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ECONOMY-AFRICA: The “Threat” of an Independent Private Sector

Francis Kokutse

STOCKHOLM, Oct 27 2009 (IPS) - From Algeria to Zimbabwe, there have been calls to develop the private sector. But some governments regard independent private sectors as a threat to their power and have even actively blocked business. Meanwhile African women have had a particularly raw deal in business. Some Africans question whether the private sector or the state should drive development.

The African Development Bank’s president, Donald Kaberuka, told IPS on the sidelines of the European Development Days event in Stockholm that, “the private sector is very important to Africa because it can provide the required push that the continent needs to bring about development for its people”.

The annual event took place on Oct 22-24 and was hosted by the European Union Presidency and Commission to “showcase the European Union’s continuing and enduring commitment to development”.

Kaberuka noted that even though some efforts have been put in place across the continent, there was the need to ensure that the required mechanisms needed by the private sector to flourish are developed.

“Among other things, what we need now is a stable environment for the sector to propel much-needed growth across the continent. It also means that rules for fair participation by all must be put in place,” he added.

Kaberuka believes that, with the spread of democracy across the continent, the stage is now set for the development of the private sector, which can only survive without upheavals in society. Investors should no longer fear to put in their capital into ventures. This would depend largely on the establishment of the necessary rules to protect the sector.

Peter Bill Kisitu, chief executive officer of a Brussels-based consulting firm, told IPS that, “Africa needs the private sector because it would assist the continent in its drive to attain development for the people. Unfortunately for Africa, politicians across the continent have feared the development of the private sector and have not shown interest to develop it.”

In order to develop the private sector, African countries should put in place institutions to protect businesspeople from government control. “A number of African governments see successful businessmen as threats to their power and would do everything to clip the wings of any individual who succeeds in business beyond a certain limit.

“In Uganda we have seen it in the banking sector where individuals tried to build successful banks, only to have the government clip their wings using all sorts of state interventions,” Kisitu explained.

There is another element that frequently gets lost: “Women across the continent have for so many years engaged in small-scale trade but when the private sector is mentioned, no one takes note of them,” advocacy officer of Women of Uganda Network Berna Ngolobe told IPS.

The private sector is not just big business, she said. “These women have contributed so much to the private sector across the continent but no one bothers to help them grow, which is a clear sign of the marginalisation that women face on the continent.”

Citing the example of women in the information technology and communication sector in Uganda, Ngolobe said that when it comes to bidding for small contracts most women lack the money to bid and are thus by-passed for work they are capable of doing.

“It means that when we talk about developing the private sector, there is the need to look at the entire sector in order to correct the anomalies that exist. Otherwise, women would be left out,” she added.

But Otive Igbuzor, ActionAid’s head of international campaigns, had a totally different take: “We do not need the private sector in Africa.”

He told IPS in an interview that the private sector “is ill-equipped and dependent on government. Success in business has always depended on governments and the extent of one’s connections with the ruling class.

“The major concern for the African continent now is not how to develop the private sector but rather how to develop the capacity of the state to propel the development effort.” Evidence over the past two decades has shown that, around the globe, countries that have demonstrated real growth are not those who left their economies in the hands of the private sector, he added.

“Brazil and China have developed tremendously because they allowed the state to play strong roles to direct the development process.” These two countries focussed on bridging the gap between the poor and the rich.

“For the past six years, China has lifted 58 million people out of poverty while India, which is touted as using the private sector to develop its economy, has put 30 million into poverty,” he concluded.

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