News / Africa

Greater Support Urged for Private Sector in Post-Conflict Africa

China and India seek partners at local level

Liberia's President Ellen Johnson Sirleaf declared the private sector
Liberia's President Ellen Johnson Sirleaf declared the private sector"s involvement is integral to Liberia"s rehabilitation

“A strong private sector is crucial to broad based economic growth, and this is especially true to post conflict African states such as Liberia, Ivory Coast and Sierra Leone as well as a host of others in Africa, ”says Hany Besada, a senior researcher and the head of the Development Corporation Program at the North-South Institute in Ottawa, Canada.

Through its research, the non-governmental institute supports, among others, global efforts to increase aid effectiveness, strengthen governance and accountability, and promote equitable trade and commercial relations.

According to Besada, “the relationship between the private sector and post conflict African states are good and are constantly improving.”

That was not always the case.

Hany Besada, senior researcher at the North-South Institute in Ottowa, Canada
Hany Besada, senior researcher at the North-South Institute in Ottowa, Canada

Rough start

Socialism was the choice of many African independence leaders, and with it, a preference for government-managed enterprises and a command economy over private-owned businesses and a minimum of government regulation.

In some countries, private enterprise was linked to cronyism, corruption and even civil war.  Over the past two decades, private sector actors have been involved in the illegal mining and transfer of blood diamonds in Sierra Leone, and in the illegal shipments of arms and soldiers in Ivory Coast and Liberia.

“This history,” Besada says,” still continues to hang over them, as governments and officials in the three countries at times are quick to point out the disastrous effects on the economies and the political stability given the private sector role and action during civil conflicts. “

New efforts in post-conflict states

But African economies have grown particularly over the past decade, in part due to foreign investment and to increased support for private sector expansion.

Development institutes like Besada’s and  the African Capacity Building Foundation (  encourage good governance, broad-based economic growth and capacity building for both the private sector and government.

Besada says that’s true of Liberia and other countries in West Africa.

Mpesa Kenya's first mobile banking service network
Mpesa Kenya's first mobile banking service network

“Shortly after the election of Johnson Sirleaf as President of Liberia,” says Besada, “she declared the private sector’s involvement would need to be integral to Liberia’s rehabilitation.”

He says her government inherited a budget of less than $ [US] 100 million in 2006 sharply down from the pre-coup national budget of  $ [US] 600 million in 1980.  Sirleaf was forced to raise capital and resources for reconstruction, including the revival of privately-owned businesses, especially in mining, agriculture, rubber production, and logging.

The story is similar in Sierra Leone,  which is rebuilding from decades of civil war.  The government there is working to attract foreign investment, in part with a program that aims to privatize many state owned enterprises and spur economic growth.

Besada says it’s the cornerstone of its strategy for national development which in time will reduce the role of government in the economy,  and encourage local businesses to create jobs.

In Cote d’Ivoire, there have been a number of changes to the country’s business regulations.  Goods and services that are manufactured and conducted in free trade zones are now exempt from all import and export duties.

South African President Jacob Zuma, right, walks with Chinese President Hu Jintao. China has helped promote skills transfer in Africa
South African President Jacob Zuma, right, walks with Chinese President Hu Jintao. China has helped promote skills transfer in Africa

Taxes in the zones are extremely low, with numerous rebates based on local employment and reinvestment. Foreign and local investors are now exempt from the national value added tax on electricity, water, and petroleum consumption.  They are also protected by law from nationalization, and they face no restrictions on ownership.
“These kinds of measures reflect post conflict African states’ eagerness to work with the private sector,” says Besada.


In the past few years,  private entrepreneurship has helped other economies take off.

In Kenya,  according to Besada, “Mpesa,” the country’s first mobile banking service network,  directly led to the creation of over 7,000 enterprises and 12,000 jobs.  The subsequent increase in access to financial services is also likely to have generated many jobs indirectly.

In Namibia, Besada says, “Namdeb, the diamond operation based on a partnership between the government and De Beers, accounts for more than 10% of the country’s gross national product.

In Botswana, Besada says “private sector investment has helped transform the country from one of the poorest countries in Africa, to a middle income country.

