Privatization Strategy and Organizational Performance of Tanzania Railways Limited

Abstract

Tanzania revitalized its economic policies in early 1990s under the World Bank and the International Monetary Fund (IMF) structural adjustment policies that emphasized on free market economy and privatization of state owned enterprise. On 1991 by an act of parliament, a Presidential Parastatal Sector Reform Commission (PRSC) was set up to carry out the privatization program and suddenly, the country was swindled on a privatization wave. Most public owned companies were handed over to private investors. This research draws insights into the impact of privatization strategy on Tanzania Railways Limited (TRL) performance. Initial public owned, TRL was handed down to a private investor RITES on 2007. Theories such as the principal agent theory and the public choice theory tend to suggest that privatization strategy may actual improve organizational performance. However qualitative data analyzed by the research in accordance with the balance score card‟s four perspectives on performance, shows a down ward trend on TRL‟s performance. Subsequently the failure of privatization strategy on TRL is attributed to poor quality of the concession process and the concessionaire, the government incompetence and inpromptness plus a hostile public mood.