An Assessment of the Process of Privatization in Ethiopia

Hailu, Hishe (2005) An Assessment of the Process of Privatization in Ethiopia. Masters thesis, Addis Ababa University.

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Abstract

The Ethiopian government has inherited a shattered economy due to the protracted war and misguided economic policy of the Dergue. To reverse this vice and to fulfill the international criteria to qualify for aid it has commenced privatization in 1994. However, this has not been an easy task partly because privatization has been a surge rather than a choice whereby its rejection has been deemed as infringement and anachronism that could result in the denial of aid and financial support but mainly due to the ineptness of the government and immaturity of the preconditions essential to privatization. Besides, the process has been compounded by the lack of transparency in the areas of stakeholders’ participation, proceeds utilization and valuation system. It has also been marked by the neglect of social dimensions, slow process and less FDI attraction. Hence, this study examines the process of the decade old Ethiopian privatization which is in its half way considering the number of enterprises remaining for sale. Questionnaires, discussions with the main stakeholders and experts from the affiliated offices and relevant data related to the last ten years from different organizations have been used to generate the crucial bases for the analysis. Both purposive and simple random samplings have been used. The findings show that the government has a holier than thou attitude towards participation whereby it excludes all the stakeholders that are categorically affected by privatization. The process has been conducted clandestinely and with out dissemination of the slightest of the necessary information to the public. The Agency is ill equipped with both quality and quantity of staff which has a domino effect on the whole process. The revenue generated is small but agonizing enough a substantial amount of it is not collected so far and the proceeds utilization is not publicized. Discrepancies between what is written and practiced are also observed. The Agency’s relationship with the lead institutions is so weak that what it decides is reversed by its affiliates. Besides, the process was moving at a snail’s pace whereby it privatized 214 enterprises in the last decade with 111 big enterprises remaining. A poor FDI attraction is also one of the manifestations of the process both in terms of capital and mix. Out of the 25 enterprises sold to foreigners, 23 of them are bought by one. There is a huge grievance from the workers’ side that they are exposed to high social pains. Yet, no impact assessment has been done so far. Problems in the valuation system are rampant and wrongly pronounced by the different stakeholders. Finally, no background investigation of the buyers has been conducted. The policy implications are that there should be mechanisms of transparency, awareness creation, reaching consensus and tough communication campaigns. The Agency should hire and maintain professionals of high caliber to run the process effectively. Moreover, impact assessment should be done to know the status of the privatized enterprises. There should be resurgence of attention to the workers in the post privatization scenario to design efficient mechanisms and to correct problems that cropped up in the aftermath of privatization. As privatization is new and demanding, necessary training and education should be given to the staff. New mechanisms should also be designed to attract FDI.

Item Type:	Thesis (Masters)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce H Social Sciences > HM Sociology
Divisions:	Africana
Depositing User:	Tim Khabala
Date Deposited:	04 Jul 2018 09:17
Last Modified:	04 Jul 2018 09:17
URI:	http://thesisbank.jhia.ac.ke/id/eprint/6584

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