World Bank Report Highlights Private Sector's Crucial Role in Developing Economies
According to the 2024 World Bank report, "Business Ready," experts analyze the private sector's contribution to the economy of developing countries, highlighting its vital role in creating jobs, investments, and revenue.
Key Findings:
- The private sector generates approximately 90% of employment, 75% of investments, over 70% of production, and more than 80% of public revenue in developing countries.
- However, the private sector in developing countries has struggled to recover from the 2008 crisis and has since experienced sluggish growth.
- Investments have slowed down, averaging 3.7% between 2023 and 2024, significantly lower than the rates achieved over the past two decades.
Challenges and Opportunities:
- The private sector needs to become more dynamic and resilient to meet the demands of the next decade, with 44 million jobs required annually, prioritizing youth employment, particularly in Africa, where young people make up 30% of the continent's population.
- Eradicating extreme poverty is another critical goal, requiring low-income countries to increase their GDP by around 9% annually and 5% over longer periods.
- Other challenges, such as climate change, water scarcity, natural disasters, and energy transition, must be addressed, with investments to combat climate change expected to reach nearly $2.4 trillion per year by 2030.
The Way Forward:
- Governments alone cannot tackle these challenges, and the private sector must be involved in providing capital, optimizing returns on investment, and benefiting businesses, entrepreneurs, and society as a whole.
- In turn, the private sector requires a conducive business climate and policies, which governments must ensure are in place to support growth and development.
By acknowledging the private sector's crucial role in driving economic growth and development, governments and businesses can work together to create a more dynamic and resilient economy, ultimately leading to poverty reduction and sustainable development.
