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Privatization in Sub-Saharan Africa: Some Lessons from Experiences to Date

Listed author(s):
  • Thierry Buchs

Privatization became a central element of economic reforms in most countries in Sub-Saharan Africa during the 1990s. Yet, empirical evidence regarding the impact of privatization remains scarce. Since the seminal work of CAMPBELL-WHITE & BHATIA [1998], covering transactions on the African continent until 1996, no comprehensive assessment has been conducted. At a time when public opposition to further privatization is growing, this paper aims at giving a broad overview of the impact of privatization in Sub-Saharan Africa from 1991 to 2002 in the light of recent developments, and to derive some general trends and conclusions from the body of empirical evidence available to date. During this period, about 2300 privatization transactions have taken place, generating a total sales value estimated at US$ 9 billion. The main findings on the impact of privatization are as follows: first, privatization has had a minimal one-off impact on the budget; second, firm turnover and profitability have generally increased immediately following privatization but the evidence is mixed regarding the sustainability of the initial post-privatization upswing; third, employment has been adversely affected by privatization, although the latter has not resulted in massive layoffs in absolute terms; fourth, FDI and stock markets have played a limited role in privatization transactions despite some showcase transactions; fifth, regulation and competition have often been overlooked in the privatization process, and even where they have been dealt with, enforcement problems have greatly limited their effectiveness; sixth, privatization has created new political patronage opportunities, leading to numerous corruption scandals which have damaged the credibility of the privatization process; finally, social aspects of privatizations have generally been overlooked, reflecting the tendency to focus on privatization transactions, rather than on sector reorganization at large including wider social objectives.

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Paper provided by EconWPA in its series Microeconomics with number 0502007.

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Length: 50 pages
Date of creation: 23 Feb 2005
Handle: RePEc:wpa:wuwpmi:0502007
Note: Type of Document - pdf; pages: 50
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  1. Fink, Carsten & Mattoo, Aaditya & Rathindran, Randeep, 2001. "Liberalizing basic telecommunications : the Asian experience," Policy Research Working Paper Series 2718, The World Bank.
  2. Horn Welch, Karen & McMillan, Margaret & Rodrik, Dani, 2002. "When Economic Reform Goes Wrong: Cashews in Mozambique," CEPR Discussion Papers 3519, C.E.P.R. Discussion Papers.
  3. David McKenzie & Dilip Mookherjee, 2003. "The Distributive Impact of Privatization in Latin America: Evidence from Four Countries," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Spring 20), pages 161-234, January.
  4. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (estimated from Individual Country Distributions)," NBER Working Papers 8933, National Bureau of Economic Research, Inc.
  5. Triche, Thelma, 1990. "Private participation in the delivery of Guinea's water supply services," Policy Research Working Paper Series 477, The World Bank.
  6. Kerf, M. & Smith, W., 1996. "Privatizing Africa's Infrastructure: Promise and Challenge," Papers 337, World Bank - Technical Papers.
  7. Menard, Claude & Clarke, George, 2000. "A transitory regime : water supply in Conakry, Guinea," Policy Research Working Paper Series 2362, The World Bank.
  8. Estache, Antonio & Kouassi, Eugene, 2002. "Sector organization, governance, and the inefficiency of African water utilities," Policy Research Working Paper Series 2890, The World Bank.
  9. Jeffrey M. Davis & Thomas J Richardson & Rolando Ossowski & Steven A Barnett, 2000. "Fiscal and Macroeconomic Impact of Privatization," IMF Occasional Papers 194, International Monetary Fund.
  10. Laffont, Jean-Jacques & N'Guessan, Tchetche, 2002. "Telecommuications reform in Cote d'Ivoire," Policy Research Working Paper Series 2895, The World Bank.
  11. John Nellis, 2003. "Privatization in Africa: What has Happened? What is to be Done?," Working Papers 25, Center for Global Development.
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