Privatisation Of Public Enterprises In Nigeria And Its Implications On Trade Union Organization And Administration

Project and Seminar material for Public Administration

Project and Seminar material for Public Administration


Privatization and commercialization of hitherto public enterprises have been increasingly used as a cosmetic solution to the fundamental political/economic problems arising from under capacity utilization and public disdain of state-owned enterprises.

However, privatization of public enterprises as one of the economic devices has been used by different governments and countries all over the world as an antidote to their ailing economics. Privatization could be partial or full whichever the case, the effect of privatization of public enterprises on workers is always negative especially in the short run. Nigerian Telecommunication Limited (NITEL) the nation’s former sole provider of telecommunication services was not left out among those public enterprises that have been fully privatized.

Chapter One


1.0 Background Of The Study

There is no doubt that in Nigeria today, there is a great yearning for new direction after more than forty-six years of political – economic experimentation with several management, political and economic theories and practices. This yearning which grows more urgent by the day is both legitimate and understandable. Hopes have been raised and dashed in the last forty-six years of our independence therefore, it is not surprising that Nigerians are worried and weary. Having gone through several years in which their faith in the national enterprise has been abused and affronted, Nigerians’ impatience with government and almost total distrust of its functionaries can no longer be dismissed as merely cynical.

Nigeria today, can be likened to a vehicle, which has been reduced to a cannibalized contraption, heavily buffeted by the elements and badly battered by its operators. No one undertakes a journey with such a vehicle. The sensible thing to do is to commence in earnest extensive repair works having established the causes and sources of the damage.

In view of the foregoing, it has been discovered that the management and administration of public enterprises in Nigeria is one of the numerous problems confronting the Nigeria state. In fact, public enterprises in recent years have received the attention of scholars, politicians, economists and social critics. These interests are not unconnected with the various complaints and charges of inefficiency, lack of control and accountability in such public institutions. The debate on whether to sell or retain public enterprises is not really devoid of ideological biases based on inter-sectorial animosity and competition for pre-eminence among stakeholders in public owned companies (M.I Obadan 2000).

Meanwhile, the problems of public enterprises are real and need to be addressed frontierly if the goals for setting them up is to be realized. The attention public enterprises have received in recent time is provoked by two factors. First, the aftermath of the end of the cold war has made western political and economic ideology of liberalism the only game in town which all countries, irrespective of their pedigree either willingly or unwillingly want to mimic,. Today, once question on the role of government in society is asked, the answer appears too obvious i.e. government should only play the role of night-watchman while private property and laissez fairyism reigns supreme. Second, once public enterprises are accused of inefficiency and ineffectiveness, it invariably raises the question of control and accountability in these enterprises.

It would appear therefore that government has either willingly or unwillingly that the size of government sphere of activeness is too large to promote efficiency and effectiveness in the operations, especially with regard to her public institutions in general and public enterprises in particular. Therefore, there is the desire to cut down on its involvement in the economy with privatization, downsizing, rightsizing etc. as some of the mechanism for this change. In Nigeria, the auction of public enterprises started in the early 80s but the issue of sale of public enterprises has continued to elicit controversies particularly on the issues of circumstances and modes operandi for disposing them.

While some people believe that the whole essence of privatization is economic, others are of the opinion that it is more of political but one thing is apparent, the controversy over the sale of public enterprises is all about the role of government itself. No thanks to the present phenomenon of globalization. The verdict is already in favour of privatization, perhaps there is more than meet the eyes as more public enterprises are still being established at various levels of government i.e. Federal, State and Local governments. This is not to say that public enterprises like the public sector do not have management problems which include among others, issues of control and accountability (K. Onojola 1992) once again, it raises the issues of the extent to which government can allow autonomy for a body that must be accountable to the people. How this dilemma can be resolved will be examined in the subsequent phases of this investigation.

