Short-term Impact of Privatization on Firm Performance in Ethiopia: The case of Leather Industry

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Addis Ababa University


Privatization is a very recent experience in Ethiopia though it is a worldwide phenomenon in the past three decades. This study aimed at investigating the potential impact of privatization on the financial and operating performance of State Owned Enterprises (SOEs) in the Leather sub sector as an effort to find out how the privatization of public enterprises may affect the financial and operational performance of these enterprises. The data were obtained from the annual financial reports of seven firms in the stated industry four years before and four years after privatization. Performance criteria were calculated and compared to determine whether there are differences among them in the pre- and post-privatization periods. The findings revealed that while privatization did not seriously affect privatized enterprises operating performance and profitability, it led to liquidity improvement, debt reduction, increased investments, and a decline in overstaffing. Key words: Privatization and Efficiency



Privatization and Efficiency