Thursday, June 05, 2008

Sierra Leone Ports: Is Privatization the Answer?

Sierra Leone Ports: Is Privatization the Answer?: "For centuries, economists and political leaders have debated the issue of privatization versus non-privatization and private versus public sector ownership as a major means of production and distribution.In all of these debates, the strategic importance and national security implications of utilities like water, gas and electricity, communication (telephone cable and wireless) and urban transit made it possible for them to be treated as Natural Monopolies.

Natural Monopolies which were established by government were regulated interms of prices to charge quality of service and items produced. As a result, only one company was given the go ahead to produce anyone of the items or services identified earlier.

Incidentally, this was done because of the huge expenditure involved in setting up such enterprises. Also the decision to grant such a privilege to only one company was taken into account in order to avoid waste of resources through duplication of assets; to avoid confusion and risk to consumers coupled with the desire to maximize profits and minimize losses.

The ideas, which were primarily western, were later transferred to the colonies of the metropolitan power. Public utilities in the colonial era were akin to pure monopolies because they produced items/services for which there were no known close substitutes. It was therefore the absence of competition that created the environment for the practice of “benign neglect."

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