The Social Economic Implication Of Privatization Of Government Parastatals In Nigeria (A Case Study Of Forte Oil Plc, Ilorin)

Project and Seminar Material for Business Administration and Management BAM

The Social Economic Implication Of Privatization Of Government Parastatals In Nigeria (A Case Study Of Forte Oil Plc, Ilorin)

Chapter One


1.1 Background to the Study

Essentially, privatization can be viewed as a systematic and programme withdrawer of government from these business or activities which private individual or companies can perform more effectively and efficiently than government agencies or business organization. In other words, privatization is most commonly defined as the transfer of government industries to the private sector, implying that the predominant share in ownership of asset of transfer lies, with private shareholders.

However in view of the lack luster performance of public enterprises in Nigeria and the limited scope of the private sector participation in some keys enterprises government seek to the higher to ugly tried by encouraging increase private sector participation. The strategy for achieving this object is the privatization appeals to the most prevalent and important to our nation economy. The purpose of this research work is to evaluate both positive and negative implication in privatization all government parastatal and moreover, to provide corrective measure. However, the implication of privatization in Nigeria lies with reference to decree No 25 1988 (amended 1999) which provides the legal backing for the technical committee of privatization, and thus began the major paradigm shift in the conceptualization, of public enterprises in Nigeria. This study however discoursed that only a few successful enterprises such as flour mill, African petroleum, national oil and chemical company limited where partially privatized the commercialization of enterprises such as NEPA, NITEL and NNPC.

Hardly show any significant improvement in their operation and economic performance, the project shows that employment levels were affected by privatization. Between 1989 and 1993 the public sector accounted for more job losses than privatize companied privatized sector still have lower employment level. The sharp increase in price between 1984 and 1992 did not create sufficient increment is gross earnings for 1994, but the result reveals that a reduction in public sector would haven effect (at least in the short time) an prices. Result show that privatization has or resources utilization. Higher to capital employment ratio has not been affected and this also reveals that price increase in excess of 20% accursed immediately after privatization. However, are gone for good. It is one this rate that the study that privatization is the most appropriate economic recipe to achieve the much desired human development and good government.

1.2 Statement of the Problem

The statement of the problem for this research work is theoretically evaluates the problem facing government parastatals.

Among this problems are:

  1. Unsatisfactory service because of their erratic supply (e.g. and water supply is irregular).
  2. Corruption and his management leading to law productivity.
  3. Dependence on continue finding from government revenue
  4. Inequity in income and wealth distribution
  5. Poor services, arrogance/insensitivity to customers. All these and other were against business or companies privatization concept and practice.

1.3 Objectives of the Study

With the seemingly increasing economic hardships face by the Nigeria working class particularly, those in the public employment increased pay and better conditions of services are of paramount importance to them, the major objective of the study therefore are:

  1. To examine the implication of privatization of government parastatals in the Africa petroleum Plc, Ilorin.
  2. To investigates the constraint, inadequate and discrepancies in the labour management relations corporation.
  3. To contribute to the resolution of the discrepancies and inadequate issues in the course of the study.

1.4 Significance of the Study

The importance of this study can be streamlined to the public company and researcher.

i. To the public:

This study will help the target to enjoy services provided or rendered by Africa petroleum Plc and thereby improving consumers standard of living.

ii. To the company:

It will help the industries to evaluate areas of problem and provided them with corrective measure. It will also increase their sales volume and productivity level and also enable them to gain larger market share. It will also help the industries on hail t o deliver maximum satisfactory to their target market.

iii. To the researcher:

It will improve and update the knowledge of the researchers.

It will help the researcher to acquire HND certificate in partial fulfillment of the requirement for the award of higher national diploma and it will also help the researchers or exposes the researcher to a simplest ways of findings solution to a problem.

1.5 Scope of the Study

The scope of this study means the area of coverage. The areas of coverage of this study are industries scope, geographical scope and time scope.

Industrial Scope:

This implies specification of the industry of study. Therefore, the industries scope of this study is African petroleum plc.

Geographical Scope:

This cover the geographical area in limited to Lagos were Africa petroleum plc is situated the area covered in Lagos are the place where Africa petroleum plc is situated. The result that emaciates in this study be generalized for the whole Africa petroleum Plc.

Time Scope:

This cover the periodic depth of the research, this is time scope of this study is three (3). Thos research work was carried out between the year 2008-2010.

1.6 Limitation of the Study

During the course of carrying out this research work, some difficulty were encountered and solution were found to them. Some of these difficulties are: –

  1. Financial constraint
  2. Time constraint
  3. Respondent Constraint
Financial Constraint:

The researcher is still depending on parents. This made is difficult for the researchers to set enough money for the project, but this was solved by getting money from parent, uncles, friends etc.

