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)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 Namibia : Creating Resilient and Inclusive Markets - Country Private Sector Diagnostic
(Washington, DC, 2022-07)Since achieving independence in 1990, Namibia’s remarkable growth has been fueled by foreign direct investment and enabled by prudent economic management. Since 2016, however, growth has declined steadily and the economy fell into recession, exposing the vulnerability of Namibia’s economic growth model to external and climate shocks. These challenges were exacerbated by the Coronavirus (COVID-19) pandemic, an economic slowdown in neighboring South Africa, worsening terms of trade on the back of declining global demand and commodity prices, a decline in Southern African Customs Union (SACU) revenues, and the effects of crippling droughts on agricultural and industrial production. Namibia has very high levels of poverty and inequality, which are largely driven by high levels of unemployment. The primary objective of this Country Private Sector Diagnostic (CPSD) is to identify near and medium-term reform opportunities to revitalize the private sector and help reposition Namibia’s growth on a green, resilient, and inclusive trajectory. This CPSD explores priority reform opportunities to address five cross-cutting bottlenecks: (1) enhancing the role and performance of the state-owned enterprise (SOE) sector through a more effective competition policy environment; (2) strengthening implementation of the public-private partnership (PPP) framework to expand private investments, especially in infrastructure; (3) leveraging the potential for digital transformation of the economy; (4) addressing inefficiencies in logistics and trade facilitation; and (5) tapping opportunities in the water sector for green and resilient growth. The diagnostic then looks in depth at three sectors prioritized by the Namibian government - renewable energy, climate-smart agribusiness, and housing, and provides recommendations for reducing sector-specific bottlenecks to stimulate growth potential. -
Publication
Creating Markets in Albania: Taking Advantage of New Trade and Investment Opportunities for a More Robust Private Sector - Country Private Sector Diagnostic
(World Bank, Washington, DC, 2022-06)Despite a challenging transition period and a string of adverse shocks, in recent decades Albania has made major strides in raising per capita income and integrating into the world economy. A dynamic private sector has become the engine of Albania’s economic development, and its increasing role continues to offer opportunities for expanding the country’s economic base and promoting faster and more diversified export-oriented growth. Albania is endowed with considerable economic assets, including a strategic geographical position, exceptional natural beauty, and abundant renewable and nonrenewable resources. A politically stable environment, improving governance indicators, and a record of dependable macroeconomic policies have supported the process of European Union (EU) accession, which offers a wide array of opportunities for the development of the Albanian private sector. Because a small domestic labor pool and consumer market limit the potential for economies of scale, sustaining Albania’s economic expansion will require intensifying its integration with the global economy. Despite decades of progress, Albania continues to face serious structural and policy challenges. The country’s economic expansion has not been matched by commensurate improvements in productivity. In this context, the World Bank Group has prepared the following country private sector diagnostic (CPSD) to assist the authorities in their efforts to leverage Albania’s geographic location, natural assets, and improved institutional and policy framework to promote diversification, competitiveness, and robust private-sector-led growth. The analysis highlights the importance of improving the business environment while stepping up investments in technology and innovation. The report explores three critical sectors for accelerating and diversifying growth: agribusiness and food processing, tourism, and automotive manufacturing. -
Publication
Creating Markets in Fiji: Overview and Summary of Key Findings from Sector Deep Dives - Country Private Sector Diagnostic
(World Bank, Washington, DC, 2022-05)This Country Private Sector Diagnostic (CPSD) comes at a challenging yet opportune juncture for Fiji to rebuild a more diverse and resilient economy amid the lingering impacts of COVID-19. Fiji recorded its strongest period of gross domestic product (GDP) growth (since achieving independence in 1970) in the decade leading up to COVID-19, underpinned by rising productivity and investment, improved political stability, and a booming tourism sector. However, the shocks of COVID-19 and a series of natural disasters, Tropical Cyclone (TC) Harold and TC Yasa, have been devastating for Fiji’s economy, bringing widespread production disruptions and job losses. The increasing frequency of these weather events has also complicated Fiji’s economic development strategy and plans. Fiji’s real GDP declined by 15.2 percent in 2020 and is estimated to have contracted a further 4.0 percent in 2021, with the long-term ramifications of the COVID-19 pandemic on the economy yet to be fully seen. These shocks have also exacerbated some of Fiji’s long-standing structural vulnerabilities, including the economy being vulnerable to repeated climate-related shocks, its lack of sectoral diversification, and sluggish private sector job growth (particularly among youth and women). In this context, the CPSD approach for Fiji to ‘build back better’ revolves around four key interrelated pillars: (1) unlocking new sectoral sources of growth beyond tourism; (2) strengthening economic and climate resilience; (3) leveraging Fiji’s potential as an economic hub in the Pacific region; and (4) creating inclusive employment opportunities. -
Publication
Creating Markets in Mali: Mobilizing the Private Sector for Economic Resilience and Recovery - Country Private Sector Diagnostic
