Rethinking government economic activism in sub-Saharan Africa: Some contending issues of the privatization strategy

Journal of Third World Studies, Spring 2001 by Ugorji, Ebenezer C

The second school of thought on privatization is theoretically based on public choice approach to policy and political analysis. Developed by economists, public choice theory seeks to explain behavior of public employees. Some public choice adherents contend that government employees are motivated by selfish and material gains. Where no such gains exist, the argument is that public employees will not be highly motivated and therefore would not work very hard. In his Nobel Prize acceptance speech, public choice scholar, James Buchanan warned that bureaucracy "manipulates the agenda for legislative action for the purpose of securing outcomes favorably to its own interests."38 This view may not, however, totally explain the behavior of government employees. Anthony Downs has pointed out that in addition to power, money, security, and convenience, there are other range of motives that may animate government employees. These may include loyalty to an idea, loyalty to an institution, or loyalty to the nation. Of equal weight are pride in excellent work, and desire to serve the public interest.39

From the perspective of public choice, privatization addresses the question of the type of activity the government should engage in. In other words, privatization assumes that citizens are rational, utility-maximizing individuals. They would behave the same way in public service as they do in the private sector, unless faced by the constraints of each sector. For the individual, therefore, economic efficiency is the prime criterion for judging the political, social, and economic system. Consequently, the activity a government engages in is to be judged in terms of its impact on individual choice and economic efficiency.

Public choice theory distinguishes goods and services in terms of exclusion and jointness of consumption. The exclusion characteristic is one in which the use of the good by one person precludes its use by another person, and jointness of consumption is one in which the use of one good by one person does not prevent its use by another person, whether or not everyone contributed to its provision or creation. In the public choice literature, the nature of goods and services determine whether they should be provided via the market system or through the public sector. The argument is that private goods should be provided by the market while public goods are provided by the government. In the cases where public goods provide separable, private benefits, for example, education, public choice theory suggests that recipients of the private benefit be required to pay for that portion of the cost that represents the private benefit.40

The criticism of many African governments is that over the years, they have gone beyond the provision of public goods to the provision of private goods. And they have not only failed on both scores, they have also overextended themselves in their public sector commitments not only through the establishment of too many state enterprises, but also through continued financial support of those enterprises that are continuously losing money. This situation gave rise to public sector deficits, high inflation rates, and balance of trade deficits, all of which they tried to deal with through heavy external borrowing. Public choice theorists argue that privatization would mean relying on the self-- correcting behavior of the market instead of the self-serving behavior of public officials.41