Does Privatisation Meet the Expectations in Developing Countries? A Survey and Some Evidence from Africa

Abstract

Although privatisation has turned into a worldwide phenomenon, it is only recently that developing countries have launched extensive privatisation programmes. This paper surveys the empirical literature on the operating and financial performance of newly privatised firms in developing countries. The major studies in the field suggest that privatisation improves the operating performance of former state-owned enterprises. However, performance improvements seem to be less marked for firms in less developed countries. The paper also provides new evidence for a subset of firms privatised exclusively in African countries. The preliminary results for a sample of 16 privatised firms in Africa suggest that privatisation resulted in profitability improvements, although not significantly. Efficiency as well as output measured by real sales decreased slightly but not significantly, while capital expenditures rose significantly in the post-privatisation period.