• Privatisation of services

Privatisation of services

Global privatisation goes back 25 years, but to what extent has the sale of state-owned enterprises to the private sector improved welfare? And what are the possible implications for the Middle East and North Africa region? The author of this paper - a senior research fellow at the Center for Global Development - addresses these questions, with a specific focus on Egypt. He traces the evolution of privatisation over the last twenty five years across regions and sectors, and also summarises the extensive evidence on the outcome of privatisation up until now.

Based on this survey evidence, the author concludes that:

• the economic impact of privatisation on the performance of privatised firms is positive in the majority of cases, and consumers appreciate improvements in terms of quality and quantity of good or services produced
• privatisation has also produced improvements in infrastructure sectors in many developing countries, most often and obviously in telecommunications
• however, the distribution of the benefits among different stakeholders has not always been even
• in addition, privatised infrastructure development remains a problem in low-income countries, due to a lack of strong commitment from governments to enhance these sectors, and to the poor quality of existing services
• the key determinants of success seem to be the extent to which governments adopt appropriate measures to enhance competition, establish effective regulation of monopolies, conduct the sale process in a transparent manner, and devise reasonable packages to compensate the losers.

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