allAfrica.com: Africa: Spurring Business to Invest in Continent's Future (Page 1 of 3)

Since the signing of a comprehensive peace agreement in March 2007, Côte d'Ivoire has been healing the wounds of a civil war that divided the country for more than four years. Major challenges remain in reconciling different political and ethnic groups and in reviving the confidence of a vibrant business sector that once made the country one of West Africa's economic powerhouses.

Local business leaders believe that the New Partnership for Africa's Development (NEPAD), adopted by African leaders in 2001 as the continent's comprehensive plan for economic, social and political advancement, has a key role to play in helping to mobilize the private sector for Côte d'Ivoire's recovery. The NEPAD Business Group in Côte d'Ivoire, set up a few months before the peace agreement, has been in "constant dialogue" with the government to "set up building blocks for a post-crisis plan," says its president, Guy M'Bengue, who also heads the country's export promotion agency.

In fact, Mr. M'Bengue told Africa Renewal, the Ivorian private sector managed to minimize the damage of the war by keeping intact the country's industrial base, "despite the difficult times over the last five years." But if renewed investment is to be encouraged, business confidence must be restored.

The NEPAD Business Group, now with more than 100 members, has been urging the government to undertake legal, tax and customs reforms. So far the authorities have reduced the value-added tax and begun paying off public debts owed to private businesses, measures that have helped "to create trust between the government and the private sector," says Mr. M'Bengue.

The Ivorian group also joined with the government to organize a forum for businesses to learn about NEPAD-sponsored infrastructure development projects that are being financed by the African Development Bank (ADB). The group expects further dialogue with the government in developing more incentives for the private sector, as part of a broad plan for post-conflict recovery.

Reforms under way

Whether involved in post-war reconstruction or not, many countries across Africa are carrying out reforms to create a "sound and conducive environment for private sector activities," as specified by NEPAD.

Ghana, Côte d'Ivoire's immediate neighbour to the east, is overhauling its public sector to encourage efficiency and provide more incentives for private business. The port authority's operations have been streamlined to speed the clearing of goods, and all major ports and harbours have been linked on a computer network with relevant government departments and agencies to simplify the processing of imports. Reforms at the agency that registers companies have cut the time needed to start a business from several months to 42 days.

Textile factory in Lesotho: Lower tariffs and changes in government policies can do much to stimulate private investment.

"We have adopted a pro-business stance aimed at achieving widespread private sector-led growth throughout the country," John-Hawkins Asiedu, a director at Ghana's Ministry of Trade, Industry and Private Sector Development, told Africa Renewal.

South African Minister of Trade and Industry Mandisi Mpahlwa told a NEPAD projects conference in South Africa in November that the increase in economic growth in many African countries in recent years can be attributed, at least in part, to the fact that many governments are addressing critical issues such as "investment in infrastructure, the promotion of a stable investment and business environment, as well as private sector development."

The World Bank, in a Doing Business report issued in 2007, found that a total of 24 African countries implemented reforms during the year, making it simpler to start businesses, strengthening property rights, enhancing investor safeguards, increasing access to credit, easing tax burdens, expediting trade and reducing costs. "Doing business has become easier in some parts of Africa," the report said. It ranked Ghana and Kenya among the world's top 10 "reformer countries."

Suspicion and obstacles

However, many African countries continue to have weak private sectors and low levels of private investment. Analysts point to a variety of factors that contribute to this shortcoming: institutional failures, weak legal systems, inadequate infrastructure, poor policies, bureaucratic red tape and unclear government regulations and operations.

Historically, domestic business has not been systematically involved in Africa's development. Following independence, some governments viewed the private sector with suspicion, while others could find few local entrepreneurs with the capital or skills to play a notable role. State-owned enterprises therefore emerged as the main institutions for promoting the development of Africa's industry and infrastructure.

Many countries across Africa are carrying out reforms to create a "sound and conducive environment for private sector activities," as specified by NEPAD.

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