Theoretical Arguments and Debates on Public Enterprises Privatization: Ethiopian Focus

Abstract

Purpose: To critically review the theoretical arguments and debates on privatization, challenges, and prospects in the Ethiopian context, and the various countries experience on privatization with especial focus on sub-Saharan countries and come up with valuable directions to undertake the privatization process successfully.

Design/Methodology/Approach: The entire review basis the theoretical end empirical literature published in various national and international reputable journals.

Findings: Privatization is not a recent phenomenon globally; different economies practiced it via arguing and debating in terms of its economic and political benefits. Currently, the government of Ethiopia is practicing economic reforms to get ready for the country to join middle-income countries by 2025. In filling this gap, inter alia, the government has taken new initiative to privatize the existing wholly state-owned enterprises, both for local and foreign owners, with the primary objectives of limiting government's participation in the manufacturing and service sectors, and thereby realizing economic efficiency and competition, boosting foreign exchange, rising tax revenues, simplifying problems associated with costs of living through controlling inflation, reducing unemployment and alleviating the problem of good governance.

Practical Implications: Finally, it tried to forward sequential steps that the government of Ethiopia should follow at least to mitigate the common mistakes and to undertake the privatization process successfully by alleviating the fear of the citizens that those SOEs would be concerted in the hands of some oligarchies.

Originality/Value: the inferences made as a result of this review will offer new insights through which countries like Ethiopia, who are suffering from political unrest and enormous amount of unemployment, can justly distribute the wealth of public enterprises especially to the local citizens and thereby mitigate the unbalanced concentration of resources in the hands of some oligarchies.

Keywords: privatization; a state-owned enterprise; privatization debates; Ethiopia

DOI: 10.7176/JESD/11-11-06

Publication date:June 30th 2020