RESOURCE RECOVERY & REUSE SERIES 24 ISSN 2478-0529 24 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South Avinandan Taron, Abinaya Sathiskumar, Trapti Malviya, Susanne Bodach, Sairam Muthuswamy and Solomie Gebrezgabher About the Resource Recovery & Reuse Series The Resource Recovery and Reuse (RRR) Series originated in 2014 under the CGIAR Research Program on Water, Land and Ecosystems (WLE), and continues since 2021 under the CGIAR Initiatives on Resilient Cities and Nature-Positive Solutions. The aim of the RRR series is to present applied research on the safe recovery of water, nutrients, and energy from domestic and agro-industrial waste streams. IWMI’s research on RRR aims to create impact through different lines of action research, including (i) developing and testing scalable RRR business models, (ii) assessing and mitigating risks from RRR for public health and the environment, (iii) supporting public and private entities with innovative approaches for the safe reuse of wastewater and organic waste, and (iv) improving rural- urban linkages and resource allocations while minimizing the negative urban footprint on the peri-urban environment. IWMI works closely with the World Health Organization (WHO), Food and Agriculture Organization of the United Nations (FAO), United Nations Environment Programme (UNEP), United Nations University (UNU), and many national and international partners across the globe. The RRR series of documents present summaries and reviews of the research and resulting application guidelines, targeting development experts and others in the research for development continuum. RESOURCE RECOVERY & REUSE SERIES 24 Avinandan Taron, Abinaya Sathiskumar, Trapti Malviya, Susanne Bodach, Sairam Muthuswamy and Solomie Gebrezgabher Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South The authors Avinandan Taron is an international researcher at the International Water Management Institute (IWMI), Colombo, Sri Lanka, with a background in environment and resource economics. His work involves institutional and economic analysis of circular bioeconomy businesses and their feasibility. Abinaya Sathiskumar is a consultant at IWMI, Colombo, Sri Lanka, working under the research group – Integrated Circular Economy Transformations. She is pursuing a master’s degree in molecular biology and biotechnology and assisting with research works involving the analysis of circular economy businesses and their feasibility. Trapti Malviya is a senior consultant at Athena Infonomics, Pipariya, India, with a background in social sciences. Her work encompasses qualitative research, employing applicable methodologies to ensure clarity and coherence in conveying insights. Susanne Bodach holds a PhD in low-carbon development and is Research Group Leader - Integrated Circular Economy Transformations at IWMI, Colombo, Sri Lanka. With 20 years of working experience, her areas of interest include circular economy, sustainable energy, climate change and innovation scaling for overall agri-food system resilience. Sairam Muthuswamy is an associate director at Athena Infonomics, Chennai, India. He is a development consulting professional with over 20 years’ experience. His work involves development strategy, process transformation, due diligence and risk management. Solomie Gebrezgabher is a senior researcher at IWMI, Accra, Ghana. She specializes in research on economic and environmental sustainability assessment and business model development in a circular economy with a focus on the economics of water, energy and nutrient recovery. Acknowledgements The authors thank Duleesha Nisansala, Consultant, IWMI, Colombo, Sri Lanka, for helping to identify and review the environmental and waste management regulations in different countries. This work was finalized under the CGIAR Initiative on Resilient Cities and Nature-Positive Solutions. The authors are grateful for the support of CGIAR Trust Fund contributors (www.cgiar.org/funders). Citation: Taron, A.; Sathiskumar, A.; Malviya, T.; Bodach, S.; Muthuswamy, S.; Gebrezgabher, S. 2024. Assessing the investment climate to promote a circular bioeconomy: a comparison of 15 countries in the Global South. Colombo, Sri Lanka: International Water Management Institute (IWMI). 89p. (Resource Recovery and Reuse Series 24). doi: https://doi.org/10.5337/2024.218 Keywords: / resource recovery / resource management / reuse / circular economy / bioeconomy / investment / regulations / frameworks / policies / guidelines / business models / governance / infrastructure / incentives / corruption / access to finance / financial inclusion / funding / lending / taxes / legislation / contracts / private sector / public institutions / waste management / Sustainable Development Goals / organic fertilizers / composting / renewable energy / biogas / entrepreneurs / markets / competitive behaviour / awareness-raising / indicators / developing countries / Global South / North Africa / West Africa / East Africa / South America / South East Asia / South Asia / Ethiopia / Kenya / Rwanda / Egypt / Burkina Faso / Ghana / Colombia / Peru / Bangladesh / India / Nepal / Sri Lanka / Cambodia / Philippines / Vietnam / ISSN 2478-0510 (Print) ISSN 2478-0529 (Online) ISBN 978-92-9090-966-8 Copyright © 2024, International Water Management Institute (IWMI). Fair use: Unless otherwise noted, you are free to copy, duplicate or reproduce, and distribute, display or transmit any part of this paper or portions thereof without permission, and to make translations, adaptations or other derivative works under the following conditions: ATTRIBUTION. The work must be attributed but not in any way that suggests endorsement by WLE, IWMI or the author(s). NON-COMMERCIAL. This work may not be used for commercial purposes. SHARE ALIKE. If this work is altered, transformed or built upon, the resulting work must be distributed only under the same or similar Creative Commons license to this one. Front cover photograph: Mee Ko Dong (Shutterstock photo ID: 2016729548). Series editor (science): Pay Drechsel, IWMI English editor: Robin Leslie Designer: Dinuk Senapatiratne https://doi.org/10.5337/2024.218 TABLE OF CONTENTS LIST OF FIGURES ........................................................................................................... V LIST OF TABLES ........................................................................................................... VI LIST OF BOXES............................................................................................................. VI ACRONYMS AND ABBREVIATIONS ...................................................................................VII SUMMARY .................................................................................................................. IX 1. INTRODUCTION .......................................................................................................... 1 1.1. Towards a Circular Bioeconomy (CBE) ............................................................................. 2 2. REGULATORY FRAMEWORK ......................................................................................... 6 2.1. Public Organizations and Laws, Policies and Guidelines .................................................... 7 2.2. Conclusion ................................................................................................................. 11 3. BUSINESS CLIMATE AND ASSOCIATED PROCEDURES....................................................... 12 3.1. Regional Scores under the Ease of Doing Business (EoDB) Index ........................................13 3.2. General Business Climate .............................................................................................14 3.3. Performance Based on the Global Competitiveness Index ................................................ 20 3.4. Conclusion .................................................................................................................21 4. GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION ............................................................................................................. 22 4.1. Infrastructure Conditions across Regions ...................................................................... 23 4.2. Logistical Status across Countries ................................................................................ 29 4.3. SDG Expenditure on RRR-Related Goals with Respect to Total SDG Expenditure .................. 29 4.4. Tax Incentives and Rebates ..........................................................................................31 4.5. Prevalence of Corruption and Corrupt Practices ............................................................. 34 4.6. Levels of Satisfaction and Associated Challenges ........................................................... 36 4.7. Infrastructural Gaps and Effects on Business Satisfaction ................................................ 39 4.8. Conclusion .................................................................................................................41 iii 5. ACCESS TO FINANCE: SOURCES, FINANCIAL INCLUSION AND DONOR FUNDING ................42 5.1. Inclusion and Sources ................................................................................................. 44 5.2. Lending Interest Rates ................................................................................................ 46 5.3. Donor Grants and Associated Dependencies .................................................................. 47 5.4. Foundations and Activities Related to Circularity ............................................................ 49 5.5. Green Bonds ............................................................................................................. 52 5.6. Conclusion ................................................................................................................ 53 6. ENTREPRENEUR ECOSYSTEMS: MARKETS, NETWORKS AND POTENTIAL .............................54 6.1. Existing Firms in the RRR Ecosystem ..............................................................................55 6.2. Entrepreneur Ecosystems: Network Associations ........................................................... 58 6.3. Registering a Product Related to RRR ........................................................................... 59 6.4. Conclusion .................................................................................................................61 7. CONCLUSIONS AND RECOMMENDATIONS FOR ENABLING A CIRCULAR BIOECONOMY INVESTMENT CLIMATE ..................................................................................................62 REFERENCES ..............................................................................................................65 ANNEXES ................................................................................................................... 73 ANNEX 1. Regulations and Laws to Support RRR Businesses in the Studied Countries. .................... 73 ANNEX 2. Definitions of Each of the Indicators under Ease of Doing Business. ............................... 76 ANNEX 3. Green Bonds across Different Countries. .................................................................... 77 iv LIST OF FIGURES FIGURE 1. Developing countries selected for assessing the investment climate to promote the CBE. ..4 FIGURE 2. Maturity assessment of circular economy legislation rated on a scale of 1 to 4 .................9 FIGURE 3. Stringency and enforcement of environmental regulations across selected countries. ..... 