Evaluation of the divestiture and privatization project : breaking new ground with the Center for Privatization

Missions with resources for helping host governments implement divestiture. External evaluation covers the period 9/85-8/89. The project's major achievements are in its promotional activities, which include seminars, efforts to stimulate multilateral dialogue, participation in international conferences, networking and marketing, studies, and reconnaissance missions to the field. While limited direct impact on divestitures can be attributed to these promotional activities, they have changed the attitudes of many developing country officials and Missions. Through its subcontractors, the CFP has been able to provide fast access to a range of short- and long-term TA for Missions in 49 countries; this assistance was most effective when Missions and host governments maintained close supervision of and collaboration with the TA teams. Successful long-term TA in Tunisia and Honduras has achieved 21 privatization transactions worth about $75 million. However, the CFP has failed to fully utilize its subcontractors, relying instead primarily on its core staff, which is not technically experienced and has limited ability to support teams in the field. This has created friction with the subcontractors and the Bureau for Private Enterprise. Moreover, reports submitted to Missions by the CFP have been of limited quality and often delayed. A major lesson learned is that privatization projects always take longer to develop than anticipated. To be successful, four important conditions must exist: (1) host government commitment; (2) a good working relationship between Missions and government bureaucracies; (3) identification of the timing and quality of resource needs; (4) and proper management of these resources. The project also illustrated that the mixture of buy-in assignments with a core-funded set of activities can create conflicting objectives (financial versus technical) for the contractor, which can dilute the overall project impact. On the other hand, such arrangements can provide Missions with flexibility to explore and introduce controversial new subjects, such as privatization. It is recommended that host countries participate in research activities when sensitive issues, such as valuation, are involved in order to promote acceptance of the often controversial results.