The Restructuring of State Owned Enterprises: Does it Pay?

The debate around the privatisation of state owned assets has focused around economic efficiency gains and regulation. Very few studies have considered the fiscal impact of privatisation on the tax-payers. Even the few empirical studies conducted were done in industrialised countries where institutions and markets are well developed. This paper is an attempt to look at the fiscal impact of privatisation of state assets in South Africa. It focuses on the use of proceeds to reduce budget deficits. Telkom is used as a case study since it was recently listed on the JSE Securities Exchange and the New York Stock Exchange. The paper argues that that the privatisation of state assets leaves taxpayers worse off than before.