10 FIGURE 4A. EoDB scores (2020). .............................................................................................14 FIGURE 4B. Comparison of EoDB scores between 2016 and 2020 for the selected countries. ...........15 FIGURE 5. Time taken to start a business (in days) across selected countries in different regions. .....18 FIGURE 6. The cost of starting a business (% of GNI per capita). ..................................................19 FIGURE 7. Rankings of selected countries under the Global Competitiveness Index (GCI) 2019 (lower is better). ................................................................................................................. 20 FIGURE 8. Projections for total infrastructure investment across regions for the year 2040. ........... 24 FIGURE 9. Sectoral investment trends across countries for 2022. ................................................ 25 FIGURE 10. Increase in access to electricity (% of the population) in the countries studied. ........... 27 FIGURE 11. Annual freshwater withdrawal by industries in 2017 ................................................... 28 FIGURE 12. Overview of RRR-related incentives provided by selected countries. .......................... 32 FIGURE 13. Percentage of firms identifying corruption as a major constraint (in %) across selected regions. ............................................................................................................................... 35 FIGURE 14. Bribery incidences observed in the selected countries. ............................................. 35 FIGURE 15. Corruption perception index score 2022. ................................................................. 35 FIGURE 16. Comparative political stability score of different countries. ........................................ 36 FIGURE 17. Regional performance in WGI (percentile rank) ......................................................... 37 FIGURE 18. Performance (rank) of selected countries on the CGGI 2022. ...................................... 37 FIGURE 19. Corporate income tax rates across selected countries in 2022 (%). .............................40 FIGURE 20. FDI inflows (in billion USD) across selected regions. ................................................. 43 FIGURE 21. Financial inclusion: Borrowed from a formal financial institution (% age 15+). ............... 45 FIGURE 22. Financial inclusion: Financial institution account (% age 15+). .................................... 45 FIGURE 23. Lending interest rates across selected countries (in %). ............................................ 46 FIGURE 24. Official Development Assistance (received as a percentage of central government expenditure (in %)). ............................................................................................................. 47 FIGURE 25. Access to finance: Foundations and activities across countries. .................................. 49 FIGURE 26. Percentage of CBE projects registered under the CDM. ............................................. 56 List of figures v LIST OF TABLES TABLE 1. Public organizations (POs) that support RRR in the studied countries. ............................... 7 TABLE 2. Key legal instruments functioning across the RRR sector in the studied countries. ..............8 TABLE 3. Comparative ranks and scores of selected countries across EoDB parameters. .................16 TABLE 4. Country-wise performance at a glance adopted from the GCI 2019 Index. ........................21 TABLE 5. LPI for the countries under study (1 = low, 5 = high). ..................................................... 29 TABLE 6. Developmental finance across selected countries targeting identified SDGs (2015–2017+, in USD million). ................................................................................................. 30 TABLE 7. Donor funding disbursed across identified sectors in selected countries in 2020 (in USD millions). .................................................................................................................. 48 TABLE 8. Green bond development in different countries. .......................................................... 52 TABLE 9. CBE products recovered across different countries. ..................................................... 57 TABLE 10. Network associations promoting the CBE across different countries. ............................. 58 TABLE 11. Preliminary requirements and nodal departments for licensing and registration of CBE products in different countries. .............................................................................................. 59 List of tables List of boxes LIST OF BOXES BOX 1. Government-conducted perspective performances and satisfaction levels in selected countries ................................................................................................................ 38 BOX 2. Examples of foundations engaged in circularity among various countries in the study .......... 50 vi ACRONYMS AND ABBREVIATIONS ACEN Africa Circular Economy Network AGRA Alliance for a Green Revolution in Africa BMGF Bill & Melinda Gates Foundation CBE Circular Bioeconomy CDM Clean Development Mechanism CGGI Chandler Good Government Index CPI Corruption Perceptions Index EoDB Ease of Doing Business FDI Foreign direct investment GCI Global Competitiveness Index GNI Gross National Income GW Gigawatt IWMI International Water Management Institute LPI Logistics Performance Index MENA Middle East and North Africa MSME Micro, small to medium enterprise ODA Official Development Assistance OECD Organisation for Economic Co-operation and Development PO Public organization QIP Qualified investment projects RGB Rwanda Governance Board RGS Rwanda Governance Scorecard RRR Resource Recovery and Reuse SDG Sustainable Development Goal SIPAS Satisfaction Index of Public Administrative Services UNDP United Nations Development Programme UNESCAP United Nations Economic and Social Commission for Asia and the Pacific UNU-INWEH United Nations University – Institute of Water Health and Environment WEF World Economic Forum WGI Worldwide Governance Indicators vii Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 viii SUMMARY SUMMARY Linearity in resource consumption with unprecedented waste generation has put pressure on environmental systems, and one of the solutions to this concern is a shift towards a circular economy. The circular economy approach encompasses three perspectives – (1) eliminate waste and pollution, (2) circulate products and materials at the highest value and (3) regenerate nature. A circular bioeconomy (CBE), a niche sector within the circular economy, derives goods and services from recovered resources to promote sustainable growth through regenerative practices. This involves different processes that convert biomass from different waste streams into marketable products such as organic fertilizers (compost or biochar) or energy (common products such as biogas, charcoal or charcoal briquettes) to provide fuel, power or heat. This is a growing necessity for economies where urbanization is growing rapidly and the agricultural sector needs to meet the growing demand and transition to a bio-based economy. Closed resource loops are necessary to ensure resource conservation and sustainable growth for future generations. However, the transition has been slow and countries are struggling with the need for significant investment. Along with investments, new businesses and business models are required. Private entities can close the gaps by contributing to technical expertise and innovation, providing services and capital investment (or cofinancing). However, entrance of the private sector is slow, and its presence is limited to certain parts of the value chain. The private sector requires appropriate regulations, financing mechanisms, evolved markets with the required infrastructure and well-defined contractual frameworks. Operating in countries where the enabling factors are minimal or weak proves extremely challenging for private enterprises. A facilitating environment on the other hand increases scalability and replicability of sustainable projects, accelerating the transition to a CBE. The present study uses secondary literature and databanks to assess the investment climate for promoting a CBE based on different indicators. The main indicators used for the assessment are existing regulatory frameworks; business climate and associated procedures; governance in provision of infrastructure and incentive systems; access to finance; and entrepreneurial ecosystems. While most of the countries analyzed indicated evidence of regulations on waste management and policies related to promoting circularity, the divide is mainly on aspects related to business environments, access to finance and governance. The World Bank’s Ease of Doing Business and the Global Competitiveness Index (GCI) indicate that Southeast Asian and Latin American countries are better positioned than other Asian and African countries, except for India, Rwanda and Kenya. South Asian countries (India and Bangladesh) are top performers in governance, followed by Latin America countries (Colombia, Peru) and Southeast Asian countries (Vietnam and the Philippines). African countries, except for Rwanda and Egypt, are low performers. Meanwhile, infrastructure investment per capita is higher in Peru and Colombia compared to other countries, although Vietnam and Egypt are close competitors. The study indicates the potential from green bonds towards investments is growing in India and Colombia. The study reveals that Peru, Colombia and the Philippines are leading in terms of providing opportunities for establishing a CBE. India, Bangladesh, Vietnam, Egypt, Rwanda, Kenya are Ghana are emerging centers for circular businesses. In other countries either the business environment/governance is not developed to attract entrepreneurs (Cambodia, Sri Lanka, Nepal), and/or there is low market potential (Burkina Faso, Ethiopia) which deters growth. Most of these economies are challenged by factors such as awareness and education, investment in infrastructure, supportive policies and regulations, market development for recycled products and technological advancements. Overcoming these barriers can help foster the widespread adoption of a CBE. ix Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 x INTRODUCTION INTRODUCTION 1 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 Today, the world generates 0.74 kilograms (kg) of waste per capita per day Da ily Globally, the largest waste category is food and green waste National waste generation rates 0.11 kg to 4.54 kg per capita per day (World Bank 2018) 0.74 kg per capita 44% 0.11 kg per capita 4.54 kg per capita food and green waste constitutes 44% of global waste in the countries studied focuses on the resource recovery and reuse (RRR) of materials from waste streams. emphasizes the importance of waste as a potential resource. Circular projects have the potential to support green economies and restore nature, enhance food security, protect human health, reduce waste, contribute to cost recovery systems, and create livelihoods. This approach involves the transformation of biomass into a range of value-added products and materials: eg. biofuels, bioplastics and biofertilizers This approach aims to (1) reduce the amount of waste sites; and sent to landfills or other disposal environmental benefits by (2) circulate products and materials at their highest value, generating economic, social and regenerating nature. Circular Bioeconomy Circular economy 1.1. Towards a Circular Bioeconomy (CBE) 1 Organic fertilizer is usually compost-based; it is also known by the public as biofertilizer, soil conditioner, humus or ‘manure’. Bioenergy can refer to biogas or, for example, briquettes made from