Privatized Public Enterprises Performance Evaluation Recent Ethiopian Experience

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Ethiopia has been in the process of privatization since the mid 1990s. Attempts were madernin this study to assess performance of privatized public enterprises during the last decadernin Ethiopia. Percentage share of privatization proceeds to total revenue of the country forrnthe years 1995/96 - 2001/02 were on average below 6 percent which implies that the primernobjective of privatization in Ethiopia, revenue generation for financing developmentrnactivities undertaken by the government, does not realized yet.rnPrivatization process in Ethiopia with regard to employment seems painless. However, thernfate of employees in the state farms of the country and other divestitued famer publicrnenterprises had been miserable for those who have no social-security system to fall back on.rnSince the beginning of privatization, only slightly higher than half billion new investment isrnmade on privatized SOEs. Much effort has to be exerted to attract FDI to the Country.rnA panel data for 41 privatized large and medium scale manufacturing and agriculturalrnindustries covering a period of seven years (1995/96-2003/04) was taken. The hypothesisrnwhether the privatization performance, interms of technical efficiency and profitability, inrnthe public sector is indeed lower that of the post-privatization years of industries inrnEthiopia was testedrnThe findings of this study are mixed. Out of the six categories in this study, only in the tworncases i.e. ill the cases of food processing and beverage sectors post privatizationrnperformance in terms of technical efficiently and profitability exhibit significantrnimprovement. In the rest leather and textile, chemical, metal and wood, and agriculture nornimprovement is indicated both interims of technical efficiency and financial profitability.rnOn the basis of these findings privatization in Ethiopia doesn't meet its expectations for itsrnoutcomes are less satisfactory. In order to improve and sustain the outcomes ofrnprivatization, development of capital market and property right legislation, promoting goodrngovernance and strengthening the institutional capacity of all the levels of federal units isrncritical.

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Privatized Public Enterprises Performance Evaluation Recent Ethiopian Experience

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