During the period from the late sixties to the nineties Tanzania embraced state monopoly of the economy with the state acting as owner and entrepreneur. This period saw the expansion of the public sector at the expense of the private sector. Public enterprises were the major policy instrument and as such people were made to contribute their promotion and development. However, inefficiency and poor performance led to the need for wide economic reforms and in particular far deep reaching reforms in the public sector. As a result, laws the reformed to give way to restructuring and divestiture of the public enterprises. The government had felt the budgetary strain. The public enterprise had, on the most, become a burden and not an asset. However, there has been growing concern among citizens that the legal environment within which the reform policy is implemented is not well suited to afford protection and participation of the citizenry. This paper surveys briefly the legal environment under the following main theses. That, throughout the establishment, management and operation of public enterprises the State was more pre-occupied with the political –economic interests of the ruling cadre at the expense of the citizenry. That, the creation of the legal environment of the divestiture and privatization of public enterprises has not b: tailored with attendant legal measures providing for the protection of the interests of the citizenry and full public participation in the process