The Impact of Privatization on Firm’s Performance in Tanzania (A Reflection of Financial and Profitability Status of Privatized vs Non-Privatized Firms)

This study examined privatization result of privatized public enterprises compared to a corresponding set of enterprises that are still under state ownership then see whether privatization initiatives do put in force state-owned firms to improve their performance. In the light of increasing dissatisfaction and opposition among citizens and policy makers, this study aims to establish performance evidence of privatization benefits and provide advise whether privatization initiatives put in force state owned firms to improve their performance. An ordinary least square step-wise linear regressions were employed to predict enterprise performance from privatization and non-privatization initiatives. The main finding is that, on average, privatization works. That is, profitability analysis supports the hypothesis that State-owned Enterprises (SOEs) with private sector ownership have higher levels of performance than those fully owned by the government. This finding is consistent with success story gathered from privatized enterprises which have been approached and affirmed that in terms of investments and profits parameters, privatized entities have done better than the still-existing public enterprises. However, given the critical role of some public firms that cannot be privatized, recommendations were given on the need for these enterprises adapting and using Private Sector Business Models (PSBMs) so as to no longer be ‘loss makers’ and burden to Government. The study recommends to introduce and set a target return for all public enterprises at a rate close to, or above that of their counterpart firms which have been privatized as a basis for challenging their organizational performance. These findings support the Tanzanian Government move towards further privatization in that SOEs with at least some private sector ownership have greater performance levels