Afghanistan: Women’s Economic Empowerment

Evidence and Learning Note Business Environment Reform and Women’s Economic Empowerment in Afghanistan May 2017

This BERF Evidence and Learning Note was commissioned to address the evidence gap on business environment reforms that should be adopted by Afghanistan to promote sustainable women’s economic empowerment. DFID will use the evidence from this assignment to design the Women’s Economic Empowerment pillar of its new investment climate programme.

Context

Afghanistan is a fragile state with issues of security, low levels of economic development and high levels of donor involvement in the economy. Challenges to Women’s Economic Empowerment include adverse social norms and customary practices which limit women’s movement and participation in the economy. On the other hand the country has recently gained accession to the World Trade Organisation and the policy environment is supportive as is reflected in the Women’s Economic Empowerment National Priority Programme. Moreover, despite the challenging context, there are plenty of examples of women who are in employment or have their own business.

Key Recommendations

Whilst the report includes a range of possible actions, the recommended priority Business Environment Reform areas for action in promoting Women’s Economic Empowerment in Afghanistan that came out of this research include a) improving market information, b) broadening public-private dialogue and c) supporting land titling.

  • Improving women entrepreneurs’ access to market information and advice is vital to enabling women to access markets, to compete effectively and to increase their Solutions based around Information and Communication Technologies and the widespread use of mobile phones provide opportunities for significant gains for women, with the ‘Katalyst’ programme in Bangladesh, being a leading international example.   Information Technology can also help to circumvent general security issues as well as gender specific restrictions on movement. Women’s trade associations also have a key role to play in opening up access to information on markets and products, as well as providing a potential route for sharing the cost of research and marketing. Access to market information further increases in importance if women are to take advantage of the opportunities created by World Trade Organisation accession.
  • Broadening public-private dialogue to include women’s voices is critical for ensuring that the business environment is conducive to supporting, not undermining women’s Recommended actions include: creation of women only consultation opportunities; inclusion of women in consultations with local chambers of commerce where possible; and local government level task committees that include women business representatives. The Sustainable Economic Development and Employment Promotion Project provides an example to be assessed for potential replication in other provinces. ‘EconoWin’ in the Middle East and North Africa region promoted regional collaboration between four business associations to discuss possible ways to raise awareness of gender diversity at the workplace.
  • Supporting land titling is both a strategic and transformational intervention that DFID could support to facilitate women’s access to business Two key intervention strategies that have been used successfully elsewhere are: informing communities about Sharia law and the rights of women to inheritance, and, secondly; developing registers of land owned by women independently and jointly (GEMS 3 in Nigeria providing an effective example).

In addition to these priority areas for action, it is vital that the key socio-economic barriers to women’s engagement in enterprise and employment are tackled hand in hand with business environment reforms. The key contextual barriers highlighted in this review are 1) addressing social and cultural norms and 2) tackling concerns around women’s security.

  • Widely held social norms restrict economic and social opportunities for women.  Of particular importance to women’s economic activity is the widespread misinterpretation of Sharia Law’s guidance on women as economic actors and on land ownership that impact on women’s ability to secure collateral and to engage in economic life. Working with established structures and ensuring buy-in from the community and men are essential. Raising awareness and encouraging discussion on the importance and value of women’s work can be an important part of developing this buy-in. This report identifies a number of areas for action, including: educating religious, community and influential leaders; media campaigns; making more of women role models in resistant communities; and working with men and boys and the wider community to support women’s enterprise and employment.
  • Concerns about security emerged consistently in consultations and document reviews as a key constraint to both women’s employment and It is strongly recommended that actions to prevent violence and harassment against women in the workplace and on the way to work are included in any package to improve the environment for women’s economic empowerment. Extensive evidence and examples of best practice are available globally and can be accessed through DFID’s Violence Against Women and Girls helpdesk (not covered in this evidence review as beyond the initial remit). In conflict zones one of the major additional hurdles faced is transportation and mobility, creating additional challenges for women’s economic endeavours. These include a higher cost of production, risk of damage to products and border crossing delays. These challenges impact both women and men´s enterprises, but women lack the information and mobility to make necessary adjustments to pricing and output.

