Public sector versus private sector: the case of Uganda
| Published date | 01 February 1997 |
| DOI | http://doi.org/10.1002/(SICI)1099-162X(199702)17:1<161::AID-PAD911>3.0.CO;2-F |
| Author | JOHN KHABUSI |
| Date | 01 February 1997 |
Public sector versus private sector: the case of Uganda
JOHN KHABUSI
Ministry of Finance and Economic Planning, Uganda
SUMMARY
The article reviews the case for privatization in Africa, with special reference to Uganda. It
argues that enterprises supplying goods and services other than infrastructure are best left to
the private sector, but considers the relative merits of local performance contracts to expatriate
management contracts. (&1997 by John Wiley & Sons, Ltd.)
INTRODUCTION
With the collapse of communism in Eastern Europe, privatization is now a global
phenomenon. Even African countries have had to realize that the state cannot
combine the role of providing infrastructure as well as providing goods and services.
After continuing expansion of state involvement in economic activities since
independence, many African countries now question the rationale of state
involvement in what would be purely private enterprise business. In Uganda, the
National Resistance Government was ready for change as far back as 1987. By 1991,
Government had decided to embark on a serious privatization programme. In 1993,
Parliament passed the Public Enterprise Reform and Divestiture Statute with a view
to reducing the direct role of Government in the economy and promoting a
correspondingly greater role for the private sector. It also aims at improving the
ef®ciency and performance of public enterprises that will remain under Government.
Problems of public enterprises in Uganda
Jensen and Meckling (1976) have described a ®rm as a `nexus of contracts'. Fama,
(1980) suggested that the ®rm is not different from the market in contractual
respects. It is, therefore, expected that employees of public enterprises have a
contractual obligation to produce the best available results in prevailing
circumstances. Where, however, the management of public enterprise has been
appointed partly on political merit, that management may have to ful®l the ®nancial
obligations of their masters before considering the overall ef®ciency and pro®tability
of the enterprise.
PUBLIC ADMINISTRATION AND DEVELOPMENT, VOL. 17, 161±165 (1997)
CCC 0271±2075/97/010161±05$17.50
&1997 by John Wiley & Sons, Ltd.
John Khabusi is Team Leader, Privatisation Unit, Ministry of Finance and Economic Planning, PO Box
10944, Kampala, Uganda.
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