(World Bank, Washington, DC, 2022-04)Until the onset of the coronavirus disease 2019 (SARS-CoV2) COVID-19 pandemic and despite the deteriorating security situation, Mali’s economic growth averaged five percent since 2014, on par with its long-term potential. Mali’s fragile state status has also taken a toll on economic activity and social welfare by reducing access to markets, threatening food security, and degrading human capital indicators. With an increasing debt burden resulting in limited fiscal space to address persistent security risks and to combat the COVID-19 pandemic, the government of Mali is compelled to refocus the role of the state and unleash the potential of the private sector to boost productivity growth, to diversify the economy away from a narrow base, and to ensure inclusive economic and social welfare for all Malians. The growth model will be readdressed around energizing investment, creating resilient markets, and building back better for a more resilient recovery via (a) improving the business environment; (b) crowding-in private participation in the delivery of infrastructure and certain public services; (c) ensuring that remaining state-owned enterprises and private firms compete on equal terms - that is, upholding competitive neutrality principles; (d) expanding public-private partnerships in key sectors, through transparent and competitive procurement; and (e) leveraging digital solutions by further enhancing digital infrastructure that would, in turn, increase the uptake of digital financial services and digital platforms for key sectors of the economy, such as agriculture, and digitize government services (e-government). -
Publication
Creating Markets in Malawi: The Road to Recovery : Turning Crisis into Economic Opportunity - Country Private Sector Diagnostic
(World Bank, Washington, DC, 2021-06)Malawi is at a turning point in its political, social, and economic trajectory. Lazarus Chakwera was sworn in as Malawi’s sixth president in June 2020. This marked a historic moment: the first time in Africa that an opposition candidate won a presidential election following initial results being overturned. After widespread unrest prior to the election, Malawians, especially the youth, have been demanding greater accountability, an end to corruption, and tangible progress on eradicating persistent poverty levels that exceed 70 percent of the population. The average gross national income (GNI) of a Malawian is the third lowest in the world, just US$380 as of 2019. The Chakwera administration will need to find a way to unify the country’s fractured political landscape and deliver on development promises. On top of these challenges, the new administration must also navigate the ongoing and evolving economic shocks of the COVID-19 pandemic. Gross domestic product (GDP) growth expectations for 2020 have been lowered from 4.8 percent to 0.8 percent. Recent efforts to build fiscal and institutional resilience have helped but need to be strengthened. The pandemic’s fallout has weakened the country’s macroeconomic foundations, and the overall risk of debt distress is now high. Meanwhile, human capital gains are at risk. Poverty reduction is expected to stagnate, and overall poverty could potentially worsen. The pandemic will likely exacerbate existing inequalities in economic opportunities for women. Women-owned firms, for example, are primarily concentrated in informal agriculture and services, sectors that lack basic social protections to buffer against economic distress. Female farmers, for example, generally have lower access to productive inputs, information, and liquidity than male farmers, so in times of crisis, their farm productivity and food security can be hit harder. -
Publication
Creating Markets in the Kyrgyz Republic: Unleashing the Private Sector to Rebuild Development Success - Country Private Sector Diagnostic
(Washington, DC: World Bank, 2021-05)This country private sector diagnostic (CPSD) for the Kyrgyz Republic assesses the barriers and opportunities for a more forceful development of the private sector in the country. Between 2000 and 2019, gross domestic product (GDP) growth rate averaged 4.4 percent, enabling the Kyrgyz Republic’s ascension to lower-middle-income country status by 2014. Economic growth has been unstable as its sources lacked diversity and were vulnerable to external shocks. Economic growth has been unstable as its sources lacked diversity and were vulnerable to external shocks. If the Kyrgyz Republic wants to inaugurate a new era of faster, more sustainable economic growth, it must more aggressively develop its private sector to support economic diversification and improve productivity. -
Publication
Job Creation in the Private Sector: An Exploratory Assessment of Patterns and Determinants at the Macro, Sector, and Firm Levels
(World Bank, Washington, DC, 2017)Why do some countries create more jobs than others? To consider this question, in this paper we focus on one of the most basic relationships, between growth and employment. In practice, the private sector responds very differently to growth (and decline) across countries. Understanding the patterns and drivers of private sector decisions to expand and shed jobs may be important to guide policy approaches for job creation. This paper analyzes the output-employment relationship in the context of business cycles at three levels: the macro-economy; industry (in manufacturing); and firms. The results highlight major differences in private sector job creation responsiveness to growth across stages of development and economic structures, but a critical finding is that economies (and firms) where formal sector job creation was more responsive to growth cycles generated more jobs overall. In addition, results from both the macro analysis and the sectoral analysis suggests significant complementarity between capital and labor. Finally, the findings may help to frame a broad policy agenda for job creation, including: macro-economic fundamentals, responsive labor markets, access to finance, competition, and a facilitative business regulatory environment. These are not surprising, but nevertheless frame a set of issues that could be explored in further research. -
Publication
Assessing the Potential for the Electronics and ICT Manufacturing Industry in Ethiopia
(World Bank, Washington, DC, 2016-09-30)The report includes the analysis of global Information and Communication Technologies (ICT) and electronics value chains, an assessment of Ethiopia’s current and potential participation in these regional and global networks, and an analysis of the country’s competitive positions in specific segments of the sector. The findings of these efforts have been used to provide strategic direction for the development of the sector and to draft an action plan and road map to implement the sectoral strategy in the short, medium, and long term. The analysis shows that the overall electronics and ICT industry is currently playing only a modest role in the Ethiopian economy, with a relatively limited presence of companies and commercial activity. The analysis also illustrates important differences in the competitive position across the various segments analyzed. In conclusion, the analysis has shown that the ICT and electronics industry has potential in Ethiopia, with a presence already emerging in selected segments. -
Publication
Shifting Kenya's Private Sector into Higher Gear: A Trade and Competitiveness Agenda
(World Bank, Washington, DC, 2016-04-01)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.