The National Priority Programme has put forward a comprehensive set of measures for Women’s Economic Empowerment and within these are a number of sub-components related to Business Environment Reform. Key areas to address are:

  • Improving access to credit, both informal and
  • Accessing and analysing market information to support the creative

Finally, no single initiative is likely to lead to Women’s Economic Empowerment, but all will contribute to achieving empowerment by addressing different elements of the evolving framework. Similarly, ‘No one size fits all.’ Different approaches are needed for different groups of women, reflecting not only variations in capacity but also variations in need. It is important to take a long-term approach and build capacity for change through learning.

BERF and the DFID Economic Development Strategy

DFID’s Economic Development Strategy  was published earlier this year.  Yesterday the BERF team discussed with DFID the question of how BERF could be used to help DFID country offices implement the strategy.

BERF is very well aligned with the DFID strategy.  In particular:

  • The DFID strategy includes a focus on supporting countries to improve their enabling environment for business.  BERF is designed to help achieve this;
  • The DFID strategy aims to use DFID’s country presence, knowledge and expertise to bring eocnomic opportunity to some of the world’s most fragile states.  Working in Fragile and Conflict Affected States (FCAS) is a key theme of BERF.
  • The DFID strategy focuses on the poorest and most marginalised people, the majority of whom work in the informal sector.  It places the economic empowerment of women at the heart of the approach.  Gender is a key theme of BERF.  BERF also has a strong focus on Youth.
  • The DFID strategy seeks to focus on investment to spur economic growth in developing countries, whilst focusing on sectors that can unlock growth.  BERF is very well placed to support sectoral analysis, as we have done especially in Mozambique, Pakistan, and Kenya.

A number of important elements of the DFID strategy could be supported through BERF as appropriate.  These might include, in particular:

  • Focusing on international trade as an engine for poverty reduction.  BERF for example is working on the export strategy in Kenya, and the research in Pakistan considered international trade elements of priority sectors;
  • Making it easier for companies, including from the UK, to enter and invest in markets of the future. BERF would be well placed to help partner countries to target Business Environment Reform strategies which promote Foreign Direct Investment;
  • Building a sharper focus on human development and skills for work into economic development programmes.  BERF could be used to strengthen the enabling environment for work skills for example.

DFID’s strategy provides sample indicators in Chapter 5 for assessing and reporting progress.  It would be helpful to DFID for BERF to report against the relevant elements of the Economic Development Strategy.

 

Ghana: Using the Compliance Cost Methodology

How Ghana Business Enabling Environment Programme (BEEP) Is Using the  Methodology to Assess Results and Drive Implementation

DFID Ghana Evidence and Learning Note Lessons from Ghana BEEP March 2017

BERF recently reviewed early lessons from applying of the Compliance Cost Methodology  to the regulatory environment in Ghana.   The findings of the Evidence and Learning Note are being used by DFID Ghana as it implements the Business Enabling Environment Programme (BEEP), a £10 million four-year programme (2016 -2019) which aims to improve the business environment by supporting Government institutions to implement reforms, build an evidence base, and support public private dialogue to advocate reforms. BEEP is working to reform three regulatory areas – commercial justice and contract enforcement, improving taxpayer services, and reducing the cost of business licensing fees and construction permits.

The Evidence and Learning Note provides an update on the programme’s progress, explains how  the Compliance Cost Methodology works, assesses how it compares to other Business Environment reform measurement tools such as the Doing Business Indicators, and gives guidance on how the methodology can be used for implementing Ghana BEEP and other DFID programmes.

What works

  • The Government of Ghana is beginning to understand the value of the Compliance Costs Methodology to showcase results and guide policy decisions. The methodology needs to be accepted by partner governments if it is to be used beyond the life of the programme, and one of Ghana BEEP’s programme outputs measures the extent to which the Government adopts approaches used by the programme. The methodology was well received by officials in all reform areas. Qualitatively it is similar to the consultative user committees that officials already use, although these user committees are more used to solicit feedback and air grievances than to identify whether new or amended regulations will likely have a small, medium, or large impact on companies. Officials see quantitative data as useful and in some cases contributing to their own departmental agendas, i.e. as evidence of results, increased organisational efficiency, or justifications for setting fees or other departmental costs. The methodology is also starting to be used in guiding component level work-plans and designing regulatory reforms.
  • Compliance Cost Methodology provides a way to compare value for money and results of Business Environment Reform programmes. It provides comparative data across similar Business Environment Reform programmes. Many DFID programmes, guided by the World Bank Doing Business indicators, are working in the same reform areas, including tax, export and customs, and e-portals for permit applications, often using the same indicators and seeking the same results.  This methodology provides a means to compare the efficiency, effectiveness, and value for money of these programmes.

