Most African countries have come to recognize the critical role that the private sector can play to help the continent attain economic and social growth, the 2011 African Development Report launched by the African Development Bank (AfDB) in Arusha yesterday has said.
Focused on private sector as the engine of Africa’s economic growth, the report examines the challenges facing the sector’s development and highlights ways to address them, taking country differences into account.
“After being hamstrung for decades by difficult political and economic conditions and burdensome government policies, it is now poised to become the main engine of growth for the continent,” AfDB president, Donald Kaberuka (pictured) said in the report.
The report ends with a discussion of the AfDB’s role in support of private sector development in Africa.
“The African Development Bank is committed to addressing the constraints on private sector development. We believe that private sector development is fundamental for creating inclusive growth through employment creation,” he said.
The private sector, he said, is also a provider of essential goods and services to the public, and a key source of the revenues that African countries need to meet their development challenges.
Having promoted development of the sector for more than 40 years, the AfDB has made private sector development one of the four priorities of its Medium Term Strategy (MTS) for 2008-12, along with infrastructure, governance and higher education.
In order to generate a greater developmental impact, the AfDB is integrating private sector development across all its operations with threefold objectives, he said.
According to the report, they are: supporting regional member countries to improve the business enabling environment and strengthening its international business competitiveness, broadening participation and inclusion in the private sector and supporting local enterprise development to spur robust employment creation and improve the social well-being and encouraging the embedment of social and environmental responsibility, sustainability, and good corporate citizenship in private sector development.
Though the private sector helps reduce poverty, reliable statistics on its activities in African countries are scarce, he said, adding that most of the activities are informal, carried out by micro, small and medium enterprises.
The report also says that laws and regulations critical for private sector development and corporate governance were undermined by poor monitoring and enforcement.
Although the private sector in African countries faces common challenges, the impact of these constraints varies according to the stage of economic development, he said.
Fundamentally, the constraints include insufficient transport networks and lack of access to power and finance, he said.
Challenges also differ by type of firm, with large companies being more concerned about corruption, skill shortages and labour regulations, while export-oriented businesses place tax administration at the top of their list, he said.