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A Limited Impact on Private Sector Development

Guest post by: OECD Development Centre

Article Overview: Since the beginning of the process in 1990, the number of privatisations through public flotation has been only 4 per cent of total transactions. Moreover, the trend is downward, confirming the difficulty in African countries of building stock exchanges and capital markets, still often used by governments to raise loan finance rather than capital for industry.

A Limited Impact on Private Sector Development

Since the beginning of the process in 1990, the number of
privatisations through public flotation has been only
4 per cent of total transactions. Moreover, the trend is
downward, confirming the difficulty in African countries of
building stock exchanges and capital markets, still often
used by governments to raise loan finance rather than
capital for industry.

Some countries have attempted to give priority to local
investors. In Ghana, for instance, where restrictions on nonresident
portfolio investors apply, and in South Africa with
special offers for historically disadvantaged individuals.
However, the participation of the local private sector is also
constrained by poor management and the lack of access to
cheap financing. Only Mauritius has attempted to create
small and medium-sized entities in the power sector. There,
close to 25 per cent of annual electricity generation comes
from local privately owned and operated cogeneration plants
in the sugar industry.

by Lucia Wegner
Privatisation: A Challenge for Sub-Saharan Africa
This Policy Insights is derived from the special theme section
of the 2003 African Economic Outlook and on a 2004 OECD Development Centre Study

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Article Tags: african countries, african economic outlook, capital markets, cogeneration plants, disadvantaged individuals, electricity generation, ghana, governments, oecd development centre, policy insights, poor management, portfolio investors, power sector, private sector, sized entities, south africa, stock exchanges, sub saharan africa, sugar industry, wegner



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