Privatisation in transition economies : lessons and experience from Tanzania

Mwapachu, Aisha (2002-12)

Thesis (MBA)--Stellenbosch University, 2002.

Thesis

ENGLISH ABSTRACT: The process of privatisation has been prompted in many instances by economic necessity and high fiscal deficits prevalent in many developing countries in the 1980s. Although addressing fiscal prudence is commonly cited as the main objective, it has been argued that the choice of enterprises for privatisation suggest that the primary motivation for privatisation has been to secure World Bank, International MonetaryFund (IMF) and donor financial support. Privatisation of state assets has been a key element of the emerging new market orthodoxy concerned with redefining the role of the state. Market theories posit that sustainable development and achievement of more dynamic economic growth in most economies requires a greater role for the private sector. Underlying this consensus is the belief that resources will be used more productively if they are transferred to the private sector. The low saving capacity has led to the realisation by African leaders through the New Partnership for Africa's Development (NEPAD) initiative that Africa's achievement of long-term sustainable development is dependent on its ability to create conducive conditions that will attract Foreign Direct Investments (FDI). Consequently, the importance of Multinational Corporations in privatisation transactions, especially now that most African countries have embarked on privatisation of utilities and infrastructure sector cannot be emphasised enough. This has, inevitably, led to conflicting objectives between the need to mobilise foreign investors, particularly in countries such as Tanzania where broadening of ownership is a primary objective of privatisation. It is important to note that Tanzania's Parastatal Sector Reform Programme was initiated lnthe context of broader policy changes initiated since the late 1980s. The privatisation programme has formed part of comprehensive economic reforms and Structural Adjustment Programmes(SAPs) prescribed by the World Bank and IMF. This study presents findings on the extent of privatisation in Tanzania, its process, challenges and the impact it has had on the economy since 1993. The study explores and identifies key factors that have led to the varying performance of privatised enterprises. Key lessons and experience from Tanzania's privatisation exercise are also outlined. The study concludeswith possible areas for further research.

AFRIKAANSE OPSOMMING: Ekonomiese noodsaak en groot fiskale tekorte in menige ontwikkelende lande gedurende die 1980s het in baie gevalle aanleiding gegee tot die privatiseringsproses. Alhoewel die aanspraak van fiskale omsigtigheid gewoonlik as hoofrede aangegee word, is daar ook aangevoer dat die keuse van ondernemings vir doeleindes van privatisering daarop dui dat finansiële ondersteuning van die Wêreldbank, Internasionale Monetêre Fonds (IMF) en donateurs die eintlike motivering onderliggend aan privatisering is. Privatisering van staatsbates was 'n kern element van die opkomende nuwe markortodoksie wat betréf die heromskrywing van die staat se rol. Markteorieë postuleer dat handhaafbare ontwikkeling en die bereiking van meer dinamiese ekonomiese groei in die meeste ekonomieë 'n groter rol aandui vir die privaat sektor. Onderliggend aan hierdie konsensus is die aanname dat hulpbronne meer produktief eksploiteer sal word as dit na die privaat sektor oorgedra word. Die lae spaarkapasiteit het Afrikaleiers laat besef dat deur die New Partnership for Africa's Development (NEPAD) inisiatiewe, Afrika se langtermyn handhaafbare ontwikkeling afhanklik is van sy vermoë om bevorderlike omstandighede te skep wat direkte buitelandse investering sal lok. Die belangrikheid van multinasionale korporsies in privatiseringstransaksies, veral nou dat Afrikalande 'n poging in die werk gestel het op privatisering van gebruiksgoedere en die infrastruktuur sektor, kan derhalwe nie genoeg beklemtoon word nie. Dit is belangrik om kennis te neem van Tanzanië se Parastatal Sector Reform Programme sedert die laat 1980s wat in die konteks van breër beleidsveranderinge inisieer is.' Die privatiseringsprogram het deel gevorm van omvattende ekonomiese hervormings en strukturele aanpassingsprogramme soos voorgeskryf deur die Wêreldbank en die IMF. Bevindings oor die omvang van privatisering in Tanzanië, die proses van privatisering, uitdagings en die impak wat dit op die ekonomie gehad het sedert 1993, word in hierdie studie gebied. Hierdie studie eksploreer en identifiseer kern faktore wat tot die wisselende prestasie van geprivatiseerde ondernemings gelei het. Belangrike lesse en ervaring uit Tanzanië se privatiseringsoefening word ook toegelig. Die studie sluit af met moontlike areas vir verdere navorsing.

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