Coming Soon: ERA 2003... Ten Country Studies.. Private Sector Focus

As in previous reports, ERA 2003 will analyze how Africa fared in the global economy in 2002 and examine the medium-term economic prospects for the continent. ERA 2002 will supplement the regional analysis with ten in-depth country studies spanning the diversity of Africa.

The main theme of the Report will be private sector development. The premise of the discussion is that private sector development has the potential to lift Africa out of poverty: if production of goods and services is handled by private enterprises operating in a competitive environment, African countries have a better chance of growing at a faster rate. However, rather than dwelling on the constraints to private sector development, the discussion will focus on success stories that have evolved: which countries have been particularly successful in which sub-sectors, and what can their success be ascribed to?

In attempting to answer these questions, doing so, the Report will focus on four main themes, each which will be of interest to policy-makers and entrepreneurs alike:

· Attracting Foreign Direct Investment (FDI).
· Encouraging local innovation.
· Private provision of social services.
· Using growth poles for SME development.

Attracting FDI: the case of telecommunications

FDI is necessary given Africa's severe lack of capital, technology and skills. For various reasons, Africa has had difficulties in attracting a reasonable share of FDI flows to developing countries. In addition, even this small share has predominantly gone to natural resource based industries and not other sectors with high potential for growth.

In spite of these difficulties, there are non-natural resource based sectors where Africa has done reasonably well in recent years. One such example is the transformation of the telecommunications sector that has taken place in several countries. Using the experiences of countries that have successfully opened their telecommunications sector, the Report will outline the deregulation experiences and sector specific policies/programs that succeeded and failed, and explain how the respective economies benefited from the increased efficiency of improved delivery of services.

Encouraging local innovation:

Growth in Africa not only depends on more efficient resource use in existing sectors but especially on structural transformation through entering into higher productivity sectors and activities. To this end, it is necessary to promote local innovation through investing in applied scientific research and technology development, and translating knowledge into marketable goods and services provided by private enterprises.

The Economic Report for Africa 2003 will look at three main public policy measures that can be used to translate the vision of technology development into reality: industry/technology hubs and incubation centers, start-up type venture capital and market development and marketing support services.

· Technology hubs bring together the ability of universities and research institutes to train skilled workers or develop technologies. Examples of countries that have successfully created such hubs will be explored with regard to specific policy measures that have worked to nurture the hubs, and the contribution of them to local innovation.
· Venture capital funds are one way of providing financing to those start-ups that have promising ideas, and most of the time concentrated in the high-tech sector, but are not able to raise financing at the initial stages through the banking sector. The Report will examine the role of how public policy can encourage such funding facilities and how far these types of financing arrangement have promote local innovation.
· Market development and marketing support services are key once an idea has been transformed into a product/service. The Report will study how successful government support programs have worked to promote the products locally and internationally.

Private provision of social services

The public provision of social services is highly inefficient, costly and mismanaged in a number of African countries. Private sector involvement in the provision of certain elements of health and education services on a "for profit" basis under various types of pubic-private partnership (PPP) arrangements has the potential to improve upon this by improving growth through welfare efficiency improvements and expansion of capacity. This private provision is becoming increasingly unavoidable for the cash strapped and inefficient public sectors in Africa. The Report will provide guidance to policy makers on a range of policy and regulatory issues involved in this new frontier.

Using growth poles for SME development

In most of Sub-Saharan Africa, one or two dominant sectors control the economy in terms of their contribution to GDP, foreign exchange reserves, and/or government revenues. In most cases these activities are concentrated in the natural resource based sectors and tend to remain as enclaves without much forward or backward linkages with the rest of the economy. How to create these linkages with the economy, particularly through developing links with the local privates sector (micro-enterprises and small and medium enterprises (SMEs)), is one issue that policymakers throughout Africa are interested in. The Report will document, review and draw lessons from specific policies and programmes that are being implemented in selected countries to promote linkages and will focus specifically on four policy/program areas: (i) The regulatory and tax framework, (ii) The availability of micro-financing, (iii) The availability of other business support services (for example, relating to skill building, product quality control, business advisory services etc.) and (iv) Direct sector specific policies and programs that promote the use of local goods and services.

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For more details, write to ecainfo@uneca.org