What doesn’t work

  • The approaches in the Evidence and Learning Note are not appropriate for measuring compliance cost in the informal sector. The methodology is applied to formalised companies which abide by government regulations and are willing to discuss these issues with researchers.  Research methods outlined in the report use businesses as the unit of analysis, and derive sampling frames based on lists of eligible businesses. However, up to 85% of Ghanaians work in the informal sector, are not registered as businesses or with the tax authority, and require another sampling approach. Compliance cost methods may need to be administered at the household level for programmes to measure benefits at the individual level. The purpose of the research must be explained well to participants to get a good response.
  • Governments and industry groups in partner countries may not yet have the in-house technical capacity to undertake compliance cost methodology themselves. This means donors may need to provide technical assistance to generate initial compliance cost data. This approach is not sustainable unless government and/or industry groups see the value of the data and have both the desire and the know-how to repeat the exercise with future regulations.
  • Data gathered may not be fully representative of all businesses effected by regulatory reforms. Sampling of businesses in developing countries is challenging due to a lack of information. Ministries in Ghana had limited ability to produce lists of businesses with which they had interacted. Moreover, some lists were decentralised, held at local offices, and  were paper-based, with incomplete and inconsistent information. Piecing these lists together took time and some businesses were not captured. The overall sampling frame is limited and perhaps not representative.
  • Businesses may be reluctant to respond to surveys.  It can be challenging to get businesses to talk about sensitive reform areas. Businesses in Ghana are not used to this kind of research and viewed contact with suspicion.
  • Compliance cost methodology does not directly lead to all relevant outcomes, and may not be appropriate for all Business Environment Reform programmes.  The methodology looks at efficiency and cost savings, and is part of a results chain which has evidence linking it to increased growth and GDP.   More evidence is needed to link compliance cost savings with outcome and impact level results such as job creation, business satisfaction, and private sector investment including Foreign Direct Investment.  It has limited relevance for programmes that take the perspective of the government rather than taxpayers, for instance DFID tax reform programmes that aim to maximise tax revenues collected without direct consideration of the costs involved to businesses.
  • Survey instruments are designed for specific regulatory areas and require additional work to adapt to others. The Ghana BEEP programme is flexible in its ability to add other reform areas and vary existing components.  Although compliance cost methodology provides a useful means of standardising measurement of results across different reform areas, adding a new reform area during the programme requires re-developing survey instruments specific to that area and collecting baseline data. This may mean that rolling baselines and additional survey work are needed if a BER programme adds more reform areas.

 

Female Labour Force Participation

Women at Work: A Key Agenda for Business Environment Reform

The range of labour force participation in DFID partner countries is huge:  from 18% in West Bank and Gaza to 86% in Rwanda (see table of World Bank quoted ILO data).    This ratio really matters because it reflects a lack of livelihoods and economic empowerment for millions of women, exacerbating the problem of disproportionately high numbers of women and children in poverty.   It may be debated exactly what proportion of the world’s poor are women, but but few would argue that they do not form the majority.

The number of women excluded from the labour market in some countries is sufficient to have a significant macro economic impact:  if India were to increase its labour force participation rate for women (27%), to match that of men (79%), this would increase the labour force by 50%.  This could boost GDP per capita by a very significant amount.

Increasing female labour force participation in countries where it is low should be a very high priority for Business Environment Reform and complementary measures.  This is particularly important in South Asia, which has a female labour force participation rate which is less than half of that in Sub Saharan Africa; and a number of Middle Eastern countries.  Whilst it is true that there are many complicated cultural and other reasons which contribute to the inequality of labour force participation between men and women, measures should be identified and implemented to move in the direction of greater equality and participation.  This will not just benefit women, but the country as a whole.

Country Name 2016
Rwanda 86.3
Mozambique 82.3
Uganda 82.3
Malawi 81.2
Nepal 79.7
Zimbabwe 77.9
Ethiopia 77.1
Ghana 75.6
Tanzania 74.0
Congo, Dem. Rep. 70.5
Zambia 69.9
Sub-Saharan Africa (excluding high income) 62.8
Kenya 62.3
Tajikistan 59.5
Ukraine 52.2
Nigeria 48.5
South Africa 46.3
Bangladesh 43.2
Somalia 33.3
South Asia 29.1
India 26.9
Yemen, Rep. 26.0
Pakistan 24.6
Sudan 24.3
Afghanistan 19.2
West Bank and Gaza 18.1

Gender Discrimination in the Legal Framework

World bank data on women, business and the law  is incorporated in the BERF log frame.  BERF cannot directly influence the number of discriminatory laws in partner countries, but WBL indciators are a useful means to monitor the direction of travel in respect of discrimination.

