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 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.
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.
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.
Looking Beyond the Horizon: A Case Study of PVH’s Commitment in Ethiopia’s Hawassa Industrial Park

(World Bank, Washington, DC, 2017-06) Mihretu, Mamo ; Llobet, Gabriela

The story of how the PVH Corp. (referred to throughout this document as PVH) came to leada group of its top suppliers to build factories and a fabric mill in Ethiopia’s Hawassa IndustrialPark (HIP) is the study of a strong collaboration between a private company looking to optimizeits business model and a government aiming to transform its economy through global strategic repositioning. The success of this story hinges upon the intersection of their goals and a shared vision of development that includes a strong commitment to social and environmental goals.PVH was motivated to invest in Ethiopia to respond to shifts in the global apparel sector, its growing desire to retool its business model and to address its concerns about compliance with social and environmental standards in its traditional sourcing locations. PVH had decided to rethink its business model and to look beyond the horizon towards a new region in which tolocate its manufacturing base. To have better oversight and enforcement, PVH moved to adopta fully integrated vertical supply chain, including direct investment in one of the manufacturingfacilities.Key to Ethiopia’s success in attracting this important investor was the government’s ability and willingness to strategically evaluate its foreign direct investment (FDI) needs and strategy and to take steps to evolve into an attractive location for higher value-added export-oriented investment.This case study explains a private investor’s site selection process. It assesses the elements PVH prioritized when deciding to commit to Ethiopia, and specifically to HIP. The case study further assesses the government of Ethiopia’s strategy, level of readiness, interest, and commitment, and sets out some key challenges that lie ahead for this partnership. The case study is structured in ten sections. Section second offers a brief background on the textile and apparel industry, including an explanation of its value chain. It provides a brief corporate profile of PVH and its current global footprint and business model. Section third describes the site selection process: PVH´s initial explorations in Africa, its consideration of several African countries, and its initial conversations and negotiations with Ethiopian authorities. Section fourth discusses the Ethiopian government’s strategy to attract and expand export-oriented investments, including efforts to bolster the country’s competitiveness. This section attempts to offer some explanation why Ethiopia was the right fit at the right time and its level of readiness to land such an investment. It provides a brief profile of PVH’s Africa point of entry, the HIP. Section sixth covers the challenges that lie ahead for this-project---potential setbacks that will affect not only the consolidation and growth of the textiles and apparel industry in Ethiopia, but also the government’s vision of becoming the “manufacturing powerhouse of Africa.” Section eighth concludes with some key lessons from PVH’s decision to invest in Ethiopia. Such lessons may be relevant to countries or regions interested inattracting FDI and may be of particular interest to other African countries in their quest to attract major investments in the textile and apparel sector.
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 Copper Mining Industry to Achieve Its Potential?

(World Bank, 2011-06-01) World Bank

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 copper mining industry could make to jobs and prosperity in Zambia, and what it will take to achieve this potential. Copper has for many years played an important role in Zambia's economy, and the performance of the economy has followed the fortunes of copper mining closely. This report investigates the role copper mining could play in achieving the government's objectives of increasing economic growth and jobs in the future. Although 40 percent of the country has not been geologically surveyed, Zambia is recognized by the international mining industry as having good mineral potential. Zambia possesses 6 percent of known world copper reserves. According to the highly-respected Fraser Institute survey of mining and exploration companies, Zambia ranks 26th out of 79 jurisdictions worldwide for mineral potential. In Africa, only the Democratic Republic of Congo (DRC) and Burkina Faso have appreciably higher mineral potential scores.
Africa Region Tourism Strategy : Transformation through Tourism - Harnessing Tourism for Growth and Improved Livelihoods

(Washington, DC, 2011) World Bank

This paper presents the strategy vision for Africa of promoting tourism. The strategy relies on four pillars: policy reforms, capacity building, private sector linkages, and product competitiveness. Working closely with client countries, implementation of the Africa Region Tourism Strategy, will focus interventions in these four areas in order to address the persistent constraints to the growth of tourism in Africa. Combined, these interventions will enable high-demand tourism products to compete in the global marketplace. The approach is region-wide; it engages staff across the Bank's Africa Region. Implementation will be led by Africa Region s Finance and Private Sector Development Department (AFTFP). The World Bank Group support to the Africa tourism sector is currently 120 million US dollars. It could reach 500 US dollars million by 2015, generating as many as 300,000 direct formal jobs. The report examines the social, environmental, and economic risks associated with poorly managed tourism, and offers recommendations based on years of experience with tourism projects.This review has provided a snapshot of what Bank has been doing to support tourism development, and its alignment with national strategies in sub-Saharan Africa (SSA). The findings from this review are anticipated to facilitate future dialogue and negotiations among tourism stakeholders to increase support for tourism development in the region.