Private sector investments in Botswana has helped transform the country from one of the poorest, to a middle income country.
Private sector investments in Botswana has helped transform the country from one of the poorest, to a middle income country.

He also points out that South Africa’s business involvement in the rest of the continent had a marked effect in terms of structure to the labor market, more specifically on wage levels and job creation.

In Mozambique, Besada says “the entry of South African companies into the job market has had a striking impact on wage structure.   The highest paid labor group in the country is the skilled workers at the Mozal smelter. Today, the lowest paid worker earns $4,000 there, which is 10 times the minimum wage. ”

Injecting needed capital

The domestic private sector needs lots of financial support to grow and flourish particularly in post conflict states.  Besada points out that foreign investments help inject needed capital in the local economy that are made available for local investments later on.  It’s a trickle effect, says Besada, that also helps promote skills transfer and increases productivity levels.

Two important investors in Africa are India and China.

India’s investments on the continent are largely driven by its private sector.  Besada says India is keen to move away from formal arrangements between governments and is focusing more on local partnerships through the exchange of managers and skilled laborers.

China, Besada says, has helped promote skills transfer in Africa, including in Egypt’s manufacturing sector and Zambia’s mining sector.

However, Beijing has been the focus of criticism. African governments criticize China for supplying its own manpower in African projects,  rather than using local workers.  Some says it also drives African retailers out of business with cheaply made goods imported from China.

Indian Prime Minister Manmohan Singh. India's investments in Africa are largely driven by its private sector.
Indian Prime Minister Manmohan Singh. India's investments in Africa are largely driven by its private sector.

Beijing has begun to react to some of these criticisms.  Over the past few years, Beijing has pumped millions of dollars into African industries geared to serve markets in the EU and the United States.

Using the provisions of the EU’s Cotonou Agreement and the US African Growth and Opportunity Act,  Chinese investors have established joint ventures with local investors to produce goods for exports at concessional rates.

The Chinese are especially involved in agriculture, agro-business, textiles, and light manufacturing.  In the process, says Besada, they are helping to build local capacity, boost technology transfers, and raise the export levels of dozens of Africa economies.

Besada says traders from Asia, and the Middle East have been in coastal Africa for decades, though they have at times been driven from the continent.   Some African leaders accused them of not sharing skills, or wealth, with the African business community.

As a result, today, Lebanese traders in West Africa are partnership more with local investors while Indian investors in East Africa are using more local workers as part of their work forces while wages levels are increasing.

You May Like

Yemen Brings US, Iran Closer to Naval Face-off

US sending two more ships to waters off coast of Yemen to take part in 'maritime security operations' More

Minorities Become Majority Across US

From 2000 to 2013, minorities became the majority in 78 counties in the United States. Here's where those demographic shifts are happening More

Japan's Maglev Train Breaks Own Speed Record

Seven-car 'magnetic levitation' train traveled at more than 600 kilometers per hour during test run Tuesday More

This forum has been closed.
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Brain Mapping Techniques Could Ease Chronic Paini
Shelley Schlender
April 20, 2015 7:03 PM
Pain has a purpose - it can stop you from touching a flame or from walking on a broken leg. As an injury heals, the pain goes away. Usually. But worldwide, one out of every five people suffers from pain that lasts for months and years, leading to lost jobs, depression, and rising despair when medical interventions fail or health experts hint that a pain sufferer is making it up. From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.

Video Hope, Prayer Enter Fight Against S. Africa Xenophobia

South Africa has been swept by disturbing attacks on foreign nationals. Some blame the attacks on a legacy of colonialism, while others say the economy is to blame. Whatever the cause, ordinary South Africans - and South African residents from around the world - say they're praying for the siege of violence to end. Anita Powell reports from Johannesburg.

Video Italy Rescues Migrants After Separate Deadly Capsize Incident

Italy continued its massive search and rescue operation in the Mediterranean Monday for the capsized boat off the coast of Libya that was carrying hundreds of migrants, while at the same time rescuing Syrian migrants from another vessel off the coast of Sicily. Thirteen children were among the 98 Syrian migrants whose boat originated from Turkey on the perilous journey to Europe.