As noted in a press article in the UK Guardian newspaper, there are 155 countries with at least one discriminatory law. In 18 countries, women require their husband’s permission in order to work.

How does the picture stack up in DFID and BERF partner countries?  Some, such as Jordan, Afghanistna and Yemen, are amongst the most discriminatory countries in the world.  Others, such as South Africa, Zimbabwe, and Burma, are amongst the least.

Economy Legal gender differences
Jordan 25.2
Afghanistan 21.6
Yemen 21.6
Sudan 21
Syria 19
Occupied Territories 15.8
Pakistan 14.8
DRC 12.6
Lebanon 11.8
Nepal 9
Sierra Leone 6.2
Bangladesh 5.8
Ukraine 5.8
Uganda 5
India 4.4
Mozambique 4.2
Ghana 4
South Sudan 4
Tanzania 4
Kyrgyzstan 3.8
Kenya 3.2
Liberia 3
Malawi 3
Nigeria 2.8
Rwanda 2
Zambia 2
Ethiopia 1.4
Myanmar 1.2
Zimbabwe 1
South Africa 0

Research by the IMF detects an important link between the legal framework, and rates of female labour participation.  This research concludes that  “Drawing on a large and novel panel data set of gender-related legal restrictions, the study finds that restrictions on women’s rights to inheritance and property, as well as legal impediments to undertaking economic activities such as opening a bank account or freely pursuing a profession, are strongly associated with larger gender gaps in labor force participation. These factors have a significant additional impact on female labor force participation over and above the effects of demographic characteristics and policies. In many cases, the gender gaps caused by these restrictions also have macro-critical effects in terms of an impact on GDP.”

In sum, gender discrimination matters a lot for labour force participation of women, and hence overall economic growth.  This agenda stretches beyond those countries with extreme numbers of discriminatory laws.  And remedies to encourage such participation stretch beyond legal reforms. In India for example only 27% of working age women are active in the labour force (compared with 79% of men). With over 586 million women and girls, removing gender barriers to education and labour market participation could improve India’s ability to realise the economic gains that could be achieved by harnessing a high working age population.

 

Gender: Scoping study on gender and customary laws in Business Environment Reform

BERF Gender and Customary Law in Business Environment Reform

This study indicates the ways in which customary laws and practices can impact on women as owners and managers of enterprises and as employees of these enterprises. It highlights the ways in which customary laws and practices intersect with the three elements of Business Environment:

  • regulatory and administrative framework through the processes by which business registration and licensing are administered;
  • the policy and legal framework through discriminatory labour laws that have implications for the sectors where women can work or the hours when they can operate their businesses; and
  • the institutional arrangements through women’s limited representation in decision-making bodies that administer land rights or hold public bodies to account.

Components  directly affected by customary laws and practices include:

  • Access to finance, with banking laws discriminating against women’s ability to apply for loans or credit without a signature from a male family member;
  • Business registration and licensing, with restrictions imposed on interacting with men who are not family members;
  • Land titles, registration and administration, with a lack of property rights limiting women’s ability to use land as collateral; and
  • Access to commercial courts and dispute resolution mechanisms, where judges may rule in favour of male on the basis that men are responsible for the family.Customary laws and practices particularly can impact women’s physical mobility and ability to access employment and their freedom to choose what work they do, where they work and when – particularly if they need a husband’s permission to work. Significant areas that particularly affect women entrepreneurs include:
    • Land and property rights that constitute a barrier to growth of women-owned enterprises. Restrictions on women’s ability to own, sell, acquire and use property limit their access to capital by means of credit and equity. For example, restricted property rights limit women’s prospects of having savings, investments and sufficient collateral for loans and therefore their prospects to start and run businesses.
    • Inheritance practices and norms, as inheritance is one of the key means of acquiring assets. Marriage can impact women, including their inheritance and land rights, and therefore on women’s access to collateral and finance for business growth. Child marriage is also indirectly linked to a reduction in the likelihood of formal employment and diminished earnings throughout a woman’s lifetime.
    • Religious laws and women’s land, property and inheritance rights that may be particularly tenuous in cultures where polygamy is the norm. In addition, customary practices such as paying for brides and polygamy can reduce women’s security in relation to land.