sawdust, wood chips and/or charcoal. The world is progressing towards an era of new possibilities and interventions juxtaposed by the strengthening of sustainable development. To establish balance between future looking technology and basic amenities such as clean water and sanitation, economic reforms are formulated and implemented periodically. Current global imperatives are now requiring adoption of the circular economy concept, which is the practice of reducing dependency on (new) natural resource extraction while making the most of available resources through alternative uses (Tan and Lamers 2021) using the 3Rs principle (reduce, reuse and recycle). The concept of circular economy focuses on the resource recovery and reuse (RRR) of materials from waste streams and emphasizes the importance of waste as a potential resource. This approach aims to (1) reduce the amount of waste sent to landfills or other disposal sites, (2) circulate products and materials at their highest value generating economic, social and environmental benefits by regenerating nature. The CBE, on the other hand, is more of a niche sector within the ambit of a circular economy. This approach involves the transformation of biomass into a range of value-added products and materials, such as biofuels, bioplastics and biofertilizers, through a combination of biological, chemical and physical processes. It focuses on processing biomass from different waste streams into marketable products such as organic fertilizer and bioenergy.1 This is a growing necessity for economies where urbanization is growing rapidly, and the agricultural sector needs to meet the growing demand. Transition to a bio-based economy can close resource loops to ensure resource conservation and sustainable growth for future generations. For example, urban waste is rich in water, nutrients, energy and organic compounds that can be treated for recycling purposes. Circular projects therefore have the potential for supporting green economies and restoring nature, enhancing food security, protecting human health, reducing waste, contributing to cost recovery systems and creating livelihoods. However, the transition towards a CBE needs investments, new businesses and business models. The involvement of the private sector is paramount in closing the gap because the private sector can be expected to contribute technological expertise and innovations, organizational capabilities, marketing expertise and leverage capital inflow. In contrast, the public sector needs to complement this with a regulatory framework and help its enforcement, provide infrastructure, plan public investments, involve and educate stakeholders, ensure waste supply and provide market assistance. Promoting such enabling factors would promote the scalability and replicability of sustainable projects accelerating the transition to a CBE. 2 INTRODUCTION Today, the world generates 0.74 kilograms (kg) of waste per capita per day Da ily Globally, the largest waste category is food and green waste National waste generation rates 0.11 kg to 4.54 kg per capita per day (World Bank 2018) 0.74 kg per capita 44% 0.11 kg per capita 4.54 kg per capita food and green waste constitutes 44% of global waste in the countries studied focuses on the resource recovery and reuse (RRR) of materials from waste streams. emphasizes the importance of waste as a potential resource. Circular projects have the potential to support green economies and restore nature, enhance food security, protect human health, reduce waste, contribute to cost recovery systems, and create livelihoods. This approach involves the transformation of biomass into a range of value-added products and materials: eg. biofuels, bioplastics and biofertilizers This approach aims to (1) reduce the amount of waste sites; and sent to landfills or other disposal environmental benefits by (2) circulate products and materials at their highest value, generating economic, social and regenerating nature. Circular Bioeconomy Circular economy 3 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 As stated above, the overall objective of the assessment is to understand the critical challenges for a favorable investment climate, compare the progress towards achieving a CBE and documenting best practices that could be replicated in other countries. Although the report presents extensive facts and figures, its essence is in providing a comprehensive view of the RRR ecosystem and its commercial viability. To better understand the commercial aspects and viability of the CBE framework, this report seeks to analyze the prevailing legal, financial and operational landscapes across the countries studied. The analysis uses secondary information collected from research articles published in academic journals, data on international indices (such as the World Bank’s Ease of Doing Business, the Global Competitive Index, Worldwide Governance Indicators, the Chandler Good Government Index and so forth), reports from international agencies, think tanks and corporations as well as grey literature. Philippines Sri Lanka India Egypt Kenya Rwanda Ghana Peru Colombia South America North Africa West Africa East Africa South Asia Southeast Asia Burkina Faso Ethiopia Nepal Bangladesh Vietnam Cambodia FIGURE 1. Developing countries selected for assessing the investment climate to promote the CBE. Source: Author. Based on the CBE and resource recovery and reuse concepts, this report focuses on a qualitative assessment across different countries to assess their efforts to promote resource recovery (from organic solid and liquid waste) for reuse in nutrient and/or energy sectors, based on different criteria such as regulatory and infrastructure frameworks as well as access to finance, business support services and markets. The objective of this regional report is to document and assess the investment climate for promoting the CBE in 15 selected countries globally (Figure 1). These countries are in East Africa (Ethiopia, Kenya, Rwanda); North Africa (Egypt); South America (Colombia, Peru); South Asia (Bangladesh, India, Nepal and Sri Lanka); Southeast Asia (Cambodia, the Philippines and Vietnam); and West Africa (Burkina Faso and Ghana). The report aims to provide a holistic assessment of commercial prospects and the preparedness of countries for adopting approaches for circular economy practices with a focus on food and organic waste, agro-industrial waste, wastewater, septage and reutilization of septic or sewage sludge. 4 INTRODUCTION FARM SHOP Regulatory framework: This indicator reviews the institutional arrangements and organizations related to the CBE sector. It covers regulations related to solid and liquid waste management as well as environmental mandates that govern businesses engaged in resource recovery and reuse of different waste streams such as wastewater, agro-waste and municipal solid waste. Business climate and associated procedures: This indicator assesses competitiveness of the economy and ease of doing business, which are important for entrepreneurs when setting up and operating businesses within an economy. Governance climate: This indicator focuses on the nature of governance, for example provision of infrastructure, incentives for promoting businesses and reviews from secondary data entrepreneurial perspectives on corruption and dissatisfaction about governance. Access to finance: This indicator addresses the financial aspects of CBE businesses such as sources of capital, the financial strengths of each country, lending rates and inclusiveness in finances. Entrepreneur ecosystems: This indicator collects and analyzes information on existing and potential markets, and business networks for promoting such transition. However, it should be noted that the CBE is a dynamic and developing concepts and the countries selected have significant developmental challenges. As such, the sources cited are not exhaustive, but merely illustrative of the broad methodical approach adopted by the research team to collate the relevant information for analysis and conclusions. The study uses the following five indicators to assess the investment climate: 5 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 6 REGULATORY FRAMEWORK 2 REGULATORY FRAMEWORK To analyze the investment climate of the CBE, the study reviewed environmental regulations, solid and liquid waste management ordinances, relevant policies and strategies on circular economy and fiscal policies. Proper regulations and policies with execution by the relevant public organizations are essential for business functions. Hence, the study analyzes the enforcement and stringency conditions to measure the performance of the regulations across selected countries which would provide an idea of whether the formulation of future policies and strategies related to circular bioeconomy is easily implementable. 2.1. Public Organizations and Laws, Policies and Guidelines Each country is gradually introducing changes in governing structures with respect to government agencies and public organizations related to RRR. The studied countries have multiple ministries/departments and government-owned organizations which work in support of the RRR sector and the CBE generally, with no specific segregation of fields, for instance the ministries related to environment and/or climate change has overlapping functionalities. Table 1 gives an overview of such organizations in the studied countries and Annex 1 provides details of the existing regulations related to the CBE in the respective countries. TABLE 1. Public organizations (POs) that support RRR in the studied countries. Region Countries POs related to nutrient recovery POs related to water POs related to energy Environment (cross- cutting) Total organizations related to RRR East Africa Ethiopia 0 6 0 1 7 Kenya 0 0 1 6 7 Rwanda 0 0 0 8 8 North Africa Egypt 0 3 0 3 6 West Africa Burkina Faso 0 0 0 3 3 Ghana 0 2 1 7 10 South America Colombia 0 2 0 6 8 Peru 0 3 0 2 5 South Asia Bangladesh 1 1 1 6 9 India 0 1 2 9 12 Nepal 0 0 4 4 8 Sri Lanka 1 1 0 6 8 Southeast Asia Cambodia 0 0 0 7 7 Philippines 0 3 2 7 12 Vietnam 0 1 0 3 4 Source: Authors’ survey 7 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 Each country has defined laws and regulations governing the activities of the sector especially waste management laws, and environmental standards. In most countries, solid waste management is a local responsibility, by default or through decentralization policies. The private sector is typically engaged through management or concession contracts for collection, treatment and disposal of solid waste. Broadly, the environment ministry governs the policy directives and implementation of RRR enterprises in all the countries studied. Almost all the countries across the regions have established institutions with responsibilities for policy development and regulatory oversight in the waste sector as well as environment management. Table 2 shows key legal instruments including acts, policies, guidelines, regulations, laws and codes functioning in the countries across different components of the sector (details are provided in Annex 1). TABLE 2. Key legal instruments functioning across the RRR sector in the studied countries. East Africa North Africa West Africa South America South Asia Southeast Asia Area Et hi op ia Ke ny a Rw an da Eg yp t Bu rk in a Fa so G ha na Co lo m bi a Pe ru Ba ng la de sh In di a N ep al Sr i L an ka Ca m bo di a Ph ili pp in es Vi et na m Environmental protection and environmental standards ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Circular (bio)economy ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Solid waste management (incl. waste segregation) ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Wastewater management ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Sanitation and fecal sludge management ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Renewable energy covering biogas and biomass ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Soil management ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Recovery and reuse ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Sewerage and sewage treatment (including manuals/guidelines) ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Waste-to-energy ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Compost standards and further RRR relevant standards/guidelines ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Incentives for organic fertilizer ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Source: Authors’ survey. 