PRIVATIZED PUBLIC ENTERPRISES

PERFORMANCE EVALUATION:

RECENT ETHIOPIAN EXPERIENCE

By: Mulatu Fekadu

Lecturer at Ethiopian Civil Service College

April, 2006

Addis Ababa

Table of Content

													Page
ABSTRACT .........................................................................................													i
CHAPER ONE INTORDUCTION.......................................................													1
		1.1.			BACKGROUND OF THE STUDY ....................................................								1
		1.2.			BACKGROUND OF THE STUDY.....................................................								4
		1.3.			STATEMENT OF THE PROBLEM....................................................								4
		1.4.			OBJECTIVES OF THE STUDY.........................................................								6
		1.5.			HYPOTHESES OF THE STUDY.......................................................								6
		1.6.			SIGNIFICANCE OF STUDY..............................................................								6
		1.7.			LIMITATION OF THE STUDY...........................................................								6
CHAPTER TWO LITERATURES REVIEW......................................													7
			2.1			Technical Efficiency as Measure of Performance............................								7
			2.2			Frontier Approaches to Measure Technical Efficiency....................								9
						2.2.1				Parametric Methods..............................................................				10
						2.2.2				Non-Parametric Methods......................................................				13
						2.2.3				Application of DEA...............................................................				12
			2.3			Ratio Analysis as a Measure of Performance..................................								13
			2.4			Privatization.....................................................................................								14
						2.4.1				The Conceptual Framework................................................				15
						2.4.2				Privatization in Theory.........................................................				17
						2.4.3				Methods of Privatization of SOEs.........................................				22
						2.4.4				Empirical studies on Privatization.........................................				26
						2.4.5				Studies on Ethiopia Privatization..........................................				31
CHAPTER THREE PUBLIC ENTERPRISES REFORM AND PRIVITIZATION ..........................................													33
		3.1			Public Enterprise Reform Ethiopia...................................................								36
		3.2			Ethiopia Privatization Experience....................................................								42
					3.2.1				Introduction...........................................................................				39
					3.2.2				Privatization Modalities used in Ethiopia ............................				42
					3.2.3				Number of Privatization Transactions in Ethiopia..................				43
					3.2.4				Proceedings of Restitutions in Ethiopia................................				46
					3.2.5				Privatization and the Incidence of Corruption.......................				79
		3.3			Institutional Development and Privatization in Ethiopia....................								54
					3.3.1				Property Right Legislation in Ethiopia...................................				54
					3.3.2				The Role of Non-Bank Financial Institutions in.....................				57
CHAPTER FOUR DATA AND THE EMPRICAL MODEL ..............													58
	4.1. Data Sources and Type ..............................................................................												59
	4.2. The DEA-Empirical Model ........................................................................												64
CHAPTER FIVE DISCUSSIONS, EMPRICAL ANALYSIS AND INTERPRETATION..................................................													71
	5.1. Discussion ..............................................................................................												71
				5.1.1				Major Institutional and policy Related ......................................					71
				5.1.2				Impact Privatization on Government Financial Flows.................					73
				5.1.3				Impact of Privatization of SOEs ................................................					75
				5.1.4				Impact of Privatization on Investment Ethiopia ..........................					77
	5.2			Analysis and Interpretation of Empirical Results ......................................									78
				5.2.1			T-test for mean comparison .......................................................						78
							5.2.1.1				Measures or Technical Efficiency Difference .............		78
							5.2.1.2				Measures of Profitability Difference .............................		81
				5.2.2			Impact of Privatization on Technical ...........................................						83
							5.2.2.1					Regression Result of Lather and Textile Sub Sector...	85
							5.2.2.2					Regression Result of Food Processing Sub sector...	85
							5.2.2.3					Regression Result of Beverage sub-sector.................	87
							5.2.2.4					Regression Result of Chemical sub-sector..................	88