Bottlenecks to Private Sector Development in Sub-Saharan Africa: A Firm-Level Analysis

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This paper analyzes the major bottlenecks to private sector development in sub-Saharan Africa using novel methods based on firm-level data. Employing both perception-based and proxy-based methodologies, we identify and measure seven key obstacles to development. Our findings reveal significant divergences between firms' perceptions and objective measures of business constraints. While firms frequently cite infrastructure deficiencies as their primary concern, our proxy-based analysis identifies corruption followed by financial constraints as the most severe impediments to firm growth. Furthermore, small and medium-sized enterprises face disproportionate challenges compared to large firms, especially regarding financial access and human capital limitations. These findings underscore the need for targeted, context-specific policy interventions that address the objective constraints facing different types of firms across diverse economic environments in sub-Saharan Africa.

Subject: Business environment, Competition, Corruption, Crime, Economic sectors, Education, Financial markets, Income, Infrastructure, National accounts

Keywords: Business environment, Competition, Corruption, Firm-level data, Income, Infrastructure, Principal component analysis, Private sector development, Sub-Saharan Africa, Sub-Saharan Africa