The Role Of The Nigerian Government In The Privatization And Commercialization Of Public Enterprises

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The Role Of The Nigerian Government In The Privatization And Commercialization Of Public Enterprises


Abstract


This study examines government role in the commercialization and privatization of public enteprises. The issues of Privatization and commercialization of public enterprise could be restated as that of ensuring even accessibility to investment opportunities created by the exercise for all Nigerians irrespective of economic class or geo-polity. The major challenges-to the Bureau of Public Enterprises (BPE), whose duties and responsibilities must be open, fair and transparent to commercialized public enterprises from economic management that must reflect socio-political balance to one that has to be guided by marketing place efficiency considerations. An extensive review of existing literature was made. Some recommendations where put forward that the government should create an environment favorable to private economic activity. This can be done by truly committed to the reduction of the opportunities for corruption and misuse of public property by government officials. Most importantly, there should be infrastructure privatization as this may unleash large inflows of foreign direct investment and help develop local capital marks. In addition, bold privatization programs can send a clear message to international capital markets, the wider investor community and the local populace that governments are committed to improvement economic management.


Chapter One


1.0 Introduction

1.1 Background of the Study

The Information technology it is the technology which support activities involving the creation, storage, manipulation and communication of information together with related methods, management and There are rapid and sweeping changes taking place in the political economy of most developed and developing countries. This is dominated by liberal democracy in the political process and free-enterprise in the economic sphere. In the economic sphere, these changes are characterized by economic reform programmes whose fundamental objective is the rationalization of national economics for the achievement of efficiency and effectiveness in resource allocation and laying the foundation for future growth. By economic reforms, it means a significant movement by governments to expand the use of market signals in shaping production and distribution patterns, and the reduction of direct state ownership and direct stale controls over the economy.

Typically, these reforms occur across several important sectors and include changes in the degree of stale ownership and regulation, in pricing, personnel and other management decisions at the enterprise level. It is important to observe that state enterprises suffer from fundamental problems of defective capital structure, excessive bureaucratic control or intervention, inappropriate technology, gross incompetence and mismanagement, blatant corruption and crippling complacency which Monopoly engenders. Inevitably, these shortcomings take a heavy toll on the national economy. Nigerian economy from colonial history through independence and up till today has been characterized by huge government investment in Public Enterprises (P.E.) had always arrived in a mixed economic system where government at all levels, being the major spender, sought to nurture and increase commonwealth for the greatest good of the greatest number through heavy capital investment.

The deciding factor propelling such investments by successive governments in Nigeria was (and still is) the availability of enormous spendable resources more than anything else. Thus, one might, especially given the topic of this discourse, well, extend the argument to say that the shortest act to our economic blues is to legislate government out of the control of excessive disposable resources via privatization. Privatization has emerged as a major public policy issue in many countries of the world in the decade of the 80’s, following the revival and efficiency of the doctrines of the market forces in the leading industrial countries. This programme entails the transfer of some government owned enterprises to the private sector, either fully or partially and the adoption of National privatization practice in some enterprises which still remain publicly owned. Thus, going by definition, section 14 of the Decree Number 25 defines privatization as the “relinquishment of part of all the equity and other interest held by the Federal Government”. Privatization, which appears to be a different concept from privatization, aims to re-organize enterprises whether owned wholly or partly by Federal Government, to profit making ventures.

Thus, the key words to note in the case of enterprises to be commercialized are: re-organization and profit-making. For the avoidance of doubt, however, it is important to state that, the term privatization does not just mean the transfer of ownership of shares or equity from one sector – the public sector, to another sector. Nor does it just mean the relinquishment of part or all the equity and other interest held by the Federal government or its agencies. The term privatization means a good deal more. It also means the transfer of power and functions from the public sector, viz-a-viz from the Government, to the Private sector. Suffice it to say that, this is the crux of the matter that has attracted divisive debate.

The case for privatization is clear evidence that P.E. have contributed to our economic stagnation and poor national image. The foregoing state of Affairs partially reveals why government justifiably did a rethink on increased investment in such enterprises. Privatization is not a cure all panacea for economic difficulties, but a situation where the option of continued investment in P.E. has been proven a failure, the trial of the next best alternative (Privatization) recommends itself to consideration.

Efficiency and effectiveness today demand that government units itself to a. regulatory role, creating enabling environment, facilitating and encouraging the activities of the private sector. In line with this over arching need, the Federal government of Nigeria is determined to develop, install and maintain institutional capacity, which is compliant with our defined need. More so, government role in this exercise must therefore be seen to be directed at creating relevant institutional and regulatory framework with the necessary incentives to facilitate the development of the private sector as the engine of economic growth as well as protect the public interest.

