AUGUST 2011 64873 ABOUT THE AUTHOR Turning Peer-to-Peer Knowledge Management DOBROMIR CHRISTOW is a member of the Business into Implementation Regulation practice of the Investment Climate Depart- Adventures in Business Registration Reform Practice ment, focusing on business regulation reforms, both operational and knowledge Some developing countries have successfully reformed their business start- management. Over the last four years, he participated in, up systems,1 but the majority significantly lag behind. And starting a business led, and supervised reforms in is one of the Doing Business (DB) indicators recognized as a major constraint Africa, South Asia, East Asia and the Pacific, MENA, ECA, to businesses in developing countries. For over five years, the World Bank and LAC and currently manages the South Africa Group has been on a mission to support the poorest performers in starting Business Entry Reform project. a business. Although the WBG is one of several development institutions Prior to joining the WBG, Dobromir worked in the public providing this form of technical assistance to countries around the world, and private sectors, on national and international our approach is novel: we use the services of government officials— levels, in Europe and the reformers from best practice countries—to work with their peers in United States. developing countries. This approach helps us transfer firsthand reform APPROVING MANAGERS experience between peers. This SmartLesson describes how the Business Najy Benhassine, Manager, Business Regulation, Investment Entry (BE) team discovered another powerful partner—governmental Climate Department; Melissa Johns, Acting Manager, Business agencies and regulators from best-practice countries, and their international Regulation, Investment Climate associations—and engaged with them to make giant strides in introducing Department. business registration reforms and creating an unprecedented peer-to-peer (P2P) learning experience. HOW WE DID IT Through the Business Entry team of the Investment Climate Department, the WBG has To set up our P2P approach, we used a provided technical assistance to over 70 three-step process: countries in the process of carrying out business registration reforms, with a special 1. Discover: We discovered who our natu- focus on International Development ral partners are—and what we have in Association countries and fragile and conflict- common. affected states. Normally, such reforms involve three parties—donors (including the WBG), 2. Interest: We got our potential partners the government of the reformed country, and interested by creating a forum for them to consulting firms implementing the reforms. interact with our clients—their peers, who However, we have discovered a fourth partner, work in countries with challenging environ- the best-practice peers—company registrars ments. and their associations—whose expertise is invaluable, especially when it comes to 3. Involve: We involved these best-prac- engaging clients and pursuing reforms in tice registrars directly in our project work difficult environments (See Box 1). and put them face-to-face with their peers from developing countries. 1 Rwanda, for example, is ranked No. 9 in Starting a Business in the 2011 Doing Business Report. SMARTLESSONS — AUGUST 2011 1 In April 2008, the annual meeting of the Corporate Registrars Forum (CRF)2 was hosted by Corporations Canada.3 At this point, Canada was ranked No. 2 in the DB indicator for starting a business, after holding the No. 1 position for several consecutive years. The Canadian host invited World Bank representatives, and this is how the WB staff first got to know some of the DB Top 10 performers, such as Canada, New Zealand, Singapore, and Australia. We realized that CRF and its member best-practice countries pursue goals similar to ours—development and modernization of business start-up systems. We also noticed an interesting correlation: the countries ranked as Top 10 by DB and recognized globally as best practice are the founding members of the CRF—New Registrars from over 40 developing and developed countries Zealand, Canada, Singapore, Australia, Hong Kong, and the exchanged experience during CRF 2010 in Mauritius. United Kingdom. When we put these two facts together, Photo by CRF we decided to showcase their reform experience to our clients from developing countries—through five P2P regional events hosted jointly by IFC and CRF in 2009 and staff across regions are now familiar with the best global 2010. 4 and regional practices and can directly tap into their resources and expertise. The novelty of our approach was that we used firsthand peers’ reform experience, and IFC stepped aside to act as During the course of these five events, we signed facilitator. The reform advocates were the reformers Memoranda of Understanding (MoU) with the best-practice themselves. Once we had established the benchmark and registrars to formalize our relationships and establish the the credibility of the best-practice countries, using the DB framework for deeper reform cooperation. Then we turned ranking through the CRF platform, we left the floor to the what was meant to be a P2P knowledge exchange platform peers. Most of the presentations were either by our clients into a partnership for implementing business registration or by registrars from the best-performing countries that reforms. Top DB performers, such as New Zealand, Canada, were our ambassadors advocating for reforms. Such reform and Singapore, learned about our reform work, and our “push� from fellow