PRIVATIZATION'S INROADS IN AFRICA

One of the most positive aspects of Africa's current economic crisis - in 1986 gross domestic product per capita in a large number of states has slid back to 1960 levels - is the debate it has provoked about government policies, notably the often sacrosanct role of the public sector in the development process.

In the wave of independence that swept sub-Saharan Africa in the 1960s, governments sought to take control of the main levers of their economies, thereby supposedly hastening the end of foreign domination.The method most commonly used was the nationalization of foreign interests or the setting up of public corporation, or para-statals, to cover a whole range of new economic activities.

This provided new governments and their leaders with the opportunity to create a expanding number of jobs in the public sector and adhere to the more or less hazy rhetoric of African Socialism.

Unfortunately, these para-statals proved to be highly inefficient from an economic point of view and costly for parlous state finances as the soaring wage bill contributed heavily to soaring budgetary deficits.

Rather than contributing to the creation of national wealth and well- being, these public corporations became white elephants, consuming what was produced by others.

In particular, the rural population was forced to indirectly contribute, through low producer prices paid by government agencies, to the financing of these urban-based institutions.

Not only inefficient, the para-statals were graft-ridden and the political base for most politicians working on the principle of tribal nepotism.

A study of 44 para-statals carried out by a Cameroonian scholar has demonstrated that those companies wholly-owned by the government performed the least satisfactorily, while those with mixed ownership, either indigenous or foreign, performed the best.

Even when some courageous African leaders tried to face up to the problem, they have met with considerable resistance from local trade unions, students and bureaucrats. In Nigeria, the debate has been particularly boisterous.

When pragmatic technocrats plead for more flexibility in economic planning, ideologues retort that Nigeria is not for sale.

This rear guard attitude has, however, started to be overcome in a number of African states, including Nigeria, under the encouragement of international institutions like the World Bank, bi-lateral donors and private western companies. Togo has taken a lead in the privatization drive. Indeed, an intrepid American industrialist, John Moore, has leased a once unprofitable steel mill and turned it into a money-spinner in just a little over a year. The same is true with a local milk plant, now under Danish management.

Countries as diverse as Kenya, Senegal and Ivory Coast have either

closed down unprofitable state enterprises or sold them off to the private sector.

In some countries, however, it is not expedient to sell off para- statals, so other arrangements have been worked out: For instance, through management contracts, the government retains full or partial control of an enterprise's equity, but hires a private management firm.

This is the case of Zaire, which contracted for the management of its airline, Air Zaire, by the private French carrier, UTA.

Another way of encouraging efficiency is to contract with private providers of services by offering franchises or concessions. The water for Ivory Coast's capital of Abidjan is supplied this way, and Kenya uses private contractors for road maintenance.

Privatization, like state control before it, is not a panacea for Africa's numerous economic ills. If used skillfully, nonetheless, it does offer a tool in favor of the economic reforms needed to halt economic decline at a time when the continent's population is growing by over 3 percent a year.

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