Privatization in Africa: What Has Happened? What is to be Done?

Abstract

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Privatisation and accountability in a “crony capitalist” Nigerian state

“…Following this valuation, NITEL/MTEL was sold to Transcorp at a paltry $500 million. Nellis (2008) observes that "the privatisation process has been marked by enormous abuses: in crony capitalist countries, a few powerful and influential individuals managed to grab hold of previous SOEs for a pittance and become millionaires or billionaires". On investigation, the Senate Committee on Privatization and Other Related Matters (2008) suggested that the President might have influenced BPE to mobilise fair value accounting and other accounting practices in order to obscure cronyism and corruption in the undervaluation and fire-sale price of NITEL/MTEL to Transcorp.…”

“…Financial support has often been contingent on, amongst other things, the enlistment of accounting, on the grounds that this will create the necessary accountability in the national financial system to reduce public-sector corruption and enhance market efficiency. However, the drive to deploy accounting for this purpose must be viewed alongside the fact that the outcomes of accounting-linked privatisation in developing countries (Hawley, 2000;Uddin and Hopper, 2003), notably those of Africa (Andrews, 2013;Nellis, 2008), have often proved management of privatised entities (Tsamenyi, Onumah, & Tetteh-Kumah, 2010). The accounting concept of fair value is described as a rational and unbiased estimate of the potential market price, which reflects and reinforces a "faithful representation of reality" and enhances market efficiency in the global economy through better diffusion of real-time information on objective asset and liability valuations (Boyer, 2007).…”

The Impact of Foreign Direct Investment on GDP Growth in East Africa

“…Ngeny and Mutuku (2014) explore the FDI volatility on growth in Kenya, using time series data scanning from 1970 to 2011. The results from this study suggest that FDI has a positive effect on growth whereas FDI volatility has a negative impact on growth.…”

“…There is also an investigation of the impact of FDI volatility on growth in Kenya using time series data scanning from the year 1970 to 2011, by applying the bound testing approach. Ngeny and Mutuku (2014) suggest that FDI has positive effect on growth whereas the FDI volatility has a negative impact on growth.…”

“…FDI inflows into Sub-Saharan Africa spread unevenly across the region with a high degree of concentration in a few countries. Although there is mixed evidence regarding the impact of FDI on economic growth in Sub-Saharan Africa, African states urgently need expanded and more dynamic private sectors, more efficient and effective infrastructure provision, and increased investment from both domestic and foreign sources (Nellis, 2005). Brixiová and Ndikumana (2011) also indicate macroeconomic policies that would help the low-income countries in Africa.…”