Africa’s Business Enabling or Investment Environment

The African Development Bank plays a critical role in supporting Regional Member Countries’ efforts to improve the business enabling environment. Outdated, unnecessary or inadequate legislation government regulations have been identified as some of the most important growth constraints in many African countries. The Bank therefore invests in addressing these bottlenecks through reform programs which aim to improve both the legal and regulatory frameworks in order to encourage private investment, accelerate business development and increase economic growth.

Regulations and Laws

Exemplary of such interventions is the Business Enabling Support Project in Sierra Leone, which promotes improvement in Public Financial Management as well as improving business enabling environment for private sector development. Others include the: Financial Sector Technical Assistance Project in Mozambique, where the Bank supported the improvement of the legal and judicial environment for lending activities. The support covered the enactment of a new bankruptcy law, and a law on property registries, and the creation of a new commercial section in the judicial tribunal. In Botswana, the Bank Group is supporting the capacity strengthening of the Non-Bank Financial Institutions Regulatory Authority through a MIC Grant. Furthermore, the Bank is building on its current portfolio by continuing to support reforms in areas such as streamlining registration and licensing procedures, reforming taxation to encourage investment and business creation, modernizing customs administration, reforming and building the capacity of government agencies, regulators, and courts, and strengthening the enforcement of property rights.

Small and Medium Enterprises

Africa’s private sector is largely comprised of Micro, Small and Medium Enterprises (MSMEs), which play a major role in job creation and inclusive economic growth. Despite this, they continue to face major constraints, particularly regulatory challenges and lack of access to finance. In addition, African MSMEs face major obstacles to growth such as under-capitalization, skills shortages, weak market linkages, as well as the widespread lack of business development services and networks.

Women entrepreneurs also often face legal impediments, using and owning property, among others. The Bank continues to work closely with African Countries with a view to eliminating bottlenecks confronting MSMEs in Africa and to support active policies which encourage the creation and development of Small and Medium Enterprises (SME’s).

Examples of interventions which aid the SMEs include the Private Sector Development Support Project (Projet d’appui à la promotion du secteur privé, PAPSP) in Senegal, which supports implementation of the government’s SME policy in areas such as access to private procurement, statistical capacity building, and targeted support for women-owned SMEs. Another is in Cape Verde, where the Bank is launching a business incubator project amongst many others.

The Bank will scale up support to MSME development in Africa. Its approach will be aimed primarily at strengthening skills and business linkages, addressing regulatory constraints, as well as supporting financial sector development initiatives, with particular focus on the needs of MSMEs. It will also further engage in initiatives aimed at attaining financial inclusion and enterprise development.

Public Private Partnerships (PPPs)
And Financing African infrastructure

Both the African Development Bank and other development partners note the increasing gap in the financing of African infrastructure i.e. in water, transport, energy and ICT. The Bank has opted to strengthen its assistance to its regional member countries through support to the development of Public Private Partnerships (PPPs).

This is based on the notion that both public and private entities have respective and specific skills and by choosing to optimize the implementation of these skills in the achievement of a common project, it is possible to obtain infrastructure and services at a better quality to cost ratio. With the technical assistance of the AfDB, a number of countries such as Tanzania and Mauritius have created tools to coordinate and promote PPPs, aimed among others at disseminating good practice in terms of PPP within their states or across continent.

The Bank group also actively participates in the Infrastructure Consortium for Africa (ICA), a tripartite mechanism which brings together bilateral donors, multilateral agencies and African institutions, which promotes increased investments from both public and private sources towards Africa’s infrastructural development.

Source: (African Development Bank Group)

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