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Governance a la Carte: The Politics of Privatization in Sub-Saharan Africa

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Abstract:

Since the 1990s, privatization has touched nearly every African country. The forceful role of International Financial Institutions (IFIs) and foreign donors has in most cases determined the initiation of this reform, as part of a standardized agenda that aimed at radically restructuring African economies to enable long-term growth. However, despite the uniformity of the policy recommendations, these privatization schemes have differed in design, strategy, pace and scope. Furthermore, the overall level of dependence of IFI aid is uncorrelated with the extent and type of privatization in each country. A full range of privatization techniques have been adopted, with schemes differing in the level of investment responsibility, the degree of affirmative action to ensure domestic private sector participation, the relative irreversibility of the privatization transaction and the degree of risk transferred to the private sector. This paper explores whether this variation can be explained by differences in political institutions across Sub-Saharan African countries. The assumption is that different political institutions matter in explaining a country?s ability to implement a policy with significant distributional consequences. The paper develops a model of political rent-seeking and political survival as determining the trade-off faced by the state between efficient and distributive policies. Political systems have shown a surprising capacity to adapt to the disappearance of traditional rents, and to use state institutions and policies to strengthen new and different patronage networks. Consequently, there is a strong continuity of state power operating alongside the disruptions caused by privatization. The traditional over-reliance of African governments on rent-extraction machineries, the absence of countervailing powers in society to scrutinize state action and the lack of independent regulatory agencies, places intense political bargaining between different stakeholders at the center of processes of institutional change. This renders the analysis of the African case of politically-driven privatizations particularly important.The paper focuses on competitive industries (agriculture, tourism, manufactures), for which there is both a weaker rationale for state ownership and more private interest in the acquisition of firms. It presents results from a cross-country analysis of 2,500 privatization transactions in 41 countries in Sub-Saharan Africa. Finally, results from two in-depth case studies of the process of privatization in Mozambique and Kenya shed light on the politics behind privatization.
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Name: International Studies Association
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MLA Citation:

Sequeira, Sandra. "Governance a la Carte: The Politics of Privatization in Sub-Saharan Africa" Paper presented at the annual meeting of the International Studies Association, Town & Country Resort and Convention Center, San Diego, California, USA, Mar 22, 2006 <Not Available>. 2013-12-17 <http://citation.allacademic.com/meta/p100354_index.html>

APA Citation:

Sequeira, S. M. , 2006-03-22 "Governance a la Carte: The Politics of Privatization in Sub-Saharan Africa" Paper presented at the annual meeting of the International Studies Association, Town & Country Resort and Convention Center, San Diego, California, USA <Not Available>. 2013-12-17 from http://citation.allacademic.com/meta/p100354_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Since the 1990s, privatization has touched nearly every African country. The forceful role of International Financial Institutions (IFIs) and foreign donors has in most cases determined the initiation of this reform, as part of a standardized agenda that aimed at radically restructuring African economies to enable long-term growth. However, despite the uniformity of the policy recommendations, these privatization schemes have differed in design, strategy, pace and scope. Furthermore, the overall level of dependence of IFI aid is uncorrelated with the extent and type of privatization in each country. A full range of privatization techniques have been adopted, with schemes differing in the level of investment responsibility, the degree of affirmative action to ensure domestic private sector participation, the relative irreversibility of the privatization transaction and the degree of risk transferred to the private sector. This paper explores whether this variation can be explained by differences in political institutions across Sub-Saharan African countries. The assumption is that different political institutions matter in explaining a country?s ability to implement a policy with significant distributional consequences. The paper develops a model of political rent-seeking and political survival as determining the trade-off faced by the state between efficient and distributive policies. Political systems have shown a surprising capacity to adapt to the disappearance of traditional rents, and to use state institutions and policies to strengthen new and different patronage networks. Consequently, there is a strong continuity of state power operating alongside the disruptions caused by privatization. The traditional over-reliance of African governments on rent-extraction machineries, the absence of countervailing powers in society to scrutinize state action and the lack of independent regulatory agencies, places intense political bargaining between different stakeholders at the center of processes of institutional change. This renders the analysis of the African case of politically-driven privatizations particularly important.The paper focuses on competitive industries (agriculture, tourism, manufactures), for which there is both a weaker rationale for state ownership and more private interest in the acquisition of firms. It presents results from a cross-country analysis of 2,500 privatization transactions in 41 countries in Sub-Saharan Africa. Finally, results from two in-depth case studies of the process of privatization in Mozambique and Kenya shed light on the politics behind privatization.

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