Dairibord Milk. Image credit herald.co.zw

Dairibord Milk. Image credit herald.co.zw

ZIMSEC O Level Commerce Notes: 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.

To access more topics go to the Commerce Notes page.

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