Privatisation: A Challenge for Sub-Saharan Africa
Privatisation: A Challenge for Sub-Saharan Africa
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
Privatisation A Challenge for SubSaharan Africa - To learn more about this author, visit OECD Development Centre's Website.
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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
Privatisation A Challenge for SubSaharan Africa - To learn more about this author, visit OECD Development Centre's Website.
Like this article? Share it with your friends
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