Foreword Volume 10
(2004):
Private and Public Sectors - Towards a Balance
This Volume 10 of the African Development Perspectives Yearbook is
considering in great detail the options to balance between privatisation and
market development policies on the one side and policies to strengthen public
infrastructure and public institutions in Africa on the other side. The role of
privatisation for market development in Africa is beyond any doubt, but
objectives and measures of privatisation have to conform to established
long-term goals of development, and the whole process of privatisation must be
kept free from rent seeking, rent allocation and rent redistribution among
governmental powers, bureaucratic interest, and interest group channels. Volume
10 is complementary to Volume 9 of the African Development Perspectives
Yearbook, which deals with "African Entrepreneurship and Private Sector
Development".
The units and contributions in Volume 10 of the African Development Perspectives
Yearbook therefore address firstly, the relevance of private sector development
policies for regional integration in southern Africa; secondly, the issues of
capacity building, finance and innovation in the private sector; thirdly, major
issues of how to balance public and private sectors in Africa; and fourthly,
private sector developments in Cameroon. Other two units present book reviews,
book notes, and profiles, news and information with relevance to these subjects.
The relevance of these issues for African development has increased tremendously
in view of the repercussions of the globalisation trend on Africa. This volume
is a joint effort by many contributors and editors who have presented analytical
essays on the theme, country case studies, informative reports on policy changes
in Africa, and case studies of successful enterprises and entrepreneurs. The
issue how to balance in an optimal way private and public sectors was carefully
considered by referring to policy and action levels, such as national economies,
sub-regional entities, local communities, and social groups. The implications
for required policy changes at the level of national economies, regions and
sub-regions were analysed, and reference was also made to the relevant positions
of regional organisations in Africa that have highlighted the perspectives of
Africa in the years to come. Volume 10 of the Yearbook comprises six Units in
total.
In Unit 1 the relevance of private sector development policies for regional
integration in southern Africa is analysed, and also how a smooth integration
process of the southern African region can promote the private sector in these
countries. This interdependent relationship is discussed with regard to the
"Southern African Development Community" (SADC), which is going to
establish a Free Trade Area (FTA) by 2008. The contributions in Unit 1 examine
how far the SADC Trade Protocol that leads to the establishment of the FTA has
been successfully implemented, and what are the constraints the private sector
is still facing. Options and limitations of SADC's regional integration process
in terms of intra-regional trade and investment are discussed, showing that the
potential of both dimensions has not been exhausted yet. To do so, improved
conditions for the private sector have to be provided. These relate not only to
direct support, such as the provision of export assistance, but also to support
in terms of much more strengthened regional policies. Up to now, the SADC shows
deficiencies in various fields of common trade-related policies, such as
competition, investment, and migration policies. The Unit finds out that common
regulations in these policy fields are essential for the intra-regional trade
and investment performance of the private sector. It is argued that only a
prospering private sector in all the SADC countries can help to equalise the
conditions by reducing the economic and social disparities within the region,
what is also a necessary condition for a much faster proceeding integration
process.
In Unit 2 issues of private sector's capacity building, finance and innovation
developments are discussed. Capacity building initiatives are also evaluated
with regard to the new roles of the African state in the development process, as
the state affects the formation of human and social capital in these countries
fundamentally. The researches in Unit 2 are based on the assumption that a new
role of the African state has to be envisaged for strengthening private sectors
and African entrepreneurship. In this context, prospects of capacity building
efforts for small and medium enterprises and for micro finance institutions are
also analysed. Furthermore, the relevance of national policies directed towards
human capital accumulation is discussed. Capacity building initiatives are also
increasingly important in order to attract foreign direct investment, to benefit
from modern communication technologies, and from cross-border inter-company
cooperation. Various contributions also assess national strategies on education
and human capital formation - with orientation towards new policies that may
help to improve the position of African enterprises in the international
location competition.
Moreover, the respective roles of the state, the private sector, and of
non-market actors, like networks and associations, are discussed, especially in
stimulating human and social capital formation for the benefit of small and
medium enterprises. Capacity building initiatives are also important for the
provision of sustainable micro financial services and for a broader and deeper
innovation process to take place in the private sector of African countries.
Micro finance institutions obviously lack a sustainable structure so far,
although their developmental role is beyond any doubt. Thus, new capacity
building efforts in African countries may help to improve the process of
financing innovations in the micro and small enterprise sector. As the state in
Africa plays a decisive role in rent seeking, rent distribution and rent
allocation, capacity building initiatives have to conform always to the specific
configuration of the state towards the private sector. Innovations in African
countries always refer to this complex configuration, and cannot be confined to
specific dimensions, functions, sectors and issues.