The justification for privatization is to assist in restructuring the public sector in a manner that will affect a new synergy between a learner and more efficient government and a revitalized, efficient and service-oriented private sector. Hitherto, privatization was directed at removing the financial burden which these enterprises constitute on the public and release resources for the essential functions of government. Thus, this study is precipitated on these real issues aimed at examining government role in the privatization exercise as a deliberate strategy to entrench efficiency and effectiveness in our public enterprises. Here lies the litmus test for the Bureau of Public Enterprises (B.P.E) whose implementation task calls for optimizing its organizational skills and repositioning its administrative machinery in the pursuit of its mandate.

The historical background of bureau of public enterprises (B.P.K)

The Technical Committee for Privatization and Privatization (TCPC) was established as an ad-hoc implementation agency in 1989. The agency later metamorphosed into BPE in 1993, with a supervisory and technical board, but it retained the organizational structure and personnel of the TCPC and was made part of the public service. B.P.E. was recreated in 1999 by Privatization and privatization Act 1999, as an independent body without a board, reporting only to the National Council on Privatization (NCP) – National Council on Privatization. The Director General of the BPE is also the member-secretary to the NCP, which is Chaired by the Vice President of the Federal Republic of Nigeria.


1.2 Statement of the Problem

The capacity of the exercise to generate undesirable socio-economic and political problems issue has been whether the accruable economic benefits justify the potential socio-political problems. That contention is still much alive even though the exercise is gone beyond the stage of take it, or leave it” argument. Two broad groups of problems are bound to emerge in an economic restructuring exercise of the nature and magnitude of the privatization and privatization programme. The first group comprises problems that arise from the basic system change inherent in the exercise – a change from public sector ownership to private. Sector owned control, from highly subsidized public sector parastatals to commercialized public enterprises from economic management that must reflect socio-political balance to one that has to be guided by marketing place efficiency considerations. Systemic problems are therefore, fundamental attributes of the exercise. They are first order problems, the resolution of which requires political will on the part of government and patriotism and willingness to make sacrifices on the part of the governed.

The second group of problem’s are implementation problems. These are problems that could arise from short-comings of the implementation procedures, problems associated with implementation personnel as well as problems arising from imperfections in the socio-economic infrastructure available for the implementation exercise. Implementation problems are, of course, easier to handle. They are second order problems that could easily be contained by altering the implementation strategies and/or by fine tuning procedures. However, these multitudes of problems constitute a mammoth task to the B.P.E. In this regard, what role does the government play to avert or ameliorates these attendant problems? This study will seek to unravel government employed strategies in this direction. At the level of implementation, the socio-economic and political question hinges on the issue of equity. The basic question is whether the divestment process would lead to post-privatization concentration of economic power either within economic classes or geo-politically. The issue could be restated as that of ensuring even accessibility to investment opportunities created by the exercise for all Nigerians irrespective of economic class or geo-polity. Here lies the challenges-to the Bureau of Public Enterprises (BPE), whose duties and responsibilities must be open, fair and transparent.


1.3 Objective of the Study

This study was conducted with the following objectives:

  1. To identify government role in the faithful implementation of the Privatization and privatization programmer
  2. To appraise the overall performance of Public enterprises in order to ascertain its relevance or otherwise
  3. To uncover factors militating against this programme and also• proffer solutions to the government to fine-tune the exercise and purge it of undesirable side effect.

1.4 Significance of the Study

It is hoped that the finding of this project work will not only add to the vast knowledge about the role of information technology in the public This project recognizes the intrinsic importance of the privatization programme to the nation and international community. This will serve as a test case for the efficacy and efficiency in the pursuit towards economic emancipation. The design of this study will give a practical meaning and illustration to the redefined role of government as an enabler as well as our commitment to transparency and accountability. This study will serve as a ready-made tool for government to apply strategic ways and means highlighted in the work in strengthening her institutional capacity in order to achieve its goals and objectives. The study will also provide information on the emerging socio-economic problems from this exercise as it affects stakeholders, for this will serve as a guide in the formulation and implementation of policies.

Nonetheless, this research will be of immense benefits to researchers, social scientists and the Nigerian populace at large to gain an insight on its theoretical and academic expositions that will boost and enlighten their intellect. It will also serve as a reference point to promote further study.

Finally, it is also expected that the findings and recommendations of this study will enhance credibility and also add to the pool of knowledge that could promote integrity and transparency in the exercise which should be adopted and built upon.


1.5 Scope and Limitation of the Study

The scope of this study covers the privatization and privatization exercise of the Nigerian Public Enterprises as an instrument of economic reform. The programme is a multidimensional one in which the economic growth strategy is combined with the interventions by government, investors and stakeholders aimed at creating a synergy to effect efficiency and productivity in the Nigerian economy. Thus, this project will direct its focus on B.P.E, the institutional machinery charged with the responsibility of executing the Privatization programme. The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following.

