Central to the development strategies of virtually all the sub-Saharan economies, public enterprises are nonetheless perceived as inefficient and unprofitable. Barbara Grosh examines the public enterprise system in Kenya and shows that, while average performance has indeed been poor, there has been a broad range of results - from excellent to abysmal - and many firms have performed well for long periods. Grosh uses four indicators (profitability, efficiency, prices paid to suppliers and consumer prices) to assess which firms performed well, which had problems and when and why those problems developed. Covering 1963-1988, data is provided for 17 firms in the agricultural sector, four in finance, seven in transport and communications and five in development finance. In addition, 30 publicly-owned manufacturing firms are compared with 40 private ones. She concludes that neither privatization nor policies designed to bring firms and their managers under control - approaches gaining popularity with African policymakers - is likely to solve the problems. She concludes also, however, that most of the problems are susceptible to limited and feasible reforms, and that public enterprise performance can be improved.