private sector development in africa and world bank support: march 13, 2014 … sto… · ·...
TRANSCRIPT
Private Sector Development in Africa
and World Bank Support: Presentation to Japanese Private Sector
March 13, 2014
Gaiv Tata Director, Financial and Private Sector
Development Africa Region World Bank
Africa today
Slide adapted from October 2012 Vulnerability, Macro Overview, Portfolio, Risk and Profitability Analysis Presentation by IFC. December 3, 2012
Africa Today
The Region is beginning to grow and growth forecasts are strong
Source: http://www.nytimes.com/2012/07/01/opinion/sunday/africa-on-the-rise.html; http://www.economist.com/node/21541008?fsrc=scn/tw/te/ar/thesunshinesbright
“Labour productivity has been rising. It
is now growing by, on average, 2.7% a year. Trade between Africa and the rest of the world has increased by 200% since 2000. Inflation dropped from 22% in the 1990s to 8% in the past decade. Foreign debts declined by a quarter, budget deficits by two-thirds. In eight of the past ten years, according to the World Bank, sub-Saharan growth has been faster than East Asia's.”
The Economist, December 2011
Medium-term growth prospects are strong
• GDP growth: 4.7 % in 2013; 5.3 % in 2014, 5.4 % in 2015 and 5.5% in 2016.
• Excluding South Africa, growth rates average of 6.3% during 2014-16.
• Robust domestic demand provide prospects for increasing agricultural and industrial production in Africa
• Extractive industries potential remains strong • Challenge: jobs for 7-10 million entering labor force annually • Challenge: Limited long-term financing and limited financial
services for SMEs and households • Vulnerabilities: • sharp decline in commodity prices • fragility of global economy • Climate change
The World Bank - AFTFP 2010
Africa’s private sector:
challenges and opportunities
Constraints on PSD in Africa: What has changed over the last decade ?
• Economy-wide constraints:
• Restrictive business environment: dramatic improvements
• Poor infrastructure (energy, telecommunications, transport and water).
• Financing needs of firms
• Industry/cluster level constraints:
• Strengthening value chains
• Enclave support for manufacturing
• Within-firm constraints
• Upgrading skills
• Acquiring new technology
The World Bank - AFTFP 2010
4%
5%
5%
6%
6%
6.50%
9%
10%
20%
26%
0% 5% 10% 15% 20% 25% 30%
Customs
Transport
Access to Land
Crime
Corruption
Political Stability
Tax Rates
Informal Practices
Finance
Electricity
Source: World Bank Enterprise Surveys, 2010
Top Constraints faced by African private sector
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ADDRESSING ECONOMY WIDE
CONSTRAINTS
Challenge: Streamline regulatory procedures to encourage new entrants, operating in the formal sector.
Progress: Since 2005, all economies in the region have implemented business regulatory reforms in the areas measured by Doing Business .
66 reforms adopted in the past year
of 47 economies in the region, 31 implemented at least one business regulatory reform.
Rwanda, Côte d’Ivoire, and Burundi among 10 economies globally improving the most. Rwanda implemented reforms in 8 of the 10 areas.
World Bank/IFC support Governments in reducing regulatory barriers at national level as well as at sub -regional level (e.g. OHADA countries)
Addressing Economy-wide constraints: Easing the business and regulatory environment
I nfrast ructure f i nanc ing g a p est i mated at $3 0 bi l l ion per annu m c ost ing GDP g row th of 2 % per annu m
World B ank f i nanc ing provided for pu bl ic sec tor i nfrastructure ( annu al ly i n t h e rang e of $ - to – b i l l ion)
As o f 2011, WBG provided $ 3.8 bi l l i on fo r 50 P P P t ransac t ions i n energ y, t ransport , and water, i nc luding 14 I P Ps ( U S$1 .3 b i l l ion) and 10 ra i l co n cessions ( U S$1 .1bi l l ion) .
Bujagali hydroelectric dam (Uganda) and IPPs in Cote d’Ivoire, Kenya and Rwanda and West Africa Gas Pipeline between Nigeria and Ghana .
I nc reased u se of PPPs requ ires:
Effective legal, regulatory and institutional frameworks to catalyze private participation.
Helping Governments prepare bankable transactions :
Increasing supply of funding from institutional investors (pension and sovereign wealth funds)
Ong oing work i n c ou ntries ( N igeria , Gh ana , Kenya and C ote d ’ I voire) and at su b -reg i onal l evel ( EAC , Z one Franc )
Addressing Economy-wide Constraints: Improving Infrastructure through PPPs
Opportunities:
Growth of regional banking institutions
Emergence of private equity funds
Growth of mobile financial services
Piloting of climate innovation financing
Addressing Economy-wide constraints: Increasing Access to Finance
Challenges: More than ¾ of African
households have no access to formal financial services.
