Background

The Ethiopian Privatization Agency (EPA) was established in February of 1994 by Proclamations No. 87/1994 and 146/1998. Since then, EPA has become the lead agency in carrying out the process of privatization of public enterprises. In addition to the powers and duties mentioned, EPA has the power to investigate and decide on claims of ownership in respect of property taken in violation of the relevant proclamations, in accordance with Proclamation No.110/1995 and its amendment proclamation No.193/2000. The Agency is accountable to the Ministry of Trade and Industry and administered by a Board of Directors and managed by a General Manager.

The objectives of the Ethiopian Privatization Agency are:

   To generate revenue required for financing development activities undertaken by the Government;
   To change the role and participation of the Government in the economy to enable it to exert more effort on activities requiring its attention; and
   To promote the country's economic development through encouraging the expansion of the private sector.

According to Proclamation No. 146, issued in December 1998, EPA is mandated with clearly defined tasks and duties to :

   Implement the privatization program in accordance with the provisions of the proclamation;
   Determine the privatization sequence or define a plan for all enterprises included in the privatization program;
   Undertake the necessary preparatory work for the privatization of enterprises;
   Determine bid evaluation criteria for the selection of investors participating in privatization;
   Prepare the necessary documents to be used in the privatization process;
   Design ways and means of encouraging domestic investors to participate in the privatization of enterprises;
   Take the necessary measures to publicize the privatization program and its implementation;
   Through post-privatization monitoring, ensure compliance of investors obligations, and undertake impact assessment of the privatization process in general;
   Establish close relations with relevant institutions in the implementation of the privatization program with a view to coordinating their actions;
   Own property, enter into contracts, sue and be sued in its own name; and
   Carry out other activities necessary for the fulfillment of its objectives.

In addition to the powers and duties mentioned above, EPA has the power to investigate and decide on claims of ownership in respect of property taken over in violation of the relevant proclamations. Regarding restitution, the EPA has the mandate to:

  

Register claims of title presented to it in respect of property taken in violation of the relevant proclamations;

  

Investigate on the basis of the relevant proclamations the claims and conditions of title submitted to it; to obtain any governmental or private office, organization or establishment as well as from any private person any evidence it deems necessary for such investigation; to hear the testimony of witness and require the production before it of any written evidence;

  

Give appropriate decisions on claims in respect of any property taken in violation of the relevant proclamations upon examination of the evidence therefore; and to take the measures necessary for the implementation of same;

  

Delegate its powers and duties with detailed implementation guidelines, as it deems it necessary, to the appropriate regional and central government organs;

  

Submit to the appropriate government organ proposals regarding claims of title where it finds that they require, beyond examination of evidence, policy or legal determination;

  

Issue an order for the purpose of restraining the transfer, to third parties, of any property on which a restitution claim has been lodged, as well as the carrying out of any activity that may result in substantial alteration on such property until decision is made on the claim;

ALTERNATIVES OFFERED FOR WORKERS

1.  

For workers in retail shops, in small and middle standard hotels, restaurants
 

  

To be transferred to the private owner together with the enterprise;
 

  

To be included in the Safety Net Program designed by the Government and workers' representatives;
 

  

To take a payment in accordance with the law for the service one has given and resign from job;

2.  

For workers who work in enterprises whose total value sale is up to 75%:
 

  

To be transferred to the private owner together with the enterprise;
 

  

To buy a certain amount of share from the 25% value of the enterprises which is held as a reserve for workers, management and board members;
 

  

To take a payment in accordance with the law for the service one has given and resign from job;
EPA started to implement its program first by privatizing small retail trade outlets and hotels as well as small-scale manufacturing and agro-processing enterprises. The reason was to gain first hand experience, which could be used in later privatization of medium and large-scale enterprises whose privatization process could be more complex. The privatization program steadily gathered momentum and a number of tenders and notices were issued inviting prospective investors to participate in bids for enterprises floated for privatization.

As a matter of policy, bids for retail trade outlets, stores, small hotels and restaurants as well as small-scale manufacturing enterprises and dairy farms were floated for domestic investors alone. The privatization modality selected was the sale of 100% ownership interest.

For other enterprises, the Agency invited prospective investors, both local and foreign, to participate in either joint expansion or improvement program with the government or in the acquisition of full ownership of the enterprises.

To date, 200 units and whole enterprises have been privatized and transferred to domestic and foreign investors. Among these 44 of them have been sold to 1454 workers who are organized under the Safety Net program. Over the coming two years, the plan is to privatize 113 public enterprises. The necessary preparations are under way for the privatization of 81 enterprises with the help of foreign consultants and for 32 others on which preparatory work has carried out by the in-house staff.

RESTITUTION CLAIMS
 

Pursuant to the powers and duties vested in it by Proclamation No. 110/1995 and its amendment Proclamation No.193/2000 the Agency has received 27,748 restitution claims from August 1996 up to December 2001. From these, about 5,255 applications were accepted for further investigations while cases, which could not comply with the proclamations and directives, were rejected.

Among the restitution claims that were recorded in file, a total of 428 properties, i.e. 335 homes, 60 manufacturing firms and coffee processing plants, 22 service-rendering enterprises, 3dairy farms, 2 institution buildings and 6 others (monetary, car, etc) have been restituted to the owners. Decision was passed on the remaining cases to be closed due to lack of evidences. Property claims are still continuing and there are 4,231 cases that have to undergo further investigation.

PRIVATIZATION MODALITIES
Ethiopia has, to date, used a few modalities namely:

  

Asset Sale: Retail outlets, hotels and restaurants, manufacturing and mining enterprises.

  

Employee and Management Buy-Out /MEBO: Retail outlets, hotels and restaurants through the Safety Net Program.

  

Lease/sale: Adei Ababa Yarn and Dire-Dawa Textile.

  

Joint Venture with a Strategic Investor: Tobacco

  

Management Contract: Awassa, Kombolcha Textiles.

  

Competitive Sale of Shares: Beverage Sector, Awassa Flour.

  

Restricted Tender and Negotiated Sale Selale No. 2 and 3, Modjo Dairy Farms and Olma Agricultural Development.

Since Ethiopia embarked on the road to liberalization and a market economy in the 1991, the privatization of state-owned enterprise has become an important element of the nationwide reform program. All the activities undertaken by the Ethiopian Privatization Agency are therefore part and parcel of the reform measures. They are well integrated into a larger political, social, and economic framework of Ethiopia within the historical context.

The Ethiopian privatization program which steadily gained momentum since its inception in 1994 has evolved and changed in certain perspectives, but still works along the main objectives of the Ethiopian Economic Policy launched in the year 1991. It is still designed to support the Ethiopian economy on its long way to sustainable development and growth.

 
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