Unity University Conducts Academic Discussion on Privatization Issue
Academic and Management staff of Unity University and invited officials of the various MIDROC Technology Group companies met on June 13, 2018, to deliberate on the topical issue of Privatization. The meeting, which was presided over by Dr. Arega Yirdaw, President of Unity University and Chief Executive Officer (CEO) of MIDROC Technology Group companies, was held in the Executive Training Room, Gerji Main Campus.
Speaking at the opening of the meeting, Dr. Arega pointed out that Unity University had long planned to develop a tradition to open up such venues to facilitate deliberations on topical issues of common interest, with a view to enhancing exchange of views. He said, “Universities should make this a common practice, so that the academic staff could contribute their due share in national development endeavours, by way of forwarding researched views and publishing their recommendations to enhance informed decisions. Universities are fertile ground for the purpose, since they have the necessary manpower with the required knowledge and capacity.”
Dr. Birhanu Sisay, Senior Deputy President, Responsible for Gerji Main Campus Academic Operations, introduced the programme for the meeting, and the three academicians who presented ideas for the deliberations. The presenters were Dr. Demmelash Habte, Professor Tenkir Bonger, (both economist by profession and Lecturers at Unity University), and Dr. Arega Yirdaw. Having introduced the presenters, Dr. Birhanu called upon the academicians to deliver their thoughts.
Dr. Demmelash Habte’s presentation focused on general background relating to privatization of public enterprises. It is to be recalled that the Executive Committee of the ruling Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF), at its meeting of June 4, 2018, decided to privatize mega public enterprises, such as Ethio Telecom, Ethiopian Airlines, Electric Power Generation, Marine Transport and Logisticsenterprises, as well as sugar factories, industrial parks, hotels, and railway transport, in partial or total..
Dr. Demmelash started his presentation with a note on the concept of Privatization, whereby he underlined that there is need to consider the concept in a much broader perspective. With this in view, he went into the details of the emergence of the concept since the end of the so-called Cold War era. Dr. Demmelash further noted that there were some quarters who tried to link the concept with politics. He nevertheless underscored that the inception of the concept had its origin in the 1950s; whereas it emerged as instrument of economic policy, in England, towards the end of the 1970s.
Dr. Demmelash went into the functional operation of the concept in socialist and capitalist contexts. He noted that whereas, in the socialist camp, the concept was taken as serving instrumental to bring about social and political transformation rather than economic transformation alone; the capitalist camp believed that Privatization would ensure efficiency.He also briefly talked about the situation in Africa. In this connection, he mentioned about the need to consider the objective reality, regarding the type of government; the observance of rule of law; why the government decided to privatize enterprises;and whether it would be feasible in situations where there is no adequate check and balance system.
On his part, Professor Tenkir delivered his presentation, which was divided into four major parts: Background (the concepts of private and public sectors); the economic landscape of Ethiopia; the recent decision of EPRDF Executive Committee on privatization of mega public enterprises; and the positive and negative implications of the decisionpertaining to privatization.From the outset, Professor Tenkir underlined that the private sector is important and indispensable as well. He added that it nevertheless, had its own problems.
Coming to the situation in Ethiopia, the Professor noted that though the economy was still based on agriculture. He went on to note, “Industrialization, which started very late, is in its fledgling stage. What is more, there is shortage of foreign exchange. Hence, we are stuck.” On the other hand, Professor Tenkir expressed the fear that there are among the private sector who smuggle their capital out of the country. Generalising the situation, the Professor underlined, “The country’s economy has management problem.”
Regarding the recent Privatization issue, Professor Tenkir said that capital injection could bring about development. Going into the details, he pointed out that management could be made accessible; the synergy between private and public sectors could enhance development; the sector could add value; and there could be improved quality of delivery.As a way forward, Professor Tenkir expressed the hope that the currently prevailing peace would continue.
On his part, Dr. Arega Yirdaw presented the implementation aspect of privatization, from the standpoint of his personal experience, leading 26 MIDROC Technology Group companies as CEO. Accordingly, he dealt with the preconditions for the privatization and effective implementation of privatized business enterprises.
Dr. Arega recalled the situation when MIDROC first held the ownership of privatized public enterprises. He said that the enterprises were in a devastated condition. He said, “The privatization was not base on any kind of study. Enterprises were privatized because they were not successful.” In this connection, he underlined that the question today is whether privatization was timely or not; and if it is timely, what should be the implementation modality.
He said, “On my part, I would say it is timely. Living conditions have escalated. There is unbridled unemployment. There is bureaucratic shackle, which hinders the private sector from actively engaging in development activities. Since there is dire need for foreign exchange, there is need for capital injection.” With this in the background, Dr. Arega concluded his presentation by discussing on the modalities for the implementation of the privatization process, which included the following:
- There should be an enabling environment in the transfer process.
- Ownership ratio should be flexible, considering the conditions of the enterprises.
- Due consideration should be given to the mix of shareholders. The quest for foreign exchange should also be in focus.
- The boards should not be dominated by political appointees. There should be active involvement of professionals from the private sector.
Following the presentations, the floor was open for discussion, whereby participants expressed their views and opinions, which were duly addressed by the presenters. Some participants expressed their appreciation for the timely and relevant decision taken by EPRDF to transfer the ownership of mega public enterprises to the private sector. Moreover, they forwarded comments as to how to effectively implement the process of privatization. On the other hand, some others reflected their worries regarding community interest.