Video New Test Set to Be Game Changer in Eradicating Malaria

The World Health Organization estimates 3.4 billion people are at risk of malaria, with children under the age of five and pregnant women being the most vulnerable. As World Malaria Day approaches (April 25), mortality rates are falling, and a new test -- well into the last stage of trials -- is having positive results in Kenya. Lenny Ruvaga reports for VOA from Nairobi.

Video Are Energy Needs Putting Thailand's Natural Beauty at Risk?

Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.

Video Overwhelmed by Migrants, Italy Mulls Military Action to Stabilize Libya

Thousands more migrants have arrived on the southern shores of Italy from North Africa in the past two days. Authorities say they expect the total number of arrivals this year to far exceed previous levels, and the government has said military action in Libya might be necessary to stem the flow. VOA's Henry Ridgwell reports.

Video Putin Accuses Kyiv of ‘Cutting Off’ Eastern Ukraine

Russian President Vladimir Putin, in his annual televised call-in program, again denied there were any Russian troops fighting in Ukraine. He also said the West was trying to ‘contain’ Russia with sanctions. Henry Ridgwell reports on reactions to the president’s four-hour TV appearance.

Video Eye Contact Secures Dog's Place in Human Heart

Dogs serve in the military, work with police and assist the disabled, and have been by our side for thousands of years serving as companions and loyal friends. We love them. They love us in return. VOA’s Rosanne Skirble reports on a new study that looks at the bio-chemical bond that cements that human-canine connection.

Video Ukrainian Volunteers Search for Bodies of Missing Soldiers

As the cease-fire becomes more fragile in eastern Ukraine, a team of volunteer body collectors travels to the small village of Savur Mohyla in the what pro-Russian separatists call the Donetsk Peoples Republic - to retrieve bodies of fallen Ukrainian servicemen from rebel-held territories. Adam Bailes traveled with the team and has this report.

Video Xenophobic Violence Sweeps South Africa

South Africa, long a haven for African immigrants, has been experiencing the worst xenophobic violence in years, with at least five people killed and hundreds displaced in recent weeks. From Johannesburg, VOA’s Anita Powell brings us this report.

Video Apollo 13, NASA's 'Successful Failure,' Remembered

The Apollo 13 mission in 1970 was supposed to be NASA's third manned trip to the moon, but it became much more. On the flight's 45th anniversary, astronauts and flight directors gathered at Chicago's Adler Planetarium to talk about how the aborted mission changed manned spaceflight and continues to influence space exploration today. VOA’s Kane Farabaugh reports.

Video Badly Burned Ukrainian Boy Bravely Fights Back

A 9-year-old Ukrainian boy has returned to his native country after intensive treatment in the United States for life-threatening burns. Volodia Bubela, burned in a house fire almost a year ago, battled back at a Boston hospital, impressing doctors with his bravery. Faith Lapidus narrates this report from VOA's Tetiana Kharchenko.

Video US Maternity Leave Benefits Much Less Than Many Countries

It was almost 20 years ago that representatives of 189 countries met at a UN conference in Beijing and adopted a plan of action to achieve gender equality around the world. Now, two decades later, the University of California Los Angeles World Policy Analysis Center has issued a report examining what the Beijing Platform for Action has achieved. From Los Angeles, Elizabeth Lee has more.

Video Endangered Hawaiian Birds Get Second Chance

Of the world's nearly 9,900 bird species, 13 percent are threatened with extinction, according to BirdLife International. Among them are two Hawaiian honeycreepers - tiny birds that live in the forest canopy, and, as the name implies, survive on nectar from tropical flowers. Scientists at the San Diego Zoo report they have managed to hatch half a dozen of their chicks in captivity, raising hopes that the birds will flutter back from the brink of extinction. VOA’s George Putic reports.

Video Exhibit Brings Renaissance Master Out of the Shadows

The National Gallery of Art in Washington has raised the curtain on one of the most intriguing painters of the High Renaissance. Mostly ignored after his death in the early 1500s, Italian master Piero di Cosimo is now claiming his place alongside the best-known artists of the period. VOA’s Ardita Dunellari reports.

VOA Blogs