Premium
HOW LARGE IS THE PRIVATE SECTOR IN AFRICA? EVIDENCE FROM NATIONAL ACCOUNTS AND LABOUR MARKETS
Author(s) -
STAMPINI MARCO,
LEUNG RON,
DIARRA SETOU M.,
PLA LAURÉLINE
Publication year - 2013
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12000
Subject(s) - private sector , productivity , labour economics , private sector development , wage , informal sector , economics , consumption (sociology) , primary sector of the economy , sample (material) , economic sector , public sector , business , economy , economic growth , chemistry , chromatography , sociology , social science
In recent years, the private sector has been recognised as a key engine of A frica's economic development. Yet, very little is known about its size and characteristics. We present novel estimates for 50 A frican countries and show that the private sector accounts for about two thirds of total investments, four fifths of total consumption and three fourths of total credit. Countries with small private sectors include a sample of oil exporters and some of the poorest countries in the continent. Surprisingly, the size of the private sector does not appear to be significantly correlated with growth performance. Labour market data reinforce the idea of a large private sector, which provides about 90% of total employment opportunities. However, most of this labour is informal and characterised by low productivity: permanent wage jobs in the private sector account on average for only 10% of total employment. S outh A frica is the notable exception, with formal wage employment in the private sector representing 46% of total employment. Finally, we find evidence of negative private sector earning premiums (−13% on the average), suggesting that market distortions abound. These are likely to prevent the efficient allocation of human resources and to reduce the overall productivity of the A frican economies.