Reasons for Privatization and Commercialization in Nigeria

    Reasons for Privatization and Commercialization in Nigeria

       Government participation in business enterprises in most colonial African and the predominance of state-owned enterprises reflected a desire to control the economy after wrestling political control from the colonialists.

    Nigeria found that, in the absence of local enterprises and viable indigenous private sector, the government had to move into the large empty space left by society to take over the building economy.
    Harvey and Henig (1997:77) See privatization exercise to include any initiative that increases the role of the market in areas previously considered the province of the state; this include not only the sale of the state assets, but deregulation and contracting out of public services to private providers.
    However, privatization simply means the divestment of government shares in enterprises there by allowing the ownership management and control to be in private hands.

    Reasons why government want to divest some of its companies are:
i.    Economic recession
ii.    Structural adjustment
iii.    Inefficiency of government enterprises.
iv.    Restructuring the economy

i.    Economic recession: The Nigeria economic has been in a very poor state for quite sometime now. The level of unemployment is simply unacceptable. Apparently, the economic can no longer sustain the level of wastages associated with public enterprise. Also, as a step to get out of this malaise, a solution has to be found on how to reduce wastages. Privatization and commercialization are one of such solutions.

ii.    Structural adjustment: Following the down turn in the Nigeria economy in the early eighties, the government of Allaji Shehu Shagari started the Austerity measures which were aimed at bring about a reduction in government expenditure and imports.

iii.    Inefficiency of government enterprises: Over the years, government enterprises have become so inefficient as epitomized by the services they render to the public. Despite the fact that the government has and still continues to pump in a lot of money into the enterprise.

iv.    Restructuring the economy: Anyanwu (1993:10) argues that privatization will help public fund to efficient users, create a self sustaining culture, attract foreign investors,  and services will reflect real values.
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