Reasons why Parastatals are turned into Public Limited companies (privatised)

Reasons why parastatals are converted into public limited companies.

• To reduce the burden on the taxpayer for example parastatals are often subsidised using tax-payer’s money.
• To improve efficiency of the company through competition.
• To reduce state monopoly by competing in the supply of goods and services with companies already in the private sector.
• To improve the quality of products.
• To free the firms from political interference and thus allow the new company to:
• pursue profit pricing.
• So they can reap the rewards of success.
• Shoulder results of failure.
• To raise revenue for the government through the sell of the government’s stake in the parastatal.
• An example of a parastatal that was privatised is Dairibord Zimbabwe.

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