A Decade of NEPAD - Economic Commission for Africa - uneca

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44 A Decade of NEPAD: Deepening African Private Sector and Civil Society Ownership and Partnership Mauritius, Swaziland and Togo. Similarly, remittances were greater than FDI in Togo, Swaziland, Mauritius and Lesotho 58 . The improved macroeconomic environment, increased foreign direct investment, along with the significant Diaspora direct investment has created a continental economic environment within which Africa’s private sector has begun to grow. Although African states have made significant effort to reduce the cost of doing business, streamline bureaucracy and taxation schemes, and provide incentives for African enterprises to formally engage in the economy, the informal and SME private sector components in Africa are very large, and growing. In fact, most African enterprises fall within the category of being micro enterprises, small or very small and are individually owned and operated with the help of a few workers, who often are relatives. The informal sector represents 42.3% of gross national income in sub-Saharan Africa and informal enterprises employ 78% of all workers on the continent. Despite the growing size of the informal sector and its value within national economies, there has actually been a decline in government assistance to the informal sector, as more effort has been invested in attracting foreign direct investment than in nurturing the formal sector and encouraging these enterprises to formalize their operations. 58 Nagarajan, Subha Impact of Global Financial Crisis on Remittance Flows in Africa, AfDB Development Research Brief, Development Research Department, Office of the Chief Economist, Number 4, May 2009 Migrants’ remittances, annual, 2006-2010 Access to infrastructure, processing and export zones most often are reserved for foreign investors rather than for African informal enterprises. Yet, were African nations to succeed in enabling the informal sector it would help them enforce regulations to protect consumers, employees, the environment, and would significantly broaden the domestic tax base. According to a World Bank survey that assessed African enterprises during the period from 2002-2006, small and medium sized formal enterprises make up 81 percent of the African private sector (51 percent are small and 31 percent are medium) and 80 percent of African SMEs are located in capital cities or large cities with over 100,000 people. Roughly one fifth of these enterprises are majority owned by women. In middle income countries female ownership of SMEs is higher (23 percent) than in low-income African countries (19 percent). The major areas of operation of African SMEs are: agro industry, wood and furniture, metals and machinery, food, garments and textiles and plastic materials 59 . While increasingly since the late 1980s, Africa nations have supported the thesis that the private sector is a critical component to the achievement of growth and development, far less effort has been invested in growing domestic investment versus foreign direct investment. Africa’s domestic investment rates have remained low, in part because the continent’s domestic savings rate is also 59 Sackey, H., Private Investment and Structural Transformation and Growth in Africa: Where do Small and Medium Sized Firms Stand?, Africa’s Development Challenges and Opportunities in the Global Arena, proceedings of the AEC held in Addis-Ababa, Ethiopia, November 2007, pp. 380-385 2006 2007 2008 2009 2010 Developing economies: Africa 26495.77 36878.45 41385.17 38342.36 39746.75 Eastern Africa 2113.47 2912.23 3456.33 3335.19 3585.78 Middle Africa 163.77 204.18 198.86 182.13 183.02 Northern Africa 15096.04 20007.19 22884.79 20653.83 21312.29 Southern Africa 1327.94 1506.32 1479.18 1511.28 1790.32 Western Africa 7794.55 12248.53 13366.01 12659.94 12875.34 LDCs: Africa and Haiti 5360.28 7112.56 9249.20 8811.36 9169.72 Africa excluding South Africa 25761.65 36044.90 40562.38 37440.10 38738.38 Sub-Saharan Africa 12578.86 18640.42 21600.83 20747.36 21612.37
very low. From 2000 to 2004 the domestic savings rate as a percentage of GDP was 17% in Sub-Saharan Africa and 26% for North Africa. This compared to 21% for Latin America and the Caribbean and 35% for East Asia and the Pacific. Domestic investment between 1998 – 2001 was a paltry 19.7% and rose only slightly to 20.1% between 2002-2005. By 2007 domestic investment had only risen to 22.1% by 2007. Excluding North Africa, the figures declined to Selected Indicators of SMEs and Large Firms in Africa: 2002-2006 4. NEPAD and the African Private Sector Today A Decade of NEPAD 18.4%, 19.0% and 19.9% of GDP during the three time frames mentioned. In comparison, domestic investment in East Asia as a percentage of GDP was 31% in 2007. 60 Africa’s leaders have slowly begun to acknowledge that they must do more than just establish an enabling environment, that they must actively provide direct assistance in key areas such as: 60 African Governance Report II, 2009, pp. 102 Firm Level Indicators Small-Sized Firms Medium-Sized Firms Large-Sized Firms All-Firms Low Income Africa Middle Income Africa Low Income Africa Middle Income Africa Low Income Africa Middle Income Africa Low Income Africa Firm Characteristics 13.4 13.4 17.9 17.8 22.5 24.7 16.1 16.9 Firm’s age (years) 81.7 79.9 85.3 86.2 82.2 81.3 83.1 82.1 Located in capital or large city (%) 8.9 19.8 6.7 13.7 7.1 18.7 8.2 18.4 Located in medium size city (%) 9.4 0.3 8.0 0.1 10.7 0.0 8.3 0.1 Local market share (%) 26.8 25.4 34.0 30.1 45.7 37.7 29.3 27.0 National market share (%) 14.6 15..7 24.9 20.9 38.8 33.1 21.8 18.5 Capacity Utilisation & Investment Capacity utilisation (%) 61.3 64.7 64.4 66.7 69.2 72.0 60.7 51.5 Spending on machinery & buildings (% of sales) 9.1 11.3 13.8 6.6 13.5 8.3 10.7 8.8 Employment Issues Middle Income Africa Employment growth over the last 3 years (%) 13.7 19.3 18.8 21.8 15.9 16.7 16.3 19.7 Skilled production workers (% workforce) 36.7 40.9 35.4 37.2 32.1 38.2 34.4 29.5 Unskilled production workers (% workforce) 32.3 31.5 35.5 37.2 40.2 37.1 32.5 27.0 Non-production workers (% workforce) 17.7 14.6 35.5 37.7 19.8 13.9 16.8 9.3 Female share of skilled production workers (%) 11.6 16.9 18.5 15.3 19.4 27.0 15.7 22.7 Female share of unskilled production workers (%) 17.3 24.2 16.1 20.5 25.0 27.3 20.2 26.9 Female share of non-production workers (%) 30.9 40.6 19.5 26.8 28.5 37.2 28.3 28.7 Human Capital Development Formal training incidence (%) 20.0 22.6 37.6 33.2 59.6 59.9 31.6 27.0 Permanent skilled workers receiving training (%) 13.9 25.2 15.8 22.3 20.0 32.1 14.1 17.7 Note: Middle Income Countries: Algeria, Botswana, Egypt, Kenya, Mauritius, Morocco, South Africa; Low Income Countries: Angola, Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Dem. Rep. of Congo, Ethiopia, Eritrea, Guinea-Bissau, Lesotho, Madagascar, Malawi, Mali, Mauritania, Namibia, Niger, Senegal, Swaziland, Tanzania, Uganda, Zambia Source: World Bank Enterprises Survey sata, 2002-2006, Sackey H., Private Investment and Structural Transformation and Growth in Africa 2009 45
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Economic Commission for Africa NEPA
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Ordering information To order copie
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Conclusion The African Union’s NE
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References AfDB (2009) Africa’s D
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Secretariat and the Secretariat of
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