Privatization of public enterprises in the emerging market: Problems and prospects

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Abstract

State-owned enterprises (SOEs) are known to provide service delivery to people because of their lack of profit motives. However, politicians (elected officials) who engage in corrupt practices often use SOEs as cash cows. Simultaneously, SOEs’ success drives national economic development and aid in the fight against poverty. The aim of this study was to investigate whether privatization of SOEs can turn around the losses they make and lead to viability. This study employed a desktop approach in which reports, financial statements, and various documents on numerous SOEs were reviewed. The time span used for the reviewed documents was 20 years (2002–2022). The findings of this study indicate that many SOEs in South Africa have incurred insurmountable losses due to corruption and poor fiscal management. Thus, privatization of such entities may look noble, yet it is a short-term fix to the problem.

Keywords: Crowding Out, Efficiency, Nationalisation, Privatisation, State Owned Enterprises

Authors’ individual contribution: Conceptualisation — P.C. and E.S.S.; Methodology — P.C. and E.S.S.; Formal Analysis — P.C.; Investigation — E.S.S.; Writing — Original Draft — P.C. and E.S.S.; Writing — Review & Editing — P.C., E.S.S., and I.U.; Supervision — I.U.; Project Administration — I.U.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: H73, H83, H82, J45, O12

Received: 17.03.2023
Accepted: 25.04.2024
Published online: 29.04.2024

How to cite this paper: Cheteni, P., Shindika, E. S., & Umejesi, I. (2024). Privatization of public enterprises in the emerging market: Problems and prospects. Journal of Governance & Regulation, 13(2), 172–180. https://doi.org/10.22495/jgrv13i2art17