Botswana Notes and Records, Volume 45 86 Privatisation as a Vehicle for Economic Development: An Appraisal Brothers Wilright Malema* and Galeage Kaelo† Abstract The ‘Neoclassical Counter Revolution’ school of thought emphasised privatisation as a vehicle for economic development. This school owes its existence to the political ascendancy to state power by conservative governments in the United Kingdom and the United States of America amongst others, around 1980. The ‘Washington Consensus’ was not to be outdone as it included privatisation amongst its ten policy prescriptions. The ‘Washington Consensus’ policies were a product of intellectual convergence by the three Bretton Woods institutions. It seems that privatisation has endeared itself to policy makers and is universally perceived as a vehicle towards economic development, save for a few exceptional cases for which China stands out. This paper interrogates this view and highlight that it deserves contextualisation for the realisation of maximum returns. Privatisation should consider other factors, far and above the ‘overemphasised’ productive efficiency. We conclude that such a policy might be counterproductive in a developing country with high unemployment and poverty rates such as Botswana. We also agree without question that ‘it is what the doctor ordered for a healthy American economy’ and others comparable to it, with the unemployment rate hovering around the natural rate. Introduction Privatisation refers to the change of ownership of assets from the state to private individuals and entities. It refers to a process of transference of ownership of business, enterprise and public service from state to private sector, with the latter comprising private profit and/or private non-profit organizations. This calls for well-defined property rights, which despite being the cornerstone of economic systems have always, until the writings of Coase amongst others been assumed a given and the phenomenon of privatization did at the same time gain prominence (Drakic 2007:103-104). The author goes on to note that property and property rights were not new, as they have according to theory of natural law, been recognised as belonging to the natural rights which belong to people. Privatisation dates back to ancient Greece and Roman Republic in which governments contracted out to the private sector functions such as tax collection and construction amongst others. The phenomenon owes its popularity in the Western countries to the Reagan and Thatcher administrations (Smith and Todaro 2009:126 and Drakic 2007:105). In the capitalists economies it was both isolated and for individualistic cases, which were predominantly pubic goods or the so often natural monopolies, in which only a single firm could be able to produce a low cost than multiple firms. It was, however, very comprehensive in the transition economies of East and Central Europe as it entailed the complete change of economic systems. It was comprehensive in part because it had the hallmarks of political, economic and social transformations. Drakic (2007:106) refers to Vickers and Yarrow (1988) as pointing out that privatisation in the West is very high on the political agenda even though they explore economic consequences with a view to portray it just an economic phenomenon. Political dimensions of privatisation are replete across the economic divide of both the former socialist and traditional capitalist economies. Privatisation policy swept the world in the last two decades of the past century. The value of privatised property was in excess of US$1,127 billion by the end of 2002. The lion’s share of such proceeds which amounted to 67 percent was amassed by the industrialized countries (Bortolloti and Pinotti 2003:2). * Brothers Wilright Malema, Department of Economics, University of Botswana. Email: malemabw@mopipi.ub.bw † Galeage Kaelo, Department of Research, Bank of Botswana. Email: galeagek@bob.bw