The scoping study identified a few positive and promising examples of reforms and interventions that directly or indirectly address customary law and practices to create a more gender equitable Business Environment. These include reforms around land and property rights in Ethiopia to increase women’s ownership and security of tenure and their labour force participation, and reforms around secured transactions system in China to enable Small and Medium Enterprises, including many female-owned businesses, to draw on a wider range of movable assets and improve their access to finance.

Based on the evidence reviewed, the scoping study has identified a few areas for a more in-depth follow-up study – using case studies to analyse changing customary laws and practices over time for Business Environment Reform on:

  • land tenure/titling reform; and
  • access to finance.

Within these case studies, it will be important to look at marital property regimes (as well as other factors) and how these have impacted the prospects for women’s (or joint) businesses.

Gender differences in enterprise surveys

BERF Scoping Study: Gender Differences in Enterprise Surveys, April 2017

The aim of this scoping study is to support efforts to enhance overall business performance in low income and emerging countries through contributing to the efficacy of business environment reforms. In the vast majority of countries, women’s businesses are fewer in number, smaller in size and concentrated in less capital and asset intensive sectors, compared to men’s businesses. In some regions, they are also weaker in certain dimensions of performance.

This study explores the extent to which the relative weakness of women’s businesses is attributable to the Business Environment, and aims to identify the potential for business environment reforms to assist the growth of women’s businesses. It lays the ground for a more rigorous assessment of these two issues, using the largest available database on this topic: the global World Bank Enterprise Survey.

The study assesses the suitability of the Enterprise Survey datasets for sex disaggregated analysis, sets out the key gender-related findings that have emerged from previous research, and explores possible hypotheses and methodologies for understanding the different impacts that the Business Environment may have on the prevalence and performance of women’s and men’s businesses. Newly available repeat (panel)  datasets that track the situation of individual enterprises over time appear to have great promise; but they have limitations, particularly in respect of data on women’s businesses.

Taking a broad view of what constitutes the Business Environment, including aspects of the general legal framework of particular concern to women, the study puts forward four hypotheses to be tested by further detailed analysis using survey data, complemented by other relevant data, using appropriate statistical methods. The hypotheses are a package of interrelated ideas, covering equity as well as efficiency aspects.

Our first hypothesis is that certain elements of the Business Environment are more constraining to women’s than to men’s enterprises, although the effects will differ across countries.

Our second hypothesis is that individual Business Environment Reforms have had different effects on the performance of men’s and women’s businesses, such that, as before, Business Environment Reform affects enterprises by gender in different ways in different countries.

Our third hypothesis is that certain Business Environment and related reforms have induced larger improvements in the performance of newly- (or soon to be-) formalised enterprises relative to more established businesses.

Finally, given that female employment rates seem to be significantly higher among women’s than men’s businesses, the fourth proposed hypothesis that we wish to test is that the gender gap in employment (captured by the difference in share of female employees in the enterprise workforce) is related to the gender of the enterprise owner or manager.

Three levels of analysis can be considered to examine these hypotheses: cross-country analyses using aggregate country-level data; enterprise level analysis both within and across countries; and cohort-level analysis, grouping companies by categories (sector, gender in size and other possible categories).  Our assessment is that cohort-level analysis is likely to be most fruitful.

We anticipate that analysis to test one or more of these hypotheses will produce findings that can increase the gender sensitivity of DFID and partners’ policy and programming on Business Environment Reform in ways that enhance both the prevalence and performance of women’s businesses.

Sudan Business Environment Constraints

Sudan Review of Business Environment Constraints, March 2017

Objectives

DFID Sudan approached BERF for support to

  • identify general business environment  constraints in the economy with the aim of bringing a this perspective to potential future programmes;
  • identify constraints in the agricultural and related agribusiness sectors, with an emphasis on how removal of constraints will benefit the poor; and
  • assess Government of Sudan capacity to implement the reforms.

DFID Sudan’s main interest was identifying entry points where there is an opportunity to engage government in an intervention with the ability to create jobs and reduce poverty.

A menu of options for DFID Sudan engagement is identified based on an analysis of (i) the political economy (including government willingness and capacity to reform), (ii) partnerships available, (iii) DFID’s competitive advantage and (iv) value for money. The menu of options was developed on the basis of a general business environment diagnostic to identify economy-wide constraints to doing business in Sudan, as well as a sector specific diagnostic of the agricultural sector and relevant agribusiness value chains.

