Successful negotiations : the key to privatization -- lessons from Zambia : final report

This report describes the TA and the training provided to ZPA by Ostrer & Associates (O&A) under project 6110230 and presents lessons learned by O&A. O&A designed a customized training program for ZPA, government, and business personnel; conducted negotiation skills workshops to guide participants through the transaction process; developed model sales agreements and case-specific consultations on ongoing negotiations; and helped ZPA to apply the techniques taught in the workshops. This assistance, along with other project inputs, has enabled ZPA to dramatically decrease the amount of time needed to successfully conclude agreements (from 2 years to as little as 2 days), maximize the long-term economic value of both cash and non-cash commitments in a sale, improve staff productivity, create more viable short-term prospects for privatized companies and increase their chances of long-term profitability, address the needs of key stakeholders, and conduct negotiations that focus on mutual gain for all parties. ZPA has also redesigned some of its internal procedures to smooth the privatization process. Zambia"s experience demonstrates the importance of developing a privatization process that is inclusive, transparent, and consistent; privatization is an inherently political process and this dimension cannot be ignored. Zambia"s experience also teaches the importance of: (1) forming teams with responsibility and authority to conduct transactions from initial study to final sale; (2) setting clear and specific objectives to guide each negotiation; (3) providing comprehensive, broad, and flexible authority to allow negotiating teams to make optimal deals; (4) structuring agreements of sale with "teeth" that include monitoring, compliance, and enforcement provisions; (5) identifying "champions" with the political access and clout to lead the privatization process; and (6) providing negotiators with the deal-making skills and techniques needed to conclude successful agreements. Important lessons for donor agencies include the value of broadening the range of TA offered to privatization entities, and the benefits of remaining flexible in program design. The Zambian experience clearly illustrates the value of providing focused training in both the substance and process of privatization negotiations. Training in negotiation skills complements and augments technical support to privatization efforts. (Author abstract, modified)