n African Renaissance - Privatization programme in Ethiopia : is the cause justified?

Volume 4, Issue 1
  • ISSN : 1744-2532
  • E-ISSN: 2516-5305


Ethiopia actually began the 1990s with a clear vision of reversing the socio-economic crisis of the 1980s and rapidly transforming the economy. The clear vision was nothing but the economic reforms, facilitated by the Transitional Economic Policy (TEP) which was then announced by the EPRDF (Ethiopian People's Revolutionary Democratic Front) government in November 1991. Following that policy, a three year Policy Framework Paper was also developed and agreed with the IMF and the World Bank in October 1992. The Policy Framework Paper, which forms the basis of the economic reform programme, sought to revitalize the economy and create a more market oriented economic system, giving room for privatisation and thereby, replacing the rigidly centralized command economy.

Economic reforms urged the country to review the conditions of their State Owned Enterprises (SOEs). Structural Adjustment programme in SOEs normally brings out a clear picture of what SOEs are meant for the economy of the country. In the wake of economic reforms, there have been many a good number of privatisation cases, but brought under two categories: First, if SOEs were not meaningful in the economic sense, there would be no option but to privatize. Second, even if they were sound, sadly no other option, but to privatize thanks to the conditionalities of the World Bank, IMF and other international donors. Many are perplexed in searching for the real and logical causes why many developing countries have introduced privatization programme. The debate on African privatization is hot and long standing as many African intellectuals blame the international donors for the cause. The fact is nonetheless otherwise.
This paper, therefore, attempts to examine what exactly has prompted Ethiopia to go for privatisation. In this regard, the causal analysis helps this study to ascertain through some of the selected indicators as to what factors were behind privatisation of the country. The paper has four sections: the next one discusses the background of Puss; third deals with the causal analysis and the final ends with summary along with some concluding remarks.

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