Memorandum submitted by Barbara
Vitoria, Managing Director, ICC Zimbabwe
Thank you for your invitation to submit
ideas to the enquiry into Private Sector Development in the developing
world.
I have selected two areas in which to
respond.
a) What are the constraints on the
private sector in developing countries and how can they be addressed?
The main constraints are at the international
level, rather than at country level. Tariff and non-tariff barriers
significantly prevent many African private sector players from
competing in developed world markets and gaining market share.
Farm and other subsidies, popular amongst developed world governments,
make competing in many product sectors in which Africa excels
difficult, if not impossible. These, in my experience as a consultant
living and working in Africa, are the main constraints to PSD
in Africa.
Of course, the macro, meso and micro
level issues play their part, but they are small in comparison
to the international level constraints described above.
b) What type of donor interventions
have strong leverage in changing the business climate (in partner
countries) towards PSD and pro-poor growth?
The most useful interventions, which
do not appear as yet to be part of current donor thinking, should
in my view, be focussed on phasing out tariff barriers and product
subsidies in developed countries to allow the African private
sector, wider and genuinely competitive access to developed world
markets. This would make the African private sector the national
hubs of wealth generation, rather than the donor community. Currently,
donor budgets in Africa are often larger than the wealth generated
by the private sector on the continent. An unfortunate consequence
of this is that African governments often pay more attention to
what donors want than to what the African private sector wants
to generate wealth locally. This undermines PSD and diminishes
the pressure on African governments to be accountable to their
private sectors, and to their electorates, for creating the macroeconomic
and regulatory frameworks needed to support private sector growth.
Making it difficult for the African
private sector to access developed world markets often creates
the poverty that donor aid and efforts seek to address. This is
a situation that makes no sense and, in my view, suggests that
the motivation and objectives of donors need to be critically
reviewed in the light of this conundrum, and new ways explored
to address how donors can meaningfully and appropriately support
the private sector in reducing poverty in the developing world.
Supporting good governance is also important
to creating private sector growth in Africa as it provides the
security that local and foreign investors need. Levelling the
playing field in the manner described above would, I believe,
go a long way to improving governance, transparency and accountability
at country levels, and in addition would make initiatives in these
areas locally-driven, rather than donor-driven, as African governments
and the private sector see the advantages that good governance
has in attracting local and foreign investment.
c) Other
One last area is the area of the distribution
of wealth, which touches on the pro-poor issues mentioned in this
enquiry. Whilst I am aware of several bodies of knowledge that
describe wealth creation, I am not aware of significant studies
that explore and recommend practical and workable approaches to
the distribution of wealth in ways that protect the social good.
Studies of this nature would be very useful in rethinking approaches
to how wealth creation can benefit the poor.
January 2006
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