Another PSIRU critique of another version of the World Bank private sector development strategy

In December 2001, the World Bank (WB) issued a revised strategy for Private Sector Development (PSD). This paper reviews the changes made to the strategy in the December draft and considers the Bank's policy position.

The article concludes that the PSD program has the following goals:

• extending the reach of markets
• fostering a sound investment climate
• direct support for private firms
• improving Basic Service Delivery
• private participation in infrastructure
• private provision of social services
• output-based aid and tapping private initiative for public services

The article recommends that:

• the bank should have distinct policies for improving infrastructure, developing the private sector, attracting FDI and improving conditions for the poor. These policies need to be clear on the objectives and their social, economic and developmental implications
• in focusing on private firms and the role of the IFC, the currently proposed polices proposed are in danger of undermining the remit of democratically elected governments. The policies need to placed greater emphasis on the central importance for democratic accountability
• strategy for infrastructure development should be based on further exploration of the relative roles of the public sector, democratically elected public authorities, the local private sector and MNCs