Privatization: The New Buzzword in Africa

Today, some remain oblivious to the various opportunities for growth and investment in the most resource-rich continent in the world.

You guessed it -- Africa.

Africa has around 30% of the earth's remaining mineral resources, with over 40% of gold reserves and a whopping 90% of platinum reserves.

The mere fact that Africa is the second most populous continent after Asia is a key indicator that investors should be paying much more attention to the continent.

According to the World Economic Forum's Africa series, the continent is expected to have the world's largest working-age population by 2034. This invariably means Africa will be contributing the largest number of potential workers within the world economy.

While Sub-Saharan Africa has excellent growth potential, it remains necessary for African governments to leverage this potential to foster the economic development that will take Africa to the world.

As one of the most viable means to boost economic growth and settle long-term debts, several African governments are putting their long-cherished assets on the auction block to raise new funds.

Privatization is becoming the go-to option for governments in Africa looking to turn around the slowing economic growth in recent years.

Here are three African governments with budding privatization plans for 2020 and the coming years:

1. Ethiopia

The country forges ahead with plans to privatize it's Telecom Industry (Ethio Telecom). Amidst the hard-hitting effects of Covid-19, Ethiopia goes ahead with privatization plans, which include two new licenses awarded to bidders.

In essence, this means that license owners can own and operate telecom networks, which was primarily a state monopoly. Ethio Telecom is the largest telecom monopoly in not only the African continent but the world.

These new licenses aim to boost the economy, which has slowed down in recent years, especially considering the fact that Ethiopia was once one of the world's fastest-growing economies.

Moreover, this significant privatization move encourages more investments and innovation. With the country being hard hit by the pandemic, new investors' competition will grant citizens greater options for direct employment and other indirect services.

2. Egypt

As part of the country's strategy to raise $4.5 BN by 2022, Egypt continues with its plans to offer stakes in 23 state-owned companies through a series of public offerings.

While the Egyptian government initially announced its plans for offering stakes in 2017, there have been steady reveals of the names of the specific state companies offering shares to investors, including Alexandria Mineral Oils Company (AMOC) and Eastern Company, a tobacco manufacturer.

As at the end of 2019, the first few rounds of the planned offerings were well underway with others to be concluded in the next two years.

3. Angola

Angola is selling off stakes in up to 195 state enterprises.

Only about a year ago, the Angolan government had 74 companies listed for privatization as part of its Privatization Programme. In 2020, the number of state-owned enterprises up for sale has been increased to 195.

The second phase of the program was set to start early in 2020 with 13 companies up for sale including:

  • Betonar (pre-stressed concrete)

  • Inducarpin (carpentry)

  • Mangotal (metal towers)

  • Induplas (plastic bags)

  • Absor (absorbents)

  • Saciango (cement bags)

  • Indupackage (metal packaging)

  • Pipelaine (PVC pipes)

  • Talhafal (metallic tiles)

  • Transplas (PVC accessories)

  • Vedatela (fencing)

Out of these 195 enterprises either wholly or partially owned by the Angolan government, 8 are telecom operators, and this massive privatization project is expected to be completed by 2022. More importantly, the program aims to boost the country's economy as well as develop its most resourceful sectors.

Although privatization can be vulnerable to political instability and volatile market forces, nonetheless, Africa seems to be leading the pack in privatization projects. It shows positive signs for growth in the coming years. This may be a great time to invest in Africa.

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