A Comparative Analysis of Pre and Post Privatization Performances of State Owned Enterprises (SOEs): the Case of Chemical Industry
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Date
2015-11
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Addis Ababa University
Abstract
This paper is intended to examine the pre and post privatization performance of privatized
SOEs in the Chemical Industry of Ethiopia. The main concern is to see the financial and
operational performances of the case enterprises. The study is based on literature review and
used secondary data predominantly. Moreover, some primary data sources were used. Four case
firms namely: Alkyd Resin S.C, Addis Ababa Foam and Plastic, Nefas Silk Paint and Addis
Ababa Bottle and Glass Factories were taken as point of the study. Primary data were gathered
from the respective firms through interview and Annual Audited Financial Reports were
reviewed as secondary data source. The study summarizes the privatization performance of the
case enterprises in terms of profitability and efficiency measures. The empirical evidence on the
financial and operating performances of the privatized enterprises shows a mixed result. The
result suggests that the profitability indicators ROS and ROA on average showed a better
performance while ROE on average showed a decline. The efficiency measures both sales and
income efficiency showed a better performance in all the case firms and the industry [case firms
taken as industry] as a whole. While the efficiency measures in terms of the total and fixed asset
turnover exhibited a declined performance. The performance indicators as measured by changes
in output, change in employment has on average showed a positive increment. The leverage, as
expected as in the literature, resulted in a decline at industry level. The current ratio has also
improved after privatization. Moreover, the results indicated an increase in production per
employee. The findings of this research showed a mixed impact of privatization over firms’
performance
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Keywords
Chemical industry, SOEs, Owned enterprises