Tweet

Privatisation: A Challenge for Sub-Saharan Africa

Guest post by: OECD Development Centre

Article Overview: Thirty-eight sub-Saharan African countries have implemented privatisation programmes, following the mid-1980s pattern in the OECD countries: privatisations of small and medium-sized enterprises in the early 1990s; and larger enterprises, including, companies in the utilities sector, by the mid-1990s.

Privatisation: A Challenge for Sub-Saharan Africa

The Record So Far

Thirty-eight sub-Saharan African countries have implemented
privatisation programmes, following the mid-1980s pattern in
the OECD countries: privatisations of small and medium-sized
enterprises in the early 1990s; and larger enterprises,
including, companies in the utilities sector, by the mid-1990s.

There had been 2 535 privatisation transactions in sub-
Saharan Africa by 2002. French-speaking countries (Côte
d’Ivoire, Madagascar, Mali, Niger and Togo) were the first
to carry them out, joined in the late 1980s, by some
Portuguese and English-speaking countries (Mozambique,
Nigeria and Ghana). The number of privatisations peaked
at 495 in 1995. The total sale value for the region by the
end of 2002 is estimated at $8.8 billion, against $46 billion
in transition economies and $177 billion in Latin America
and the Caribbean. Lower proceeds reflect the poor financial
condition of the companies listed for privatisation.

Sales values differ substantially from the number of transactions.
Early privatisations were numerous but yielded relatively little.
Utilities and strategic sectors of the economy contained fewer
candidates but, initially at least, brought higher proceeds.
The spectacular peak in 1997 was caused by the sale of
30 per cent of South Africa’s Telkom worth $1.26 billion.

West and Southern Africa are the most dynamic zones
in sub-Saharan Africa for the number of transactions
and the value of sales. South African privatisations,
however, are fewest but produce the highest proceeds
in sub-Saharan Africa ($179.3 dollars per transaction),
because the process has focused on large entities in
transport, defence and telecommunications. Conversely,
in the same region, Mozambique and Zambia rank first
and second in the number of transactions in all sub-
Saharan Africa, yet proceeds are relatively slim,
respectively $0.7 and $2.8 per transaction because the
sales involved small retail establishments and the
dismantling of large non-core entities in the residentialhousing
sector.

Agriculture, extractive industry, manufacturing,
construction, and tradable services accounted for 70 per
cent of all privatisations up to the end of 2002, before
attention turned to power, water, telecommunications
and transport. Divestitures in the latter sectors have
been delayed, despite their often being unproductive,
inefficient and badly managed under public ownership,
because utilities:

• provide both production inputs and services that are
part of the consumption basket of households;
• are an essential tool of distributive policy making, since
they can be used by politicians to support either
progressive policies or, in contrast, clientelist objectives;
• display very specific features in terms of organisation
(e.g. the possibility of economies of scale and
important sunk costs) naturally leading to market
concentration; and
• provide wage employment for an important urban
workforce.

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

Related Articles
  Lessons Learned
  The Efficiency and Labour Market Impact Have Varied Across Sectors
  Proper Regulation Is Crucial to Ensure Welfare Gains
  Has Privatisation Benefited the Poor?
  Local Entrepreneurship in Southeast Asia and Subsaharan Africa: Networks and Linkages to the Global Economy

Article Tags: african countries, early 1990s, english speaking countries, french speaking countries, ivoire, latin america, medium sized enterprises, mid 1980s, mid 1990s, niger, oecd countries, proceeds, retail establishments, sales values, sectors of the economy, small and medium sized enterprises, southern africa, sub saharan africa, telkom, transition economies



Related Forum Posts
Re: need advice - Africa is a pretty big place I think it is a question of where in Africa you would like to open a call centre. South Africa for example actually has plenty of call centres already operating, so it would very much depend on what part of Africa you are considering. MichelleJ
Re: Newbie from Africa - Hello Biiyke Welcome to the forum. Which part of Africa are you from it is quite a big continent? I live in South Africa. MichelleJ
Adventure travel to Africa. - Africa is a place where adventure is taking place. If you are a travel who loves adventure, nature, culture you should visit Africa. Safari Village operator is a .leading tour operator in Kenya who are offering marvelous tour packages to Africa. Saffari Villages Online is a trusted name for africa travel.
Re: Newbie from Africa - [quote="Evan":22gvtxlq]Welcome to the forums Biiyke! You asked if we know any sellers who were trying to reach the African market... I think you'd honestly have more luck going the other way - try to find sellers in Africa and sell to the rest of the world.[/quote:22gvtxlq] Hello Evan, You are absolutely correct.Thank you for your advice.That's actually the whole idea,Africa to the world and the world to Africa. So I will throw more weight on that area.
Re: New top Banner - my feedback - [quote="Evan":3lwxhlef]Hi Ben, I liked how you showcased the prize in the top banner and I updated it along with putting a funky background on the picture similar to some of the textures you had. I also put in a community picture that Kevin suggested. What do you think about the new layout? Any more suggestions?[/quote:3lwxhlef] Hi Evan, I think it looks great! The only downside is that the forums seem to be moving slower after the change. Perhaps you can use a picture of the audience from your SEO for Africa seminars as an alternative community photo (i.e. it would switch back and forth between your Mastermind Group and your SEO for Africa attendees every time you refresh the page). This way, you'd also be able to try Ben's idea of having an orange background behind the SEO for Africa group.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Track Your Time for Increased Productivity

How do I finance a franchise?

How to choose your executive coach -1

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.