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 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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Creating Markets in Mali: Mobilizing the Private Sector for Economic Resilience and Recovery - Country Private Sector Diagnostic

2022-04, International Finance Corporation

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).

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Creating Markets in Jordan: Volume II, Sector Assessments - Country Private Sector Diagnostic

2021-11, International Finance Corporation

The Jordan Country Private Sector Diagnostic (CPSD) is a joint International Finance Corporation (IFC)-World Bank report that highlights the constraints as well as the opportunities facing the private sector in Jordan. It considers three sectors—tourism, logistics, and information and communication technology (ICT) - and the potential they offer for greater private sector contributions to the Jordanian economy, as well as the obstacles that they face from general or sector-specific policies and regulations. The CPSD also offers concrete recommendations to address some of these constraints. Although this report was largely prepared prior to the COVID-19 outbreak, its analysis and recommendations remain as, if not more, valid in the context of the pandemic and of an eventual recovery. A dynamic and resilient private sector is necessary if Jordan is to break the low-growth, high-unemployment trajectory it finds itself in today. The CPSD argues that tackling some of the major obstacles facing the private sector is essential to firm performance, investment, and productivity. These actions are as critical in times of crisis and especially afterwards to pave the way for a vigorous and sustainable recovery. Similarly, the sectors assessed by the CPSD continue to hold promise for the country. The pandemic has underscored the important role that digitalization, a strong ICT infrastructure, and supportive services have in creating a resilient economy and business continuity. E-commerce and logistics capabilities and services are an area put forward by the CPSD as an opportunity for Jordan in the coming years; they have boomed during the current crisis and are expected to be one of the post-pandemic growth sectors. Conversely, tourism, which had been experiencing a strong rebound in Jordan over the past few years, is one of the sectors hardest hit across the globe by the COVID-19 crisis. In Jordan the sector accounts for about 19.2 percent of gross domestic product and 32 percent of exports. Crafting a strategy that effectively addresses the many obstacles that prevent the tourism sector from attaining its potential is a necessary investment for a strong recovery - and a good use of what is likely to be a transitional period until travel re-commences.

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Creating Markets In Namibia : Creating Resilient and Inclusive Markets - Country Private Sector Diagnostic

2022-07, International Finance Corporation

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.

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Creating Markets in Albania: Taking Advantage of New Trade and Investment Opportunities for a More Robust Private Sector - Country Private Sector Diagnostic

2022-06, International Finance Corporation

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.

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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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Creating Markets in Sri Lanka : Private Sector-Led Inclusive Growth from Islands of Excellence: Country Private Sector Diagnostic

2022-07, International Finance Corporation

Sri Lanka is a country of paradoxes. With the lowest poverty rates, best social indicators, and highest per capita income in South Asia, Sri Lanka’s economic performance since independence had generally been hailed as a success before the current debt crisis. However, past performance occurred amidst many distortions and an economy less open than its peers, largely reflecting the strong involvement of the state in the economy. Even if this interventionist model of economic policy and the presence of many state-owned enterprises (SOEs) served the country well through the years of conflict and their aftermath, it is no longer sustainable. Indeed, after the rapid growth of the peace dividend in the years post-2009, the economy has faltered and progress on social indicators has stagnated. Many of market distortions remain and have been exacerbated by COVID-19. Understanding how, despite these handicaps, Sri Lanka achieved positive economic and social outcomes in the past provides the building blocks of a realistic, forward-looking growth strategy, one of the objectives of this Country Private Sector Diagnostic (CPSD). The research for this report was conducted prior to the current crisis, but the recommendations remain relevant to implementing public policies that will support private sector-led inclusive and sustainable growth.

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Creating Markets in Fiji: Overview and Summary of Key Findings from Sector Deep Dives - Country Private Sector Diagnostic

2022-05, International Finance Corporation

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.

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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