Private Sector Development, Privatization, and Industrial Policy

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  • Publication
    Creating Markets in Eswatini : Strengthening the Private Sector to Grow Export Markets and Create Jobs - Country Private Sector Diagnostic
    (Washington, DC, 2022-09) International Finance Corporation
    Eswatini is facing multiple challenges. It was already experiencing weak economic growth before the COVID-19 pandemic, a reflection of longstanding, deeply rooted issues such as fiscal unsustainability, declining private investment, weakening productivity and competitiveness, and falling export diversification and complexity, compounded by the impact of climate shocks. It shifted from a private investment–led higher-growth model to a government spending–led lower-growth model after the end of apartheid in South Africa. With weak investment in productive sectors, Eswatini’s job market failed to keep pace with an expanding, younger labor force, leading to a large informal sector. Eswatini’s public sector–driven growth model is unsustainable under current fiscally constrained conditions, and there is a need to reduce and reprioritize public spending. An assessment of existing sectoral data and consultations with Eswatini’s private sector and policy makers suggest that four sectors can help drive the export-led private sector growth model. To return to an export-led growth model, Eswatini needs to increase export competitiveness by advancing regulatory reforms and improvements in trade logistics that include regional collaboration to address trade facilitation constraints. Finally, given the country’s vulnerability to climate risks, policies to foster economic resilience amid extreme weather events (mainly droughts that affect agriculture) and improve disaster preparedness need to be pursued. The private sector must adapt to this challenge and work with the government to improve climate resilience.
  • Publication
    Creating Markets in Madagascar: For Inclusive Growth - Country Private Sector Diagnostic
    (World Bank, Washington, DC, 2021-12) International Finance Corporation
    The report is organized as follows: the first part gives an overview of recent economic and private sector trends, followed by an in-depth review of the cross-cutting constraints that affect private sector participation. The CPSD recommends putting a special focus on resolving three types of constraints: (a) deep-rooted governance issues (especially as they relate to policy unpredictability, red tape, and the uneven playing field in key sectors of the economy); (b) infrastructure bottlenecks, focusing on transport connectivity and energy; and (c) limited and poorly functioning factor markets for human capital, access to finance, and land. The second part lays out opportunities and policy options to strengthen competitiveness in agribusiness, apparel, and tourism. The three sectors reviewed are deemed to hold a high potential for job creation and growth and have been prioritized by the PEM and by the private sector stakeholders and development partners consulted for the report. The review puts a lens on addressing gender gaps, policies to promote sustainability, and opportunities to increase the impact of information and communication technology (ICT) as an enabler for development, where relevant.
  • Publication
    Creating Markets in Mozambique: A study conducted by the World Bank Group in partnership with SIDA - Country Private Sector Diagnostic
    (World Bank, Washington, DC, 2021-06) International Finance Corporation
    The Country Private Sector Diagnostic (CPSD) is a joint IFC-World Bank diagnostic that aims to make concrete recommendations for crowding-in private sector investment and financing in client countries. The CPSD analyzes the country context, including the state of the private sector, and identifies cross-cutting as well as sector-specific opportunities and constraints. The analysis presented in the Mozambique CPSD will feed into various upcoming World Bank Group (WBG) engagement reports for the country, including the IFC country strategy and the WBG Systematic Country Diagnostic (SCD). Similarly, it is expected that the CPSD will be of interest to the government, the private sector, and other development partners. Policy makers in Mozambique can take advantage of the CPSD to undertake reforms for improving the opportunities for private sector investment in priority economic sectors. The CPSD seeks to provide answers to the main development questions for private sector development in Mozambique, including which traded sectors, beyond extractives, have the most potential to drive growth and productive employment, and what reforms are needed to support this change.
  • Publication
    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.
  • Publication
    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.
  • Publication
    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.
  • Publication
    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.
  • Publication
    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.
  • Publication
    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.
  • Publication
    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.