The Success of Newly Privatized Companies: New Evidence from Tanzania

Abstract

ABSTRACT Much has been written about the benefits of privatization; however, in countries with low per capita incomes and with slow or no growth recently, most local residents do not have the capital or expertise needed to acquire parastatals. Who then is buying enterprises formerly owned by government? This pilot study of a sample of agro-industrial enterprises in Tanzania gives some insight into the purchasers and managers of newly privatized firms, the estimated economic viability of these firms, and the problems and level of investment associated with the privatization process. The firms, which had been privatized for at least three years, were located in the Dar es Salaam-Morogoro region of the country. The study also reveals information on the government's progress in privatization, a government that had a strong carry-over of socialist indoctrination and that is struggling with changes in commercial laws to allow competition to flourish at the same time it is encouraging privatization. Tanzania's experience is compared with that of other sub-Saharan African countries. Conclusions appear to apply more widely than the pilot sample chosen.