Private Sector Development and Poverty Alleviation: The Case of Sub-Saharan Africa

Abstract

Abstract: Post independence, most sub-Saharan African countries initiated a growth strategy with the public sector as the main engine of economic growth and development. Following the dismal economic performance of the region through its state-owned enterprises (SOEs) or parastatals, especially during the 1970-80s, structural adjustment programs (SAP) that focus mainly on streamlining the public sector's resources and enhancing privatization were utilized in order to stimulate growth and reduce poverty. However, after about two decades of experimentation with SAP, the World Bank and IMF and other donors recognized that the traditional approach or the "top-bottom" paradigm, also referred to in this study as the "trickle-down hypothesis " to poverty reduction has been ineffectual in the case of sub-Saharan Africa (SSA). Albeit that private sector and public sector investments are not necessarily mutually exclusive, nonetheless, this study inferred that private sector investment yields a greater multiplier impact than public sector investment. Thus, private sector development (PSD) should be the main engine of growt h for sub-Saharan African region. This could be accomplished via a "bottom-up " participatory method that emphasizes a holistic approach, whereby PSD initiatives are complemented by public sector investments to achieve a viable and sustainable growth, development, and poverty alleviation.

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