Privatization Modalities and Business Valuation: An Ethiopian Focus

Abstract

This paper has been ignited as a result of the current privatization movement by the Ethiopian government straight away as soon as the new prime minister comes into the position. The main motive of the government, behind the decision to privatize public enterprise to the local and foreign investor, was, inter alia, to limit government’s participation in the manufacturing and service sectors of the economy so as to transfer the scarce resources from owned by inefficient public sector enterprises to efficient private entrepreneurs and to re-deploy such resources in higher prioritize and efficient private enterprises and to meet poverty reduction programs in a given economy, and thereby increase foreign exchange and alleviate the problem of good governance. In line with this agenda, various privatization modalities, theoretical debates, and arguments on such a privatization, and the various business valuation approaches have been critically reviewed via considering the current political and economic conditions of the country, and finally, contextual privatization strategies and business valuation methods have been implied at least to fairly redistribute wealth, institutionalize stock market and mitigate the common mistakes in the process of privatization of such public companies.