Private Sector Development, Privatization, and Industrial Policy

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The Untapped Potential of Mauritania’s Entrepreneurial Ecosystem: Lessons from the Entrepreneur's Marathon
(World Bank, Washington, DC, 2019-08) World Bank Group
In Mauritania – a country dominated by the Sahara Desert and defined by tradition – players from across society are coming together to encourage innovation and set a new path for the country's development. From the public sector to local and international businesses, as well as the donor community, entrepreneurship is beginning to emerge as a crucial element in any strategy to address Mauritania's greatest challenges: socio-economic inclusion, poverty reduction, youth employment, economic diversification and climate change. Since independence, the country has pursued a traditional state-driven model that has failed to catalyze the necessary investments and private sector-driven solutions to these problems. Due to structural limitations of competition in the economy, the country's private sector is a concentration of large business groups that dominate the trade, banking and procurement markets. New entrants are crowded out, with formal micro, small and medium enterprises (MSMEs) in Mauritania numbering a mere 3,000. Informal self-employment and micro-businesses in agriculture, livestock and commerce currently make up the vast majority of jobs among the poorest households in Mauritania. Smaller independent firms continue to encounter obstacles, discouraging the emergence of local suppliers and directly impacting international investors who face higher operating costs. Poor quality in education and professional training reinforce these challenges, limiting job opportunities even in expanding sectors in the economy. A lack of expertise and practical skills are compounded by complex labor regulations, making it even harder for businesses to recruit and retain young job-seeking Mauritanians.
Creating Markets in Burkina Faso: Growing Burkina Faso’s Private Sector and Harnessing it to Bolster Economic Resilience
(International Finance Corporation, Washington, DC, 2019-07-01) World Bank; International Finance Corporation
A small landlocked economy in the heart of West Africa’s French-speaking Sahel, Burkina Faso is characterized by its modest economic size, with a rapid population growth, with one of the highest per capita birth rates in the world. Burkina Faso needs to create 300,000 jobs annually to match its demographic growth, while about ninety percent of its workers are in the informal sector. Despite sustained robust economic growth over the past two decades driven by cotton and gold exports, private investment is low. Compounding the considerable development challenges that it faces, Burkina Faso is currently confronted by acute security and climatic threats, together with emerging fiscal risks. This country private sector diagnostic (CPSD) therefore investigates whether opportunities exist for the private sector to contribute more substantially to Burkina Faso’s development. The CPSD proposes a platform for action aimed at boosting Burkina Faso’s development through greater private sector investment. The remainder of the report provides an overview of: (i) the private sector environment; (ii) the cross-cutting constraints to the private sector; (iii) the critical enabling sector bottlenecks to the private sector; (iv) the opportunities for the private sector; and (v) a series of priority private sector focused recommendations.
Creating Markets in Ethiopia: Sustaining Progress Towards Industrialization
(International Finance Corporation, Washington, DC, 2019-03-20) World Bank; International Finance Corporation
Ethiopia has made impressive strides along its developmental path. Job creation is now the critical development challenge, raising the importance of the private sector agenda. After more than a decade of sustained public sector-led growth, the government is revising its growth strategy to allow for a much greater role for the private sector in driving growth and job creation. Broadening the base for job creation beyond light manufacturing toward a wider range of high productivity agricultural and services activities will help to overcome the uneven spatial distribution of manufacturing jobs across the country. Ethiopia has a number of advantages that it can leverage to attract the investment needed for job creation. These include rapidly improving transport and energy infrastructure, low labor costs, a large and growing domestic market, cheap power, an ideal climate, and preferential market access to the European Union, the United States, and other major markets. The purpose of the Ethiopia country private sector diagnostic (CPSD) is to support the transition to a private sector- driven growth model that advances the country’s development objectives and, in particular, delivers the necessary jobs. It identifies investment opportunities that can materialize in the short term, and the reforms that are needed to enable these opportunities to emerge. It also discusses how specific actions by the public sector, in collaboration with the private sector, in filling gaps in public investment, reforming business regulations and trade policy, addressing market failures, and enhancing the efficiency of key backbone services and sectors, while tackling gender inequalities, can fully unleash the potential of private sector investment.
