2013-2017_-_Private_Sector_Development_Strategy

Executive Summary
Africa is experiencing unprecedented economic growth,
and the key objective of the Bank Group’s Strategy 2013-
2022 is to support the transformation of the continent by
improving the quality of that growth – making it shared and
more sustainable.
The future of African economic growth – and the futures of
millions of Africans and thousands of African communities
– is closely tied to the private sector.
However, the primacy of the private sector in African growth
must be seen in context. The public sector still needs to
create an environment in which the private sector can thrive
and the two must work together to deliver services and
opportunities.
African business offers both a potential blessing and a
potential curse. Fifteen million new job seekers enter the
African market annually and; they can shine in employment.
Trapped in unemployment, they will become a threat to
themselves and society.
It is African businesses that will create African jobs, by
training and using African talent, and by developing the
potential of services and industries, through the sustainable
management and prudent use of Africa’s considerable
natural resources. This will plough the dividends of enterprise
back into the lives of Africans and African societies. The
private sector can also deliver services to society’s most
vulnerable people and – if it is properly regulated and
responsible – it can help to make society at large wellregulated
and responsible.
There has been a fundamental change of Africans’ thinking
in recent years, as governments recognize the centrality of
the private sector’s role in generating more business. The
African Development Bank is responding to this change.
The Bank issues this Private Sector Development Strategy
for 2013 to 2017 at a time that the private sector already
generates two-thirds of Africa’s investment, three-quarters
of its economic output, and nine-tenths of its formal and
informal employment. While the bulk of Bank lending is to
governments, it has directly and indirectly supported private
sector operations in Africa since the end of the 1980s. Its
private investment operations have increased nearly tenfold
since 2000, from US$250 million in 2005 to US$2 billion in
2012. Increasingly, the Bank is moving and will continue to
move from public to private investment, and from making
investments itself toward encouraging others to do so, by
unlocking further funds. Recent research shows that a
dollar of AfDB money invested in the continent brings in a
additional six from the private sector.
The private sector faces many obstacles in Africa, including
inadequate government regulation, restrictive policies, poor
infrastructure (particularly in power and transport), severe
skills shortages and mismatches between employers’ needs
and available workers (particularly those just out of school),
trade restrictions, tariff and non-tariff barriers to African
exports, difficulties in obtaining medium- and long-term
finance on affordable terms, and a large informal sector.
Business has also harmed itself when companies have failed
to recognize the need for, and the potential of, widening
their activities. Private sector growth in Africa, where it has
occurred, has often been uneven, and exploitation of natural
resources – the continent’s largest area of growth – has
failed to create enough new jobs.
This new Strategy’s overriding vision is of a competitive
private sector across Africa that will be an engine of
sustainable economic growth, employment and poverty
reduction on the continent in the next decade and beyond.
Several features distinguish this Strategy from its
predecessors. It looks at Africa’s private sector in its entirety,
rather than at just some of its component parts. It commits
to upstream policy work – across nations, regions and
sectors, and using all available Bank expertise – as much
as to individual projects, recognizing that short-sighted
policies can quickly diminish the development impact of
projects. It makes stronger linkages between the money
that the Bank lends to governments and the money it lends
to private organizations. It promises significant support to
small businesses – key elements of any economy – while not