Privatization of Public Sector Enterprises: Lessons for Developing Member Countries

Evaluation Document | 31 December 2001

This evaluation was designed to help increase understanding of the privatization process and provide guidance on how the objectives of privatization should be managed and incorporated in project designs.

Beginning in 1984, ADB integrated privatization into its strategies for developing countries. ADB's Medium-Term Strategic Framework (1992-1995) identified privatization as a desirable strategy to help meet economic growth objectives. Its private sector development strategy (2000) was approved to help both promote growth and support poverty reduction efforts.

This study aims to help raise understanding of the privatization process and provide guidance on how the objectives of privatization should be managed and incorporated in project designs. The general pattern among developing countries has been to privatize retail businesses, manufacturing, and road transport services before privatizing monopolies and oligopolistic entities such as banks, airlines, telecommunications, and utilities.

The study found that the experience in developing member countries of privatization is positive. "But to date, privatization has proceeded largely without attention to the sequencing of reforms and appropriateness of approach for maximizing its effectiveness," it says. What is needed, says the study, is assistance for developing policy, regulatory and institutional frameworks.

It encourages ADB to review its privatization strategy, taking into account the need for a more integrated approach to reforms to promote economic and private sector development, the importance of sequencing, and the need for more comprehensive social welfare assistance.

Contents 

  • Executive Summary
  • Background
  • Global Experience
  • Developing Member Country Experience
  • Insights from Study
  • Appendixes