The private sector continues to be a critical driver of job creation and economic growth. However, several factors can undermine the private sector and, if left unaddressed, may impede development. Through rigorous face-to-face interviews with managers and owners of firms, the World Bank Group’s Enterprise Surveys benchmark the business environment based on actual experiences of firms.
This blog focuses on Ghana, where 720 firms were surveyed covering six business sectors—(i) Food, (ii) Chemicals, Plastics, & Rubber (iii) Basic Metals, Fabricated Metals, Machinery & Equipment (iv) Other Manufacturing (v) Retail (vi) Other Services.
Use of financial services for investments and working capital on the rise
According to the 2012 Ghana Enterprise Surveys (ES), 21% of firms used banks to finance investments (vs. 16% in 2007) and 25% used banks to finance working capital (vs. 21% in 2007). However, while access to financial services has improved, it is still lower compared to the average for around 135 countries with ES data. The corresponding global averages for bank finance for investments and working capital are 25% and 30%, respectively. Moreover, in Ghana, 23% of the firms surveyed had a bank loan or line of credit, compared to the global average of 34%.
Private Sector Development
Cross posted from the Private Sector Development Blog
In 2013, investment commitments to infrastructure projects with private participation declined by 24 percent from the previous year. It should be welcome news that the first half of 2014 (H1) data – just released from the World Bank Group’s Private Participation in Infrastructure (PPI) database, covering energy, water and sanitation and transport – shows a 23 percent increase compared to the first half of 2013, with total investments reaching US$51.2 billion.
A closer look shows, however, that this growth is largely due to commitments in Latin America and the Caribbean, and more specifically in Brazil. In fact, without Brazil, total private infrastructure investment falls to $21.9 billion – 32 percent lower than the first half of 2013. During H1, Brazil dominated the investment landscape, commanding $29.2 billion, or 57 percent of the global total.