'How Privatisation Can Succeed in Africa'
Economy
From Cletus Akwaya in Abuja
For the privatisation programmes in various African countries to win the support of the people, proceeds from the exercise must be deployed to the funding of visible social services.
Also, privatisation agencies must define selection criteria and ensure transparency in bidding and other selection processes if privatisation programmes in Africa must instill confidence among potential investors.
The above recommendations were made by participants at the five-day international conference of African Privatisation Network (APN) which ended in Abuja at the weekend.
APN, the continental association of privatisation implementation agencies in frica has Director General of the Bureau of Public Enterprises(BPE), Dr. Julius Bala as President.
The APN conference brought together privatisation agencies in 13 African countries, World Bank officials and experts in enterprise reform,renowned privatisation consultants and advisers,financiers, investors and experts in various areas.
In a communique yesterday, the experts urged privatisation agencies to use competent advisers with vast local knowledge in every transaction while emphasising post-privatisation viability of the enterprises put up for sale.
"Government,investors and privatising agencies must communicate to achieve buy-in from critical segments of the stakeholders," it said adding, Indigenous/African sources of funds should be explored for investment in enterprises being privatised.
However, it advised government to relinquish some measure of control of the privatisation processes while calling for adoption of more creative packages for project financing and enactment of investment friendly laws to breakdown private monoploies and regulate monoploies and oligopolies.
The communique suggested the unbundling of large scale enterprises where possible just as it advised privatisation agencies to de-emphasise the sale value of state owned enterprises at the expense of broader macroeconomic goals such as technology upgrade, employment generation post privatisation sustainability.
With specific reference to the oil and gas sector, the conference recommended that local content investments should be the way forward while stressing that "execution capability, and guranteed market access should be the key drivers for accessibility to sources of funding for local content."
And in order to achieve speedy development of the ports in Africa, the experts recommended the "decentralisation and devolution of ownership where states and local governments control and own ports."
Alternatively, the conference suggested a lease arrangement of between 10-25 years where leasee purchases handling equipment at market value as well as carry out other related issues.
After a careful review of the various privatisation programmes on the continent, the conference noted that the programmes recorded significant progress in the first 10 years beginning from 1980 during which about 254 enterprises were sold adding however, that the programmes slowed down by1995.
It said since 1995,implementaion of privatisation programmes was generally carried out as a "stand alone strategy and not part of overall reform package" adding there was also dwindling stakeholder support especially from labour.
Other problems identified in the programmes during the review period include implementation of decisions on critical issues like pensions and debts, crisis of credibility arising from transparency issues and failed transactions, dearth of (indigenous) investors and capital inflows, too few success stories and inadequate implementation capacity.
These impediments notwithstanding, the communique noted some success stories in African privatisation as in Kenya Airways, Cement Company of Northern Nigeria and Telecomms sector reform especially in Nigeria and South Africa where liberalisation and deregulation of the sector it noted, has improved tele-density.
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