must ensure that its negative trade balance with SA is compensated by increased investment into production; this is also in SA’s interest

20. Economic Background Regional trade will not be free without harmonised standards - a highly complex task Malawi has made strides in improving the conditions for private sector development; macro-economic conditions have considerably improved The institutional landscape to support the development of the private sector is fragmented and weak The MCCCI has become self-sustaining and stronger in membership and acceptance as the private sector voice

21. Malawi’s Competitive Position The 2004 WEF Africa Competitiveness Report ranks Malawi 12th of 25, positively pointing out its lower crime and corruption levels as well as its judicial independence The 2006 WB ”Doing Business in Malawi” report shows positive rankings for employment flexibility, contract enforcement and other areas Malawi is performing better than others with regard to a number of human development benchmarks in the group of low human development countries

22. Survey results The current performance is positive; expectations for the future are even better Investment and employment plans support this optimism Investments are geared towards modernisation, productivity gains and expansions

23. Survey results Exchange rate fluctuations, customs regulations, public spending and policy uncertainty are important obstacles to doing business in Malawi Market information, access to finance, reliable transportation and access to land are important direct needs

24. Conclusions Dynamics in public-private sector interaction have substantially grown, but much more must be done to meet the global challenges; lack of action is already causing frustration The survey revealed optimism as well as readiness to invest and to create employment Greater integration of SME into the economy is possible, but a much stronger institutional infrastructure is needed Many problems are structural, but a number of issues can be dealt with, even with the limited available resources

25. Conclusions Strengths • Improved macro economic environment • Good will for economic development • Good policy documents • Public-private dialogue going on (NAG, MCCCI) • Optimistic, diversified industrial sector • MCCCI being strengthened • Relatively good security situation Weaknesses • Fragility of present political situation • Weak infrastructure (e.g. electricity) • Weak institutions • Landlocked situation affects competitiveness • Low skill base • Fragmentation of the private sector Opportunities • Domestic market opportunities • Regional and global market opportunities • Regional investments Threats • Inadequate response of regulatory and fiscal system to globalisation

26. Possible Strategies A clear economic development vision, shared by the public and private sectors, would contribute to political stability Strengthening the institutional and physical infrastructure must be a key objective Attracting foreign investment will strengthen the domestic private sector; Malawi must prepare itself in time to point out its advantages to SA investors The need to adapt the fiscal and regulatory system to the requirements of globalisation is immediate. The PPD needs to be directed towards this The landlocked situation of Malawi could be an opportunity, in particular if linkages between Malawian industries are strengthened The fragmentation of the Malawian private sector needs to be overcome