It is now widely accepted that a thriving private sector can make a significant contribution towards achievement of development goals. However, there is no simple recipe for creating the right regulatory and economic environment for the private sector to thrive. It requires an in-depth understanding of the local business landscape and culture to enable the key factors constraining private sector development to be identified and addressed.
Skills shortages are one of the biggest barriers to private sector growth in every country. In developing countries in particular, vital technical, functional and managerial skills are in short supply, driving up the costs of recruitment and retention and increasing reliance on imported expertise. So how can countries best build a sustainable skills base?
It’s widely accepted that, left alone, markets rarely serve the poor. As a result, governments - often influenced by donor support - are inclined to intervene. However, any intervention in markets has an impact far beyond what might be first anticipated. The challenge is to identify appropriate interventions, where the likely gains outweigh the likely costs and potential winners and losers can be identified. Reforms often come unstuck as the likely gainers have limited economic and political capital, whereas the likely losers are strong and well informed.
Though it can be tempting for governments to stimulate enterprise through artificial incentives and backing for individual businesses, the key to establishing a strong Micro Small and Medium Enterprises (MSME) sector is to create the enabling environment for businesses to grow. That means focusing on regulatory and infrastructure aspects and encouraging and incentivising market-based providers to provide relevant financial and non-financial services.
We have been appointed by the South African National Treasury to provide evaluation services in relation to the Jobs Fund. A total of 9Bn Rand has been committed to the Fund by over a 5-7 year period starting in 2011. Read more
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