Creating Markets in Rwanda: Transforming for the Jobs of Tomorrow
(International Finance Corporation, Washington, DC, 2019-03) International Finance Corporation
Rwanda has made unsurmountable strides along its development path. Rwanda has placed among the world’s fastest-growing economies, climbing the development ladder from second-poorest in the world in 1994 to sit ahead of nineteen other countries. Today, job creation lies at the heart of Rwanda’s development challenge. The government of Rwanda (GoR) recognizes the urgency of creating new jobs. The new thirty-year Vision for the period up to 2050, which is currently being finalized, elaborates the country’s long-term development goals. The core of transformation for prosperity is developing high-value and competitive sectors, to transition the population and economy from subsistence agriculture toward industry and high-skilled services. The purpose of the Rwanda country privates sector diagnostic (CPSD) is to identify market opportunities and constraints in sectors that advance the country’s development objectives. By assessing the landscape of private sector investment in the country, the CPSD identifies specific constraints to private sector investment and productivity growth, concrete opportunities that could materialize in the short term, and the reforms that will enable this materialization. It then discusses how specific actions by the public sector in collaboration with the private sector by filling gaps in public investment, reforming regulations, and addressing market failures could unleash sectors’ private investment potential.
Scaling Up Ecosystems for Small Businesses in the Democratic Republic of Congo: Analysis Based on Data from Kinshasa, Lubumbashi, Matadi, and Goma
(World Bank, Washington, DC, 2019-01)
Micro, small, and medium-sized enterprises (MSMEs) dominate the private sector of the Democratic Republic of Congo (DRC) and can serve as an engine of growth and job opportunities for the country. To support the growth of MSMEs and increase employment and entrepreneurship opportunities, the DRC government prepared a SME Development and Growth Project with support and funding from the World Bank Group (WBG). To better understand the challenges particular segments of MSMEs face, WBG with support from the competitive industries and innovation program (CIIP) conducted a MSME ecosystem analysis in four project locations in the DRC: Kinshasa, Goma, Lubumbashi, and Matadi. The study leveraged a diverse range of data collection channels and methods to capture deep, detailed, and meaningful insights on formal and informal MSMEs in the DRC. Overall, the MSMEs report a positive revenue growth trend in the past five years. This increase is linked to growth in domestic demand and improved quality of suppliers. The key conclusions and recommendations reflect the needs of various types of MSMEs and the international experience of policy responses that are adapted on their needs: simplify and make more transparent the policy environment; address market and institutional gaps to foster private investment in the MSMEs; strengthen and expand the base of opportunity entrepreneurs; devise innovative solutions to infrastructure challenges; pilot approaches to address MSME skills gap at scale; and pursue integration into national market and value chains. Recommendations from the multi-stakeholder dialogues about the SME ecosystem will support the implementation of the SME Growth and Development Project but can also be applied more broadly and inform the design of government policies and reforms.
South Africa Digital Economy Assessment
(World Bank, Washington, DC, 2018) World Bank
An assessment of South Africa’s digital economy has been launched as part of the World Bank Group’s digital economy for Africa (DE4A) initiative, which leverages an integrated and foundations-based diagnostic framework to examine the present level of digital economy development across Africa. The assessment will map the current strengths and weaknesses that characterize the national digital economy ecosystem, as well as identify challenges and opportunities for future growth. Rapid digital transformation is now re-shaping the global economy, permeating virtually every sector and aspect of daily life - changing the way one learns, work, trade, socialize, access public and private services and information. Well-functioning digital economies are thus expected to achieve faster economic growth, offer innovative products and services, as well as create more job opportunities. Assessing where strategic investments and interventions need to be made is a critical first step to enabling digital economy growth. This background paper will provide an overview of digital entrepreneurship in South Africa.
