The impact of privatisation : ownership and corporate performance in Lesotho.

Thesis (M.Acc.)-University of KwaZulu-Natal, Durban, 2005.Across the globe, privatisation has become one of the key instruments in the economic reform process. The study investigates the impact of privatisation on selected privatised firms in Lesotho. An evaluation was made of former parastatals that included the Government of Lesotho directly-owned enterprises and Lesotho Bank companies that had since been privati sed, after being declared poor performers and that had been regular recipients of Government subsidies for their survival. The country is in the process of rebuilding its economy after experiencing a major setback in its economy in the late 1990's due to a political crisis. Privatisation was seen as one way of fulfilling this enormous task. Hence, the Government of Lesotho decided to offload some of its enterprises to the public whom they believed to be capable of running them in a profitoriented manner given efficient management and fresh capitalisation. Public participation through share ownership is involved in this process therefore it is important to evaluate these companies' performances. Shareholders are primarily interested in improving their values through maximising profits, and in tum getting high returns. This study also measures the effects of privatisation in Lesotho in terms of its contributions to the welfare of shareholders and individual corporate performances, with emphasis on the theoretical background to the subject and the opinions of directors, managements and employees of selected companies towards the critical performance changes that occurred in the pre and post privatisation era ranging from the late 1990s to date. After the analysis, the investigation revealed that the selected companies performed indifferently. Some organisations managed to grow financially and in size, while others struggled in the new competitive environments. Whilst the study did not show their individual financial performances, it did highlight the effects of privatisation on these companies in an economic manner. It was also established that Lesotho had significantly different objectives ofprivatisation to those of other countries especially developed ones. Key Words: Privatisation, state-owned enterprise, shareholders, ownership, corporate performance, Lesotho, economy, private sector, public sector