Guidelines for the privatization of agro-industrial enterprises

The act of changing the ownership or control of assets is only the most visible aspect of an intricate structure of institutional and regulatory change. Privatization at the level of the individual enterprise mirrors many of the issues and phenomena associated with these changes at the level of the economy. Governments in developing countries first became active participants in productive sectors of the economy due to perceived widespread failures of market forces to satisfy economic expectations. Social and political agendas fueled the drive for public sector domination of the economy. While there is little doubt that the private sector as it existed at the time of independence in many countries was characterized by deficiencies which, in the short-term, would have prevented it from filling the role it plays in industrialized countries, it nevertheless remains that the public sector is inherently less effective in owning and managing productive enterprises than private firms. This has led to successive financial issues in most cases, and a trend toward re-introduction of private ownership and management. The paper assumes that the decision has already been made to increase private sector participation in a particular agribusiness enterprise or group of enterprises; it is not intended to assist policy makers in reaching decisions concerning the merits of privatization, nor is it intended to serve the strategy needs of those planning privatization across a sector. The paper aims to identify the factors which will influence the results of the decision to privatize a particular enterprise, and to provide guidelines to assist in addressing these issues and carrying out the many tasks that are required to complete the privatization process. The framework of the paper follows approximately the chronology of events and activities as they should occur in the privatization process. (Author abstract, modified)