8 REGULATORY FRAMEWORK While considering maturity assessment of the federal and national regulations towards circular economy, a study by Weick and Ray (2022) indicated that countries in Latin America, East and West Africa and Southeast Asia are in the progressive stage of transition. Figure 2 shows that Peru, Colombia, Cambodia and Vietnam have made regulatory frameworks concerning the resource recovery sector including policies and strategic action plans. Similarly, Kenya, Rwanda, Ethiopia, Burkina Faso and Egypt have developed resource recovery specific frameworks. The other countries, although having progressed with environmental and waste management policies, have yet to progress further towards circularity. FIGURE 2. Maturity assessment of circular economy legislation rated on a scale of 1 to 4. Source: Weick and Ray 2022. BasicLevel Value Description Initiated Progressive Mature 1 2 3 4 Waste management and recycling Fiscal policy, EPR, product policy Roadmap National circular economy policy No data available Note: Maturity levels are not cumulative. EPR - Extended Producer Responsibility. 9 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 However, not all ministries and public agencies in these countries are efficient and many fail to enforce regulations. WEF (2013) and Koziuk et al. (2019) analyzed stringency and enforcement of environmental regulations. In these studies, each country was given a score according to a scale of 1 to 7, where 1 corresponded to the lowest possible score and 7 corresponded to the highest possible score. The parameters included the stringency of environmental pollution standards, sophistication of regulatory structure, quality of the environmental information available, the extent of subsidization of natural resources, the strictness of enforcement and the quality of environmental institutions. In the present study, the country scores are compared to the regional scores. As shown in Figure 3, Rwanda, Kenya, India, Sri Lanka, Peru and Colombia have better performance in terms of stringency and enforcement within their respective regions. The study shows that low scores on enforcement can be attributed to poor coordination among departments/agencies, lack of access to information and restrained civic engagement. FIGURE 3. Stringency and enforcement of environmental regulations across selected countries. Source: WEF 2013 and Koziuk et al. 2019. 0 1 2 3 4 5 6 7 3.88 Ba ng la de sh In di a South Asia Sr i L an ka N ep al 3.57 Ke ny a Rw an da Et hi op ia East Africa 3.91 Eg yp t North Africa 4.24 Ca m bo di a Ph ili pp in es Vi et na m Southeast Asia 3.64 Co lo m bi a Pe ru South America 2007-2017 2011-2012 Regional Mean Sc or es Bu rk in a Fa so G ha na West Africa 3.57 10 REGULATORY FRAMEWORK 2.2. Conclusion There are four areas which are either covered under holistic laws/policies/guidelines or have had specific regulations passed: (1) solid waste management (including waste segregation), (2) wastewater management, (3) sanitation and fecal sludge management, and (4) renewable energy, covering biogas and biomass. Along with waste management policies and regulations, environmental standards and policies are reviewed. In most countries, public organizations/agencies do cover these domains under administrative norms highlighting their awareness. However, apart from Peru, Cambodia, Vietnam, Egypt, Rwanda, Kenya and Burkina Faso, the circularity agenda has not progressed significantly. The enforcement of environmental regulations in Colombia, Peru, India, Sri Lanka, Rwanda, Ethiopia and Kenya is above average. This analysis has implications for the transition towards the CBE. It is evident that Peru, Colombia, Kenya and Rwanda have made substantial progress towards promoting a CBE for entrepreneurs in terms of implementing new regulations. All other developing countries without the circularity component, need to formulate policies and strategies directed towards tapping resources from waste streams. This can be achieved through partnerships and coordination among public agencies, academia and business networks for policy formulation. For example, Vietnam formed the Circular Economy Hub with support from the United Nations Development Programme (UNDP) and Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE), to promote a circular framework. Secondly, countries with federal structures where both centers and the state can conduct regulation and monitoring need more coordination within public organizations/agencies. Thirdly, some countries lack policy enforcement capacity. This is evident in Egypt, Cambodia, and the Philippines, where the potential for law enforcement in waste and environmental management is low, leading to lower resource recovery. The process of mixing dried fecal matter to eventually produce fertilizer pellets, Bangladesh. Photography by Neil Palmer / IWMI 11 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 BUSINESS CLIMATE AND ASSOCIATED PROCEDURES 3 12 BUSINESS CLIMATE AND ASSOCIATED PROCEDURES The overall performance and the prevailing business climate vary considerably across countries and regions, leading to differentiating scores and consequently, difference in rankings among the countries. To understand the focused RRR business climate, there is a need to understand the overall business climate and the procedures associated with it that are applicable to all the RRR business initiatives. The World Bank’s Ease of Doing Business (EoDB) scores and ranks countries and regions individually upon a holistically determined criterion. 3.1. Regional Scores under the Ease of Doing Business (EoDB) Index The EoDB scores economies between 0–100 (worst to best) based upon their performance in the 10 topics consisting of 41 indicators. These topics include: Calculating the EoDB score for each economy involves two main steps: In the first step, the scores of each 41 component indicators are normalized to a common unit (except for total tax and contribution rate). The scores are rescaled using a linear transformation (worst - indicator score for the economy)/(worst - best). The best/worst score represents the economies obtaining highest/lowest scores on the specific indicator. Both the best and worst performance are established every 5 years based on the available data and remain in that level for the 5 years regardless of any changes in the interim years. In the second step, the scores obtained for individual indicators for each economy are aggregated through simple averaging into one score, first for one topic and then across all 10 topics. (i) starting a business (ii) dealing with construction permits (iii) getting electricity (iv) registering property (v) getting credit (vi) protecting minority investors (vii) paying taxes (viii) trading across borders (ix) enforcing contracts (x) resolving insolvency The index divides the economies into seven regions namely: 1. East Asia and Pacific (25 economies) 2. Europe and Central Asia (23 economies) 3. Latin America and Caribbean (32 economies) 4. Middle East and North Africa (MENA, 20 economies) 5. Organisation for Economic Co-operation and Development (OECD) high-income (34 economies) 6. South Asia (8 economies) 7. Sub-Saharan Africa (48 economies) 13 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 3.2. General Business Climate In terms of scoring, regionally, OECD high income remains the most performant region with a score of 78.4, followed by Europe and Central Asia (73.1). Among the selected countries, in terms of regional distribution, East Asia and Pacific with a score of 63.3 remains the best performer, followed by Middle East and North Africa (60.2), Latin America and Caribbean (59.1), South Asia (58.2) and Sub-Saharan Africa (51.8) as shown in Figure 4a. Notably, even among regions that have overall low scores, such as South Asia and Sub-Saharan Africa, certain countries within the regions have experienced performance improvements in their individual scores between 2016 and 2020 (Figure 4b), namely India (54.7–71), Vietnam (62.1–69.8), Rwanda (68.1–76.5) and Kenya (58.2–73.2). A few other countries such as Cambodia and Peru have shown a decrease in their scores, while the remainder have shown a negligible improvement in the scores over the past 5 years (World Bank 2016, 2017, 2018, 2019a, 2020a). 0 2010 40 60 8030 50 70 EoDB scores 2016 EoDB scores 2017 EoDB scores 2018 EoDB scores 2019 EoDB scores 2020 South America South Asia East Africa West Africa North Africa Europe and Central Asia Middle East and North Africa Organisation for Economic Co-operation and Development (OECD) high-income Sub-Saharan Africa East Asia and Pacific 78.4 73.1 63.3 60.2 51.8 Latin America & Carribean 59.1 South Asia 58.2 Peru Colombia India Sri Lanka Nepal Bangladesh Burkina Faso Ghana Egypt Cambodia Philippines Vietnam Ethiopia Kenya Rwanda Southeast Asia FIGURE 4a. EoDB scores (2020). Source: World Bank 2020a 14 BUSINESS CLIMATE AND ASSOCIATED PROCEDURES 0 2010 40 60 8030 50 70 EoDB scores 2016 EoDB scores 2017 EoDB scores 2018 EoDB scores 2019 EoDB scores 2020 South America South Asia East Africa West Africa North Africa Europe and Central Asia Middle East and North Africa Organisation for Economic Co-operation and Development (OECD) high-income Sub-Saharan Africa East Asia and Pacific 78.4 73.1 63.3 60.2 51.8 Latin America & Carribean 59.1 South Asia 58.2 Peru Colombia India Sri Lanka Nepal Bangladesh Burkina Faso Ghana Egypt Cambodia Philippines Vietnam Ethiopia Kenya Rwanda Southeast Asia FIGURE 4b. Comparison of EoDB scores between 2016 and 2020 for the selected countries. Source: World Bank 2016, 2017, 2018, 2019a and 2020a 15 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 Table 3 presents a broad overview of the overall rankings and the regional rankings of the selected countries as well as their individual scores in the indicators of starting a business, construction permits, getting electricity, registering property and paying taxes. A brief definition of each of the indicators by the World Bank is given in Annex 2. TABLE 3. Comparative ranks and scores of selected countries across EoDB parameters. Regions as per the World Bank EODB data Regions as per the classifications in the report Country Ranks within the region Starting a business Construction permits Getting electricity Registering property Paying taxes Sub-Saharan Africa Mauritius 1 94.5 85.8 88 82.5 94 East Africa Ethiopia 29 71.7 59.7 60.1 50.9 63.3 Kenya 3 82.7 67.6 80.1 53.8 72.8 Rwanda 2 93.2 70.6 82.3 93.7 84.6 West Africa Burkina Faso 25 88.2 68.7 29.4 51.4 55.9 Ghana 13 85 67.6 77.4 59.4 56 Middle East and North Africa UAE 1 94.8 89.8 100 90.1 85.3 North Africa Egypt 12 87.8 71.2 77.9 55 55.1 Latin America and the Caribbean Mexico 1 86.1 68.8 71.1 60.2 65.8 South America Colombia 6 87 69.1 76.3 71.2 58.6 Peru 3 82.1 72.5 74.5 72.1 65.8 South Asia South Asia India 1 81.6 78.7 89.4 47.6 67.6 Bangladesh 7 82.4 61.1 34.9 29 56.1 Nepal 3 81.7 67.3 60.9 63.6 47.1 Sri Lanka 4 88.2 72.3 74.5 51.9 59.8 East Asia and Pacific Singapore 1 98.2 87.9 91.8 83.1 91.6 Southeast Asia Cambodia 18 52.4 44.6 57.5 55.2 61.3 Philippines 11 71.3 70 87.4 57.6 72.6 Vietnam 8 85.1 79.3 88.2 71.1 69 Source: World Bank 2020a, 2020b In Table 3, countries are compared with respect to the regional best-performing countries. The data show that India is leading the South Asian region, followed by Nepal and Sri Lanka. In Latin America, Mexico is followed by Peru and Colombia. In Sub-Saharan Africa, Rwanda and Kenya obtained higher ranks comparing to Mauritius. Apart from these countries, others are comparatively lower ranked. Similarly, within the MENA region, Egypt is far behind the leader (United Arab Emirates). Cambodia and the Philippines in East Asia, although trailing behind Singapore and Vietnam, are gradually progressing, as shown in temporal data previously. 