Enhancement of Corporate Governance through Privatization

Abstract
The convergence of global economies towards market-based systems has put the modern corporation in the centre of economies around the world. It is becoming increasingly recognized that companies should be managed to reflect the interests of society at large rather than for purely private interests. The positive and negative externalities of the separation of management and ownership in the modern corporation makes corporate governance an important issue. This leads to a number of issues related to efficient control of the assets of corporations in the interest of all stakeholders. Corporate governance is also important for state-owned enterprises (SOEs).Click to download document

Dealing with Resistance to Privatization

Abstract
As the Privatization Commission executes its mandate of formulating, managing and implementing the Privatization Programme, it is likely to encounter resistance from different stakeholders. This is not unique to Kenya as every country that has pursued privatization as a Government policy has had to deal with resistance to privatization at one time or the other. A survey carried out by the Center for Global Development in 2002, concluded that “privatization remains widely unpopular, largely because of the perception that it is fundamentally unfair, both in conception and execution”.

Opposition to privatization can come from different stakeholders and groups that include trade unions - including workers and management, consumers, professionals, environmentalists, political groupings and politicians, and community organizations. Resistance to privatization has taken place in countries at varying levels of national incomes so that the resistance to privatization is not limited to developing countries.

Resistance has the potential to delay, dilute or sabotage public enterprise reform in general and privatization in particular (Nellis, 2003). Despite the resistance, the economic benefits associated with privatization are widely accepted and can include: improving enterprise efficiency and performance; developing competitive industry which serves consumers well; accessing the capital, know-how and markets which permit growth; achieving effective corporate governance, broadening and deepening capital markets and securing best price possible for the sale.

In light of the above, this paper seeks to identify the possible reasons for resistance to privatization and the mitigation measures that can be put in place to deal with the resistance.

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