More firms name access to
finance as a key constraint in Africa than in any other region.
Source: World Bank Enterprise Surveys, 2010
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ADDRESSING INDUSTRY/ SECTOR
SPECIFIC CONSTRAINTS
Agriculture and agribusiness projected US$ 1 tril l ion industry by 2030 (compared to US$ 313 bill ion in 2010). Growth in :
downstream agribusiness activities (such as processing) as well as upstream activities (such as supplying inputs),
developing commercial agriculture, and
supporting and linking smallholders and small enterprises to productive value chains
World Bank Group working on a growing list of agribusiness operations with the aim of attracting increased private investments in agriculture including in: Burkina Faso, Cameroon, the Democratic Republic of Congo, Ghana, Guinea Bissau, Mozambique and Zambia.
Addressing Industry/Cluster Constraints:
Scaling up Agribusiness
Average contribution of tourism to SSA GDP is 5.9%. Much larger contribution in countries such as Seychelles, Mauritius and Namibia. Tourism constitutes over 10% of total exports (direct & indirect) in more than half of African countries.
In 2009, the sector contributed to 10.1 million direct and indirect jobs throughout the region, representing 5.6% of total employment or 1 in every 18 jobs.
World Bank providing technical support through regional and country specific studies and supports through lending operations to identify means of increasing sector competitiveness (e.g. star grading).
Tourism’s Contribution to GDP
Addressing Industry/Cluster Constraints:
Scaling up Tourism
• Manufacturing sector stagnant in Africa at around 10% of GDP.
• Growing demand from African Governments to revive manufacturing through provision of enclave support through Industrial Zones, SEZs, etc .
• Package of measures required including:
• legal, regulatory and institutional framework facilitating zone development;
• demand driven development based on projected market demand according to a physical master plan;
• trade facilitation and logistics support;
• on and off-site infrastructure linking zones to ports, electricity and roads; and
• forward and backward linkages with domestic firms.
Addressing Industry/Cluster Constraints:
Enclave Support for Manufacturing
World Bank providing technical support through regional studies, support for zone development in several countries and lending support (under preparation) in Ethiopia.
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ADDRESSING FIRM SPECIFIC
CONSTRAINTS
Need to improve firm level productivity Challenge:
Diminishing export competitiveness,
Skills mismatch
Low investment in knowledge and training.
Addressing firm level constraints
*Data is sourced from different years depending on the country (2006-2011) Source: World Bank Enterprise Survey
Opportunity: • Instruments to increase capacity for designing and managing national innovation policies • Increased linkages between local firms and local economy, FDI, and Diaspora • Increased linkages between firms and research centers (e.g. TTOs, Tech Parks) • Provision of startup support services (e.g. incubators) • Stimulate vocational training through the private sector
National Competitiveness projects that focus on cross-cutting, nation-wide investment climate issues, financial infrastructure issues and invest in business environment reform programs (including in areas such as business registration, institutions, customs, standards, investment regimes and improving access to finance.)
Growth poles and trade corridors: Growth pole operations are the largest and the fastest growing PSD projects that aim to support industrial competitiveness and inclusive growth. These are generally designed as comprehensive sets of interventions, with a view to concentrating efforts on regions with high potential to maximize the desired impact, build momentum and achieve demonstration and spill-over effects.
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World Bank Interventions in a Snapshot
National Competitiveness projects that focus on cross-cutting,
nation-wide investment climate issues, and invest in business
environment reform programs (including in areas such as
business registration, institutions, customs, standards,
investment regimes)
Growth poles and trade corridors: Growth pole operations are
the largest and the fastest growing PSD projects that aim to
support industrial competitiveness and inclusive growth. These
are generally designed as comprehensive sets of interventions,
with a view to concentrating efforts on regions with high potential
to maximize the desired impact, build momentum and achieve
demonstration and spill-over effects.
Characteristics of Growth Poles
• Geographical ly concentrated or l inked ( industr ial c lusters , c i t ies , transport corr idors)
• Strong private -sector interest and committed governments
Critical mass of interventions:
• Policy re forms, infrastructure investments, sk i l l bui lding, f inancing faci l i t ies
• Present Growth Poles Projects - Madagascar, Cameroon, Gambia, Mozambique and DRC.
• Nampula (Mozambique) Province development
is the first step to developing the Nacala
Corridor in Mozambique.
Foreign investment participated in African growth but much more from developing economies
Source: World Investment Report, 2013
Emerging opportunities for Asia-Africa collaboration in Special Economic Zones
Strong interest in learning from Asian experience in SME
development, manufacturing competitiveness and planning and development of growth poles
Private sector led training programs– e.g. Kaizen Training
Private investments in growth pole and PPP Projects
Scope for private financial institutions to accompany the Japanese private sector
Opportunities for Japanese private sector
THANK YOU!
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