16 BUSINESS CLIMATE AND ASSOCIATED PROCEDURES Cabbage crop under sprinkler irrigation from groundwater, White River, South Africa. Photography by E.L.S.K.E Photography / IWMI 17 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 Under the EoDB, time taken to start a business and cost incurred while starting business procedures provide key insights into how efficient and effective the institutional mechanisms are and how they perform under the broader business climate. Figure 5 provides an overview of selected countries and their performance in terms of the number of days taken to start a business while Figure 6 provides information about how the costs are incurred by an individual while registering and starting a commercial entity within the country. Across the selected countries, Rwanda by far remains the best in terms of time (number of days) taken while starting a business. On average, it takes 4 days to open a business in Rwanda, with zero procedural costs for a micro, small to medium enterprise Cambodia Ethiopia Burkina Faso Philippines Kenya Egypt Nepal WORLD Colombia Ghana Peru Bangladesh Sri Lanka India Vietnam Rwanda 0 5.6 7.2 8.7 8.7 9.4 12.3 14.1 19.8 20.2 20.3 22.4 23.3 42.8 45.4 53.4 % 0 10 Sri Lanka Across the selected countries, Rwanda (East Africa) by far remains the best in terms of time and cost for starting a business. World average 20 days World average 19.8% Rwanda Time taken to start a business (in days) Cost to start a business (% of the GNI per capita) in % Burkina Faso Colombia 4 8 10 13 Egypt 13 India 18 Bangladesh 20 World 20 Kenya 23 Nepal 23 Peru 26 Ethiopia 32 Philippines 33 Cambodia 99 Ghana 13 20 30 40 50 60 70 80 90 100 Ra nk Days Rank 1 2 3 1 2 3 Cambodia (Southeast Asia) remains the most significant laggard, and the most expensive country FIGURE 5. Time taken to start a business (in days) across selected countries in different regions. Source: World Bank 2019b. 18 BUSINESS CLIMATE AND ASSOCIATED PROCEDURES (MSME). Cambodia remains the most significant laggard, requiring over 3 months for the procedures to complete from start to finish, taking over four times more time than the world average of 20 days. Rwanda again remains the best placed. For MSMEs, the cost of starting a business remains zero, as a 2-year exemption is provided to them for paying the registration tax. Following Rwanda, Vietnam takes the lead, requiring just 5.6% of the Gross National Income (GNI) per capita income. Cambodia remains by far the most expensive country, requiring over half of the per capita income (53.4%) followed by Ethiopia (45.4%). Cambodia Ethiopia Burkina Faso Philippines Kenya Egypt Nepal WORLD Colombia Ghana Peru Bangladesh Sri Lanka India Vietnam Rwanda 0 5.6 7.2 8.7 8.7 9.4 12.3 14.1 19.8 20.2 20.3 22.4 23.3 42.8 45.4 53.4 % 0 10 Sri Lanka Across the selected countries, Rwanda (East Africa) by far remains the best in terms of time and cost for starting a business. World average 20 days World average 19.8% Rwanda Time taken to start a business (in days) Cost to start a business (% of the GNI per capita) in % Burkina Faso Colombia 4 8 10 13 Egypt 13 India 18 Bangladesh 20 World 20 Kenya 23 Nepal 23 Peru 26 Ethiopia 32 Philippines 33 Cambodia 99 Ghana 13 20 30 40 50 60 70 80 90 100 Ra nk Days Rank 1 2 3 1 2 3 Cambodia (Southeast Asia) remains the most significant laggard, and the most expensive country FIGURE 6. The cost of starting a business (% of GNI per capita). Source: World Bank 2019c 19 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 3.3. Performance Based on the Global Competitiveness Index Competitiveness remains crucial for countries as well as regions, as a highly productive country can mobilize larger intellectual and financial capital, drive innovation and consolidate greater, transferrable gains. Across regions, Singapore remains the premier country, in both its respective region, i.e. East Asia, as well as the world. Notably, within the selected countries, Colombia, ranked at 57, remains the most competitive, followed by the Philippines (64), Peru (65), Vietnam (67) and India (68). From selected African countries, the best performant country is Egypt (93) followed by Kenya (95) and Rwanda (100) (Figure 7). Country-wise performance across different parameters used in the GCI is given in Table 4. FIGURE 7. Rankings of selected countries under the Global Competitiveness Index (GCI) 2019 (lower is better). Source: GCI 2019. Philippines Vietnam India Sri Lanka Egypt Kenya Rwanda Bangladesh Cambodia Nepal Ghana Ethiopia Burkina Faso Colombia Peru 64 65 67 68 84 93 95 100 105 106 108 111 126 130 57 Within the selected countries, Colombia (South America ) remains the most competitive Rank - 57 20 BUSINESS CLIMATE AND ASSOCIATED PROCEDURES TABLE 4. Country-wise performance at a glance adopted from the GCI 2019 Index. Enabling environment Human capital Markets Innovation ecosystem Region Country Overall rank (out of 141) In st it ut io ns In fr as tr uc tu re IC T A do pt io n M ac ro ec on om ic st ab ili ty H ea lt h S ki lls Pr od uc t m ar ke t La bo r m ar ke t Fi na nc ia l se rv ic es M ar ke t si ze Bu si ne ss dy na m is m In no va ti on ca pa bi lit y East Africa Ethiopia 126 126 123 137 127 108 137 135 124 107 63 131 118 Kenya 95 68 110 116 100 116 97 88 79 78 72 51 78 Rwanda 100 36 111 111 96 107 128 66 45 90 129 46 100 North Africa Egypt 93 82 52 106 135 104 99 100 126 92 23 95 61 West Africa Ghana 111 69 118 90 132 119 102 85 93 116 65 102 89 Burkina Faso 130 95 134 129 64 133 138 103 113 127 114 122 133 South America Colombia 57 92 81 87 43 16 80 90 73 54 37 49 77 Peru 65 94 88 98 1 19 81 56 77 67 49 97 90 South Asia Bangladesh 105 109 114 108 95 93 117 119 121 106 36 121 105 India 68 59 70 120 43 110 107 101 103 40 3 69 35 Nepal 108 103 112 109 90 100 109 132 128 51 85 98 112 Sri Lanka 84 79 61 107 118 43 66 131 118 87 58 70 84 Southeast Asia Cambodia 106 123 106 71 75 105 120 113 65 88 84 127 102 Philippines 64 87 96 88 55 102 67 52 39 43 31 44 72 Vietnam 67 89 77 41 64 71 93 79 83 60 26 89 76 Source: GCI 2019. 3.4. Conclusion EoDB data show that over time, countries like Vietnam, India, Egypt, Ghana and Rwanda have improved their rankings indicating the gradual evolution of an enabling environment for entrepreneurs. In 2020, the rankings for Peru, Colombia, India, Kenya and Rwanda, projected a higher comparative advantage for the investors in comparison to the other countries. For example, in Rwanda, the cost and time taken to initiate a business is 4 days with zero procedural fees and a 2-year exemption for paying the registration tax. In contrast, an entrepreneur takes over 3 months and it costs about USD 2,500 to initiate a business. A regional analysis shows that in Latin America and South Asia the cost and time to start a business is comparatively attractive. To complement the EoDB, the GCI was used, as it uses indicators that extend beyond the enabling environment, such as human capital, markets and innovation ecosystems. This index is more comprehensive as it considers both microeconomic and macroeconomic foundations of the economy to provide a guide on the productivity of the economy. This index indicates that countries like Peru, Colombia, India, Vietnam and the Philippines are comparatively more attractive destinations for entrepreneurs. In contrast, African countries like Rwanda, Egypt and Kenya, although better in terms of EoDB (World Bank 2020a), score lower in overall competitiveness. 21 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 22 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION 4 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION The effectiveness, accessibility and nature of the governance climate are contingent upon which sectors are responsible and/or contribute to the greater share of the economy. Therefore, policies and decisions taken for major sectors shape the larger regulatory and governance environment, introducing both opportunities as well as limitations. The countries studied in this report are still developing, and while the significance of technological status, taxation policies and level of satisfaction vary among them, all of these factors contribute extensively to their economies, indicating both extensive opportunities for enterprises related to RRR as well as challenges owing to the limited availability of skilled labor, technological skills and other critical operational resources. 4.1. Infrastructure Conditions across Regions Infrastructure, such as transportation, communications, sewerage and electricity, is regarded as a vital for economic progress in low-income countries. Efficient and dependable infrastructure services are critical for economic growth and have a significant impact on the investment climate of developing countries (Raihan 2011). The Global Infrastructure Outlook forecasts infrastructure investment needs and gaps and compares forecasts globally across 56 countries for the year 2040. According to The Global Infrastructure Hub, Cambodia needs to invest USD 28 billion in infrastructure between 2016 and 2040 to sustain its growth. Colombia’s rise in the rankings reflects recent advances in infrastructure, stability and institutional development. However, Colombia’s infrastructure remains underdeveloped in comparison to regional peers such as Peru, which leads the South American region (U.S. Department of Commerce 2024). Egypt’s infrastructure is underdeveloped and has a higher investment gap when compared to other African countries. Kenya has extensive, but uneven, infrastructure that is still superior to that of its neighbors (U.S. Department of Commerce 2019). Today, the world invests approximately USD 2.5 trillion per year in transportation, power, water and telecommunications systems that businesses and populations rely on. However, this amount continues to fall short of the world’s ever-increasing needs, resulting in lower economic growth and lack of essential services for countries. The data in Figure 8 show significant infrastructure asset gaps in the developing countries of the South Asian and African regions. The countries in the African region have a USD 1.7 trillion infrastructure investment shortfall. South America, on the other hand, has a greater investment imbalance of USD 6.5 trillion. South Asian countries have the highest infrastructure deficit of USD 15 trillion. Photography by Neil Palmer / IWMI 23 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 FIGURE 8. Projections for total infrastructure investment across regions for the year 2040. Source: Global Infrastructure Outlook 2022. Note: Data for Burkina Faso, Nepal and Sri Lanka were not available. The Global Infrastructure Outlook forecasts investment needs and trends across infrastructural sectors including