Effect Of Privatization And Commercialization Of Government Owned Industries In A Developing Economy (A Case Study Of NITEL Enugu)

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Effect Of Privatization And Commercialization Of Government Owned Industries In A Developing Economy (A Case Study Of NITEL Enugu)


Emphasis on affects of privatization and commercialization of government owned industries in developing Economy. (A case study of PHCN Enugu) in order to emulate a concrete result the researcher constricted questionnaire. At the end of the work the research result in identifying some effects emanating from privatization and commercialization and among them are

  1. Increase in employment due electricity
  2. Increase in productivity an efficient.
  3. Reduction in government expenditure.
  4. Increase in profitability

Based on the findings male, recommendation, were made by the research while in her view would help to improve privatization and commercialization in this economy. It should also be noted that the recommendations were made in solution, which were based on the response chosen by the respondent.

Chapter One


1.1 General Background

Privatization was one of the pre-condition, kid down by the International Monetary Fund [IMF] to assist financially the development countries of which Nigeria is one. This was to unable their economic to open up market forces the collapse of all price and the consequent. Contraction in foreign exchange earnings, couples with the surge in imports resulting mainly from an over valued naria led to serious balances of payment problems debt crises and by budget deficits.

In the past the years, Nigeria has witnessed a tremendous growth in the Power Holding Company of Nigeria industries by this growth PHCN not only become one of the heading public company in the country but also placed the country on top of the Power Holding Company of Nigeria area in Africa. Thanks to PHCN that today, Nigeria can boast of about 600,000 electricity wax lines, which have equally been improved with the introduction of prepaid meter.

Apart from making life comfortable for its works, PHCN has contributed to the economic and social advancement of Nigeria through its revenue generation. In terms of performance PHCN several associates and awards have gone a long way to prove that PHCN is really running the race fast. In 1992 for instance it was confirmed with the Herbert Macaelory Award for Engineering excellence and a certificate of co-operate excellence. Others are the merit award for cooperate leadership by the University of Nigeria Nzukka and a rotary club of Nigeria. It is however, distrusting that’s despite PHCN’s good inventions and social well being of the citizens are being subrogated by unscrupulous Nigerians. These people of evil intentions instead of joining millions of Nigerians in extolling the achievements of PHCN have decided to purist the company vandalizing its installations all over the country costing millions of Niara. For instance in Enugu, PHCN plc lost about 10 million worth of cables wee damaged.

However, the researcher followed with considerable interest on the controversy surrounding the deregulation of tile communications in Nigeria. The controversy started with aspiring entrants purported “I concede” by the Nigeria that PHCN was been frustrating their efforts at getting of the ground and reached its peale when PHCN disconnected its joint measure company, the mobile Power Holding Company of Nigeria service (MTS) fronts network. Millions of unsuspecting Nigerians have last their land earned money through what was an unregulated deregulation of the banks industries while the village was going on, much fraud what banks and bankers were being hailed as the progressive and innovation banks and bankers. This same situation is being repeated in the Power Holding Company of Nigeria industry by uninformed communicators. The insiders in the industry renew this and many of the intending entrants only want to have their cut from the new national cake which they assumed been backed by the Power Holding Company of Nigeria deregulation decree and called PHCN.

Dispassionate analysis and a careful study of decree No 75 November 1993 will show that PHCN has been keeping to the letter of the decree while like any commercial organization. They are however strictly not for, public subscription. The only networks open for public transaction as per the second schedule are payphone telephone and mobile communication service. Private operator who have applied for hence from NCC need to make a careful strictly of the second schedule.

Especially why the operative word is private in terms (3) and public in terms (2) and (4)

There is also the misconception that decree 75 of 1992 precludes PHCN from engaging in certain services. a careful study of section (10) subsection (2) and (3) will defiPHCNy remove such misconceptions. Generally, the objective of decree 75 of 1992 is to continue PHCN to its existing role of providing conventional Power Holding Company of Nigeria mainly telephone and telex services while making the ionconventional new technology in mobile communication information transfer, etc. free for all in which PHCN too can seek a hence to participate.

Already, certain aspects of the decree have been overtaken by technology. These controversies of the effect of privatization and commercialization on a developing on a developing are what this work is sit to remain with special references to PHCN Plc. Enugu.

1.2 Statement Of Problem

According to Werner Sombort if capitalism has its own spirit which is profit making spirit” the motive to make profit from investment is considered as a force which is moving that drives investors. People’s major aim of invested is to have return on the fund invested is to have return on the fund invested in the profit.

Whenever the return on investment is considered not form coming such investment may be taken as avenue financial loss. There was this economic situation which confronted the Nigeria society when the return of 93.7 million (1.4%) was received do 11 Billion Nana invested on parastatals and private own companies. The poor returns portray the fear that such investment is a waste of public revenue which was then on a decline following a global recession on the PHCN’s revenue.

The first official public statement on privatization was in the 1986 budget speech by the head of state, President Ibrahim Babangida when the said (government parastals have for long been subjects of study and policy review). They have too generally come to constitute on unnecessary high burden government resources. They have been variously classified for purposes of reforms. Government has now decided that as from 1986. The volume of non statutory transfers to all economic and quasi economic parastatals would constitute no more than so to it their levels. There are to fund the balance from increase in the price of their product and service charges tariff and rates”.

According to another Mbamele, (yp) there is no doubt that excessive participation by government of developing countries like Nigeria in business ownership created great imbalance on their economy. It is obvious that under. Living cause of privatization exercise is the attempt to increase efficiency by making public owned enterprises more productive as well as more responsive in the market place and on competitive pressures.

Privatization and commercialization of publicly owned enterprise is expected to block the drain on government revenue by bringing profit spirit into such needed for the execution of public programmes and this need for this study.

1.3 Research Question

  1. What solution has privatization and commercialization to the problem of the masses?
  2. What is the impact of privatization and commercialization has on general masses?
  3. What impact does privatization and commercialization bring to government funding?
  4. To what extent does privatization and commercialization proffer to solution to problem associated with government parastatals ?

1.4 Objective Of The Study

  1. To determine whether privatization and commercialization helps to solve the problem of poor masses.
  2. To identify the impact of privatization on the general masses
  3. To determine the impact of privatization on government funding.
  4. To proffer solution to problems associated with privatization and commercialization of government parastatals.

1.5 Significant Of The Study

The study is of a great importance in the fact that privatization and commercialization at public enterprise was being resort to as a solution to their unpredictability; inefficiency and unproductively public companies in the western countries are privatized for maximum profitability and efficiency. Such companies include the British telephone company’s the British railway’s, the united state postal agency etc.

The study is very timely since privatization and commercialization on public owned enterprise was pursued with many investors still ignorant of the benefit derivable from such investment considering the that there are limited literature on the effect of the activity this research therefore seeks to enlighten the general public about the effect of privatization and commercialization of our inefficient public enterprises.

It is also hoped that this research will create or stand as a point of reference for further research or this issue.

1.6 Scope Of The Study

The scope of this research is limited to Enugu state. Focus is also on PHCN formally owned by this state government. This company is expected to make profit while charging competitive prices.

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