Returning the State's assets to the private sector: A review of the case for privatisation

Abstract

Privatisation is currently a globally topical and controversial issue. There are various approaches to privatisation all of which aim to shrink the extent of the public sector's activities, a sector whose performance has generally been unimpressive. The disillusionment with public sector enterprises has prompted many countries, including South Africa, to embark on a reform programme of selling off much of their state assets to the private sector. The underlying rationale is that scarce resources can more efficiently be allocated and accordingly goods and services more efficiently produced by the private sector than the public sector. Admittedly, privatisation can bring certain efficiency benefits, but it should not be considered as a panacea.

This paper seeks firstly to clarify the concept of privatisation: secondly, to analyse the benefits, drawbacks, implications and mechanics of privatisation; thirdly, to consider the case for privatisation in South Africa, and finally to examine certain policy guidelines.

Notes

Lecturer in Economics, University of Transkei.