Private sector vital to growth
SHANGHAI: Africa should do more to help the private sector flourish, experts at a seminar here said yesterday.
"A vibrant private sector is vital for sustained economic growth, job creation and income generation," said Razia Khan, Standard Chartered Bank's regional research head for Africa.
African economic growth has been outpacing global growth since 2001, but a strong private sector is yet to emerge, she said.
"Africa has made progress in macro reform. However, there is need to advance further in micro reform," Khan said.
She quoted World Bank data, saying that in Sub-Saharan Africa, the tax rate is about 71.2 percent of profits, and the cost of starting a business accounts for 162.8 percent of per capita income.
Both figures are much higher than figures in other regions, which show the need to address these problems, Khan said.
Regarding the role of entrepreneurship and the private sector in development, Africa has a lot to learn from Asian countries, including China, said Ken Kwaku, previously advisor to Tanzania's former president Benjamin Mkapa.
The first lesson is that a supportive and facilitative investment climate is very important for sustained economic growth. Deregulation, reducing the role of government in the economy, slashing red tape, and respect for property rights, have enabled growth and produced globally competitive enterprises and products, he said.
Second, increased public and private investments in human resources have driven growth in countries like China, India, Malaysia and Singapore, he noted.
He cited an example from a small town in rural India where people have access to books in small bookshops, written in local languages, on topics such as marketing, business planning and basic accounting.
In African countries, however, even in large cities, this kind of knowledge remains the monopoly of experts.
Moreover, through aggressive intra-regional trade and investment, the private sector has led the way towards greater regional integration, particularly in Southeast Asia.
An estimated 11 percent of Southeast Asia's private capital is held outside the region and the figure is more than 30 percent in Sub-Sahara Africa, according to Kwaku.
(China Daily 05/16/2007 page25)
