Private sector and economic development

The role of the private sector in economic development is not in doubt. As a critical stakeholder in every economy, the private sector acts as a provider of income, jobs, goods, and services to enhance people’s lives and help them escape poverty.

According to the 2013 Brookings Blum roundtable policy briefs, which detailed the role of the private sector in the post-2015 development agenda, every high-level development report and project now has private sector involvement, adding that the time is ripe to systematise this approach and experiment with new forms of public-private partnerships.

Similarly, a stakeholder consultations report on the future EU approach to private-sector development and engagement of the private sector for development states that the private sector plays a crucial role in the development process by creating jobs, innovating and providing products that can transform the lives of poor people.

Likewise, President Goodluck Jonathan, at the opening ceremony of a two-day ‘2012 Oil and Gas Trade and Investment Forum’ in Onne, Rivers State, had stressed the role of the private sector in the realisation of Nigeria’s economic growth under his transformation agenda.

In line with this, we believe that expanding economic opportunity is arguably where firms have the greatest potential to create what Michael Porter and Mark Kramer have called “shared value”, or value for both business and society. Business activity can create jobs and entrepreneurial opportunities, cultivate inter-firm linkages, enable technology transfer, build human capital and physical infrastructure, generate public revenue for governments, and offer a variety of products and services to consumers and other businesses, including those operating at what has been termed the “base of the economic pyramid”. Each of these impacts has multiplier effects on social and economic development.

A look at China with a GDP growth rate of 9 percent in 2009, India with a 6.2 percent growth rate and Brazil at 5.2 percent, one finds that they all have vibrant private sectors. China, with a labour force of 812.7 million, has undergone a steady transformation from a centrally-planned economy to a private sector-led one over the past 30 years. India has become a world technology centre, driven by a private sector of more than 200 million persons and entities. And through its private sector, Brazil has built one of the world’s largest retail markets, dominated by huge supermarket chains.

In addition, a new EU policy paper on setting out the role of the private sector at the forefront of international development in its partner countries recently adopted by the European Commission revealed that the private sector provides some 90 percent of jobs in developing countries.

While it is not in doubt that government has the capacity to generate jobs and provide employment in the public sector, it is also clear that the government cannot go it all alone. Much more would be achieved in partnership with the private sector.

As such, we commend the ongoing reforms in various sectors of the Nigerian economy and the efforts to bring the private on board. That is the way to go. We are confident that private institutions are better placed to bridge the unemployment gap in the country through creating sustainable jobs, ultimately bringing about economic development. Moreover, the Nigerian economy needs to be transformed into a private sector-led one if the government’s Vision 2020 plan is to succeed.