Private Sector Development, Privatization, and Industrial Policy

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Creating Markets in Eswatini : Strengthening the Private Sector to Grow Export Markets and Create Jobs - Country Private Sector Diagnostic

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.

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Creating Markets in Madagascar: For Inclusive Growth - Country Private Sector Diagnostic

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.

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The Untapped Potential of Mauritania’s Entrepreneurial Ecosystem: Lessons from the Entrepreneur's Marathon

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.

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Creating Markets in Rwanda: Transforming for the Jobs of Tomorrow

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.

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Creating Markets in Botswana - A Diamond in the Rough: Toward a New Strategy for Diversification and Private Sector Growth - Country Private Sector Diagnostic

2022-06, International Finance Corporation

Diamonds have been at the center of Botswana’s growth miracle for decade - but the urgency to diversify is stronger than ever. Although Botswana’s economy has undergone transformation over the past decades, the shift has been largely into non-tradable services, with limited gains in employment, income equality, and export diversification. In addition, Botswana’s high vulnerability to climate change, which affects all major sectors of the economy, underscores the need to strengthen Botswana’s response to climate factors as a basis for renewed, sustainable growth. A positive growth outlook and steps taken as part of the Coronavirus disease 2019 (COVID-19) crisis response should give the government new impetus to accelerate reforms. Success in diversifying the economy will depend on the decisive implementation of structural measures to increase private sector participation in nonmineral exports and transformative sectors. The dominant role that the government of Botswana still plays in large parts of the economy, particularly through its footprint as a shareholder in companies in the corporate sector, is a critical constraint that inhibits the entry and success of private sector participants. Gaps in infrastructure, access to finance, and skills are additional key constraints to employment and productivity growth. A coordinated approach to financing entrepreneurship and policies to increase uptake of digital finance can help close the gap. Trade barriers are another key cross-cutting constraint for the private sector, and a greener path for the economy can be unlocked by facilitating improved trade in environmental goods and services (EGS). Three key recommendations for the energy sector are as follows. The first recommendation is the fast tracking of instruments to facilitate investment in energy infrastructure development, including independent power producer (IPP) licensing, and procurement guidelines and processes. The second recommendation is the enhancement of the institutional capacity and governance model of the Botswana Energy Regulatory Authority (BERA). The third recommendation is the development of credit-enhancement and risk-mitigation strategies and supporting instruments to attract and mobilize private sector investment.

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How Have Firms Fared in Times of COVID-19 in Addis Ababa?: Evidence from Eight Rounds of High-Frequency Phone Surveys

2021-11-24, Wieser, Christina, Abebe, Girum, Asfaw, Adamsu

The COVID-19 pandemic and its negative economic effects create a need for timely data and evidence to help monitor and mitigate the social and economic impacts of the crisis. To monitor the impacts of the COVID-19 pandemic and related containment measures on formal firms in Ethiopia and inform the policy response, the World Bank, in collaboration with the government, is implementing a high-frequency phone survey of firms (HFPS-F). The HFPS-F interviews a sample of firms in Addis Ababa every three weeks for a total of eight survey rounds. This high-frequency follow-up allows for a better understanding of the effects of and responses to the COVID-19 pandemic on firm operations, hiring and firing, and expectations of future operations and labor demand in order to better tailor and implement interventions and policy responses and monitor their effects

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Creating Markets in Burkina Faso: Growing Burkina Faso’s Private Sector and Harnessing it to Bolster Economic Resilience

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.

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Creating Markets in Uganda: Growth through the Private Sector and Trade - Country Private Sector Diagnostic

2022-02, International Finance Corporation

This Country Private Sector Diagnostic (CPSD) investigates the potential for greater private sector investment to meet some of Uganda's development challenges. At least 600,000 Ugandans enter the labor market every year, making for a workforce that is increasingly younger and urban based. To address the country’s simultaneous productivity and job challenge requires a focus on growth in sectors that can leverage demand from abroad, are labor intensive, and low skilled. Three sectors hold promise in this regard: agribusiness, which is important for productivity, employment, and export growth; energy as an enabler of overall productivity; and housing because of its role in fueling growth in the labor-intensive construction sector and alleviating the demographic pressures that rapid urbanization puts on Ugandan cities. Within the agribusiness sector, the CPSD considers three of the most promising value chains—fish, dairy, and maize—and undertakes a more disaggregated assessment of the environment for private investment.

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Creating Markets in Mozambique: A study conducted by the World Bank Group in partnership with SIDA - Country Private Sector Diagnostic

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.

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Creating Markets in Ethiopia: Sustaining Progress Towards Industrialization

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.