Nairobi (All Africa News Agency, March 22, 2000) -

The speed at which privatisation is undertaken by African countries has been
one of the benchmarks that donor institutions use to determine their aid
obligations to specific countries. That process is important to those eager
to see economic growth in Africa. The question, however, is whether
privatisation is creating the "core poor" population or contributing to the
economic growth.

The major result in the push towards public sector reforms in Africa by
principal donor and lending institutions like World Bank and the
International Monetary Fund IMF, has been privatisation and restructuring of
public enterprises all over the continent.

Privatisation is seen as a partial panacea for some crumbling Africa
economies under the heavy burden of the money mincing state enterprises
widely referred to as parastatals.

Apart from being public money guzzlers, corruption dens and inefficient
entities, the state enterprises are seen as major promoters of unfriendly
private sector business atmosphere particularly due to the monopolies and
other privileges they enjoy from the governments at the expense of the
private sector.

According to the World Bank policy research report for 1997, the public
enterprises are a major drag on fiscal budget and other quasi- financial
sources of revenue. The returns on public capital invested are very low and
in many cases negative.

The African Development Bank ADB, in one of its development reports, further
justifies the need for privatisation of state enterprises. The report
favours privatisation "since public sector inefficiency has been a major
factor inhibiting the growth of African economies, undermining
competitiveness in the private sector and imposing heavy burden on
taxpayers".

The big question though is whether the aims initialising the privatisation
processes are being achieved and whether the process will help to uplift the
growth of the Africa economies.

Although there has been no comprehensive survey conducted in Africa and
there is only scanty data available to ascertain the statistical impact of
privatisation and restructuring, unfolding events in various countries can
give a glimpse of the reality.

Opinion on the necessity of privatisation widely divided and influenced by
interests of particular stakeholder(s).

Initial study conducted by the World Bank policy research department,
leading to the publication of the Adjustment in Africa report reveals that
for those countries which took up public sector enterprises reforms earlier,
the pay-off although minimal was positive.

Statistics indicate that half of the countries which embraced adjustment in
the early years of the 1990s, experienced relatively significant growth in
gross domestic product GDP per capita growth rates.

The World Development Report 1999/2000 by the World Bank notes that Africa
led other continents in economic growth in 1998. This growth could be partly
due to privatisation process that has been taking place since 1996.

The same report states that the number of people living below the
international poverty line continues to increase in Africa. Could this then
be partly due to massive lay-off from public enterprises?

Workers protests in opposition to the massive labour lay-off that
characterise privatisation process have been witnessed in South Africa,
Nigeria, Zambia and Zimbabwe. These events present different faces of the
privatisation process.

Privatisation process was undertaken to ease the fiscal burdens of
respective governments and increase service delivery and performance
efficiency by first bringing in private entrepreneurs thirsty for profits
and demolishing the monopolies previously enjoyed by these state
enterprises.

However, according to Ken Watkins of the Oxfam's Policy Unit, the result has
been the opposite. "I think the problem, in a lot of contexts, is that
privatisation has become an euphemism for the creation of private sector
monopoly, which does not necessarily address many of the problems it was
supposed to".

At a recent Africa privatisation conference held in Johannesburg, South
Africa, delegates heard that the major threat posed by privatisation in
Africa is the joblessness that results from massive lay-off.

Statistics from the World Bank indicate that public enterprises provided on
average over 25 percent of formal sector wage employment in Africa and
accounted for over 10 percent of gross domestic product GDP.

"Many of the workers who are sacked in the privatisation process have joined
the category of the population being described as 'core poor'," says Appiah
Agyei, Secretary General of Ghana's Trades Union Congress.

Jeff Radebe, the Minister of public Enterprises in South Africa, warns
African governments against losing control of the privatisation process to
the restructuring agencies or the enterprises themselves.

"We need to avoid situations where restructuring is driven by enterprises or
privatisation agencies as this often dilutes the states ability to optimise
economic impact which can lead to a diversion from government privatisation
policy".

Agyei is particularly concerned that labour movements have been left out of
the privatisation decision making in most parts of Africa. This has meant
that the process has been insensitive to the needs of the workers rendered
jobless.

He maintains that organised labour in Africa should be involved in the
formulation of social and economic policies especially those that have
direct consequences on the workers.

A unique trend to emerge has been the controversy dogging almost all
privatisation initiatives in Africa. In Lesotho, the country's Chamber of
Commerce and Industry early this year suggested that the process be
suspended because the locals did not show any interest of buying the
parastatals.

In Zambia, the privatisation of copper mines has been suspended due to
commitment shortcomings by a strategic partner. But in Kenya, Uganda and
Nigeria corruption has undermined the processes.

So far, the common feature among all these controversies is the fact that
those in power are using their influence to privately acquire as large
stakes as possible in the privatised enterprises.

The misconception that has affected the viability of a number of
privatisations in Africa, has been the conviction that privatisation is the
cure-all for the fiscal deficits and that non performance of the state
enterprise qualifies it for divestiture.

This conviction, in many cases, has resulted into the creation of private
monopolies and a situation where the governments have lost out in policy
gains.

Indeed, Radebe says restructuring options should be considered against a
strategic assessment of the particular owned enterprise influenced by the
role played by such an enterprise in the government's overall policy
framework.

Since privatisation is here to stay, analysts urge that the best for African
countries is to identify the problems that inhibit it and which contribute
to its post negative consequences.

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