 DeRisk Advisory Services Ltd.

1. Doing Business in Conflict-Affected Countries Lisa Curtis 14th July 2009  DeRisk Advisory Services Ltd.

2. Characteristics of Conflict Affected Countries: Some truisms • Most things are broken (infrastructure, institutions) • No-one remembers how to run things, let alone fix them • Everything needs fixing before you can fix anything else • The private sector is scared of taking big investment risks • The private sector that survived did so in spite of the lack of systems and rules. That has become “the way we do business around here”  DeRisk Advisory Services Ltd. (FSA Registration No. 503053) is an Appointed Representative of Rapprocher Ltd., which is authorized and regulated by the Financial Services Authority. Registered in England & Wales at 145-157 St. John Street, London, EC1V4PY. Registration No. 06000654. Advisory Services Ltd.  DeRisk Advisory Services Ltd. 2

3. NEPAL (rank 121) SIERRA LEONE (rank 156) • Starting a business: (73) • Number of procedures: 7 • Time (days) 31 • Cost (% per capita income) 22.1 • Starting a business: • Number of procedures: 7 • Time (days) 17 • Cost (% per capita income) 56.2 • Enforcing Contracts (121) • Number of procedures: 31 • Time (days) 735 • Cost (% of claim) 26.8 • Enforcing Contracts (141) • Number of procedures: 40 • Time (days) 515 • Cost (% of debt) 149.5 • Protecting Investors: (70) • Extent of disclosure index: 6/10 • Ease of Shareholder suits index 9/10 • Strength of investor protection index 5.3/10 • Protecting Investors: (53) • Extent of disclosure index: 3/10 • Ease of Shareholder suits index 8/10 • Strength of investor protection index 5.7/10 • Getting Credit: (109) • Credit information index : 2/6 • Public registry coverage ( % adults) 0 • Private bureau coverage (% adults) 0.2 • Getting Credit: (145) • Credit information index : 3/6 • Public registry coverage 0 • Private bureau coverage 0 Challenges to Doing Business : Two Examples Source: World Bank, Doing Business in 2009  DeRisk Advisory Services Ltd. (FSA Registration No. 503053) is an Appointed Representative of Rapprocher Ltd., which is authorized and regulated by the Financial Services Authority. 3

4. Problems and Solutions Disincentives to Investment Perception vs Real Risk • Discretion in procedures • Cumbersome administrative processes • Lack of information • Shortage of skilled employees • Uncertainty does not always mean corruption • Not all conflict-affected countries are the same • Not all sectors the same • Investment process can help clarify the rules • Large informal sector distorts the playing field • Threatens the rule of law • Limits competition • Constrains growth • Partnering with reform-minded policy-makers to support investment climate reforms reduces risk • Partnering with domestic suppliers to create incentives for formalisation • Understanding the upside: • New business opportunities – fast growth esp. in domestic and regional markets • Conditions for investment improving • Growing portfolio of donor-sponsored initiatives to support investment in difficult environments  DeRisk Advisory Services Ltd. (FSA Registration No. 503053) is an Appointed Representative of Rapprocher Ltd., which is authorized and regulated by the Financial Services Authority. Registered in England & Wales at 145-157 St. John Street, London, EC1V4PY. Registration No. 06000654. Advisory Services Ltd. 4

5. Self-Help: Responsible investing reduces risk Knowledge is Power Security • What are the rules: know the law better than the administrators • Understand the reformers: what do they want to achieve? How can investment correct market failures? • Political economy matters: what caused the conflict? Who benefits from perpetuating instability? Who needs to benefit most from a “peace dividend”? Building a Long-Term Business Case • Mainstreaming social benefits: social infrastructure vs charitable works • Promoting employment growth: creating jobs and strong businesses in the supply chain has as much lasting impact as direct employment In conflict affected environments aligning the business case with the development case promotes stability, reduces risks of disruption, strengthens the license to operate  DeRisk Advisory Services Ltd. (FSA Registration No. 503053) is an Appointed Representative of Rapprocher Ltd., which is authorized and regulated by the Financial Services Authority. Registered in England & Wales at 145-157 St. John Street, London, EC1V4PY. Registration No. 06000654. Advisory Services Ltd.  DeRisk Advisory Services Ltd. 5

6. Multi-Donor Programmes • Private Infrastructure Development Group: A group of initiatives providing project preparation support, deal-structuring assistance, debt, credit guarantee facilities for infrastructure investments (including ancillary infrastructure for agriculture, manufacturing, tourism) • Investment Climate Facility for Africa (ICF) Assistance to governments to implement regulatory reforms required by investors to support investment process Bilateral-Donor Programmes • Market development programmes: Various single-country or regional programmes aimed at channelling investment to correct market failures and promote sectoral competitiveness and investment. • Challenge Funds/ Innovation Funds Various single-country and regional matching grant schemes to support investment in frontier markets/difficult environments • Business Call to Action UK Govt initiative to encourage multinationals to expand core business activities into frontier markets/difficult environments Outside help: a wide range of facilities to assist investors  DeRisk Advisory Services Ltd. (FSA Registration No. 503053) is an Appointed Representative of Rapprocher Ltd., which is authorized and regulated by the Financial Services Authority. Registered in England & Wales at 145-157 St. John Street, London, EC1V4PY. Registration No. 06000654. Advisory Services Ltd.  DeRisk Advisory Services Ltd. 6

7. For everything else, there’s insurance. For more information please contact: Lisa Curtis lisa.curtis@deriskas.com +44 (0)20 8819 4272 Registered in England & Wales at 145-157 St. John Street, London, EC1V4PY. Registration No. 06000654.  DeRisk Advisory Services Ltd. (FSA Registration No. 503053) is an Appointed Representative of Rapprocher Ltd., which is authorized and regulated by the Financial Services Authority. Registered in England & Wales at 145-157 St. John Street, London, EC1V4PY. Registration No. 06000654. Advisory Services Ltd.  DeRisk Advisory Services Ltd. 7