Public Sector Capacity, Corporate Responsibility, and Corporate Profitability in Africa

Business activities that boost public sector capacity are profitable and socially responsible. They are profitable because a competent, well-managed public sector creates and sustains rapid economic growth. They are socially responsible because improved public sector capacity enhances governance that is essential if private businesses are to expand and prosper.

Public sector support for private enterprise and industry has a long history. Contract enforcement, the maintenance of law and order, tax incentives to stimulate particular activities, grants for employee training, support for study tours, and financing of infrastructure are just a few examples. Yet, across most of Sub-Saharan Africa (hereafter Africa), the boot is on the other foot. Public sector capacities (human, organizational, institutional, and financial) are limited, the result of too little reform, over-stretched agendas, and decades of slow economic growth. In high HIV prevalence countries, these capacities are declining.

Private businesses have two options – continued detachment or constructive engagement. Remaining detached will result in the further erosion of public sector capacities compromising all possibility of robust economic growth. Constructive engagement provides an opportunity for boosting public sector capacities in ways that accelerate growth. This paper argues that continued detachment is a dead-end whereas private business engagement with the public sector will produce large mutual benefits.