Creating Markets in Ghana: Country Private Sector Diagnostic
(World Bank, Washington, DC, 2017-11) World Bank Group
The objective of the Ghana Country Private Sector Diagnostic (CPSD) is to identify the main opportunities for the private sector that will have a strong development impact in Ghana and to highlight the key constraints (both cross-cutting and sector-specific) hampering private sector growth. The CPSD consists of a systematic assessment of all of Ghana’s economic sectors along two dimensions: (a) desirability: how private investments in these sectors could help Ghana to address its development challenges; and (b) expected feasibility: how the constraints standing in the way could be removed. This sector scan led to identification seven priority sectors, of which, three were selected to conduct deep dive studies: namely agribusiness, ICT and education.Four main opportunities exist for the private sector to make a major contribution by creating markets in Ghana. First, the private sector can help to develop new high-value export markets, such as horticulture and ICT-enabled services, in which Ghana is already well positioned. Second, the private sector can leverage ICT to improve the performance of Ghana’s most important sectors, including for improving government activities and services. Third, the private sector can help to promote efficiency and innovation in the key social sectors of education and health. Fourth, the private sector can play an important role in helping to address the main cross-cutting constraints, such as facilitating trade, providing competitive green energy, opening rural land markets, developing technical skills, and financing promising small and medium enterprises (SMEs).There are fewer opportunities for transformative private sector investments in the other sectors (mining, tourism, retail, construction, water and sanitation, and manufacturing).Ghana can seize these opportunities through a mix of public and private interventions:The government should pursue essential economic reforms to resolve the energy crisis by reforming the regulatory framework for electricity tariffs; facilitating trade, through customs reforms and the Ghana Community Network Systems;These reforms would pave the way for the private sector to invest in projects with a high development impact, including through large firms. Such opportunities already exist in Ghana in the three priority sectors of ICT, agribusiness and education that are reviewed in this report.The government should also consider supporting the entry of ‘pioneer’ investors, which are often in the form of foreign direct investment (FDI).Supporting promising SMEs will also be critical, especially during their acceleration phase.This could be achieved through a combination of public financing and capacity building, technical support adapted to the sector in which they operate, and risk-sharing and mezzanine finance facilities. Similar to the pioneer investors, such support should be provided in an inclusive, transparent and competitive manner. Examples of promising SMEs were found in all three deep-dive sectors.
Shifting Kenya's Private Sector into Higher Gear: A Trade and Competitiveness Agenda
(World Bank, Washington, DC, 2016-04-01) World Bank Group
Shifting Kenya’s private sector into higher gear: a trade and competitiveness agenda’ was born out of the World Bank’s Trade and Competitiveness (T&C) Global Practice recent stock taking of its work in Kenya. This was part of a Programmatic Approach that aimed to organize T&C’s knowledge, advisory, and convening services to address Kenya’s development challenges in the private sector space. By Sub-Saharan African standards, Kenya has a large private sector, which accounts for around 70 percent of total formal employment. As a result, the dynamics of the private sector are a key determinant of the trajectory of the Kenyan economy. The country’s product market regulations a restrictive for domestic competitors and foreign entrants, and the actions of cartels and behavior of dominant firms across sectors undermines competition and hurts consumers. The Kenyan Government recognizes these challenges and has invested significantly in unlocking these bottlenecks with impressive results so far and several important laws passed. Additional efforts to ease regulatory constraints and expedite important legislative changes could improve the investment climate at national and county levels.
Sierra Leone Growth Pole Diagnostic : The Growth Poles Program
(Washington, DC, 2013-08) World Bank
This First Phase Report on Sierra Leone growth poles is the result of a 9 months consultative process led by the Office of the President which specifically requested that the output of this diagnostic be in an engaging format. The fundamental concept of growth poles is that they exploit agglomeration economies and spillover effects to spread resulting prosperity from the core of the pole to the periphery. At the basis of this theory is the assumption that economic development is not uniform over a region. Rather, it concentrates around a geographic feature or economic hub. In particular, it frequently concentrates around a key industry, around which linked industries develop. A growth pole can be used to nurture direct and indirect linkages from the flagship industry to supporting sectors, which vastly expands the employment generation potential of new investments in said flagship industry. The expansion of this key industry implies the expansion of output, employment, related investments, as well as new technologies and new industrial sectors.
Zambia - What Would it Take for Zambia’s Beef and Dairy Industries to Achieve Their Potential?
(World Bank, 2011-06-01) World Bank
This report is a window into a larger initiative, the jobs and prosperity: building Zambia's Competitiveness (JPC) program. The JPC program is a 'joint venture' between the governments of the Republic of Zambia, the Zambian private sector, the United Kingdom's Department for International Development (DFID), the African development bank group and the World Bank Group. As such, the report represents the collective efforts of many people who engaged in this work at different stages in the process. This report is part of a series produced by the World Bank's Africa Finance and Private Sector Development Unit (AFTFP). This report explores the potential contribution that the beef and dairy industries could make to jobs and prosperity in Zambia, and what it will take to achieve this potential. The Zambian government has been looking to increase growth and job creation, and the prosperity resulting from them, by developing a more competitive and diversified economy. This report explores the potential contribution that the beef and dairy industries could make to the government's ambition and sets out what it will take for the industries to achieve their potential. Two main factors provide Zambia with large potential for developing its beef and dairy industries: the country could sustain more than double its current population of cattle; the demand for beef and dairy products in the domestic and regional markets is likely to increase significantly. However, Zambia's beef and dairy industries are currently underperforming and uncompetitive.