Privatisation of State Owned Enterprises in Zambia: Winners and Losers

Abstract

The performance of enterprises is important to the success of an economy. Privatisation has come to be viewed as the means through which development can be achieved. Nevertheless, scholars note that privatisation always has winners and losers. Therefore, there is a need to ensure that the majority come out on the winning side. This study determined the winners and losers from privatisation in Zambia. The study employed the Marxist theory of political economy which posits that privatisation benefits private investors and the state at the expense of workers and the general public. The study employed a qualitative approach using both primary and secondary data. Primary data came from interviews held with relevant officials while secondary data was sourced from published documents on privatisation. Data was analysed through thematic and document analysis, respectively. The study uncovered that until the early 1990s, Zambia had a socialist economy dominated by parastatals across all sectors. Privatisation in the country was pushed for by foreign interests through the World Bank and International Monetary Fund. The two institutions ordered the country to divest its parastatals as a condition for debt relief and further funding. Consequently, the country divested 265 enterprises, leaving only 30 parastatals. The state’s three branches were reconfigured to serve the interests of private firms. As expected by Marxists, private investors and the state emerged as winners while workers and the general public lost. Private investors made huge profits by barely paying any taxes while being shielded from major legal issues. The state in turn earned huge sums of money from the divesture and passed on responsibility for the provision of most goods and services. In contrast, thousands of employees lost jobs. Those who remained employed endured deteriorating working conditions. Citizens were overtaxed, lost access to social amenities, failed to compete with foreign investments and suffered health complications from industrial pollution. The study thus concludes that Zambia’s privatisation had more losers than winners.