Private Sector: Engine for Growth

By Mekonnen Hailu/ABN/

A government could not alone realize infrastructural facilities expansion, social service delivery, and economic development. Successful sustainable economic development requires, unquestionably, strong and last long partnerships between government and the private sector.

The private sector, of course, has the power of innovation and ability to create many of the solutions needed to address the challenges our planet is facing today.

Taking this fact into consideration the public and private sectors should work hand in hand in an effort to ensure sustainable economic development in a country. It is promising that it is now broadly accepted that the private sector has a critical role to play in achieving the overall economic growth and improving living standards.

Nowadays, foreign and domestic investments have been steadily growing in Ethiopia. With a view to enhancing the foreign direct investment flows to the nation, the Government has been providing incentives and all the necessary supportto investors.

With a view to creating a conducive investment climate and attract more foreign direct investment, the Government of Ethiopia itself has been investing heavily to improve the country’s infrastructure like electric power, telecom, road networks, industrial parks, and the likes.

Ethiopia has recorded annual average GDP growth of over ten percent in the past decade and it is undeniable fact that investment has immensely contributed to the nation’s rapid economic growth. In fact, the nation has untapped investment opportunity in Eastern Africa especially in the agriculture, manufacturing, tourism and service sector.

The agriculture sectorin Ethiopia is the foundation of the country’s economy, accounting for half of gross domestic product (GDP), 83 percent of export, and 80 percent of total employment. In other words, many other economic activities depend on agriculture, including marketing, processing, and export of agricultural products.

In this East African nation agriculture and other allied activities like animal husbandry, horticulture, dairy farming, poultry etc. are playing a dominant role as it immensely contributes to the export. The major export products in the sector include commodities such as coffee, oilseed, pulses, flower, fruits, vegetables and coffee.

Currently, more than 120 foreign and local companies are engaged in the cultivation of horticultureproducts, including production of flower, fruits and vegetables mainly for the European market. The country has currently secured about 300 million USD from the export of horticultural products. Such a big investment sector is mainly owned and managed by the private sector.

On top of that Ethiopia’s livestock population is believed to be the largest in Africa, and in 2016/2017 livestock accounted for 11.5% of Ethiopia’s export income, with leather and leather products making up 7.8 percent while live animals accounts for 3.2 percent.

Africa as the youngest continent in terms of economic development, has abundant supply of young and dynamic labor force at very competitive wage level, this enormous advantage would effectively enhance the economic growth by receiving the coming global industrial and capacity relocation especially from Asia to African countries including Ethiopia.  In this regard, the private sector also plays a key role in creating jobs, boosting growth and fighting poverty in low and middle-income countries.

It is undeniable fact that job creation has been the major channel through which economic growth has uplifted the poor in countries that have escaped extreme poverty in recent decades. Indeed, the critical roles of the private sector and private capital are fully recognized in the new global goals for sustainable development which will guide us in the fight against poverty up to 2030.

Some researches indicate that one of the main challenges that the private sector in Africa has to face stems from the involvementand interference of government-linked companies, which are usually given preference and priority. This in turncreates unfair competition and uncomfortable operation amongprivate sector and that of government-affiliated companies.

Generally speaking, the private sector still remains the key-driver in the nation’s economic growth, as the sector carries out much of the economic activities in a country, including agricultural, manufacturing, mining and service sector. Furthermore,the private sector is the main link between the nation and the international communities for both are intertwined in this globalized world to comfort each other’s nations in all development activities.

At this juncture, it’s important to understand that every developing country has the potential to grow dynamically as long as there exists governmentwill and commitment tosupporting and facilitating the development of private enterprises. 

Leave a comment

Your email address will not be published. Required fields are marked *