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__Abstract__ Privatization of urban services focuses often on the involvement of foreign enterprises. This contribution deals with micro-privatization, the partial transfer of government responsibility for solid waste collection to micro-enterprises. It tries to shed light on whether the current private sector participation (PSP) of micro-enterprises in solid waste collection service is the best way to capture the expected advantages of private sector involvement. The article examines the relations of the micro-enterprises with beneficiaries and the public sector by focusing on the contract procedure, the tariff-setting process, the cost recovery mechanism and institutionalizing of market principles for micro-enterprises. The research was carried out using secondary and primary data sources. Primary data were collected through the interviewing of public sector officials at different levels, focus group discussions with community groups and micro-enterprises, and observation. A survey was conducted among 160 micro-enterprises in the city of Addis Ababa, Ethiopia, using a standard questionnaire. What are some of the factors contributing to the results of PSP in Addis Ababa, the capital of Ethiopia? Policies at higher levels of government definitely produced an overall climate conducive to micro-privatization and recognized the need to develop micro-enterprises, but it is not clear what role the micro-enterprises are to play in solid waste management. New opportunities were created by formalization and taken up by communities and micro-enterprises. Coverage and waste collected both increased. The initiation and institutionalization of the formalization process was not without problems. The public sector over-stressed the autonomy of micro-enterprises. The fate of the micro-enterprises is largely determined by the reforms undertaken at local government level. The rapid changes in policies at the local level made waste-collecting micro-enterprises lose confidence and mor

Privatization of urban services focuses often on the involvement of foreign enterprises. This contribution deals with micro-privatization, the partial transfer of government responsibility for solid waste collection to micro-enterprises. It tries to shed light on whether the current private sector participation (PSP) of micro-enterprises in solid waste collection service is the best way to capture the expected advantages of private sector involvement. The article examines the relations of the micro-enterprises with beneficiaries and the public sector by focusing on the contract procedure, the tariff-setting process, the cost recovery mechanism and institutionalizing of market principles for micro-enterprises. The research was carried out using secondary and primary data sources. Primary data were collected through the interviewing of public sector officials at different levels, focus group discussions with community groups and micro-enterprises, and observation. A survey was conducted among 160 micro-enterprises in the city of Addis Ababa, Ethiopia, using a standard questionnaire. What are some of the factors contributing to the results of PSP in Addis Ababa, the capital of Ethiopia? Policies at higher levels of government definitely produced an overall climate conducive to micro-privatization and recognized the need to develop micro-enterprises, but it is not clear what role the micro-enterprises are to play in solid waste management. New opportunities were created by formalization and taken up by communities and micro-enterprises. Coverage and waste collected both increased. The initiation and institutionalization of the formalization process was not without problems. The public sector overstressed the autonomy of micro-enterprises. The fate of the micro-enterprises is largely determined by the reforms undertaken at local government level. The rapid changes in policies at the local level made waste-collecting micro-enterprises lose confidence and more dependent on