Key Findings / Conclusions

Sudan’s business environment is one of the most challenging in the world. Key findings are:

  • Lack of access to finance particularly for small businesses including farmers;
  • The proliferation and uncoordinated nature of regulations, taxation and fees at all levels of government, and the unpredictability of changes;
  • Lack of access to land and contested land rights including fundamental tensions between formal and informal (customary) land rights;
  • Lack of reliable low cost electricity; and
  • Limited dialogue between the GoS and the private sector on policy issues.

Specific issues for the agricultural sector include:

  • Restricted access to markets and agricultural marketing infrastructure; and
  • Lack of access to inputs: seeds, fertiliser, agricultural machinery, information / extension services, and to a skilled workforce.

Summary of Recommendations

In line with latest thinking on addressing complex institutional reform problems, and engaging in fragile states, it is recommended that DFID Sudan adopts a portfolio approach.  A menu of nine potential entry points for engagement has been identified. DFID Sudan should engage a supplier to test out a selection from the menu. The approach should be a ‘step wise’ one, taking ‘small bets’,engaging with problems that local counterparts care about, ensuring short feedback loops so that interventions that are not working can be dropped where appropriate and lessons learned and incorporated in real time. Options include:

1: Support the Ministry of Foreign Trade in Sudan’s World Trade Organisation accession process.

2: Support the Ministry of Investment to enhance coordination of government investment promotion and to facilitate policies and laws to reduce uncertainty and to support a joint vision for growth.

3: Look for opportunities to bring government and private sector together at federal level including assisting the State Minister for Investment to improve investment facilitation coordination across government.

4: Introduce a business environment component to DFID’s support to improving local government Public Financial Management with the aim of streamlining taxes and fees and reducing the number of last minute changes or rate rises.

5: Offer technical assistance to the Bank of Sudan on the development of a regulatory framework for agency banking and mobile banking and improve financial information and services for farmers.

6: Partner with the private sector to deliver services to farmers. Form cost-sharing partnerships with agribusiness companies to establish privately run extension service, with government ‘invited in’ in a low key way where appropriate.

7: Explore the opportunity to improve the business environment of private investment in renewable energy and for markets for household solar systems for small farmers. Review current status of regulatory and policy framework and if necessary address gaps in United Nations Development Programme’s technical assistance.

8: Consider partnership with the African Development Bank on vocational education for young farmers.

9: Coordinate with the Food and Agriculture Organisation, the International Fund for Agricultural Development, and Ministry of Agriculture on seeds and fertiliser standards, including potentially setting up seed and fertiliser testing laboratories and improving inspection services.

Afghanistan Harakat Organisational Review

BERF Harakat Organisational Review and Design Report March 2017

Background

DFID and the Board of Harakat Afghanistan Investment Climate Programme commissioned BERF to out a Review of the existing organisational structure of the programme. A key recommendation from the Harakat Process Evaluation was to shift from a project approach to a programme approach.

The Board developed a new programme implementation model based on recommendations from these as well as other assessments. As outlined in the 2016 Business Case, programme interventions will be focus on four pillars (Private-Public Partnerships, Legal and regulatory reform, Investor Facilitation, Women’s Economic Empowerment).

Key findings

This assignment concluded that the organisational structure and the processes used to implement and evaluate initiatives are not adequate. Harakat has difficulty in aligning and synchronising the many projects.  A critical challenge posed by the organisational structure is the limited administrative and management resources available to supervise and monitor project initiatives.

This report focuses on:

  • A workforce database identifying skills, knowledge and abilities of the current Harakat workforce;
  • A proposed organisational structure and rationale;
  • Job descriptions for 12 roles within the structure.

The organisational structure proposed in this report will provide the operating framework for the programme approach and is designed to address issues raised in independent reviews, further strengthen the implementation model, maximise Value for Money, and manage risk.

To effectively implement the programme approach, the organisational design will be more robust and capable of managing financial risk with appropriate procurement and financial management systems in place. Job roles within the structure will be grouped together to combine functional support across programme outcomes. The strength of this approach lies in putting specialists together, minimising full-time employee numbers, while allowing the sharing of specialised resources across programmes.

