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December 5, 2019

Somalia Vision for Private Sector Development

The paper covers macroeconomic policies and regulations, institutional capacities, and micro aspects and firm levels performance. It pushes the idea that private sector expansion cannot happen in a vacuum, and instead underscores the importance of improving the foundations for growth that are essential for an expansion in private capital.  For example, should the new US$ 15.9 billion Horn of Africa Initiative move towards implementation, major anchor and ancillary infrastructure developments will open up markets and provide completely new opportunities for the private sector.  This is not just in terms of forwards and backwards linkages, but also in terms of direct growth and employment multipliers. If a major shift is going to occur in terms of private sector investment, the provision of public goods will be essential. The paper is supported by the results of a rapid firm level survey, providing qualitative insight on issues relating to principal constraints; such as access to financial markets, inadequate power, prevalent corruption and limited trade development, from which the authors can understand how the private sector understands the ‘risks’ and ‘rewards’ framework in Somalia, and importantly, how public private dialogue can be improved. The principal objectives of the study are therefore to document the current state of the private sector; assess the key challenges facing the operations of private sector; review the state of economic regulations; and examine the government’s involvement in major economic activities and sectors, including the promotion and facilitation of private sector investments, and the generation of productive employment.

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