Privatization Of Public Enterprises And The Working Class In Nigeria

Project and Seminar Material for Political Science

Project and Seminar Material for Political Science


This work is intended to explores privatization of public enterprises and its impact on the working class in Nigeria. It contends that privatization has negative implications on the labour force and on the poor in Nigeria. The Marxist political economy was adopted as the theoretical framework. Privatization of public enterprises is nothing but a political agenda of the capitalists and their ideologues. The data for this study were collected from the primary and secondary sources. With privatization, poverty and unemployment has increase, just as education and health care has become a luxury for the Nigeria masses. It recommends pro-poor reforms instead of this pathological fixation on privatization as the only solution to the country’s economic problems.

Chapter One


1.1 Background To The Study

The participation of the state 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 fall on the colonial government due to the absence of indigenous companies with the required capital to these capital – intensive projects (Igbuzor 2003).

For a large part of the twentieth century, there were countries in the world (Eastern Bloc) promoted private ownership of the means of production. A good number of countries practiced what was termed a mixed economy i.e., a combination of public and private ownership of the means of production. However, at the end of the twentieth century with the end of cold war between the eastern and western blocs, private ownership of means of production took ascendancy. Today, the received wisdom i.e the means of production is the only viable approach to efficient production of goods and services, economic growth and development. Consequently, there is a move all over the world to privatizeerstwhile public enterprises.

Since independence in 1960 (and especially during the 1970s), Nigeria like most developing countries, developed a particularly large parastatal sector. The parastatal sector is composed of such economic activities as banking and insurance. Oil prospecting, exploration refining and marketing cement, paper and steel mills, hotel and tourism, sugar estates; etc. a survey undertaken by the Technical Committee on Privatization and Commercialization (TCPC) shows that there are nearly 600 public enterprises at the federal (National level alone and an estimated 900 at the state (Regional) and local levels. The estimated 1,500 public enterprises in Nigeria account for between 30 and 40 percent of fixed capital investments and the same proportion of formal sector employment.

To conclude the full-scale privatization the 1988 decree was repealed and the Bureau for Public Enterprises (BEP) Act of 1993 was promulgated. As a result of the political crisis and staunch opposition from the masses, coupled with the loss of credibility on the part of the government, it became clear that the Babangida regime could not go on with the assignment.

The Abacha regime that follow did not enjoy the support of the people even for one day. This made it most difficult for him to play any significant role in this direction, and it was becoming obvious to the ruling class that a new method of deceit was necessary to finalize this agenda.

Obasanjo came to power in 1999. Less than a month after coming to power the federal government enacted the public enterprise (privatization and commercialization) Act, which created the national council on privatization under the chairmanship of the Vice president. The World Bank itself had to surrender one of their chieftains Mrs. Kojo, as a member of the executive.

All this points to the desperation of the ruling class in wishing to complete this looting and destruction of the collective wealth of the Nigerian people.

Privatization according to civil society has generated serious welfare implications. This situation is such that many common people can no longer enjoy these services. Soyebo et al (2001:31) “recorded a reduction in employment in the post privatization period. Okomu oils staff strength fell from 1000 to 993.4 on the average”.

According to Danjuma (2003: 1), “in Nigeria, privatization came as integral parts of Adjustment credits and was aimed at enhancing the efficiency of resource allocation of government. The core objectives are reducing fiscal deficits, building a broader tax base attracting more investment and growing the private sector”. According to him, that criticism centers on the alleged adverse effects of privatization on employment and the poor, as well as the perceptions of rampant corruption in the privatization process especially in developing countries.

We are interested in providing answers to the following problematic; the privatization of public enterprises and unemployment in Nigeria, the ideological orientation which informs the privatization programme. The economic arguments, security concerns as well as the implications of privatization for the Nigerian working class. And also on the political consideration as well as legal arguments of privatization of public enterprises, as well as the reasons and motives behind privatization of public
enterprises in Nigeria.

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