Commercialization and Privatization of Public Owned Enterprises in Nigeria and their Effect On Economic Growth.

Commercialization and Privatization of Public Owned Enterprises in Nigeria and their Effect On Economic Growth. (A Study Of Nigeria Telecommunication (NITEL)

Introduction:

      The key component of the Federal Government Structural Adjustment Programme is the drive towards higher efficiency in the public sector. This necessitated the promulgation of privatization and commercialization Degree 25 of 1988 by the Federal Government in which it was reflected that government will divest its holdings in agricultural production, electrical appliances, hostels, and non strategic industries. Government will also reduce its holdings in banks, insurance companies and other financial enterprises without losing control.


    Privatization is thus, the process of divesting government ownership, control and management of enterprises and agencies to private individuals and/ or groups of individual or business firms that are seeking profit.

    Okafor and Udu (2002:201) defined privatization as the process of transferring equity and owner interest in an enterprise, hitherto, held by government to private persons or groups so that such persons or groups become involved in the ownership control of such business.

    As a matter of facts commercialization under the Decree no. 25 of 1988 on privatization and commercialization was defined as the re-organization of enterprises wholly or partly owned by the Federal Government such that these enterprises operate as profit making/ commercial ventures and without subvention from the Federal Government.

    The Government involving itself in business enterprises came as a result of predominance of staff-owned enterprises, reflecting a desire to control the economy after the colonial rule in the country.

    The 1983 presidential commission on parastatals examined the operation of all the parastatals with a view to determining the basis for new finding scheme, appropriate capital structure, as well as incentives measured to enhance their productivity.Following the commissioning, the year 1989 was earmarked the first year of implementation programme of the privatization and commercialization programme of the Federal Government of Nigeria.

    In the recent years, 2003, another stet into privatization and commercialization has been taken by his Excellency, Chief Olusegu Obasanjo the former president of the Federal Republic of Nigeria as this has been a dream in the mind of the Nigeria government for the past years, to invest profit ad political, social economic development on a sustained basis. It is with goals in minds, that it is realigning its policies and programmes to create the enabling environment for efficient government and put in place available private sectors. These public sectors include: NNPC, NITEL etc.

    Consequently, there are reasons why government embarks on privatization and commercialization of parastatals such as: government desires to bring optimum efficiency into the industrial sector of the economy.

Background Of The Study

    Government involvement in business enterprises in Nigeria and the predominance of state owned enterprises, reflected a desire to control the colonialists’ enterprises and viable indigenous private sector, the government had to move into the large empty space left by society to make over the budding economy.

    Government played a very important role in many areas of economic and industrial development. Moreover, provision of services in such areas of business like, insurance, petroleum, manufacturing, shipping and banking where government acquired equity interest in twelve commercial and merchant banks. In all these, Nigeria had a rather bloated public sector with over 1500 public enterprises with a regulated private enterprises. These enterprises accounted for between 30%-40% of fixed capital investment as stated in the final report of the Technical committee on privatization and commercialization (TCPC).

    The structural adjustment programme was first announced in 1986 as part of the broad efforts to reduce budgetary allocation to public sector efficiency and support the aim of fixed balance.
    The Federal Government Structural Adjusted Programme is the drive towards higher efficiency in the promulgation of the privatization and commercialization Degree No. 25 of 1988 by the Federal Government which reflected that government will divest its holdings in agricultural production.

    The year 1989 marked the first year of implementation of the privatization and commercialization programmes of the federal government.

    Commercialization under the Decree No 25 of 1988 was defined as, the re-organisation of enterprises wholly or partly owned by the Federal Government such that these enterprises shall operate as profit making/commercial ventures and without subvention from Federal Government.

    Decree No. 25 1998 defines privatization as the relinquishment of all or part of all the equity and other interests held by the government or its agency in enterprises.
    Therefore, privatization and commercialization is an economic policy geared towards relieving government of what is holds on direct participation in the economic operations in the country.
 Statement Of The Problem
It is general knowledge that public-owned enterprises are not performing creditably in Nigeria. To ensure growth in the organization, it would go as far as:
Determining the problems facing the management of these public sector in order to enable them perform properly.
Determining how the government is over-burdened with continued financing of public sector.
Determining how the Federal Government could not fund the monumental and inefficiencies of these public enterprises with problems such as ill-conceived investments, political interferences in decision making, costly and inefficient use of public resources, and lastly, growing budgetary burden.

Objectives of the Study
    The objective of this study was to evaluate the implications of privatization and commercialization of public-owned enterprises on the Nigeria economy.  
In view of the identified problems militating against public enterprises, the objective to be accomplished are:
a.    Analyze the problems facing the management of public enterprises with reference to Nigeria Telecommunication Ltd.
b.    Identify how privatization and commercialization of government parastatals will help grow the Nigeria economy.
c.    Make recommendations on how privatization and commercialization of public-owned enterprises should be implemented.

Research Question
    The following questions would serve as the research question for this study:.
(i)    Will the privatization and commercialization of all sectors help Nigeria economy?
(ii)    Does privatization and commercialization of the public sector change it to dependant market derivation and private sector oriented?
(iii)    To what extent will the privatization of public enterprises ensure more efficiency thereby satisfying the economy and the general public.
 Statement of Hypothesis
The hypothesis to be test are as follows:
H¬0:     Removing the problems of public enterprise executives will not enable them to act properly.
Ha:    Removing the problem of public enterprise will enable them to act properly.
H0: Privatization of public enterprises will not change it from sector dependant to market driven and private sectors oriented.
Ha: Privatization of public enterprises will change it from sector dependant to market driven and private sectors oriented.
H0:    Privatization will not make public enterprises more efficient thereby satisfying the general public.
Ha: Privatization will make public enterprises more efficient thereby satisfying the general public.
 The Significance of the Study
    This study is no doubt of great importance to the Government of Nigeria in the sense that it will help to enhance their policy inputs to the public enterprises.
    The outcome also helps the government to improve the public sector and examine its performance. The study will serve as a basis for solving ownership and economic problems and to control the various government agencies to understand the implication of their unhealthy management style.
    The study could be used by students in their various researcher programmes as well as other authors who may wish to write on this important topic.
Scope of the Study
    The study is by means exhaustive but a useful attempt is made to private sector into the core of an issue. However, the researcher confronted many conflicting problems.
Definition of Terms
    This section will aim at determining some of the technical terms used in the course of this project writing.
i.    Militating: It is defined as a kind of situation making things difficult to happen.
ii.    Privatization: This is the transferring of government equity holdings to the private individual to manage for profit oriented.
iii.    Promulgation: This can be defined as an announcement of new law or system officially or publicly.
iv.    Subvention: This is an amount of money that is given by the government to help to an organisation.
v.    Commercialization: This is defined as the re-organization of enterprises wholly or partly owned by the Federal Government such that these enterprises shall operate as profit-making.
vi.    Ventures: This is defined as a business project or activity.