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Rethinking the Ethiopian Privatization

Minga Negash, Seid Hassan, Abu Girma and Ezana Kebede have made a case for “Rethinking the Ethiopian Privatization,” focused on state owned enterprises. “Privatization in a networked or captured economy of course transfers public assets in disguised and opaque ways to those who are already connected. Privatization without institutional reforms may only relieve the government from temporary illiquidity but does neither affect the efficiency nor make the market contestable nor prevents throwing away public assets at questionable prices.”)

Trade unions and civil society organizations are shut out of the government’s new ‘Privatisation Advisory Council’

Public services unions and civil society organizations are shut out of the government’s new ‘Privatisation Advisory Council’. “A look at the advisory council's list of members shows why we should be worried about conflicts of interest. Kassahun Kebede is the Managing Partner of Cepheus Growth Capital Fund, a private equity fund focused primarily on investments in Ethiopia. Eyesuswork Zafu and Aynalem Megersa are board members of two private banks that could potentially be involved in the privatization process. These kinds of banks often facilitate payments, provide loans or may have existing relationships with the enterprises. Abebe Aemirosellasie, another member, is a director of the International Monetary Fund's African Department. International financing institutions often provide loans, negotiate funding conditions and impose restrictions on governments. Their objectives are not always aligned with the government's aim and do not necessarily take into account the impacts of the structural adjustments they often advocate.” The government was tendering for advice from global business consultancies including McKinsey and PwC, the country’s information minister told Reuters in July. McKinsey is currently dealing with a major scandal in South Africa over its practices there, including charges of corruption for its alleged role in a “five year looting spree” of government structures. McKinsey is currently dealing with a major scandal in South Africa over its practices there, including charges of corruption for its alleged role in a “five year looting spree” of government structures.

Source: AF

Learning from Africa’s Experience of Privatization

To coincide with Prime Minister Abiy Ahmed’s visit to the U.S., during which concerns were voiced about his stated intention to engage in widespread privatization of state-owned enterprises, Ewnetu Haile takes a look back over the recent history of privatization in Africa, periodizing it and offering some suggestions as to why it slowed or ground to a halt in the past. “Unsuccessful privatization programs are associated with high levels of corruption, poor value for money to the tax payer and increasing levels of inequality. On the contrary, the [LSE] paper notes, positive indicators for success would include strong government ownership of the process, well-designed and sequenced reforms, the implementation of complementary policies, the creation of regulatory capacity and good corporate governance structures, attention to poverty and social impacts, and strong public communication.” He adds that “privatizing health care and public transport may not be as successful as the profit motive is less important than public interest.”

Source: aigaforum.com

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