Effect of Privatization on Selected Privatized Public Enterprises: Pre and Post Privatization Performance Analysis (Targeting Industries Located in Addis Ababa and its Periphery)

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Addis Ababa University


In this paper, the Effect of privatization on selected Public Enterprises in Ethiopia is analyzed by comparing the same subjects with before and after privatization. The study aimed to examine the operational performance changes due to the intervention of privatization of the newly privatized enterprises. The indicators examined are profitability, operating efficiency, capacity utilization, capital investment, and employment level. The data were analyzed using non-parametric test, namely Wilcoxon matched-paired test to test for the significance of the difference between pre and post privatization performance indicators. However, the percentages points in examined indicators show increases after privatization but these increments are not significant, as a result the effect of privatization on performance change is negligible, Out of the three surveyed enterprises in this study, only one sample showed significant difference between pre and post privatization performance indicators. It should be privatization well stressed that in order to have effective business institutions following it requires the establishment of basic stock exchange, an institution who always keen to reducing capital shocks, and also other government institutions’ assistance should be accompanied by strong rules and regulations as to well-developed private sector institutions, and capable secure business institutions. It is also recommended that it is wise to acknowledge the collaboration of other stake holder as important component for inherently to realize privatization program in Ethiopia. Furthermore, if insightful of attention given to those newly privatized firms, intensify them as organizations go through major changes in technology in place, and other complementary changes and this in turn boosts investor’s confidence for more investment following privatization. Key word: Privatization performance.



Privatization performance.