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Effects Of
Privatisation And Commercialisation On Nigeria Economy
ABSTRACT
The
emergence of privatization as a major policy issue is a phenomenon of the
second half of the seventies (70’s). By the end of the 1980’s it has spread and
become a slogan, “everybody is doing it”
Government intervention in Africa have so far been discredited not
because there is an effective alternative in the form of an efficient market
mechanism but because of inefficient management, poor results and
miss-allocation of resources. The inefficient utilization of resources and
financial miss-management of most of the public enterprises over the years have
resulted in very week balance sheet, excessive debt, and in most cases negative
network. Furthermore, the fact that this
indolent performance of the state in the administration of public business
enterprise creates a situation in which national funds that would have been
better spent to generate new economic activity and the employment opportunities for the aim of the unemployed,
are been used to subsides dead wounds
that would neither grow nor change. The aim of this project is to give a brief
history of public enterprises and the problem confronting them, the need for
privatization, commerciation, problem, and the prospect s of privatization and
commerciation
CHAPTER ONE
1.0
BACKGROUND OF THE STUDY
The
inefficient utilization of resources and financial mismanagement of most of the
public enterprises over the years has resulted in a very weak balance sheet,
excessive debt and in most cases negative network.
Furthermore,
the fact that this indolent performance of the state in the administration of
public
business enterprises creates a solution in which national fund that would have
been better spent to guarantee new economic activity and employment
opportunities for the army of unemployed is being used to subsidize deadwood
that would neither grow nor change.
Public
enterprises are enterprises that are controlled by the state, they are
non-profit oriented enterprise.
The history
of state participation in business enterprises was not choice but by patrimony.
To buttress this fact, origin of state participation business can be grouped
under the following four categories:
The first
category to those which is conscious with the practice in their country. The
British administrators kept the colonial public sector activities that are
traditionally held by the British government. To this category belongs the
utility services industry, health, education, water, electricity, port oil, air
and sea transportation as well as the marketing of agricultural product through
marketing boards. In the wake of political independence, these state owned
services are automatically remained by the indigenous public sector. The second
category of business are that preciously controlled entrenched foreign, private
sector which manifestly controlled by commanding heights. Three of the main
factors of production via: management, entrepreneurship and capital. A
situation which was compounded by the fact that the distributive trade was also
very largely in the hand of the foreign-private sector. After independence it
was felt that to allow the means of production and distribution to be
controlled by the expatriates, community would not only make nonsense of the
newly acquired independence but would also subjugate the sovereignty of the
country to neo-colonialism.
The
participation of the states in enterprises in Nigeria dates back to the
colonial era. The task of providing infrastructural facilities such as railway,
road, bridges, water, electricity and port facilities fell on the colonial
government due to the absence of indigenous companies with the required capital
as well as the inability or unwillingness of foreign trading companies to
embark on this capital intensive projects. This involvement was expended and
consolidated by the colonial welfare development plan (1946-1956) that was
formulated when the labor party came to power in the United Kingdom. This trend
continued after independence such that by 1999, it was estimated that
successful Nigerian governments has invested up to 800 billion naira in public
owned enterprises.
The
Privatization and Commercialization net of the 1988 and the Bureau of Public
Enterprises Net of 1993 defined privatization as the relinquishment of part or
all of the equity and other interests held by the federal government or any of
its agencies in enterprises whether wholly or partly owned by the federal
government. Although privatization is not public enterprises (privatization and
commercialization) act of 1999, we can assure that it is deemed to have the
same meaning.
However the
business enterprises came into participation in business enterprises such as
control and ownership of such enterprises can be supported on the following
grounds, these includes:
a. As a means of protecting the
consumer against monopoly
b. Where it was clear, as with airlines
that the industry for many years might have to be subsidized by the state.
c. Where an industry was clearly
technology inefficient and where the private owners appearance to be unwilling
or incapable of improving it.
d. Where because of economics of scale,
a service could be provided more efficiently nationally than locally as with
electricity.
However, the
aforementioned public enterprises have been subjected to criticisms, one to
poor management and inefficient utilization of resources and mostly regard to a
dead wood that will neither grow nor change. It was these construct criticism
levied against them that leads to the idea of privatization and
commercialization. It is necessary to highlight the main problem facing the
public enterprises. Among them are:
- Lack of freedom
- Subjective considerations
- Easy access to capital
- Political interference
Supervisory
ministries have been allowed enough freedom of action to the parastatals. For
instance , the attempt to level down the remuneration of parastatals because
only officers who could make do with civil service rates if pay supplements
them with subjective earning are prepared to take up parastatals appointment.
1.1
SUBJECTIVE CONSIDERATIONS
The
injection of ethnicity meant that chief executives and principal functionaries
of parastatals institution are appointed not because of potentiality to deliver
effective result but simply for reason of repetism. This neglect the accountability to the
background, thus undermining the hiring equation in the management of public
institution. The result is that the manager of parastatals institution become
co placement and inert.
Besides top
management personnel and board members, became binds of passage only to be
charged or removed by successive governments thus loosing the valuable factor
of continuity in single and policy of management.
1.2
STATEMENT OF PROBLEM
Privatization
takes an existing government asset or services, and replaces it with a private
asset or service. We are all aware of the situation with black water and
private military contractor. The common claim is that this will reduce costs of
operation (making no claim as to whether this actually work or not- merely that
is the claim).
Commercialization
is a different beast. When we talk about commercializing space, what we are
talking about is creating private customer (users of spaceflight). This
involves developing business plans, customer surveys, business practices,
financing strategies- all aimed at targeting a new market and new customers
that are not only government based. This will be the astronaut taros, like
Buzzle Aldrin. But they’ll be joined by the private user. Like Richard
Garriott.
Privatization
involves the sale of ownership and control of assets of an enterprise to the
from government to the private sector. Such sale or transfer of equity
ownership from government owned enterprises maybe to private individuals or
corporate bodies, and in fact could take many forms.
This study
therefore hopes to answer the following questions
1) What is the history of public
enterprises in Nigeria?
2) What are the problems confronting
these enterprises?
3) Is there a need for privatization and
commercialization?
4) What are the problems and prospects
of privatization and commercialization?
5) What effect does privatization and
commercialization have on the Nigeria economy?
1.3
OBJECTIVES OF THE STUDY
The
objective of this study is to determine the effect of privatization and
commercialization on the Nigerian economy. However, the specific objectives
are;
1) To trace the history of public
enterprises in Nigeria.
2) TO ascertain the problems confronting
these enterprise in Nigeria.
3) To evaluate the need for
privatization and commercialization.
4) To find out the problems and prospects of
privatization and commercialization.
5) To evaluate the effect of
privatization and commercialization on the Nigeria economy.
1.4 SCOPE OF
THE STUDY
This project
work is intended to highlight the problem of privatization and
commercialization to preempt the future prospect of public enterprises to be
affected and its effects on the economy of the country. Since privatization and
commercialization has been popular formed as the neglected to the study shall
also suggest relent pre-requisites to a successive privatization and
commercialization. During the course of the study, proper attention will be
placed on people’s opinion and views regarding privatization and
commercialization of public business enterprises through questionnaire formed.
1.5
LIMITATION OF THE STUDY
This project
will not go beyond identification of problems confronting public enterprises,
the need for privatization and commercialization.
This project
will also suggest the form of privatization and privatization to take future
prospect of public enterprises after the system must come into operation. This
project is also highlighting the effect of privatization and commercialization
of public business enterprises on the economy of the country.
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