Management Insights into the Privatisation Process of Public Enterprises in Eritrea (East Africa). Is there a 'Privatization Trap'?

Abstract

Privatization is a popular topic in many countries. However, the more a country needs development, efficiency and the proceeds of the sales, the more difficult privatization will be. This can result in a long period of privatization in developing countries. But when privatization takes a long time, the vitality of companies may reduce. In this paper we present the case of the manufacturing industries in Eritrea, where privatization has been slow. After the privatization announcement the companies deteriorated quickly with respect to operations, investments and finance. This makes it even more difficult to sell the companies and the implied vicious circle results into a 'privatization trap'.