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 sub1Saharan 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 sub1Saharan 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
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