Private sector key to the region’s development, says EBRD chief
dubai — The private sector will be the driver of sustainable development in the Middle East and North Africa, said Sir Suma Chakrabarti, President of the European Bank for Reconstruction and Development (EBRD).
Speaking at the World Government Summit in Dubai, Chakrabarti noted that the private sector is vital if the region hopes to surmount the developmental challenges it faces, such as the urgent need for employment for millions of young people entering the job market for the first time — which he called “the youth bulge.
“The region will need to create six million new jobs each year simply to absorb the new labour market entrants and bring down unemployment,” he said. “There is a struggle by the region’s economies to create the jobs required to keep the region’s young people in meaningful employment.
“They (states) aren’t the answer,” he added. “The state sector provides security to those who work in it, but rarely the dynamism and innovation that the economy needs.” However, Chakrabarti identified several conditions that he believes pose challenges for the growth of the private sector, such as corruption.
“In some countries, more than 50 per cent of companies identified corruption as an impediment to their work,” he noted. “They try to avoid government. We need to do a lot, lot more to tackle this obstacle.” Additionally, Chakrabarti noted that political instability remains a problem in some countries, and that “unreliable supplies of electricity” stifle the private sector in others. “What made this so acute a problem in the past (was) the rapid expansion of demand for power,” he said, but noting that the EBRD sees the private sector as the “catalyst for one of the great transformations of our times” — renewable energy.
Chakrabarti also noted that many private sector companies — particularly smaller ones — lack access to finances. “The evidence suggests that many private sector firms have already in a way reconciled themselves to this state of affairs,” he noted. Lastly, Chakrabarti noted that many regional education systems are leaving young people unprepared for the realities and needs of the labour market. “The education systems are turning out young people, quite frankly, without the skills that the market needs,” he said. “Technical and vocational education and training suitable for private sector jobs, are too low a priority. On-the-job training is poor, if it exists at all,” he added.
Despite the challenges — which Chakrabarti said may seem “daunting” — he remains optimistic about a future driven by the region’s private sector. “The formal private sector is a region’s main engine for growth and job creation. Fundamentally, we need active engagement of reforming governments, co-investors and donors to make things happen.”
bernd@khaleejtimes.com