'Private sector development' in Africa

The economic policy agenda which promoted a non-interventionist state, trade openness, deregulation, liberalization and privatization as the formula for unleashing private sector productive forces in developing countries is discredited. The economic record of the past decades does not support this theory. Former proponents of the agenda acknowledge that the 'supply side' response of the private sector, especially in African countries, has not been what was expected in reaction to these economic reforms. Consensus is building on the need for industrial policy, and the debate is over what kinds of state interventions are likely to help build the private sector.

Thus, the time is ripe for an evidence-based discussion of what is 'private sector development' in Africa, and how it promote it. In order to move the debate forward, we need more analyses of how actual existing industries are created, expanded and remain competitive in the contemporary global economic context.

Lindsay Whitfield, Project Senior Researcher at DIIS, contributes to this discussion by examining the emergence and trajectory of a new agro-industry in Ghana: the fresh pineapple export industry. Whitfield explores how this new agro-industry emerged as well as how it responded to changes in international competition. She explains the limited expansion of the industry and its declining international competitiveness by looking at how Ghanaian exporters developed technological capabilities initially and the incentives and disincentives to building those capabilities. The industry has its origins in Ghanaian professionals, civil servants and import businessmen who sought new economic opportunities in the 1980s and 1990s.

The author argues that at the heart of the industry's crisis was an inability to further develop technological capabilities. The determinants of technological capability development are both firm level and national level. Thus, the crisis had systemic features that have broader implications for understanding the obstacles to developing new agro-industries in Ghana as well as other African countries. She also argues that small farmers can have a place in high value agricultural export industries, but they must be linked into supply chains in ways that increase their capabilities. The paper compares Ghana’s experience with that of the Ivory Coast and Costa Rica, its main competitors.