On Sun, 30 Jan 2000 07:37:17 -0500 Sidi Sanneh
<[log in to unmask]> wrote:
>
> Is privatization necessary?
>
>Sidi,
Thanks the discourse on privatization and the comments from
Hanmjatta and Jabou. THey were very lucid and
comprehensive.My comments will be limited to the role of
the state in the privatization process. In the classic
example of the Gambia, my observation is that the way the
privatization process was implemented left a lot to be
desired. Here I am referring to the demise of the GPMB a
once vibrant pillar of the national economy. Infact a lot
of public enterprises owe their creation and existence to
the funds and resources from GPMB. During the ERP, as part
of the government's divestiture and privatization process,
we saw that some PEs just disappeared after privatization.
In most cases I would say due to bad and inefficient
management. On reflection, was it wise for the government
to create the Livestock marketing board when in the
fisheries sector private companies are functioning
efficiently. How long has NPE and Lyefish been in the
market. What aboutthe creation of GAMTAN, Citroproducts
ect. Even those that were within the public domain suffered
from complacency and mismanagement. They did not prove
their economic efficiency. The "performance contracts" did
not achieve anything but the payment of huge bonuses some
the equivalent of 12 months salary and he practice was just
accepted willy nilly. From my own observation, the
implementation of these contracts were (1) very easy to
achieve or (11)they were badly designed. I believe that if
targets are going to be set for management (anywhere in the
world) they should work overtime to get the desired
results. A legacy of the ERP was the high bonuses that the
public enterprises paid. I believe that staff should be
encouraged to perform better, but paying 6-12 months of
salary while the majority of workers in the government
would just sit back and envy those who were working in the
parastatals. Where was the equity in that. I remember, my
last task for the Late Korro Ceesay was to prepare a review
of the salary structure of civil servants and people
working in the public sectors. Believe me there was a real
gap.
Coming back to my point on the role of the state in the
privatization process, incalculable errors were committed
in the past both in terms of the extent and the role of the
state. Rather than energizing the private sector as a
vital and indispensable partner, their role was stifled and
marginalized. The state indiscriminately overextended its
role and functions into activities that could be best
performed by the private sector.
As Keynes said "the important thing for the government is
not to do things which individuals are doing already and to
do them a little better .... but to do those things which
at present are not done at all".
The economic role of the state should then be to focus on
those activities that are necessary but beyond the capacity
and vision of the private sector. Providing the basic
physical and social infrastructure that enhances the
participation of the private sector in the development
process. The state should support private sector investment
by increasing its own investment, creating profitable
opportunities. So in instances where there are market
failures (how many private individuals will build a private
school in the remotest part of the Country),the government
must step in. We should proceed in privatization with
caution. As Hamjatta said problem with the soviet union was
that they were trying to reform very quickly and to fast
when the structures and mechanisms for the functioning of a
capitalist (market) system was not in place. Eventually the
soviet mafia saw an opportunity to penetrate the market and
that's exactly what they did. The West especially an
economist by the name of Jeffrey Sachs who was a key
economic adviser for the Russians government has a lot to
answer for. You do not experiment with an economy.
On the point about the small market size of African
countries limiting the attraction of foreign investment.
May I also add that some other benefits of regional
integration will be the greater bargaining power with the
rest of the world. It also minimizes duplication and thin
spreading of the already scarce resources and wasteful
competition. The Regional Bourse in Abidjan is what is
needed rather than every country having its own stock
market and for some it is just not viable.
For Africa to emerge from our economic and political
malaise, we need to actively coordinate investment and
projects in the continent. This can result in more rational
division of labor in the region and widening of the scope
for more efficient private sector investment. Having said
that, there are formidable obstacles along the way that we
need to overcome.
In terms of employment creation, there is
a limit as to what the government can do. The private
sector in Africa should be promoted as the most dynamic
sector and all incentives for their active participation
even in terms of policy formulation is required.The
economic transformation of Japan after world warII owed its
success to the government, private sector and unions
working together as partners. We can learn from their
experience.
Basil
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B.M.Jones
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