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.


1.7 Definition of Terms

Bureau of Public Enterprises (B.P.E.):

B.P.E. is the secretariat of the National Council on Privatization (N.C.P.) and is charged with the overall responsibility of implementing the policies and decisions of the council.

Privatization:

Privatization means the divestment by the federal government of its ordinary share holding in the designated enterprises.

Privatization:

Privatization means to re-organize enterprises whether owned, wholly or partly by the Federal government to profit making ventures.

Public Enterprise (P.E):

Means any corporation, board, company or parastatal established by or under any enactment in which the government of the Federation, a Ministry, or Extra-Ministerial Department or Agency has ownership, or equity interest and includes a partnership, joint venture or any other form of business arrangement or organization.

Efficiency:

This refers to the quality of doing something well and effectively. It is also referred to as an input-output relationship~ that is maximum work achieved for a maximum layout of energy or resources.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction and Summary

Privatization and commercialization of public enterprise is an end itself, but as a means to get government interested in fostering a new division of labor between the public and private sectors in order to increase the efficiency and contribution to the development of both sectors. Therefore, the success of privatization should be judged not in terms of the sale or contract itself or the price paid to government, or even the survival or expansion of the enterprise sold, but rather, on the basis of whether there are net benefits to the economy. Privatization must result in better service at lower prices as desired by consumers who, oftentimes, are not much bothered about economic philosophies. If privatization does not bring tangible benefits in one form or another, the opponents of privatization who argue that the benefits are not worth the cost would feel justified. On the basis of this the following recommendation is made. It is important to ascertain that the objective of this study was to ascertain a critical analysis of the role of the Nigerian Government on the privatization and commercialization of public enteprise. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations are made, which in the opinion of the researcher will be of benefit in addressing the challenges of social media and students’ academic performance.


5.2 Recommendations and Conclusion

The importance of the implementation of the privatization programme to service delivery in Nigeria cannot be overemphasized. The private sector is poised and equipped to deliver services effectively and efficiently, if given the leedway to do so. It leaves the Federal Government of Nigeria to provide favorable conditions that would enable these private sector operators to thrive and carry out their functions as expected. By reducing the cost of production; availability of electric power; accessibility of credit facilities and funding; reduction of political interference and politicizing the processes, removal of multiple taxation outlets; maintaining policy agreements; eliminating policy somersaults; curtailing intimidation of private sector workers in privatized enterprises by government officials; providing public enlightenment for citizens and beneficiaries of services; an efficient feedback mechanism to measure performance of privatised enterprises cum service delivery; and a proper balance between a maximised profit motive and a service delivery orientation of the privatised enterprise will go a long way in bringing to reality the benefits of efficient provision of services that the privatization programme has to offer. Privatization is a good policy measure, it should be pursued with vigor, truth, sincerity and transparency. The privatization equity loan program of government should be reactivated and made available. In addition, the government should endeavor to set aside politicking when privatizing or avoid selling off public property to cronies and family members. Put differently, privatization and commercialization in Nigeria and the attraction of private investors to infrastructure delivery will be a mirage unless institutional reforms take place. The government should create an environment favorable to private economic activity. This can be done by truly committed to the reduction of the opportunities for corruption and misuse of public property by government officials. Most importantly, there should be infrastructure privatization as this may unleash large inflows of foreign direct investment and help develop local capital marks. In addition, bold privatization programs can send a clear message to international capital markets, the wider investor community and the local populace that governments are committed to improvement economic management. The need to manage the Nigeria’s economy efficiently can also be felt when considered along183 countries. Doing Business 2012 is in its ninth edition. Doing Business 2012 in a series of annual reports investigating the regulations that enhance business activity and those that constrain it in developed and developing countries has consistently shown that Nigeria lags behind other countries in Africa. Out of about 183 countries, Nigeria came 114 in 2008, 118 in 2009, 125 in 2010 , 133 in 2011 and 133 in 2012 . Countries like South Africa, Botswana, Zambia, Morocco, Kenya, Egypt, Ethiopia, Uganda, and Tanzania have consistently done better than Nigeria in this index. For instance, in 2011 and 2012, South Africa came 36 and 35 respectively. Globally, the last two decades have seen a fundamental shift in the paradigm of infrastructure delivery around the world. Governments in industrial and developing countries alike are retreating from owning and operating infrastructure and are focusing more on regulating and facilitating infrastructure delivery services provided by private firms. This shift will offer the promise of more efficient investment in and operation of infrastructure services, as well as the potential to shift the burden of new investment from public budgets to the private sector.


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