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 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
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. -
Publication
Sierra Leone Growth Pole Diagnostic : The Growth Poles Program
(Washington, DC, 2013-08)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. -
Publication
Zambia - More Jobs and Prosperity in Zambia : What Would it Take? Based on the Jobs and Prosperity : Building Zambia’s Competitiveness Program
(World Bank, 2011-06-01)While Zambia's economy performs well, in macroeconomic terms, low levels of productivity plague industry, and this constrains growth, diversification and prosperity. In recent years, economic growth has averaged 5-6 percent a year, business reforms are being implemented, and investment levels are at an all time high. However, according to the World Economic Forum's global competitiveness index 2010-2011, Zambia is not a competitive place in which to do business (ranking 115th out of 139 countries). Not surprisingly, business productivity tends to be low, and few Zambian industries are internationally competitive. Formal employment is shrinking and rural poverty is increasing. In summary, there is an urgent need to increase productivity, growth and employment. These questions continue to preoccupy policy makers, businesses and civil society especially in light of government's strategy to embrace private sector-led growth and facilitate competitiveness and diversification. The Jobs and Prosperity: Building Zambia's Competitiveness (JPC) Program is an effort to answer these questions and, at the same time, to achieve some concrete results that improve industry productivity and competitiveness. The Zambian government, with support from donors, has, for a long time, been trying to raise prosperity by encouraging more productive businesses, more competitive and diverse industries, and greater employment. Yet these efforts have not generated the results sought. The goal of the JPC Program is to achieve some meaningful progress towards improving industry productivity and competitiveness. The Program focuses on four industries so as to build traction and keep the scope of work manageable. The industries were selected by a group of Zambian stakeholders. The Program facilitated a process through which Zambian stakeholders identified some narrowly defined target results that, if achieved, could help these industries become more productive and then supports initiatives to achieve these results. -
Publication
South Africa : Enhancing the Effectiveness of Government in Promoting Micro, Small and Medium Enterprise
(Washington, DC, 2007-02)This study focuses in particular on the question of whether incentives and support programs have: (a) been correctly targeted to address the diverse and specific needs of small, especially micro, enterprises; (b) been implemented efficiently by the responsible agencies in terms of their delivery and impact, and (c) have been effective in helping smaller firms access a wider market for their products and services. The findings of the micro-enterprise survey, the review of the various incentive programs and the value chain analyses indicate that: (a) among specific constraints faced by the small, micro and medium enterprises (SMME) sector, the skills gap and the issue of access to finance are of particular relevance; and (b) while the economic rationale that existed in 1995 for SMME support remains valid, there is a need to find cost-effective and well-targeted programs that meet that rationale. The issue of skills development, in particular, is central to the medium-term agenda as a means of raising productivity and, hence, employment in segments of industry - both in the formal and informal sectors. As regards the Department of Trade and Industry (DTI) programs, there is a need to improve the effectiveness of promotion, strengthening selection criteria, and modulate the process of scaling up of individual programs. As regards other incentives, implementation of the Duty Credit Certification Scheme (DCCS) incentives has not been highly effective in ensuring the compliance of beneficiaries with the training and skills development requirements of the scheme; and this will need to be tightened up in the future. -
Publication
Kenya : Growth and Competitiveness
(Washington, DC, 2005-01)The conclusions of the recently-conducted Kenya Investment Climate Assessment (ICA), based on a survey of 368 firms, have a bearing on the country's growth agenda. The results have a bearing on the key issue of labor productivity and its implications on firm performance, revealing that capital-intensity in Kenya was relatively high, compared to the rest of Sub-Saharan Africa (SSA) and also to firms in China and India, but also relatively less productive. Labor productivity in Kenya had not improved materially over the past decade or so, so that unit labor costs compared very unfavorably with those prevailing in Asian countries like India, China, Indonesia or Thailand. Major constraints to doing business cited by firms in the survey related to infrastructure, tax administration and corruption. On infrastructure, power supply was seen as the most problematic, on account of the high number of outages, compounded by high losses in transmission and distribution. 64 percent of firms reported damage to equipment on account of power outages or fluctuations valued at nearly $15,000 per firm per year. To cope with these outages 70 percent of firms had acquired generators, further adding to the cost of doing business. Road and rail services were reported by most firms as being of very poor quality, and nearly a quarter of firms reported having to spend their own resources to improve the quality of roads in surrounding areas. On corruption, three quarters of firms surveyed reported this as a problem, though only about half reported having to spend resources in terms of unofficial payments.