Perceptions of business and governance in Africa : a survey of eight countries

The main finding is that most business leaders, irrespective of firm size, still see major problems with governance. Despite a decade of reform, they find government officials lacking the will or capability to provide a legal, regulatory, and political environment in which private enterprise can flourish. This tends to confirm the broad range of studies that identify continued serious shortcomings in governance in Africa. The perception, however, is that conditions have ameliorated somewhat in the past several years, though whether this is the result of governance reforms or the halo effect of other factors (an improved world economy, changes in national leadership) is not clear from this study. A second key finding concerns business associations. Many such groups were set up or revitalized in Africa during the 1990s with a view to reproducing the advocacy and informational functions performed by business associations in the advanced and emerging industrial countries. It has been an open question, however, whether the African groups would represent all their members" interests, or become captive to the state or subordinated to the larger members. The answer seems to be that the associations work reasonably well, especially where these groups are seen as less dependent on government. African business associations are likely to be a building block for future progress in governance. A third finding points to a modest perception gap between the private and public sectors. Government officials generally believe they are doing a better job than business managers give them credit for. This may have a lulling effect that will slow the pace of institutional reforms. Then again, government officials accept the deficiency of public policy toward business, even if their disapproval does not register as strongly as it does in the private sector. The perception gap points to a fourth key finding: the risk of unmet expectations. Most survey respondents expect governance conditions to improve over the next few years. It will be difficult to meet these higher expectations simply by continuing the modest governance reforms of recent years. Yet not meeting expectations is likely to dampen economic confidence and make lobbying for additional market liberalization seem pointless. For the future, African countries must not only accelerate the pace and range of reform, but also find ways of keeping alive the sense of momentum so that economic actors do not become discouraged into withdrawing from the market or from the policy process. (Author abstract, modified)