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Africa’s Private Sector

Ghana’s Vice-President, Alhaji Aliu Mahama’s call on ?the private sector in Africa to rise above the continent’s unsatisfactory conditions in infrastructure and economics and face the challenge of creating wealth? (Daily Graphic, May 26), cannot go without a comment.

Africa’s fragile private sector cannot survive the machismo of the bloated, sluggish and corrupt public sector. Such aggressiveness translates into unnecessary cost of doing business on the continent. According to the World Bank’s Doing Business 2006 report, Mauritius and South Africa are the only sub-Saharan African countries to have jumped into the top 30 freest economies in the world. Whilst it takes only 8 percent of income per capita, and 27 days to start a business in rich nations, the average cost of starting a business in Sub Saharan Africa involves 11 procedures, 122 percent of income per capita, and 59 days.

In Ghana, entrepreneurs can expect to go through 12 steps to launch a business over 81 days on average, at a cost equal to 78.6% of gross national income (GNI) per capita. They must deposit at least 27.9% of GNI per capita in a bank to obtain a business registration number.*

The continent also lags behind in the provision of basic infrastructure. The World Bank estimates from the 1990s to 2002, the average electrification rate for the sub-Saharan Africa improved to about 27%. This figure is too modest to attract the needed investment.

Governments should therefore lead, by relaxing entry rules for start-ups and easing the burden of going-concerns or just get out of the way.

Franklin Cudjoe
Director, Imani Ghana
Email: franklin@imanighana.org



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