Privatized Public Enterprises Performance Evaluation: Recent Ethiopian Experience
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Date
2005-06
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A.A.U
Abstract
Ethiopia has been in the process of privatization since the mid 1990s. Attempts were made
in this study to assess performance of privatized public enterprises during the last decade
in Ethiopia. Percentage share of privatization proceeds to total revenue of the country for
the years 1995/96 - 2001/02 were on average below 6 percent which implies that the prime
objective of privatization in Ethiopia, revenue generation for financing development
activities undertaken by the government, does not realized yet.
Privatization process in Ethiopia with regard to employment seems painless. However, the
fate of employees in the state farms of the country and other divestitued famer public
enterprises had been miserable for those who have no social-security system to fall back on.
Since the beginning of privatization, only slightly higher than half billion new investment is
made on privatized SOEs. Much effort has to be exerted to attract FDI to the Country.
A panel data for 41 privatized large and medium scale manufacturing and agricultural
industries covering a period of seven years (1995/96-2003/04) was taken. The hypothesis
whether the privatization performance, interms of technical efficiency and profitability, in
the public sector is indeed lower that of the post-privatization years of industries in
Ethiopia was tested
The findings of this study are mixed. Out of the six categories in this study, only in the two
cases i.e. ill the cases of food processing and beverage sectors post privatization
performance in terms of technical efficiently and profitability exhibit significant
improvement. In the rest leather and textile, chemical, metal and wood, and agriculture no
improvement is indicated both interims of technical efficiency and financial profitability.
On the basis of these findings privatization in Ethiopia doesn't meet its expectations for its
outcomes are less satisfactory. In order to improve and sustain the outcomes of
privatization, development of capital market and property right legislation, promoting good
governance and strengthening the institutional capacity of all the levels of federal units is
critical.
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Keywords
Performance Evaluation, Privatized Public Enterprises, Recent Ethiopian Experience