Lessons learned from worldwide privatization : experience relevant to Zambia

This report, which is designed to help the ZPA fulfill its mission, synthesizes 12 lessons learned from case studies of privatization worldwide. (1) Systems for selecting and classifying SOEs for privatization should facilitate their quick sale, restructure, or liquidation. (2) Different types of companies will require different privatization strategies; therefore, a diverse privatization portfolio should be maintained. (3) Financial markets, even where they are unsophisticated, should be used to mobilize local resources. (4) Clear and transparent criteria should be established to determine the value of SOEs and the disposal of assets. (5) Legal, regulatory, and policy frameworks should be modified so that they facilitate privatization. Privatization is more effective when it is part of a broader macroeconomic reform program aimed at improving the business operating environment. (6) Local ownership should be encouraged through various techniques, such as employee stock ownership plans, share allotment schemes, incentives for small share purchases, voucher systems, and the use of extensive publicity and promotion. (7) Opposition to privatization should be anticipated and strategies developed to overcome it. (8) Environmental liabilities should be settled before privatization through environmental audits and by determining those responsible for the cost of clean-up. (9) Social safety nets (e.g., severance pay, job-search assistance and training) should be provided to workers affected by labor retrenchment. (10) An investment-friendly environment should be cultivated to attract foreign investors. (11) High-potential buyers should be identified through investor searches. (12) The development of technical skills in valuation, investment finance, negotiations, and legal reform is vital to the sustainability of privatization programs.