Back to the Future for African Infrastructure? Why State-Ownership Is No More Promising the Second Time Around

John Nellis ()

No 84, Working Papers from Center for Global Development

Abstract: Too many African state-owned enterprises (SOEs), particularly those in infrastructure sectors, have a long history of poor performance. African governments and donors labored through the 1970s and 1980s to improve SOE performance through “commercialization”——i.e., methods short of ownership change. These generally failed, giving rise, in the 1990s, to much more heavy reliance on private sector participation and ownership. This approach produced some successes, but Africa’s private participation in infrastructure (PPI) initiatives have been comparatively few and weak. A number of those that have been launched have run into problems, to the point where both investor and African government interest in the approach has waned in the last few years. The reform is not popular—surveys of public opinion in 15 African countries reveal that only a third of respondents prefer private to state-owned firms. Nonetheless, African states (and their supporters) should not jettison the PPI approach. Rather, they should acknowledge its limitations, and recognize the large scope and moderate pace of the preparatory measures required both to improve their investment climates and to make PPI work effectively.

Keywords: privatization; private sector; African state-owned enterprise; commercialization; private participation in infrastructure (search for similar items in EconPapers)
JEL-codes: F0 F4 O0 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2006-02
New Economics Papers: this item is included in nep-afr, nep-dev and nep-pbe
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