Creating an enabling environment for private sector development in sub-Saharan Africa

The key role played by the private sector in spurring economic development, often referred to as “engine of growth”, has since long been common knowledge. Private sector development (PSD) has thus received increasing attention by policy-makers in the developing world and by the development community alike. In this context, the creation of an enabling business environment through business environment reforms has been acknowledged as an important pre-requisite for unleashing a private sector response that leads to dynamic growth, and ultimately employment and income generation. A debate is ongoing, however, as to the relative merits and development impact of improvements of various dimensions of the business environment on the one hand, and of targeted public policy interventions in support of PSD on the other.

The present study by the German Development Institute (GDI), Bonn, offers a contribution to this debate. Taking a closer look at the reasoning and results of a set of regulatory reforms in sub-Saharan Africa—focusing on easing business registration, the provision of property rights and the simplification of labour regulations—the study advocates a balanced approach. It argues that while constituting a necessary condition, business environment reforms alone will ultimately not be sufficient to foster enterprise development in sub-Saharan Africa in a broad way, and hence require supplementary action at other fronts.

The study has been jointly commissioned by the United Nations Industrial Development Organization (UNIDO) and the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) on behalf of the German Ministry for Economic Cooperation and Development (BMZ).

Read the full document here … Creating an enabling environment for private sector development in sub-Saharan Africa (1.76 MB)

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