energy, water, telecommunications and transport services (Figure 9). All the amounts for investment are in US dollars (per capita). Peru would require huge investment in roads with respect to its population and, in comparison, with other countries. For all the 15 countries analyzed in this report, the energy sector would require maximum investment as it is the most critical infrastructure sector for developing countries. Et hi op ia Ke ny a Rw an da Co lo m bi a Pe ru South America Ba ng la de sh In di a South Asia Ca m bo di a Ph ili pp in es Vi et na m Southeast Asia East Africa G ha na West Africa Eg yp t North Africa 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2,532 2,826.1 3,528.9 3,914.9 5,167.5 3,888.2 3,421.9 2,393.4 4,677.44,348.5 2,349.3 9,917.5 3,691.8 3,260.9 381.2 5,203.7 4,544.6 6,215.4 5,227.7 4,147.2 3,165.5 6,662.46,596 3,765.3 12,101.2 1,674.7 1,047.9 1,339.6 629.7 1,165.8 725.3 772.1 1,416 2,247.5 1,965.3 2,153.4 Investment current trend per capita (USD) Investment needed per capita (USD) Investment gap per capita (USD) Pe r c ap ita in ve st m en t ( US D) 24 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION FIGURE 9. Sectoral investment trends across countries for 2022. Source: Global Infrastructure Outlook 2022. Note: Data for Burkina Faso, Nepal and Sri Lanka were not available. Road Investment (USD) Per Capita Telecommunications Investment (USD) Per Capita Water Investment (USD) Per Capita Energy Investment (USD) Per Capita Peru Colombia Egypt Ghana Rwanda Kenya Ethiopia Vietnam Philippines Cambodia India Bangladesh Sectoral investment trends across countries 0 50 39.4 21.6 11.7 11.7 10.7 5.2 10.1 11.3 17.5 12.8 9.5 6.4 9.1 12.3 12.1 13.0 15.4 66.8 33.2 17.5 29.1 31.6 42.6 27.7 32.9 33.1 25.6 37.9 54.3 29.1 31.0 35.1 58.4 33.9 88.4 26.1 50.5 44.6 24.2 29.4 24.323.5 83.1 29.5 41.3 160.7 42.5 54.6 100 150 200 250 300 S o u th A si a S o u th ea st A si a E as t A fr ic a W es t A fr ic a N o rt h A fr ic a S o u th A m er ic a 25 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 Most of the countries in South Asia and Southeast Asia have experienced considerable investment over the last few years, with India having a current investment trend of USD 75 billion followed by Vietnam and the Philippines. There have been some notable examples of developing economies mobilizing funds for clean energy projects, such as India’s achievement in financing the rapid development of solar photovoltaic panels in pursuit of its 450 gigawatt (GW) renewable energy objective by 2030. The COVID-19 pandemic also broke the pattern of steady progress toward universal access to electricity and clean cooking in some of the low-income countries in Africa and South Asia. Access to electricity is a major challenge across African countries and the number of people without access to electricity is expected to rise in the coming years (IEA 2016). Most of the countries across South Asia and Africa, both emerging and developed, have paid insufficient attention to maintaining and expanding their infrastructure assets, resulting in economic inadequacies and the deterioration of critical systems. Traffic jams, congested ports, power outages, degenerating dams and contaminated water supplies in South Asia and Africa are clear indications that national infrastructure needs cannot be delayed indefinitely. Provision of road infrastructure and telecommunication services are further investment priorities for countries across Africa and South Asia. Sukhdev Vishwakarma and his daughter Meenu, both farm workers, use water pumped from a solar water pump at the farms of Gurinder Singh in Jagadhri, India. Photography by Prashanth Vishwanathan / IWMI 26 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION 4.1.1. Access to electricity Access to electricity is paramount for establishing any business in any country and improved access to electricity results in consistent national growth. Access by the larger population is directly proportional to the availability of electricity across regions of a country, creating a supportive environment to establish a business. Although obtaining a grid connection is different for domestic and business purposes, in this section we focus on access to electricity in the studied countries over time, which has been conducive for sustaining a business (Figure 10). FIGURE 10. Increase in access to electricity (% of the population) in the countries studied. Source: World Bank 2023a. G ha na Bu rk in a Fa so Eg yp t Ba ng la de sh In di a Sr i L an ka N ep al Ca m bo di a Ph ili pp in es Vi et na m Co lo m bi a Pe ru Ke ny a Rw an da Et hi op ia South America South Asia Southeast Asia East Africa West Africa North Africa 60 50 40 30 20 10 21.3 19.6 21.5 33.8 7.7 3.7 0.2 11 11.7 5.6 9.1 7.4 13.9 22.1 3.6 29.8 22.4 23.8 13.1 11.8 9.9 2.9 3 0.7 1.8 5.4 5.8 2.4 1.4 -0.1 Access to electricity (% of population) 2015-20Access to electricity (% of population) 2010-15 G ha na Bu rk in a Fa so Eg yp t Ba ng la de sh In di a Sr i L an ka N ep al Ca m bo di a Ph ili pp in es Vi et na m Co lo m bi a Pe ru Ke ny a Rw an da Et hi op ia South America South Asia Southeast Asia East Africa West Africa North Africa 60 50 40 30 20 10 21.3 19.6 21.5 33.8 7.7 3.7 0.2 11 11.7 5.6 9.1 7.4 13.9 22.1 3.6 29.8 22.4 23.8 13.1 11.8 9.9 2.9 3 0.7 1.8 5.4 5.8 2.4 1.4 -0.1 Access to electricity (% of population) 2015-20Access to electricity (% of population) 2010-15 27 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 4.1.2. Access to water Based on the investment trends, access to water has minimum attention across the countries studied. However, water is the most crucial element for any activity. To facilitate smooth infrastructure establishment, the availability of freshwater is significant. Figure 11 indicates annual freshwater withdrawal (reference year 2017) by industries from the 15 countries studied. This provides insight on how much these industries consume with respect to total freshwater withdrawal. In Colombia more than 27% of the freshwater is utilized by industries followed by the Philippines (17%). FIGURE 11. Annual freshwater withdrawal by industries in 2017 Source: Our World in Data 2018. G ha na Bu rk in a Fa so Eg yp t Ba ng la de sh In di a Sr i L an ka N ep al Ca m bo di a Ph ili pp in es Vi et na m Co lo m bi a Pe ru Ke ny a Rw an da Et hi op ia South America South Asia Southeast Asia East Africa West Africa North Africa 5 10 15 20 25 30 0 2.1 2.2 6.4 0.3 1.5 17.1 3.7 0.5 7.5 11.1 6.5 1.3 7 27.4 In Colombia more than 27% of the freshwater is utilized by the industries Pe rc en ta ge 28 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION 4.2. Logistical Status across Countries Logistics play a vital role in establishing sound infrastructure systems that enable enterprises to flourish in an economy. Based on the World Bank’s Logistics Performance Index (LPI), for the last 10 years, only a few countries have witnessed continuous rise. The capacity of developing countries to efficiently move goods and connect manufacturers and consumers with international markets is improving, albeit slowly, as captured in Table 5. Countries such as India, Colombia and Vietnam show a steady development in logistics as the data suggest. 4.3. SDG Expenditure on RRR-Related Goals with Respect to Total SDG Expenditure The emergence of the Sustainable Development Goals (SDGs) has led to governments around the world integrating them into federal planning frameworks and ensuring that programmatic interventions and policy- making remain in appropriate consonance with the broader United Nations goals. However, the alignment is not consistent and varies considerably across countries. Furthermore, while SDGs are to be effectively interpreted as development guiding markers, the expenditure and allocation for development do not necessarily follow through from the lens of SDGs, and rather often are reversely correlated and/or incidentally come within the aegis of one or many SDGs, as the state and/or private actors draw out developmental plans and work. For example, Bangladesh has been active in developing a comprehensive SDG monitoring framework, with necessary indicator-based ministerial allocations and planning TABLE 5. LPI for the countries under study (1 = low, 5 = high). Region Countries POs related to nutrient recovery POs related to water POs related to energy East Africa Ethiopia NA NA NA Kenya 2.43 2.8 NA Rwanda 2.27 3 2.8 North Africa Egypt 2.98 2.8 3.1 West Africa Burkina Faso 2.32 2.6 2.3 Ghana 2.51 2.6 2.5 South America Colombia 2.87 2.9 2.9 Peru 2.94 2.7 3 South Asia Bangladesh NA 2.6 2.6 India 3.08 3.2 3.4 Nepal 2.04 2.5 NA Sri Lanka 2.75 2.6 2.8 Southeast Asia Cambodia 2.56 2.6 2.4 Philippines 3.02 2.9 3.3 Vietnam 3 3.3 3.3 Source: World Bank 2023b. 29 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 outlays. The cost is estimated to be nearly USD 1 trillion between the implementational period of 2017 and 2030, with the government estimating an additional cost of USD 66 billion per annum, to cater and incorporate the SDGs into the existing development works (Rahman 2020). Along similar lines, various countries have allocated resources and funding either to promote an alignment with SDGs or to strengthen the existing mechanisms that have evolved in the past few years. However, challenges remain, particularly in the aftermath of the COVID-19 pandemic and the economic downturn that it generated. For example, in Rwanda, the percent of spending now necessary to achieve SDG goals, as contemplated before the pandemic started, has risen considerably, introducing fiscal stressors that now must be timely addressed (Lledo and Perrelli 2021). In a country like Burkina Faso, the capacity of the state to marshal necessary funds to adequately address developmental requirements have become challenging, requiring recalibration of the financial framework so that the country is effectively and efficiently able to attract and organize monetary resources from both public and private sources. On a broader level, the SDG financing apparatuses have experienced fluctuations owing to global tailwinds, contracting, and unevenly being distributed owing to emergent conflicts and geopolitical connotations. Nevertheless, the uptick in SDG financing has been consistent, despite slowdowns and gaps that remain prevalent (OECD 2022a). Table 6 is an illustrative overview of aid financing that was committed to various countries, under the aegis of one or more of the SDGs. Specifically, the table provides estimates for Official Development Assistance (ODA) aligned with the SDGs between 2015 and 2017. TABLE 6. Developmental finance across selected countries targeting identified SDGs (2015–2017+, in USD million). Region Countries SDG 6: Clean water and sanitation SDG 7: Affordable and clean energy SDG 9: Industry innovation and infrastructure SDG 11: Sustainable cities and communities SDG 12: Responsible consumption and production East Africa Ethiopia 14.11 0.2 8.06 7.7 5.3 Kenya 5.2 7 19.86 24.9 19.6 Rwanda 0.79 8.3 26.1 1.04 6.7 North Africa Egypt 0.05 0 2 1.3 0.9 West Africa Burkina Faso 5.42 0 0.79 7.6 5.4 Ghana 22.6 1.61 5.85 4 4.75 South America Colombia 6.2 1.39 6.4 2.4 4.7 Peru 5.3 1.7 7.7 4.2 25.8 South Asia Bangladesh 14.15 0.014 11.45 20.6 1.87 India 700 259 279 249 132 Nepal 2.6 0.6 2.57 6.4 1.5 Sri Lanka 0.2 0 0.78 2.1 0.9 Southeast Asia Cambodia 4.3 0.056 0.43 1.06 3 Philippines 5 0.87 2.2 4 0.97 Vietnam 4.1 0.88 1.37 2.33 3.6 Source: SDGFunders.org based on OECD ODA data. 30 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION 4.4. Tax Incentives and Rebates The type of incentives’ framework that a country generally follows and promotes is determined by its own developmental ambitions and availability