Methods of Privatization of State Enterprises in Sub-Saharan Africa: A theoretical analysis

In this article, we analyze the process of privatization of state-owned enterprises in Sub-Saharan Africa. When the possible investors are not able to finance with their own funds the acquisition of public companies, the financing by the State-seller is a method relevant taking into account the objectives and constraints of the situation in Africa. We propose a particularly method of privatization via auctions, where potentials investors submits a bid with equity shares and debt shares. In this case, the government has two objectives: maximization of revenue and maximization of the efficiency. We show that the properties of this method of privatization rest mainly on the shares debt/equity. The revenue maximization is contraditory to efficiency objectives.