Privatisations and their issues in the ACP Why privatisations?

- The economic crisis affecting many ACP countries from the nineteen- eighties onwards is largely to be laid at the door of the poor manage- ment of many public enterprises by the States. The remedy recommended and applied by the structural adjustments consists in privatising these enterprises.

- The neoliberal criticism against the State, fed not only by the concept of the market economy, but also by the idea that the citizen is a con- sumer or a client of public services, insists on efficacy, profitability

and evaluation in changing the development model in the ACP by

covering the public management in discredit.

- Privatisation is sometimes put forward as a condition for the granting of a loan to an ACP country by the IMF and the WB.

- It should be noted that it is not whether the production factors are in

public or private ownership that determines the socio-economic suc-

cess of an enterprise, but how it is managed and the general macroeco- nomic and socio-political environment in which it is operating (the presence or absence of corruption, the presence or absence of misap- propriation, whether or not there is compliance with accounting and budgetary rules, not straying from objectives set). So it is not just pri-

vatised enterprises that work, as the dominant neoliberal discourse would have people believe.

What is a privatisation?

- A privatisation means the total or partial transfer of ownership of the productive factors of an enterprise, from the public sector to the private sector.

What are the various arrangements in a privatisation?

- A privatisation occurs in line with two arrangements, transfer and

- Privatisation by transfer means that the State sells off all the assets of a public enterprise to the private sector.

- Privatisation by concession means that the State signs a joint man-

agement contract with the private sector on the basis of clearly defined specifications. In this case, the State retains part of the assets

of the public enterprise and transfers the other part to the private sec- tor.

What are the general effects expected from a privatisation?

The socio-economic effects expected from a privatisation can be achieved only if the competition conditions are first satisfied. These socio-economic effects are:

- An improvement in the quality of the services provided to consumers by the enterprise thanks to competition;

- A drop in the price of that service thanks to competition;

- A rise in the quantities offered to consumers thanks to competition; - A financial adjustment consisting of saying to whom (the public and/or private sector) the enterprise belongs;

- A real adjustment consisting of stating what is to be produced, how it is to be produced, and in what quantities and at what price it will be produced.

What are the issues in privatisations in the ACP?

Privatisations have had disastrous social and political effects in many ACP countries. We have seen:

- an increase in the prices of the services provided by the privatised enterprises (water, electricity, healthcare etc);

- a deterioration in the quality of the service (repeated interruptions in the supply of water and electricity);

- a deterioration in access for vulnerable populations to essential goods and services (notably, to water and healthcare);

- a rise in the recovery rate leading to breaches of contract and the rise in the use of unsafe drinking water by populations unable to pay their bills on time (as in South Africa, the Ivory Coast, Cameroon, etc); - a rise in epidemics as a consequence of the increased use of unsafe drinking water;

- a deterioration in healthcare access conditions.

What can be done to avoid these negative social effects?

- Avoiding these disastrous social effects consists of defining a set of

specifications in such a way that the socio-economic situation of the populations after privatisation is better than the socio-economic sit- uation of the populations before privatisation. To do this, it is neces-

sary:

- To see to it that privatisation does not lead to the transformation of a

public monopoly into a private monopoly12. This has tended to be

the majority situation in many ACP countries in sub-Saharan Africa. It has engendered disastrous social consequences (price rises, a rise in ille- gal supplies, increased prevalence of epidemics, deterioration in the services and loss of State control over vital and energy supplies); - To favour privatisations by concession, where the State can retain a right of inspection and veto, rather than privatisations by transfer, where all decision-making power is handed over to the private enter- prise;

- To encourage competition between private enterprises applying to purchase the public enterprise, and to choose the ones which best sat-

isfy the demands in the political and socio-economic specifications;

- To ensure that alongside the State, the NSAs participate in the defini- tion of these political and socio-economic specifications;

12. We talk of a monopoly when we have only one party on the supply side against a multitude on the demand side. If that one supplier is the State, we talk of a public monopoly; if it is private we talk of a private monopoly.

- To submit the extension of the management contracts with the private sector to the constraint of the socio-economic results achieved after

a period laid down in the specifications;

- The NSAs, the State and the private enterprise must deliver a price for the service or the resource such that the least well-off social classes are not excluded;

- Privatisations in the water, healthcare and education sector must ensure that the general interest is preserved and that ‘healthcare for

all’, ‘water for all’ and ‘education for all’ remain realities in the ACP;

- Privatisations must not lead to social regression which would adversely affect the battle against poverty.

Sheet 2: Issues in public-private partnerships for essential goods