After reaching peak revenues of $2.3 billion in 1997, privatization in Sub-Saharan Africa declined to $1.4 billion in 1998 (see Table 6). A combination of low commodity prices (which deterred investments in the sector) and weaker investor confidence in emerging markets (reflected by lower foreign participation in the region) contributed to a deceleration in privatization activity in the region. Furthermore, the collapse of aggregate demand in East Asia directly impacted Sub-Saharan Africa, as East Asia countries have been important investors in a number of countries in the region. Privatization in the mining sector reaped almost half of total privatization revenues for the region in 1998.

Privatization programs should accelerate in Sub-Saharan Africa as the policy environment -in many countries- is shifting toward promoting foreign investment and privatization (for example, in Nigeria, Uganda, Tanzania, Mozambique and Benin). With declining foreign aid, privatization and foreign investment will help heavily indebted countries that can no longer sustain loss-making state-owned enterprises and need revenues to fund their budget and current account deficits. While privatization and foreign inflows in Sub-Saharan Africa have typically been focused to the primary sector (in particular, mining and oil), the trend has recently been broadening to the telecommunications, transport, utilities, financial and manufacturing sectors (which have also attracted significant inward portfolio and direct investment and contributed to the development of the region's stock markets.

Source: Progress in Privatization, Appendix 4, Global Development Finance 2000 produced by Development Prospects Group