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close this bookPrivate Sector Development in Low-Income Countries - Development in Practice (WB, 1996, 188 p.)
View the document(introduction...)
View the documentForeword
View the documentAcknowledgments
View the documentAcronyms and abbreviations
View the documentDefinitions and data notes
View the documentOverview
Open this folder and view contentsChapter 1-From state to market uneven progress
Open this folder and view contentsChapter 2-Establishing an attractive business environment agile firms, agile institutions
Open this folder and view contentsChapter 3-Reforming public enterprise farther performing and faster
Open this folder and view contentsChapter 4-Building robust financial systems— difficult but pressing
View the documentSelected bibliography


This strategy departs in important ways from the privatization of small firms and small banks that most low-income countries have adopted—with little impact on macroeconomic aggregates or private investment. The purposes of the new strategy are to restore fiscal stability with minimum job loss, stop the hemorrhaging of the banking system, reduce the crowding out of the private sector, and improve infrastructure services essential for competing in a dynamic global economy. It will also reduce demand on scarce government managerial resources and establish the credibility of the overall reform program.

Many low- and middle-income countries have implemented elements of the complex mosaic of private sector development. And the private sector response has been impressive. But even in countries with well-established institutions and legal systems—and the human resources to translate commitment into action—systemic reform has been a long process (often exceeding 15-20 years) subject to reversal and fragility. Moreover, the poorest countries lack many of the prerequisites—and have little latitude for error. The challenges are particularly daunting in Africa, where the environment for entrepreneurs is highly uncertain, markets are smaller, skills are shallower, the supporting infrastructure is weaker, and the legal and regulatory environment very restricting. The poorest countries thus still need assistance in designing and implementing their reform programs.

Low-income countries are also adapting elements of the reform agenda to their cultural, social, political, economic, and institutional conditions. The report highlights the lessons of experience to contribute to the learning process. But the task of reform is not purely technical. A broad consensus for reform and full government ownership of this difficult long-term agenda are essential for success. And when governments do adopt comprehensive and consistent reforms, donors must be ready to step in, in a coordinated way, with the necessary support to sustain their implementation.

Jean-Francois Rischard Vice President
Finance and Private Sector Development The World Bank