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.”