Privatisation

Privatisation, or privatization, is the transfer of ownership and control of a government-owned enterprise or public service to the private sector. It can involve selling state assets to private investors, issuing shares to the public, leasing or franchising operations, or outsourcing service delivery to private firms. It is often accompanied by regulatory reforms to ensure competition or to set price and service standards.

Governments pursue privatisation to raise revenue, reduce public debt, improve efficiency and service quality, and foster private investment and competition. Proponents argue that private firms face stronger incentives to cut costs and innovate. Critics warn that privatisation can reduce universal access, raise prices, cause job losses, and shift accountability away from the public to markets, especially if competition is weak or regulation is underdeveloped.

Outcomes of privatisation vary widely by sector and country. Some cases show productivity gains, faster investment, and better financial discipline, while others experience higher consumer prices, reduced access for low-income groups, or monopolistic practices without effective regulatory oversight. The success of privatisation often depends on sale design, the strength of regulatory institutions, and the establishment of competitive pressures or clear public-interest safeguards.

Common mechanisms include public share offerings and direct sales of state-owned enterprises, management buyouts, long-term concessions or franchises, outsourcing of certain activities, and public-private partnerships. Post-privatisation regulation typically covers competition, pricing, service quality, and consumer protections to align private incentives with public objectives.

Examples and debates around privatisation occur worldwide, with extensive privatisation in some countries during the late 20th century and ongoing reforms in others. The approach remains controversial, balancing potential efficiency gains against equity, accountability, and access concerns.