ENHANCING THE DEVELOPMENT OF THE PRIVATE SECTOR FOR

INCLUSIVE GROWTH AND JOB CREATION IN THE IGAD

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IGAD private sector paper- obstachles and potentialAs noted in HESPI’s analysis of IGAD economies (2013), most IGAD member countries are among the least developed in the world by all indicators of development. Though variations among member countries are significant, all lag behind most regions in the world, as measured by GDP per capita income, poverty levels, improvements in health and education, access to roads and communication etc.  Despite the potential to excel in tourism, in utilizing their natural resources, young labor force, and sizable diaspora; countries in the region have yet to embark on a stable growth path[1].

The objective of this study is to examine the private sector, a key vehicle for embarking on a sustained growth path, and explore ways of enhancing the development of the sector and its contribution to the overall development goals of countries in the region—sustained growth, job creation and poverty reduction.

The study examines the current status and performance of the private sector in IGAD states, drawing commonalities and contrasts between countries, and analyzing the main impediments and constraints it faces and how those can be overcome. It also examines the role that regional integration can plan in opening opportunities for trade and investment.  The study makes broad proposals, at the policy level, for moving forward on an agenda for private sector development (PSD). Those proposals are intended to provide a basis for deeper discussion by policy-makers and key stakeholders, on developing a holistic regional strategy and action plans for PSD.

The study report covers Djibouti, Eritrea, Ethiopia, Kenya, Somalia and Uganda. Sudan and South Sudan are not included mainly because of lack of data. While there is also very little data and information on Somalia’s economy, there is more available on the private sector, which has drawn a lot of attention for its performance under a situation of absence of effective state authority.

The main data sources are various country reports by World Bank, African Development Bank and other international organizations, and cross-country studies by the World Economic Forum, the World Intellectual Property rights, UNDP and the World Bank’s Doing Business Reports.  One difficulty in conducting this study was limitations and inconsistencies on data in a number of countries. Reliable data and information on the informal sector, which is normally unregistered and unrecorded, is particularly difficult to get, even though this is a critical sector for the IGAD economies, particularly for overall employment and poverty reduction.

Section I of the paper covers the overall background, including socio-economic conditions. Section II analyzes the structure and performance of the private sector and the main constraints it faces. It does so for the region as a whole in section II. 1 and separately for the six countries covered by this study in section II.2. A regional perspective on key social and economic issues and their policy implications is covered in Section III.  The international experience and lessons that can be learned from the successful efforts of other countries is provided in Section IV. Finally, proposals on actions needed to address the issues discussed above, and a roadmap for moving forward on a private sector development agenda is covered in Section V.

by: Osman Sheikh Ahmed (PhD)

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[1]  HESPI, annual report on the state of IGAD economies, trade performance and prospects, July 2014