The World Bank
International Bank For Reconstruction And Development International Finance Corporation
DOING BUSINESS IN AGRICULTURE
Concept Note 1
Contents:
1. Introduction
2. Rationale
3. Doing Business as a catalyst for reforms
4. What is Doing Business in Agriculture (DBA)
5. Coordination with other WBG agricultural activities
6. Implementation and deliverables
1. INTRODUCTION
A legal and regulatory framework that fosters competition, business integrity, and fair practices is critical to create an
investment climate that facilitates agricultural development and enhances productivity growth. Agricultural policymakers
need to be able to identify in what ways their regulations enable beneficial agricultural growth, and where legal and
regulatory reforms may be needed to encourage agricultural development. The Doing Business project offers an ideal
methodological tool to support decision-making by such agricultural policymakers, with its established methodology for
measuring laws and regulations; its informant network and participant convening power; and its effective dissemination
strategies and product branding.
Since its initial publication in 2003, Doing Business has inspired hundreds of regulatory reforms. Indeed, the Doing
Business methodology – by providing actionable indicators and by focusing on areas in which relatively simple legal or
regulatory reforms can have positive impacts on the business environment – has served as an incomparable catalyst for
business reform initiatives. This approach to measuring business regulations can be very effectively applied to the
agricultural sector. The World Bank Group’s Global Indicators and Analysis Department has already successfully adapted the
Doing Business methodology to other regulatory areas, such as regulation of foreign direct investment (through Investing
Across Borders) and business regulations that affect women’s prospects as entrepreneurs and employees (through Women,
Business and the Law).
Doing Business in Agriculture (DBA) will develop a set of indicators of the laws and regulations affecting agricultural
business in countries around the world. The indicators will be consistent over time and comparable across economies,
allowing countries to benchmark their agricultural regulatory framework and the implementation of their laws in practice.
The topics covered will focus on regulatory areas that are most important for smallholder farmers and general agricultural
productivity, and where relatively simple regulatory reform can have short-term impact on the investment climate for
agriculture. The objective is to stimulate reforms in the legal and regulatory environment for agriculture across countries,
ultimately improving smallholder productivity, agribusiness development, and rural standards of living.
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This Concept Note was prepared by the World Bank – IFC Global Indicators and Analysis (GIA) Department, in the Financial and Private Sector
Development Vice-Presidency. GIA is responsible for managing the Doing Business report, the Sub-National Doing Business, the Enterprise Surveys, and
Women Business and the Law. For additional information please contact Federica Saliola (fsaliola@worldbank.org) or John Anderson
(janderson9@ifc.org).
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, The World Bank
International Bank For Reconstruction And Development International Finance Corporation
Doing Business in Agriculture is closely coordinating with the Agribusiness Indicators project (ABI) of the World
Bank’s Agriculture and Rural Development Department (ARD). DBA has identified its proposed indicator areas in
collaboration with ABI, and has adopted some indicators from ABI that are more appropriate to be analyzed using the DB
methodology.
2. RATIONALE
A legal and regulatory framework that fosters competition, business integrity, and fair practices is critical to create an
investment climate that facilitates agricultural development and enhances productivity growth.
The business of agriculture occupies a critical space in most economies. Distinct and special among industries,
agriculture is the dominant source of employment for a large share, even a majority, of the population in developing nations.
In the light of the global food crisis of 2008 and with fears of renewed crisis on the increase, the international community has
paid renewed attention to the challenges of agricultural development in rural areas. Creating an enabling environment for
agriculture and agribusiness development has become a priority in most governments’ reform agenda. By setting and
enforcing standards that promote responsible food production, facilitating access to agricultural inputs and markets,
regulating competition, promoting the competitiveness in the agribusiness sector, supporting the greater inclusion of
smallholders and rural workers, etc., governments play a critical role in supporting agriculture productivity growth.
Policies and reforms aimed at promoting the expansion and transformation of agricultural markets and facilitating
agriculture productivity growth should take into account that, in a world increasingly dictated by value chains and the rules of
globalization, competitiveness is the condition for survival. One critical aspect related to this is the role played by
smallholders, which represent almost 80% of all farming in Sub-Saharan Africa. Evidence shows that improving
smallholders’ productivity, profitability, and sustainability is likely to be the main pathway out of poverty in using agriculture
for development. Therefore, policy makers should support smallholders’ competitiveness through appropriate agriculture
policies. Smallholders face a number of challenges and constraints that are pretty similar across the developing world. Mostly
small businesses face particularly strong barriers to entry, suffer more from poor access to finance and weak business skills
(Liverpool and Winter-Nelson, 2010; Reardon et al., 2009; Markelova et al., 2009; Obare et al., 2003 and others).
Although small-scale businesses are often considered to be part of the informal economy, several areas of legislation are
likely to directly matter for their business and have a critical impact on their productivity.
Uncertainties regarding land tenure and inadequate access to land, for instance, have been a critical challenge to
smallholder farming in East Africa. The constraints related to the tenure system, such as insecurity of land tenure, unequal
access to land, lack of a mechanism to transfer rights and consolidate plots, have resulted in under-developed agriculture,
high landlessness, food insecurity, and degraded natural resource. According to Kimaru and Jama (2005), in East Africa
sustained gains to agricultural productivity are threatened by land degradation, especially land erosion and loss of fertility.
The study found that clear land-use and agricultural policies need to be developed to provide a framework for researchers,
extension workers and smallholder farmers on environmentally-sensitive practices. Nevertheless, the lack of clarity of
property rights and un-equitable access to land exacerbate the land degradation problem.
The importance of water, along with land, has been recognized as critical factors contributing to increased agricultural
production, income, health and sustainable land use – and, as such, to reducing poverty and food insecurity. In parallel to this,
there is a growing awareness of the importance of considering the industrial and agro processing uses of water (i.e. at local or
watershed levels). Although water scarcity is the main driving factor of lack of access to water, especially in Sub-Saharan
countries, appropriate policy and interventions to improve water governance are required since legal and regulatory barriers
to agricultural water access are still in place in several countries. In this framework, IFAD has strongly supported changes in
water governance in recent decades working through community-based and civil society organizations and NGOs to better
identify the changes that are needed, and with national and local governments to change policies and legislation.
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