of resources. In terms of bolstering RRR, countries choose for a broader, more holistic incentives’ framework, comprising rebates, lower commercial tax and/or extra surcharge/ levies that emphasize larger developmental aspects over concentrated specific interventions in CBE-related disciplines (Figure 12). However, as the RRR sector remains a developing mechanism, the accompanying policy and taxation apparatuses remain dynamic, open and prone to frequent recalibration. This, at times, makes the incentives unpredictable and occasionally introduces unexpected compliance burdens. For instance, the value-added tax (VAT) exemption granted by the Government of Kenya for green products was removed, before being reinstated in 2021 following considerable backlash and discontent from industry associations. Furthermore, incentives that are provided are often designed to be time-limited and/ or outcome-contingent; for example, the Government of Kenya’s biogas digester subsidy was introduced in 2009 and subsequently withdrawn in 2013, having promoted over 11,000 installations. Finally, the success and coverage of any incentive framework is dependent upon the underlying efficiency and coordination among various administrative organs of the state – if they are lacking and/or without sufficient harmony, challenges become inevitable. Measuring the fecal sludge (human waste) at Dikowita Bio Gas Unit, Western Province, Sri Lanka. Photography by Hamish John Appleby / IWMI 31 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 Ethiopia Income tax exemption of up to 6 years for manufacturing and agro-processing, and up to 9 years for agricultural investment. There are no sustainability incentives or environmental taxes in effect currently and the carbon tax under consideration relates to the transport sector in Addis Ababa only.3 Source: Ethiopian Embassy 2018 Egypt Feed tariff for renewable energy to increase private investment in renewable energy. Peru 20% income tax reduction for generating electricity from renewable energy resources. Accelerated subsidization is applicable to machinery, equipment and building infrastructure required for the installation and operation of electricity plants generating power through renewable resources. Source: KPMG International 2014 Colombia Treatment and recycling of waste and wastewater are exempted from VAT. Up to 50% reduction of the income tax, based on the total value of investment acts as an incentive for energy recovery from solid waste. VAT and tariff exemptions and accelerated depreciation of assets (e.g. national or imported equipment, tools, machinery and services) for the production and use of energy from solid waste. Source: Alzate-Arias et al. 2018 The government subsidizes the installation of biogas digesters for households. Source: Pilloni and Hamed 2021 No Information on specific RRR-related incentives/ rebates. Kenya Ea st A fr ic a Southeast A sia South A sia So ut h A m er ic a GhanaBurkina Faso W es t A fr ic a N or th A fr ic a Rwanda Within agriculture, all inputs can be imported duty-free, 50% government subsidy for biogas technologies. Source: MININFRA 2015 RRR-related incentives provided by selected countries Cambodia Tax breaks for Qualified Investment Projects (QIPs). Exemption from certain import and export duties for QIPs. Provision of incentives to SMEs related to the waste recycling sector. Imports of equipment, infrastructure materials and machinery for industrial operations in special economic zones with wastewater treatment plants are exempt from import duties and other taxes. Source: AC 2024; GIZ 2020 Philippines Green and recycling industries can benefit from a 5–7-year income tax holiday. The Green Jobs Act provides for a special deduction from taxable income equal to 50%. Imports of capital equipment are also tax- and duty-free. 7-year income tax holiday and tax exemptions for carbon credits. 7-year income tax holiday for renewable energy developers and a guarantee of origin for the renewable energy market. A corporate tax rate of 10% (reduced from the regular 30%) on net taxable income shall be imposed on all renewable energy developers after 7 years of income tax holiday. Source: ADB 2020; KPMG International 2014 Vietnam 10% tax incentive for companies investing in eco-friendly and renewable energy projects for 15 years. 4-year tax exemption and 50% tax reduction for 9 consecutive years for renewable, clean energy, waste to energy projects. Exemption or reduction in business income tax for wastewater reuse technologies. Source: APEC 2020; World Bank 2014a Sri Lanka 7-year tax holiday for renewable energy projects. Source: BDO Global 2021 Nepal Equipment and materials for renewable energy – exemption from custom duty and VAT. Production of bioenergy will be eligible for a 100% corporate tax exemption for the first 10 years. 40% subsidy for small firms using renewable energy sources. A subsidy is granted to any producer who constructs a vermicomposting bin on farm. Provision of a minimum subsidy of 40% to set up fecal sludge treatment facilities. Source: Dhakal and Escalante 2022; GGGI 2021 Bangladesh Waste treatment plants are eligible for tax exemption. The period of exemption is 10 years, with Year 1 providing 90% exemption and each subsequent year till Year 10 reducing the exemption amount by 10%. 15% VAT exemption for renewable energy equipment and raw materials. Corporate income tax exemption for a period of 5 years for renewable energy project investors. Source: MPEMR 2008 India Financial assistance for setting up biogas plants. Incentives provided for wastewater treatment plant. Up to 40% subsidization in the first year and 20% in subsequent years on investments made in renewable energy projects, Financial subsidies of up to 50% of the capital costs to set up pilot demonstration plants on municipal solid waste composting. 15% rebate on property tax for housing societies for segregation and treatment of wastewater on premises and for using recycled grey water. 50% subsidy on project capital cost for effluent treatment plants. Deduction of 100% of the expenditure on wastewater treatment plants from their taxable income. Source: MMT 2023; Times of India 2019; Kaur et al. 2012; Zhu et al. 2008 South Asia Southeast Asia North Africa West Africa East Africa South America 30% reduction from the net taxable profits for agricultural waste recycling industry and new renewable energy projects. Investment law incentive of 10% of the establishment’s budget to support company’s working on waste management sector. Sales tax reduction from 10% to 5% and customs duties on equipment used for renewable energy production set at 2%. Source: IEA 2016 FIGURE 12. Overview of RRR-related incentives provided by selected countries. 2 3 2 The figure endeavors to provide a broad assessment of the prevailing landscape rather than an exhaustive one, as the circular econo- mic policies across countries remain in various stages of development. 3 https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/tax/tax-pdfs/ey-green-tax-tracker-30-june-2023.pdf (accessed on March 6, 2024). 32 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION Ethiopia Income tax exemption of up to 6 years for manufacturing and agro-processing, and up to 9 years for agricultural investment. There are no sustainability incentives or environmental taxes in effect currently and the carbon tax under consideration relates to the transport sector in Addis Ababa only.3 Source: Ethiopian Embassy 2018 Egypt Feed tariff for renewable energy to increase private investment in renewable energy. Peru 20% income tax reduction for generating electricity from renewable energy resources. Accelerated subsidization is applicable to machinery, equipment and building infrastructure required for the installation and operation of electricity plants generating power through renewable resources. Source: KPMG International 2014 Colombia Treatment and recycling of waste and wastewater are exempted from VAT. Up to 50% reduction of the income tax, based on the total value of investment acts as an incentive for energy recovery from solid waste. VAT and tariff exemptions and accelerated depreciation of assets (e.g. national or imported equipment, tools, machinery and services) for the production and use of energy from solid waste. Source: Alzate-Arias et al. 2018 The government subsidizes the installation of biogas digesters for households. Source: Pilloni and Hamed 2021 No Information on specific RRR-related incentives/ rebates. Kenya Ea st A fr ic a Southeast A sia South A sia So ut h A m er ic a GhanaBurkina Faso W es t A fr ic a N or th A fr ic a Rwanda Within agriculture, all inputs can be imported duty-free, 50% government subsidy for biogas technologies. Source: MININFRA 2015 RRR-related incentives provided by selected countries Cambodia Tax breaks for Qualified Investment Projects (QIPs). Exemption from certain import and export duties for QIPs. Provision of incentives to SMEs related to the waste recycling sector. Imports of equipment, infrastructure materials and machinery for industrial operations in special economic zones with wastewater treatment plants are exempt from import duties and other taxes. Source: AC 2024; GIZ 2020 Philippines Green and recycling industries can benefit from a 5–7-year income tax holiday. The Green Jobs Act provides for a special deduction from taxable income equal to 50%. Imports of capital equipment are also tax- and duty-free. 7-year income tax holiday and tax exemptions for carbon credits. 7-year income tax holiday for renewable energy developers and a guarantee of origin for the renewable energy market. A corporate tax rate of 10% (reduced from the regular 30%) on net taxable income shall be imposed on all renewable energy developers after 7 years of income tax holiday. Source: ADB 2020; KPMG International 2014 Vietnam 10% tax incentive for companies investing in eco-friendly and renewable energy projects for 15 years. 4-year tax exemption and 50% tax reduction for 9 consecutive years for renewable, clean energy, waste to energy projects. Exemption or reduction in business income tax for wastewater reuse technologies. Source: APEC 2020; World Bank 2014a Sri Lanka 7-year tax holiday for renewable energy projects. Source: BDO Global 2021 Nepal Equipment and materials for renewable energy – exemption from custom duty and VAT. Production of bioenergy will be eligible for a 100% corporate tax exemption for the first 10 years. 40% subsidy for small firms using renewable energy sources. A subsidy is granted to any producer who constructs a vermicomposting bin on farm. Provision of a minimum subsidy of 40% to set up fecal sludge treatment facilities. Source: Dhakal and Escalante 2022; GGGI 2021 Bangladesh Waste treatment plants are eligible for tax exemption. The period of exemption is 10 years, with Year 1 providing 90% exemption and each subsequent year till Year 10 reducing the exemption amount by 10%. 15% VAT exemption for renewable energy equipment and raw materials. Corporate income tax exemption for a period of 5 years for renewable energy project investors. Source: MPEMR 2008 India Financial assistance for setting up biogas plants. Incentives provided for wastewater treatment plant. Up to 40% subsidization in the first year and 20% in subsequent years on investments made in renewable energy projects, Financial subsidies of up to 50% of the capital costs to set up pilot demonstration plants on municipal solid waste composting. 15% rebate on property tax for housing societies for segregation and treatment of wastewater on premises and for using recycled grey water. 