In Unit 3 major issues of how to balance public and private sectors in Africa
are dealt with. This is done by various country cases, and especially by
reviewing the privatisation experiences of selected countries. Privatisation
policies with regard to state-owned enterprises are of great importance for the
future of private sector development in Africa. Therefore, the analysis of
approaches and outcomes with regard to privatisation is so important for the
transfer of best practices to other countries. The unit allows it to make a
comparison of such privatisation strategies and policies between Ghana, Nigeria,
Zambia, Mauritius, Namibia, and further Southern African countries. The
contributions highlight the huge differences that exist between these countries
in terms of expectations, approaches, the appropriate timing, and the outcomes
of privatisation measures. So far, the overall results of balancing public and
private sectors in Africa are disappointing, but the process is going further
and in some countries obviously in the right direction. The cases presented
reveal that some important policy conclusions and guidelines can be drawn from
the presented evidence, being of use for further privatisation policies in
Africa. The realisation of a balance between privatisation and market
development policies on the one side and policies to strengthen public
infrastructure and public institutions in Africa on the other side is a
difficult task to achieve. One-sided privatisation measures have caused many
problems in African countries, especially when disregarding the weak regulatory
power of public authorities. Private sector development therefore requires a
facilitating environment, concerted action, and deliberate public policies
towards promoting African entrepreneurs. The contributions in this Unit
highlight the issues, problems, and constraints of privatisation. The
presentation of country cases of privatisation in a comparative way allows it to
derive conclusions for a better informed judgement on the type of policies that
are required in view of the complexities that are surrounding this task of
balancing public and private sectors in African economies. The main message of
the contributions is that privatisation processes matter for development, but
only if public policies and public institutions are working in a way that may
lead to the expected allocation and welfare effects. Privatisation is thus
beneficial for the private sector and for private sector development if the
state follows strict policies on market development and market competition, and
if the implications for industrial, technological and employment policies are
adequately considered. Unit 3 therefore highlights new privatisation strategies
that are required for a successful continuation of market development reforms in
Africa.
Unit 4 on private sector development in Cameroon presents a number of
contributions that are country-focused and are dealing with specific policies
and sectors of the economy. Different aspects and functions of private sector
development in a specific African country that is characterised by valuable
traditions of entrepreneurial development are highlighted. The most important
economic issues regarding the development of the private sector in Cameroon are
the ongoing deregulation and privatisation policies, as well as the necessary
reforms that have to be undertaken in the financial system and with regard to
the institutional framework for market development. The Unit starts with a
contribution giving a general outlook, presenting the historical context of
private sector development in Cameroon, and briefing on the basic theoretical
aspects regarding these issues. The deregulation policy in Cameroon is analysed
by highlighting the processes of deregulation and state disengagement on a
sectoral level, and within the context of the Structural Adjustment Programmes.
The relevance of the practised deregulation and privatisation measures is
questioned in view of the economic crises in Cameroon; alternative policies,
based on a more balanced policy mix, are presented. The process of privatisation
in Cameroon is discussed in detail by referring to the theoretical issues of
market failure versus state failure. Main causes named for the failure of
deregulation and privatisation processes in Cameroon are the basically
non-competitive market structure, the severe macroeconomic conditions, and the
lack of a capacity to regulate on the side of the state. As the privatisation
process is considered as "highly disappointing", some recommendations
are given for avoiding a continuation of the observable de-industrialisation
trend in Cameroon. The role of micro-finance institutions for private sector
development in Cameroon is also assessed, as the problems of small and medium
sized enterprises (SMEs) in getting finance for survival, transformation and
innovation are severe. Hereafter, the importance of a functioning institutional
framework for private sector development is analysed, highlighting the linkage
between market institutions and market competition. Both, institutions and
market competition are regarded as important for a sustainable development of
the private sector in Cameroon.
In Unit 5 relevant books, magazines and documents dealing with the topic of
balancing private and public sectors as well as other most important
publications about socio-economic developments in African countries are
considered in book reviews and book notes. It is interesting to see how many
research institutes, international organisations and development policy
institutions add to the knowledge in this field by presenting new books, seminar
reports and discussion papers on various issues. More and more editors, authors
and publishers send their publications for review to the Review Editor of the
African Development Perspectives Yearbook, and the Yearbook Editors hope that
this trend will continue.
