PPESA: privatized companies must follow plan
Investors that bought public enterprises which the government privatized have botched their business plan which was a criterion for purchasing them from the Privatization and Public Enterprises supervising Agency (PPESA).
PPESA and stakeholders that included ministries and banks met and talked with the owners of the companies about their failure to meet the requirements.
During the discussion held on Tuesday February 18, Fitsum Mesfin, deputy director general of the PPESA, presented results of a study they conducted on the performance of these companies.
In the past two decades the government has sold 365 enterprises with 18.7 billion birr and collected 12.2 birr. “Even though we have earned a lot of money over the previous years, a majority of the companies that have purchased government run businesses have not been performing up to our standards,” the deputy director general wrote in his report. In his opinion businesses were not sticking with their original business plan. He says that companies must do this in order to meet their targeted achievements.
Weak export figures, not taking advantage of investment incentives, land acquisition challenges, financial problems and not meeting expected requirements are all quagmires being blamed on the companies’ failure to follow their business plans.
The agency believes pursuing the business plan is crucial for successful investment and expanding the export market.
During the talks held at the Transport Authority hall, buyers asked the agency for help getting water, power and land quickly. They also want help getting conditions to access transport from state run enterprises.
They feel better access to financing will help them meet their business plan. Wendafrash Assefa, public relations head of PPESA told Capital that the two sides have agreed to solve the problems together to boost the companies’ expected growth in terms of investment and export. Wendafrash said that to achieve this companies have to follow their business plan and report their activities on time.
Sources said that the companies’ failure in the export market is a major reason for organizing the meeting, even though Wondafrash denied it.
Sources who participated in the discussion told Capital that the meeting, chaired by the Agency Director General, Beyene Gebremeskel, is quietly trying to encourage the companies to apply their business plan, but the business owners counter that current conditions make that hard.
The government was expecting them to export far more than they actually have been able to do so far.
The agency, which is responsible for managing public enterprises, privatizing and looking after the companies’ performance after the business is transferred to the private sector, is not satisfied with the results so far.
One major concern is that most companies have not submitted their reports to the agency on time so that there is little way for them to be held accountable.
Beyene said that this was a major problem because if they could analyze the progress on time then they could work to make adjustments so that the businesses would become successful.
The buyers say they need to change their business plans but the agency does not agree with them. “Going with the original business plan is not only advantageous for the government and the public, but it has a greater advantage for the companies themselves,” Beyene said to the participants.
He said that that the agency has already started solving problems and will continue addressing new ones.
In the last 18 months exports have been below target levels, including those of the GTP and revised goals.