50% subsidy on project capital cost for effluent treatment plants. Deduction of 100% of the expenditure on wastewater treatment plants from their taxable income. Source: MMT 2023; Times of India 2019; Kaur et al. 2012; Zhu et al. 2008 South Asia Southeast Asia North Africa West Africa East Africa South America 30% reduction from the net taxable profits for agricultural waste recycling industry and new renewable energy projects. Investment law incentive of 10% of the establishment’s budget to support company’s working on waste management sector. Sales tax reduction from 10% to 5% and customs duties on equipment used for renewable energy production set at 2%. Source: IEA 2016 33 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 G ha na Bu rk in a Fa so Eg yp t Ba ng la de sh In di a Sr i L an ka N ep al Ca m bo di a Ph ili pp in es Vi et na m Co lo m bi a Pe ru Ke ny a Rw an da Et hi op ia South AmericaSouth Asia Southeast Asia East Africa West Africa North Africa 60 70 80 50 40 30 20 10 60 50 40 30 20 10 60 70 80 50 40 30 20 10 7.6 25 40 36 34 24 33 42 38 32 51 43 42 30 39 36 15 .3 26 .8 25 .9 31 .1 9. 3 7. 2 11 .8 23 .7 66 .3 54 .3 16 .5 18 .4 23 .2 26 .4 28 .3 17 .5 23 .6 23 .6 5. 3 1.9 19 .1 12 .2 3. 6 5. 9 2. 8 13 .3 18 .5 16 .4 2 17 20.2 15.6 44.7 10.2 35.4 7.6 27.9 41.6 43.5 70.4 34.8 62.1 53.6 0.2 Small Medium Cambodia (Southeast Asia) is ranked at 147 with a score of 24 so it remains the worst compared to its peers and one of the worst, globally, in the corruption ranking indices. It is estimated that over USD 3.6 trillion is lost annually owing to corruption in the form of bribes and stolen money Rwanda (East Africa) remains one of the better performing countries within its region and is perceived to have much lower levels of corruption compared to its peers with a rank of 54 (out of 180) and the highest score among its peers at 51 4.5. Prevalence of Corruption and Corrupt Practices Corruption remains a global challenge. It is estimated that over USD 3.6 trillion is lost annually owing to corruption in the form of bribes and stolen money (WEF 2018). In developing regions, difficulty of opportunities, severe inequalities and underdeveloped enforcement mechanisms generate multifarious levels of corruption and corrupt practices. However, the situation is not uniform and even within problematic regions, certain countries maintain much greater levels of curbs over corrupt practices and, consequently, have lower levels of overt corruption. Therefore, ascertaining the effective prevalence of corruption remains extremely challenging, given its different forms and the furtiveness of the act itself. Nevertheless, a tripartite approach of utilizing World Bank Enterprise Surveys (Figures 13 and 14) as well as Transparency International (Figure 15) analyses provides key insights within the selected countries. Under the World Enterprise Surveys (Figure 13), corruption was viewed as a major constraint in Burkina Faso (70.4%) followed by Colombia (62.1%). However, the inconsistency in the reporting years among countries should be noted as responses from Burkina Faso came from 2009 while responses from Bangladesh were collected in 2022. Bribery incidence (Figure 14) measures the percentage of companies that have been asked to pay a bribe in at least one of six public transactions related to utilities access, permits, licenses and taxes. If a company declines to answer a particular survey question, it is counted as a positive response for the purpose of calculation. According to the World Bank Enterprise Surveys (2023b), increased bribery incidence was seen in both small- and medium-size firms in Cambodia, India and Vietnam (Figure 14), while Egypt and Rwanda showed the lowest bribery incidence. Under Transparency International’s CPI, Rwanda remains one of the better performing countries within its region and is perceived to have much lower levels of corruption compared to its peers with a rank of 54 (out of 180) and the highest score among its peers at 51 (Figure 15). Cambodia is ranked at 147 with a score of 24 so it remains the worst compared to its peers and one of the worst, globally, in the corruption ranking indices. The World Bank’s political stability score measures the stability of a nation’s government and the political environment. This is an aggregate indicator which gives scores for countries from -2.5 to +2.5 based on the political stability and absence of politically driven violence or terrorism. The political stability score for the different countries is shown in Figure 16. Strong political stability in a country provides a conducive environment and sense of security for long-term business operations and has a positive impact on the business sector. Nepal (-0.2), Vietnam (-0.1), Cambodia (-0.1), Ghana (0.1) and Peru (-0.4) have obtained higher scores for political stability compared to their regional peers, while Rwanda (0.2) leads among all the selected countries of the different regions (Figure 16). According to the World Bank (2021a), Ethiopia (-2.1) and Burkina Faso (-1.6) have weak political stability in comparison with the selected countries of other regions which is reflected in their lowest scores. 34 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION G ha na Bu rk in a Fa so Eg yp t Ba ng la de sh In di a Sr i L an ka N ep al Ca m bo di a Ph ili pp in es Vi et na m Co lo m bi a Pe ru Ke ny a Rw an da Et hi op ia South AmericaSouth Asia Southeast Asia East Africa West Africa North Africa 60 70 80 50 40 30 20 10 60 50 40 30 20 10 60 70 80 50 40 30 20 10 7.6 25 40 36 34 24 33 42 38 32 51 43 42 30 39 36 15 .3 26 .8 25 .9 31 .1 9. 3 7. 2 11 .8 23 .7 66 .3 54 .3 16 .5 18 .4 23 .2 26 .4 28 .3 17 .5 23 .6 23 .6 5. 3 1.9 19 .1 12 .2 3. 6 5. 9 2. 8 13 .3 18 .5 16 .4 2 17 20.2 15.6 44.7 10.2 35.4 7.6 27.9 41.6 43.5 70.4 34.8 62.1 53.6 0.2 Small Medium Cambodia (Southeast Asia) is ranked at 147 with a score of 24 so it remains the worst compared to its peers and one of the worst, globally, in the corruption ranking indices. It is estimated that over USD 3.6 trillion is lost annually owing to corruption in the form of bribes and stolen money Rwanda (East Africa) remains one of the better performing countries within its region and is perceived to have much lower levels of corruption compared to its peers with a rank of 54 (out of 180) and the highest score among its peers at 51 FIGURE 14. Bribery incidences observed in the selected countries. Source: World Bank Enterprise Surveys 2023b. FIGURE 13. Percentage of firms identifying corruption as a major constraint (in %) across selected regions. Source: World Bank Enterprise Surveys 2023a. FIGURE 15. Corruption perception index score 2022. Source: Transparency International 2022. 35 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 FIGURE 16. Comparative political stability score of different countries. Source: World Bank 2021a. 4.6. Levels of Satisfaction and Associated Challenges The assessment of satisfaction in terms of public service delivery and availability of infrastructure, both physical and regulatory, across countries and regions, remains difficult, owing to unique developmental requirements, regional priorities as well as the availability of information across the regions. The Worldwide Governance Indicators (WGI) of the World Bank synthesize and present a regional and country-wise assessment of the performance of countries across the parameters of corruption, rule of law and so forth. According to World Bank (2022a), East Asia and Pacific had the best performance across the selected regions (Figure 17). An additional overview (Figure 18) can be gained through The Chandler Good Government Index (CGGI 2022), which assesses countries across seven different parameters and assigns an overall rank to establish how well governmental institutions function across countries. Apart from international-level assessments, certain governments conduct and assess perceptive performance and satisfaction levels themselves, in addition to private associations; notably, the governments of Kenya, the Philippines, Rwanda and Vietnam conduct surveys to ascertain prevailing levels of satisfaction. Rwanda conducts the most thorough evaluation with the Rwanda Governance Scorecard, an assessment which combines different perception and assessment surveys to establish governance performance on a yearly basis. However, the different methods of evaluation utilized do not make it permissible to arrive at a harmonized assessment (Box 1). G ha na Bu rk in a Fa so Eg yp t Ba ng la de sh In di a Sr i L an ka N ep al Ca m bo di a Ph ili pp in es Vi et na m Co lo m bi a Pe ru Ke ny a Rw an da Et hi op ia South AmericaSouth Asia Southeast Asia East Africa West Africa North Africa 0 0.5 -0.5 -1 -1.5 -2 -2.5 -1 -0.6 -0.2 -0.1 -0.9 -0.1 -2.1 -1.1 0.2 0.1 -1.6 -1 -0.9 -0.4-0.3 36 GOVERNANCE CLIMATE: INFRASTRUCTURE, INCENTIVES, CORRUPTION AND SATISFACTION Control of Corruption Government Effectiveness Political Stability and Absence of Violence/Terrorism Regulatory Quality Rule of Law Voice and Accountability 0 10 20 30 40 50 60 70 80 Region South Asia Middle East and North Africa Sub-Saharan Africa Latin America & Carribean East Asia and Pacific 38.82 43.02 45.35 26.65 50.09 57.45 33.31 28.21 30.45 56.95 66.31 30.88 42.17 27.22 52.58 54.03 39.84 42.07 29.08 49 59.71 36.47 23.74 32.94 58.51 55.34 39.83 32.28 49.79 58.28 Philippines Vietnam India Sri Lanka Egypt Kenya Rwanda Bangladesh Cambodia Nepal Ghana Ethiopia Burkina Faso Colombia Peru 52 52 54 55 56 61 63 73 73 81 81 82 90 92 97 200 40 60 80 100 FIGURE 17. Regional performance in WGI (percentile rank) Source: World Bank 2022a. FIGURE 18. Performance (rank) of selected countries on the CGGI 2022. Source: CGGI 2022. 37 Assessing the Investment Climate to Promote a Circular Bioeconomy: A Comparison of 15 Countries in the Global South RESOURCE RECOVERY & REUSE SERIES 24 BOX 1. Government-conducted perspective performances and satisfaction levels in selected countries Kenya The Kenya Revenue Authority (KRA) periodically conducts customer satisfaction surveys to ascertain the sentiments of different stakeholders (small, medium and large taxpayers) using its platform. For the period 2019–2020, the overall customer satisfaction was 68.4%, as compared to 71.9% in 2017 and 65% in 2013–2014 (KRA 2020). The primary drivers for dissatisfaction among the MSMEs were access to formal credit, easy access to utilities, lower crime rates and perceptions about the integrity of legal and governance institutions. Consequently, if improvements are made in one or more of these aspects, they act as motivators for companies to expand and grow (Shibia and Barako 2017). Kenya’s aggressive tax policies and convoluted filing processes have repeatedly been stated by businesses to be one of the most significant constraints in operating commercial enterprises. The Kenyan Tax System promotes ‘alternative dispute resolution’; however, the process has not reduced adversarial litigation, defeating the original intent (Kanyi 2019). Furthermore, the aggressive collection policies invariably result in ever-changing tax rules and regulations introducing compliance burdens and much higher risks of penalties. The Philippines The Development Academy of the Philippines through its Government Quality Management Program conducts a nationwide business satisfaction e-survey (e-BizSat); in the 2021 edition, businesses gave frontline government service an overall satisfaction score of 82.58 (DAP 2022). Rwanda The Government of Rwanda carries out multiple perception and satisfaction surveys across different bodies, in addition to those carried out by private actors. In 2018, the Rwanda Revenue Authority satisfaction survey found that 76% of customers were satisfied with the last interaction, with 79% being satisfied with the duration