Challenges

There are significant challenges to the introduction of the new organisational structure and the hiring of sufficiently qualified staff.  This involves finding and retaining high calibre staff, who need to be experienced contract managers. Suitably qualified and experienced national staff may not be readily available.  The leadership will need to be of international standard due to the complexity of the programme and the need for executive leadership.

Recommendations

The proposed organisational structure will be built around functional areas:

  • Operations;
  • Finance, procurement, HR and administration;
  • Stakeholder engagement and communications; and
  • Monitoring and Evaluation.

The specific programme pillars will be overlaid on the functions. This organisational structure will allow for stronger coordination, communication and flexibility as the different pillar programmes come on line and Harakat responsibilities and activities increase. The structure will achieve economies of scale by providing Harakat with the best human resources and an effective way of deploying them efficiently.

The capacity required to implement the programmes are grouped in the following functions:

  • Executive Management
  • Pillar Management
  • Stakeholder Engagement and Communications
  • Monitoring and Evaluation
  • Administration and Human Resources
  • Financial Management
  • Procurement

As Harakat migrates towards a programme approach, the organisational structure needs to provide improved financial management and procurement, better results monitoring, contract management, management of risk, improved stakeholder engagement and communications. Harakat will need to establish sound procurement, financial management and results measurement systems. These systems, though not overly complex, will need to be established with external support provided through specialist Technical Assistance. To meet these needs detailed recommendations are made in the report.

Business Environment Diagnostic in Afghanistan

BERF Business Environment Reform Diagnostic for Harakat March 2017

Background

DFID and the Board of Harakat commissioned BERF to carry out a diagnostic review of the business environment in Afghanistan, following the approval of the Afghanistan Investment Climate Programme’s Business Case for funding in June 2016.

The programme aims to improve the business environment in Afghanistan by supporting private sector-led growth through advice and advocacy on legal and regulatory reforms, supporting women’s economic empowerment, and facilitating investment. Harakat is an independent organisation with its own board who will be responsible for implementing the programme.

The new programme will be implemented through four programme pillars, with enhanced and more robust management systems in place. BERF was asked to provide technical support for organisational development, the design and update of the procurement system, and a diagnostic review of the BE in Afghanistan. This report contains the diagnostic review of the Business Environment in Afghanistan with recommendations for way forward.

Findings

The government’s private sector reform priorities are highly relevant and have guided Business Environment Reform priorities set for the new programme. Promoting a one-stop-shop, strengthening investor protection as well as national policy for public and private partnerships have particularly influenced the prioritisation of reforms. Public Private Partnerships and Investor Facilitation have been identified as priority pillars.

Harakat will need to ensure its ability to influence the government in policy making and regulatory reform, which means forming credible relationships with key ministries and their departments and agencies that will lead to increasing investor confidence in Afghanistan.

Consultations carried out during this assignment highlighted three issues that need to be addressed to enable better engagement and ownership:

  • ownership of Key Performance Indicators by prospective government ministries and agencies.
  • inter-ministerial (including the High Economic Council) and private sector engagement:
  • donor coordination among multilateral development agencies (such as the World Bank and Asian Development Bank) and bilateral donors and contractors.

The key constraints identified in this review are:

  • Inadequate private sector representation and protection to do business;
  • Fragmented and complex regulatory environment for business
  • Weak implementation of legal and regulatory frameworks for Public Private Partnerships;
  • Limited capacity within government to identify, plan, and monitor such partnerships;
  • Complicated processes for business start-ups; and
  • Weak or absent legal and regulatory frameworks for business law
  • Complicated and sometimes absent legal and regulatory frameworks for doing business

Priority Recommendations

The following actions should be undertaken with the appropriate government and public sector partners:

  • Establish a stakeholder and communications function within Harakat and use this to promote ownership and accountability for interventions by all actors in Business Environment Reform including government and private sector agencies and organisations;
  • Form a formal partnership and agree on a capacity enhancement programme with the Ministry of Finance;
  • Prepare requests for proposal for third parties to support reform in each of the three pillars;
  • Identify and appoint third party contractor to strengthen the Ministry of Finance, and enhance promotion and management of Public Private Partnerships;
  • Form partnerships with other government ministries and agencies including the High Economic Council, Ministry of Commerce and Industry, Afghan Chamber of Commerce and Industry, and Asan Khedmat to promote investor facilitation;
  • Recruit a gender specialist to support the design and implementation of the forth pillar for women’s economic empowerment; and
  • Harakat to incorporate robust management, financial and procurement systems.