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Oxford Business Group: Akinwumi Adesina, President, African Development Bank (AfDB): Interview

Governments need to work closely with the private sector to close African infrastructure gaps.
09.03.18 | Interesting article at Oxford Business Group

What has been done to support small and medium-sized businesses (SMEs) entering the formal sector of Africa’s economy?

AKINWUMI ADESINA: The AfDB estimates that the informal economy in Africa accounts for 50-80% of GDP, 60-80% of employment and as much as 90% of new jobs. The quality of the regulatory framework is vital in a firm’s decision to join the formal sector. Almost all firms at this stage are SMEs, which account for over 90% of Africa’s private sector. Policies that encourage SME development are therefore critical.

The AfDB is aware that entrepreneurs in Africa face a number of challenges. These include an unsupportive business environment, a large infrastructure deficit, expensive and unreliable energy, low access to financing, and barriers to regional trade and the movement of resources. To tackle these challenges, we structured the Industrialise Africa project to develop industrial sector strategies and policy frameworks, provide additional funding to private sector projects on the continent, create and integrate regional and international value chains, and boost competitiveness and value creation by expanding the supply of business services.

What role do public-private partnerships (PPPs) play in the development of large-scale projects in Africa?

ADESINA: Governments need to work closely with the private sector to close African infrastructure gaps. Public-private partnerships (PPPs) are increasingly seen as a logical and appropriate recourse to the challenge that governments alone lack the ability to finance infrastructure and other large-scale projects.