Time Constraint:

The researcher has so many programme that he carried along with the project. Among these is lecturer. The available time was shared among lecture, project and report writing. This was solved by allocating extra day for carry out the research. Friday, Saturday during holiday and lecture free days. These days were used to carry out fieldwork.

Respondent Attitude:

The attitude of respondents towards giving information was not encouraging. They believed that information released may sold out to other competitor even used against them in term of taxation. Questionnaires distributed to some respondents are not returned. The superior officer does not allow the researcher to fain access to some vital information needed for the project but the problem was solved by convincing them that the researcher work is purely academic and has not hidden agendas. The superior officers were persuaded and they eventually gave the researcher the need information. After much persuasion, many questionnaires were returned and they are enough for the research work.

1.7 Definition of Terms

The following terms are define to ease the understanding and a good comprehension of this research project:

Government Agencies:

Is an administrative unit of government “the central intelligence government agency.


Is an executive agency of the department of business innovation and skills.


Is the managing ineffectively in competently, carelessly and wrongly.


Is a stage in product development process where the decision to order full scale production and launch is made


It ultimate and exclusive right conferred by a lawful claim or title and subject to certain restrictions to enjoy, occupy, process, rent, sell, use, give away, or even destroy an item of property.

Management Planning:

Is a basis management function involving formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources.


Is the same thing implied or suggested as naturally to be inferred or understood.


Is a government owned corporation state owned enterprises and government business enterprise.


Is a unit of ownership interest in a corporation or financial asset.


Is the accomplishment of a given task measured against present known standards of accuracy, completeness, cost and speed.


Is the reduction or elimination of government power in a particular industry, usually enacted to create more competition


Is a reorganization of a company in order to increase its efficiency.


Is a portfolio strategy designed to reduce exposure to risk by combining a variety of in estimates such as stocks, bonds and real estate which are unlikely to be move in the same direction.


Is the formal act of proclaiming given public notice.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary of Findings

The findings of this study reveal that:

  1. Participation of the government in all business enterprises brings about failure and debars the progress of the economic performance and the improvement in their operation which arises as a result of epileptics.
  2. The findings also revealed that participant of government in business enterprises lead to corruption and mismanagement leading to law productivity and poor utilization of nation’s natural resources.
  3. However, the research findings showed that privatization has improved the company’s performance especially in the efficiency of resources utilization.
  4. Higher profit to capital employ ratio as also been witnessed since privatization occurred.
  5. Debt/total asset ration not been affected in any adverse way.
  6. Result from this study also revealed immediately after privatization price increase in excess of 200%.

5.2 Conclusion

The findings from this study made the researcher to conclude that only a few successful enterprises such as flour mill African Petroleum plc, national oil and chemical company limited were partially privatized and the commercialization of enter for your presses such as NEPA, NNPC, NITEL, hardly showed any significant improvement in their operation and economic performance, also, the study concluded by revealing that privatization is the most appropriate economic recipe to achieve the mush desired human development and good government.

Moreover privatization is a new global phenomenon and a fact of life. The rate of which public enterprises are privatized has been identified as a sure link and good means to integrate local economy into global economy in order to bring about the much needed gain and benefits. It has also been seen as veritable vehicle for increase investment competition. Nigeria cannot escape globalization; therefore she most privatized in order to be link with outside world.

5.3 Recommendations

The following recommendations are expedient and are expected to enable the nation attain the desired benefits of privatization. Since Nigeria economy is large and full of opportunities, the maximum desirable benefit cal be best tapped.

If the following issues are handed with most are:

  1. The government must ensure that the regulatory environment and competition policies must be right for the privatization programme.
  2. All laws that inhibit competition must be replace and remove, but legislation that encourage maximum competition so as to be able to deliver satisfactory services to the society be put into operation.
  3. The government must negotiate, monitor and enforce contract with private supplier of management and finances.
  4. The government must ensure that resources from privatization sales are put into productive use.
  5. The government must device sectorial that introduces competition and promotes private sector development.
  6. Government must established and maintain a sound regulatory frame work for the remaining monopolies public enterprises
  7. Importantly, Government must manage inevitable political and social tension that arise and ensure that enterprises reforms are implement with special attention.
  8. The process of government de-investment should be gradual and a little percentage should still be hold by government in order to enable it enforce its will on the privatized enterprises.
  9. Finally, the government should ensure spread among classes and region of the society in order to also successful operations.

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