East Africa or South Asia: entrepreneurship key to growing jobs, fighting poverty

Monday, February 10th, 2014 7:09:18 by

Across South and Southeast Asia, nations are doing what they can to better prepare their businesses and their citizens to compete in an increasingly interconnected world. The challenges are vast and varied.

From top-ranked Singapore to lowly-ranked Laos, the ease of doing business is all across the board. While Singapore held on to the No 1 ranking for ease of doing business, Pakistan was ranked 110th. That was at least better than 130th ranked Bangladesh, and 134th ranked India.

Rounding out the ‘Top 5’ for worst in Asia in The World Bank 2014 Doing Business report — the latest annual assessment of the ease of doing business in economies around the world — are Timor-Leste (179th), Afghanistan (164th), Laos (159th) and the Marshall Islands (156th).

None of these nations though — including Pakistan — should take heart in the retort, “Well, at least we’re better than Burma or Somalia.”

Indeed, when it comes to doing business, there are few places worse, it seems, than the likes of Burma, also known as Myanmar, unless you make your way to parts of Africa. That’s at least, according to the World Bank, which has Myanmar ranked as worst in Asia — at 182nd of 189 economies — on the ease of doing business.

Clearly, investing in Somalia is not for the faint hearted. The World Bank report once again skips Somalia entirely, with lawlessness and lack of reliable data no doubt two of the factors why Somalia continues to be absent in the rankings.

Yet, just as in the Top 5 ranked economies for ease of doing business — Singapore, Hong Kong, New Zealand, the United States and Denmark — there are lessons to be taken even from Somalia on how best to grow economies and address persistent poverty, whether in Africa or in Asia.

More than ever, given dwindling government budgets and reduced foreign assistance dollars, the private sector — whether brave entrepreneurs, small- and medium-sized enterprises or well-established and deep-pocketed corporations — can play a critical role in fighting poverty.

With well thought through partnerships, such efforts can be undertaken in a way that is quite frankly good for business — and be more sustainable than aid packages subject to donor fatigue and annual budget cuts.

Just ask Alisha Ryu and David Snelson, the two American business pioneers first spotlighted by me in Fortune. The two entrepreneurs are behind a Mogadishu guesthouse and security firm, which employs nearly 40 Somali men and women, and by a conservative estimate, indirectly supports another 400 extended family members.

Ryu, a former combat journalist, and Snelson, a retired US Army warrant officer, have been living and running their business in Mogadishu full time since 2011. Last year, the US news program 60 Minutes described their role in digging up and returning to the United States the remains of a helicopter shot down and made famous in the book and blockbuster Hollywood film Blackhawk Down. Both recount the US military raid to capture a Somali warlord. A deadly battle ensued, killing hundreds of Somalis and 19 Americans 20 years ago in Mogadishu, this past October.

That battle was just one of many tragedies in this restless nation on the Horn of Africa. Since then, Somalia has been by ravaged by clan warfare, and feared worldwide as a breeding ground for pirates and al-Shabaab militants.

Ryu told me, “It was, and still is, our hope that by showing it is possible to do business in Somalia in a smart, knowledgeable way, others will follow our example.” Indeed, whether in Asia, Africa or the United States, it will be small businesses and entrepreneurs — regardless of nationality — who will drive long-term change and job creation.

“Business investments that can make money and simultaneously empower communities at the grassroots level is key to economic growth and the reduction of poverty-related violence in Somalia and everywhere else in the world,” Snelson says.

For nearly four years, I served as US Ambassador to and board member of the Asian Development Bank (ADB) — an international financial institution focused on poverty reduction and infrastructure investments — and there too, Ryu and Snelson’s message would have great relevance.

While development banks and aid agencies can provide incremental good, it is good governance and a strong rule of law that are critical to businesses and essential to job creation and long-term growth, in Pakistan and elsewhere.

The private sector must be a critical partner if we are to sustainably lift people out of poverty.

Yet, too often, inept bureaucracy, poor or poorly enforced regulation, interventions by government and endemic corruption get in the way. These challenges of the ‘little bric’ may well be a longer-term constraint to growth and one of the biggest impediments to building better lives for people everywhere, including in the world’s most fragile and conflict-affected states.

Few may have the nerve, or the heart, to do what Ryu and Snelson are trying to do in Somalia — building a business that can turn a profit while promoting economic growth.

But by creating jobs for three dozen Somalis who would otherwise be prey for pirates and extremists, perhaps they offer a bit of hope and an example that a small business can have an impact, regardless of how long or how fleeting, even in the most troubled places in this world. And that’s as true in Rangoon and Karachi, as it is in Mogadishu.

Published in The Express Tribune, February 11th,  2014.

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