Private Enterprise in Africa: Creating a Better Environment

What can governments do to create a better environment for private enterprise in Africa? Development in many countries throughout the world has shown that the initiative and drive of private investors and entrepreneurs can be important agents of economic growth. Many African countries would therefore like to make greater use of the potential benefits of private entrepreneurship. To that end, this paper addresses key issues affecting private sector development in Africa. It is based on several missions to a number of countries and generalizes, to the extent possible, findings of weaknesses and constraints in key policy areas. Five areas are examined which typically have been neglected by governments in the past but are of crucial importance to a healthy development and performance of the private sector. These areas entail (i) barriers to entry, (ii) treatment of foreign investment, (iii) financial constraints, (iv) labor policies and price controls, and (v) trade policies and competition.