In Unit 6 Profiles, News and Information are presented. In this Unit information
on new initiatives for Africa, new research projects, and new networks on and
for Africa are presented. Referred is also to new research reports on key issues
for Africa, to news about African organisations, and to the work for Africa by
development co-operation agencies. This is part of the global network that was
created already in 1988 by the Research Group on African Development
Perspectives in Bremen, a network that is still enlarging, broadening and
deepening its interactions. Important documents and reports from African and
international organisations are reprinted in various issues of the African
Development Perspectives Yearbook, and also in Volume 10 such documents are
commented and analysed. These documents are of great importance because they are
proof of the collective will and effort of African people to change their
situation by determined action. It is also part of the editorial policy of the
African Development Perspectives Yearbook to make available to the public most
important documents, reports and researches that give authentic proof of African
intentions, plans and objectives for the development of the continent. This Unit
with Profiles, News and Information gives evidence of an increasing interest in
Africa's development perspectives.
The theme of the current Volume 10 of the African Development Perspectives
Yearbook with the title "Private and Public Sectors: Towards a
Balance" is of great importance for the future of Africa, as it is now more
and more pressing to work out strategies how private and public sectors can be
linked and can be organised so as to work towards a more successful economic
development path in African countries. In order to realise this goal a more
facilitating international environment is necessary, and NEPAD is definitely
only partially an answer to this. Much more is necessary in terms of commitment
and support from the international community. Also the forthcoming Volume 11 of
the African Development Perspectives Yearbook with the title "Africa -
Escaping the Primary Commodities Dilemma" will highlight the discussion on
how to revitalise and ultimately to transform African economies. This is done by
focussing on alternative futures for African economic development in the era of
globalisation. The dependence of the vast majority of African countries on raw
materials exports, the difficulties to diversify production and exports towards
manufactured goods and services, and the uncertain prospects and inherent
difficulties for escaping the primary commodities dilemma in Africa are the
issues that will be highlighted in seven units of the next volume.
With now 10 volumes the African Development Perspectives Yearbook has become an
important source on Africa, and we look back at a highly successful working
period of the Research Group on African Development Perspectives in Bremen. The
work on Volume 11 with the title "Africa - Escaping the Primary Commodities
Dilemma" has already started, and this will be the next important task for
the Editors. In its work so far the Research Group on African Development
Perspectives has discussed in 10 volumes of the African Development Perspectives
Yearbook such important themes for Africa as the human dimensions of structural
adjustment; the role of agriculture for industrialisation; the role of new
energy policies; the importance of active labour and employment policies; the
role of regional labour and employment strategies; the issue of good governance
for African development; economic and social empowerment strategies and policies;
the options and problems of Africa's reintegration into the world economy; the
issue of African entrepreneurship and private sector development; and, with this
new Yearbook, the central issues of how private and public sectors can be
successfully balanced in African countries.
With these volumes of the African Development Perspectives Yearbook that were
presented over the years to an international readership we have covered central
issues of African development and have also formulated innovative strategies how
to cope with these relevant problems. This may help to shape in a
future-oriented way the fabric of the economies and societies in Africa what is
to be achieved during the next decades. In future we will continue to focus on
the necessary changes of economies and societies in Africa and on the new role
of Africa in the world economy and the world society, especially in the context
of the global informational and technological revolution. Thus, the view of the
Research Group in Bremen is focussed on a future vision for Africa that is
reflecting the demands and exploiting the opportunities of the global emerging
knowledge society.
In this regard we would like to invite scholars from Africa and elsewhere to
join us in this tremendous effort of analysing African futures when preparing
for Volume 11 of the African Development Perspectives Yearbook and for
successive issues (see the International Call for Papers at the end of this book).
We have to thank all supporters and contributors of the African Development
Perspectives Yearbook for their hard work, their steady encouragement and their
continuous assistance. Sadly, we have to announce that Prof. Dr. Samuel Ngogang,
who had contributed to this volume as an editor and as an author has passed away.
We will remember him as a brilliant scholar, as an important member of the
Research Group on African Development Perspectives and as a good friend. We will
not forget his important contributions, his valuable suggestions and his deep
commitment.
For the Research Group on African Development Perspectives:
Karl Wohlmuth
Professor for Comparative Economic Systems, and
Co-ordinating Editor of the African Development Perspectives Yearbook
University of Bremen, Faculty of Economics, IWIM Bremen, Germany
Bremen, March 2004
© IWIM
31 Januar 2006
iwim@uni-bremen.de
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