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Wednesday, 02 April 2014

EU-Africa Business Forum: sustainable growth and employment

Why EU development cooperation focuses on the private sector
Creating growth and job opportunity in Africa is crucial as this continent, as well as other developing regions lack employment and income generation opportunities, combined with a fast-growing, young population.
In many developing countries, the expansion of the private sector, notably micro-, small and medium-sized enterprises (MSMEs) is a powerful engine of economic growth and the main source of job creation. The private sector provides some 90 percent of jobs in developing countries, making it an essential partner in the fight against poverty.
Yet, the private sector in Africa faces a formidable range of obstacles compared to their rivals in other emerging markets: widespread and rising informality, a “missing middle” in the size of enterprises and little upward mobility, weak inter-firm linkages, lack of export competitiveness, lack of innovation capabilities, complexity of registering business and taxation, infrastructure shortages, a spluttering electricity supply, limited access to finance and corruption.
EU assistance covers a wide range of areas in the private sector, such as support in creating an enabling business environment. A better business climate helps to promote efficient domestic investment, attract foreign direct investment and increase productivity, thereby raising income and employment opportunities.
Assistance is given to reduce administrative and regulatory barriers for business, provide support to relevant ministries to help them trade, and review existing legislation and policies. Support is also provided for business development services such as training, advice and information services, which aim to improve technical and managerial skills and encourage the transfer of know-how and technologies. EU projects and programmes also involve support for professional institutions, such as chambers of commerce, industrial federations or SME associations, as well as the promotion of reliable local financial institutions.
Other areas of support include the promotion of investment and co-operation activities among businesses, and the facilitation of access to financial markets. An important focus is also put on support for microfinance and financial inclusion. The African continent receives approximately 50% of overall EU direct support to Private Sector Development in developing countries. Between 2004 and 2010, €1.2 billion was allocated to Africa (including Sub-Saharan Africa and Northern Africa).
Source: European Commission