registrars worked well and resonated clients—Timor Leste, Rwanda, Nepal, and Indonesia— with our clients’ ideas and with the WBG’s reform vision. invited them to participate directly in their reform efforts. The five peer-to-peer learning events were eye-opening, As a result of this new business model, best-practice both for our clients and for our staff and project managers registrars became part of our project teams, directly in the field. As a result of these events, clients and WBG implementing reforms. The clients embraced this approach, which proved to be effective in a number of projects. We also discovered that it is one thing to bring a consultant to a government official in a developing country, but it is completely different when you bring a peer government official from a top-performing country! Lessons Learned 1) Find a partner. Although the WBG has a significant track record of supporting business registration reforms across the globe, we have realized that, first, we are not the only ones doing this, and second, we are doing this for developing countries without knowing what is going on in the developed world. Registrars from UK, New Zealand, Sierra Leone, Zambia and Yet our own DB project has proclaimed some developed South Africa sharing their business reform experience during a countries as best-practice performers. Once we decided to WBG/CRF 2009 event in South Africa. explore these top performers’ reform experience and tap Photo by Dobromir Christow into their expertise, we found that they can become a powerful partner. 2 We discovered that there are four globally recognized See http://www.corporateregistersforum.org/. 3 international professional associations of registrars: Corporations Canada is the government agency in charge of company registration on the federal level in Canada. See http://www.corporations- Corporate Registers Forum, European Commercial Registers canada.ic.gc.ca/eic/site/cd-dgc.nsf/Intro. Forum (ECRF),5 European Business Register (EBR),6 and the 4 The events took place in the following regions: Sub-Saharan Africa, South 5 Asia, East Asia and the Pacific, Middle East and North Africa, and Latin See http://www.ecrforum.org 6 America and the Caribbean. See http://www.ebr.org/ 2 SMARTLESSONS — AUGUST 2011 Registrars from Africa during site visit to the Accountants and South - South Reform Network - Registrars from South Africa, Corporate Regulation Authority (ACRA) in Singapore. CRF 2011. Lesotho, Rwanda, Nigeria, Sri Lanka and Botswana. Photo by CRF Photo by Dobromir Christow International Associations of Corporate Administrators Finally, we needed to convince our clients of the benefits of (IACA).7 All their members are heads of business registries— joining associations such as CRF, where they would have peers and colleagues of our clients from developing access to top-rated expertise and could elevate their countries. The natural thing was to put them together, institutions and countries on the international stage, while continuing to build our relationships with CRF and increase visibility, and enlighten their staff, while at the other associations. same time creating momentum for our projects. 2) Build relationships. 3) Leverage the power of peers. We build our relationship with the best-practice countries We had several reasons to leverage the power of peers in our using three techniques: we co-host joint events; we projects, such as: encourage our clients to become CRF members; and we formalize our relationships through MoUs with CRF, IACA, • Peers are credible reform partners, because they have and EBR. The process takes time. successfully completed their own reform journey and therefore have a shared experience with our clients as One of the first things we did was explore which best- colleagues and reformers. practice countries were inclined to share their experience • Best-practice peers are outside of the community of and become reform advocates. Then we paired them with donors, multilateral organizations, and consultants. our clients, based on common features such as region, legal They led reforms in their own countries without an heritage, administrative practices, and service culture. external push, because it was their internal mandate as Successful pairings included Timor Leste and Portugal (See government officials. The peers are unbiased reform Box 2), Bangladesh and Malaysia, and Nepal and Canada. advocates third parties who are neither consultants nor IFC staff. Box 2: Bridging an Important Gap against All Odds In 2008, the business registration project in Timor Leste was progressing slowly due to such factors as low capacity, lack of international exposure, donor-heavy environment, and language barriers. One of the issues was that the country’s business registration procedures were based on the old Portuguese system, but the few Portuguese-speaking advisers with both legal and reform background would not agree to work in such a challenging environment and remote location as Timor Leste. As a consequence, project implementation was significantly delayed, and attempts to provide remote support proved unproductive. About the same time, in Europe, the Business Registry of Portugal received the European Commission Award for Excellence. It was not difficult for us to connect with the relevant officials in Portugal, because the country is a member of EBR and ECRF. We inquired about their interest in supporting our project in Timor Leste, and their response was positive. They directed us to a registrar who was the project manager implementing the business registration reforms in Portugal. They sent him on a mission to Timor Leste on behalf of IFC to reengage with the client. This approach had a favorable outcome. As a business registrar from Portugal he was able to win the trust of his East Timorese peers and embark on implementing an ambitious program that included legal, process, and information & communications technology (ICT) reform. As a result, the law was modernized and the process was streamlined in line with international best practices. Applying the Doing Business methodology, Timor Leste effectively introduced a one-stop shop for business registration and reduced the registration time from 43 to 15 days in May 2011. 