Abstract
Purpose. Africa presents a particularly challenging environment for privatization. Progress toward privatization has been slower in Africa than elsewhere. In this study, the progress of the privatization process in sub-Saharan Africa was analyzed. This study specifically examined: (1) the performance of selected large state and private enterprises in Nigeria; (2) the types of services provided by state/private enterprises; (3) the differences found in previously state-owned banks' and industries return on investment after privatization; (4) the methods used to privatize some of the SOEs; and (5) the process the government followed in the divestment of its SOEs. Methodology. Information on twenty-five firms was obtained over a ten-year period (1983-1992), ten state-owned and fifteen private (six of which represent recently privatized firms) operating within three sectors of the economy, banking, manufacturing industries, and airlines. All the enterprises picked in this study were readily comparable to their counterparts in both state and private enterprises. The study is based on the causal-comparative study of state and private enterprises in Nigeria in order to investigate the possible cause and effect of the differences in performance by observing existing consequences and reviewing earlier data for plausible causal factors. These differences are examined within the context of multiple theories and approaches to privatization outlined in the literature. Findings. The findings strongly suggest that efficiency, performance, and profitability will greatly improve in state-owned banks if they are privatized. Between 1983 and 1992 private industries efficiency and profitability increased about three times than that of the state-run industries. When previously state-owned industries, which had negative returns on investment are privatized, they are most likely to become profitable. This study noted that the historical purposes of state-owned enterprises, based on the need to make a transition from colonial control to socialistic, served its purpose but could no longer be described in economic terms. This study found little evidence to support the notion that privatization has begun to influence the entrepreneurs' decisions in Africa. Recommendations. There are three basic recommendations and ideas for further study and future policy actions for those affected by privatization on: (a) assisting those who go to private enterprises, (b) helping those who stay in the state enterprises with better management, and (c) easing the personnel adjustment process. As efficiency and productivity increase, the economy will grow, more people will be employed, and the standard of living will improve.