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Private Sector Development

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
 
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
 
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
 
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.


Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
           
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
 
The question is, why is the private sector not shouldering its burden of growth?


From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
 
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

Three ways to manage construction risk to support infrastructure investment

Eric Dean Cook's picture


Photo: Pixabay

At the Global Infrastructure Facility (GIF) Advisory Council Meeting in March, we talked about construction risk and the way it shapes the delivery environment early in a project’s investment life. As a practicing engineer accustomed to attacking construction risk at the granular level, I enjoyed the broader discussion, particularly from the banking and credit perspective (meeting outcomes).

Unfortunately, construction risk realization will continue to be the norm. Perhaps we need to consider taking the longer view to reach potential investors by aligning the risk environment with risk tolerance.

Here are three ways to do this:

Re<Boot>: A more inclusive approach to rapid skills training programs

Alicia Hammond's picture

Digital technologies—mobile phones, computers, and the Internet—are reshaping our world. But to leverage this transformation, women and men will need to have the right mix of skills. Coding bootcamps, a type of rapid skills training program, have emerged as one approach to filling the gap.
 
Yet little is known about what works. In response, the World Bank Group developed Decoding Bootcamps, an initiative that evaluates the impact of coding bootcamps, with a focus on youth employment in emerging markets. Impact evaluation results from Lebanon, Colombia, and Kenya are forthcoming, but one important lesson has already become clear: To attract and retain women, bootcamps need a reboot.
 
With the support of the Umbrella Facility for Gender Equality, teams working on innovation and entrepreneurship, social inclusion, and gender equality have come together to design and test the impact of a different approach: coding bootcamps centered on the needs of women.
 
As groundwork, we set out to learn from providers who are trying to achieve this goal. Their experiences highlight three ways in which ICT skills training can attract, retain and help women thrive.

A new generation of CEOs: Six businesswomen discuss entrepreneurship and start-ups in West Africa

Alexandre Laure's picture

Also available in: Français

Across West Africa, it’s very difficult to find a workplace as innovative and diverse as business incubators. Known for their young, energized, and often gender-balanced staff, these organizations are an encouraging indication of what’s in store in the coming decades, as the region presents a younger, more open, and increasingly female workforce to the world.

In francophone West Africa—where there was not a single incubator at the beginning of 2011—six young women are currently leading major incubators, some of which have World Bank Group support.   

With backgrounds in computer science, engineering, finance, logistics, project management, and social entrepreneurship, these women have profiles that are just as varied and impressive as the start-ups they support. Given the World Bank Group’s commitment to promoting gender equality, as laid out in the Gender Strategy, our team talked to them to learn more about their work and leadership experience.   

Catalyzing Change: Regional Roundtables on Infrastructure Governance

Olivier Fremond's picture
Also available in: Français


Photo: Pressmaster / Shutterstock.com

In the aftermath of the global financial crisis, policy makers focused on improving access to finance, missing the crux of the problem: governance.

In pursuit of achieving the Sustainable Development Goals through the 2015 Addis Ababa Action Agenda on financing for development, the Regional Roundtables on Infrastructure Governance* were created to promote a community of practice comprising government officials and the international development community to strengthen capacities within developing countries and establish good practices in infrastructure governance across various government sectors.

The inaugural roundtable, hosted by the Development Bank of Southern Africa, will take place in Cape Town on November 2-3, 2017, and aims to emphasize that for the commercial financing of infrastructure to be a viable option, governance reforms must happen.

From Policy Dialogue to Implementation: How to Solve Public-Private Coordination Failures?

Steve Utterwulghe's picture
Modern industrial policies (IPs) or productive development policies (PDPs) are about identifying and removing constraints to the growth of productive sectors, such as agriculture, tourism, forestry, etc., which implies providing public goods and fixing market failures related to those sectors. Coordination and structured public-private dialogue are critical tools for developing and implementing such policies.



Incentivizing Bangladesh’s shoemakers to be greener

Nadia Sharmin's picture


“200 pieces of Selfie are ready, please call them to collect,” Nurjahan, an entrepreneur selling a local brand “Selfie” shoes, tells her husband to call a local shop owner to pick up his order.

We recently visited Bhairab to get a first-hand look at one of the important industrial clusters in Bangladesh, where Nurjahan’s shoe microenterprise is located.

Bhairab is about 85-kilometer from the capital Dhaka, and its shoe cluster is well organized into around 7,000 factories of which 40 percent are micro factories (employing between two to seven workers). They are mostly family-run, producing low-cost shoes, mostly for the local market at prices as low as just Tk100 – or around $1.25 a pair. Virtually none of these factories have access to bank financing, although some access credit from NGOs. In Nurjahan’s shoe factory, about 45 women and 12 men work in five sheds. Over the last 30 years, her micro business has grown into a small enterprise.

Bangladesh corridor vital to India’s ‘Act East’ policy

Sanjay Kathuria's picture
India-Bangladesh land border crossing, Photo by Sanjay Kathuria
India-Bangladesh land border crossing. Credit: Sanjay Kathuria

Deepening connectivity and economic linkages between India and Bangladesh will be critical for the success of India’s ‘Act East’ policy.

Here are five priority areas that have the potential to change the economy of Northeast India:

1. Transport Connectivity

After 1947, Northeast (NE) India has had to access the rest of India largely via the “Chicken’s Neck” near Siliguri, greatly increasing travel times. Traders travel 1600 km from Agartala (Tripura) to Kolkata (West Bengal) via Siliguri to access Kolkata port. Instead, they can travel less than 600 kms to reach the same destination via Bangladesh, or even better, travel only 200 km to access the nearby port of Chittagong in Bangladesh.

This is set to change as close cooperation between Bangladesh and India (including various ongoing initiatives such as the transshipment of Indian goods through Bangladesh’s Ashuganj port to Northeast India, expanding of rail links within Northeast India and between the two countries, the BBIN Motor Vehicles Agreement) can dramatically reduce the cost of transport between Northeast India and the rest of India.

The resultant decline in prices of goods and services can have a strong impact on consumer welfare and poverty reduction in the Northeast. Such cooperation also opens up several additional possibilities of linking India with ASEAN via Myanmar.

Moving forward, expanding direct connectivity between NE India and the rest of India via Bangladesh, while giving Bangladesh similar access to Nepal and Bhutan via India, is critical.

2. Digital Connectivity

Broadband connectivity of 10 gbps is now being provided from Bangladesh’s Cox’s Bazar to Tripura and beyond, to help improve the speed and reliability of internet access in NE India. Bangladesh has the capacity to provide more.

PPI Database users leave their mark on the new resources section

Deblina Saha's picture


Photo: yuttana Contributor Studio / Shutterstock.com

Most of us carry out research and report our findings with the expectation—or at least a hope—of an audience.
 
Yet fewer amongst us are familiar with our audience, even though their feedback may help us improve our work.
 
We, the team behind the Private Participation in Infrastructure (PPI) Database—the most comprehensive database of private investments in infrastructure in the developing world—continue to strengthen the database and our ensuing analyses. Learning more about our audience is an important component of these efforts. 

Nigeria: Getting PPPs right

Laurence Carter's picture

The Nigerian government’s Infrastructure Concession Regulatory Commission has blazed an important trail, publishing details of 51 Federal Public Private Partnership (PPP) contracts—the culmination of a year’s work with the World Bank to ensure that all, non-confidential information is easily accessible to the public. We hope other countries will follow Nigeria’s trend-setting lead.


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