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Monday, 25 April 2011

How To Run A Parastatal

"Ethiopian Airlines is Africa's oldest airline and....it has continued to perform well in the African aviation industry. It has in its existence taken some battering from heavy competition in and outside Africa, among the competitors being South African Airline, Kenya Airways and British Airways among others and the only way to counter this was to set out a strategic plan. The just ended five-year plan brought success to reinstall the airline among Africa's finest and is an example of how well an airline could be managed by maximizing on profits. In the just ended five-year strategic plan, the airline surpassed all targeted by raising its income to US$ 1.3 billion when the target was $1 billion from the $390 million at the start of the plan....The 100 per cent Government owned company also raised its profitability last year to $123 million..."
You can read about their future plans here. Ethiopian Airlines of course is not alone. One can point to many companies including Singapore Airlines which are making huge profits as parastatals. Once one drops the ideological (and unfounded based on these examples) positioning that state is bad, private is good, it becomes possible to ask some intelligent questions. For example - what is it about Singapore Airlines and Ethiopian Airlines that have made them successful parastatals where others have failed? What organisation structures do they have? How do they handle pressures from government? Or are such pressures non-existent? If so, how has that happened? We have sort of touched on this before- see Progressive Analysis. Ha Joon Chang's Reclaiming Development is also good source for starting to think around these questions. Unfortunately, these are not questions that politicians will ever bother to ask but an intelligent citizen surely has a duty to do so. 

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