Private sector is driving economies and leading Global trade growth » Capital News
By Chris Diaz,
NAIROBI, Kenya, Nov 21 -The private sector plays a critical role in driving economies and leading growth across the globe.
Through innovation, entrepreneurship, and investment, private businesses create jobs, generate wealth, and spur economic development.
One of the primary ways in which the private sector drives economies is through job creation. Small, medium, and large businesses alike are responsible for the vast majority of jobs in most countries and this is also confirmed by International Labour Organisation which states that over 90 per cent of jobs are in the private sector.
To firm up the point further with available data, IMF says that the private sector accounts for over 80% of GDP in most countries and it appears that the growth is not a result of the size of the public sector, rather a reflection of constraints that impact the dynamism of the private sector.
By employing workers and paying wages, businesses provide people with the means to support themselves and contribute to economic activity. When businesses grow and expand, they create even more jobs, leading to further economic growth and prosperity.
Private sector also generates wealth through investment and innovation. Businesses invest in new technologies, processes, and products that drive productivity and efficiency.
This innovation leads to increases in output, lower costs, and higher quality goods and services. As a result, businesses are able to expand their markets, increase their profits, and create more wealth for themselves and their stakeholders.
This wealth creation not only benefits businesses, but also stimulates broader economic growth like for instance, trade in goods and services amounted to 31.0 trillion dollars about two years and this has been on an upward trend, a good rise year-on-year.
Moreover, the private sector plays a crucial role in fostering entrepreneurship and innovation. Entrepreneurs are the driving force behind new ideas, products, and technologies that have the potential to revolutionize industries and create new markets.
The private sector provides the necessary support and infrastructure for entrepreneurs to succeed, through access to capital, networks, and markets.
Available data shows that global trade-to-GDP ratio showed a significant upward trajectory, rising from 20 per cent in 1995 to 31 per cent in 2022, before falling back to 29 per cent last year.
Transforming Africa’s economies
As the engine of innovation, job creation, investments and wealth generation, the private sector has the potential to transform African economies and improve the livelihoods of millions of people across the African continental trade agreement region.
With access to capital and expertise, private companies are able to invest in key sectors such as infrastructure, agriculture, and manufacturing, which are vital for economic development. These contribute to the overall growth of the economy.
Secondly, the private sector fosters innovation and technological advancement in Africa. By investing in research and development, private companies are able to develop new products and services that address the needs and challenges of the African market.
This not only drives economic growth, but also improves the quality of life for individuals and communities across the continent.
The private sector plays a crucial role in driving economic growth in Africa. As the engine of innovation, job creation, and wealth generation, the private sector has the potential to transform African economies and improve the livelihoods of millions of people across the continent.
As African countries continue to attract foreign investment and develop their own domestic industries, the private sector will play an increasingly important role in driving economic growth and sustainable development in the region.
It is therefore worthy to note that private sector’s success is essential for long-term prosperity and economic development. Governments should create an enabling environment for businesses to thrive, through policies that promote competition, innovation and entrepreneurship.
About The Author