Talking about trade unionism in Nigeria, the development is not that different in Nigeria from the trend elsewhere but the little exception was that trade unions were formed not against exploitation and poor factory working condition but against deprivation of the colonial workforce. There are two major views in explaining the development of trade unionism in Nigeria. The first, view argues that trade union development in Nigeria follows a natural pattern. This is because the conditions under which Nigerians work during colonialism were harsh enough to provoke negative reactions. However, the second view believes that trade unions developed as an external imposition on a relatively inexperienced and indifferent workforce. What this implies is that trade unionism might be an import of colonialism because the first set of unions were modeled after the British unions. Whatever the situation might be, it is obvious that the trade union ordinance of 1938 actually gave legal recognition to the already existing trade unions before 1938 which were more or less than mere social clubs. This ordinance was in existence till 1960 when Nigeria got her political independence and since then, several legislation have been enacted to enhance the formation and administration of trade unions.

1.1 Statement Of The Problems

Public enterprises occupy a central and substantial part of the public sector. Not even the present privatization and commercialization exercise of the Federal Government has been able to diminish its relevance to the life of the nation and the well-being and welfare of the people. Apart from playing the role of providing economic development and growth in society, it is also expected to supply social and economic goods to the people that will help elevate their social and materials conditions.

However, in the period immediately after independence, certain trends in the country’s economic development emerged. This is the use of state power, authority and resources to promote the economic wellbeing of individuals and groups in the society under the guise of promoting economic development. The effect of this development has promoted development not in terms of self-sufficiency and self-reliance but the growth of a parasitic and exploitative class found in both the public and private sectors of the country who feed fat daily on the state resources.

In view of the above, this research work will tend to ask and provide answers to some fundamental issues which include: Is privatization the solution to the already battered Nigerian economy? Has privatization of public enterprises impacted positively on the organization and administration of trade unions in Nigeria? Has NITEL got a face-lift from the privatization exercise in Nigeria? It is in light of the above problems, which are begging for solutions and other agitating questions that this study is undertaken to unravel the hidden facts.

1.2 Objectives Of The Study

The objectives of the study is to determine?

  1. If privatization is the solution to the already battered Nigerian economy.
  2. Whether privatization exercise of the Federal Government has impacted positively on the organization and administration of trade unions.
  3. To what extent has government legislations on privatization favored trade unions
  4. Whether “NITEL workers union” is now better off under privatization.

1.3 Scope Of The Study

This study looks into the current trends observable in the Nigerian economy with special reference to privatization and commercialization of public enterprises and .its implications on trade union organizations and administration in Nigeria. Special reference will be made to Nigeria Telecommunications Limited (NITEL), which was once commercialized by the government and now, has just been taken over by Transnational Corporations Pic (TRANSCORP).

1.4 Significance Of The Study

One of the biggest confronting organizations today is that of ‘people’ (Rao and Narayana 1998:428) organizations are the creation of people (Entrepreneurs), run by people (professionals and non-professionals) and for the people (public). In fact, if one probes into any problem in a workplace, it invariably leads to people. As a result, the findings of this study will surely open a new window with which to tackle the interface and conflation between government policies on privatization and trade union organization in Nigeria, if really implemented. The study will be of great value to policy makers, policy administrators as well as the public in general.

1.5 Limitations Of The Study

Given the penchant for secrecy especially among the senior administrative staff of public enterprises who feed fat daily on the state resources, the task of eliciting vital statistics from them would not be an easy one since they would not like to be exposed. Also time lag may be a constraint to this study. However, efforts have been made to make all these limitations inconsequential for policy administration.

1.6 Operational Definition Of Terms

In the course of this study, the following terms are used:

i). Privatization:

It is a process of transferring the ownership of state property into the hands of private individuals, frequently by the sale of state assets through an auction.

ii) Communication:

It is a process of making state owned corporations, parastatals and enterprises to make more profit.

iii) Deregulations:

It is the government policy of removing restrictions to market entry and government monopoly.

iv) Globalization:

This is the shift towards a more integrated and interdependent world economy.

V). Trade Union:

It is a continuous association of wage earners for the purpose of maintaining and improving the conditions of their working lives.

vi) Public Enterprises:

These are state owned corporations, parastatals and companies created mainly to provide welfare for the entire citizenry.

vii) Take Over:

This implies the ceding of NITEL’s management and ownership to Transcorp Pic.

viii) Re-Engineering:

This means skillful re-structuring and rearrangement of an organization with a view to enhance more productivity.

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