7 See http://www.iaca.org/. SMARTLESSONS — AUGUST 2011 3 • The best-practice peers bring their own in- house reform experience and expertise, often being pioneers in a given area. For instance, New Zealand allows company registrations through Facebook, while in other countries, registries struggle to reach out to business owners, most of whom use Facebook for personal matters. In this sense, the peers’ reform solutions can be innovative, as contrasted with reform rules taken from the “classic� consultant or The birth of the Association of Registrars from international development books of the Latin America and the Caribbean - signing WBG and other multilaterals. ceremony - Honduras, Colombia and Surinam. Photo by Dobromir Christow Peers also can be perceived as positive reform role models, especially when sharing the same region or legal tradition. “If you can do it, I can The most significant impact of such do it too� can be an important reform incentive. partnerships is visible in the field. With Timor Healthy competition between peers is good for Leste and Portugal, for example, a difficult innovation and development. This is true for client was transformed into a reformer, neighbors, such as the United Kingdom and building on a common legal and Ireland or Australia and New Zealand, as well administrative heritage with Portugal and as for countries sharing the same legal tradition, using the Portuguese reformers as advisers. such as Canada and Nepal, for instance. As Dick In Sub-Saharan Africa, Rwanda not only Shaw, former Director General of Corporations became a reform champion as the result of Canada, said in Nepal, “Under the DB indicator, strong reform commitment and leadership ‘starting a business,’ Canada holds the Number combined with inspiration from Mauritius, Two position and was once the global Number but the country also became a CRF member One, but I dream of the day when Canada will and started inspiring other countries to do be Twenty-seven and Nepal Number Two, not so. Today, the Rwandan model of a one-stop because Canada will be so behind, but because shop for business registration is being Nepal will have improved its system so much.� implemented successfully in The Gambia and Guinea-Bissau. 4) Partnerships should be mutually beneficial. In South Asia, Bangladesh hosted a regional event in 2009. After the event, building on The P2P events and the MoUs were the start, new partnerships and the momentum but later our clients and projects directly gained, the country organized study trips to benefited from the close cooperation with Malaysia and Singapore and introduced a their peers, members of CRF and other broad reform, significantly reorganizing the international associations. Because most CRF registry, lowering time and cost for business founding members are best-practice registration, and allowing online registration countries in DB, our clients perceived that services. The Bangladesh business they need to be CRF members too, if they registration reform is a major achievement, are to achieve the same results. considering the particularly difficult environment in the country. DISCLAIMER All parties benefited: WBG facilitated SmartLessons is an awards reforms by involving best practice registrars Conclusion program to share lessons learned in development-oriented advisory and increased its global presence; our clients services and investment improved; and CRF doubled its membership P2P is a hot topic these days, not only in operations. The findings, network with our clients. In a number of business registration but also in every other interpretations, and conclusions instances, IFC clients joined CRF after IFC reform area. Although regular P2P meetings expressed in this paper are those missions.8 In the Latin America and Caribbean are important for facilitating the exchange of of the author(s) and do not necessarily reflect the views of IFC (LAC) region, the CRF inspiration was so knowledge and benchmarking reform or its partner organizations, the strong that a regional Association of achievements, it is interesting to explore Executive Directors of The World Registrars from Latin American and the opportunities for P2P that go beyond Bank or the governments they Caribbean (ASORLAC) was created, with IFC conventional applications. In our case, we represent. IFC does not assume any responsibility for the support. 9 moved from P2P exchange to P2P completeness or accuracy of the implementation, which turned out to be information contained in this beneficial to clients, to IFC, and to international document. Please see the terms 8 Examples are Brazil, Malawi, Indonesia, Bangladesh, Ne- associations of corporate regulators. and conditions at www.ifc.org/ pal, United Arab Emirates, and Colombia. smartlessons or contact the 9 program at smartlessons@ifc.org. See http://www.asorlac.org/ingles/contenido/conteni- do.=731. 4 SMARTLESSONS — AUGUST 2011