The Concept Of Privatization And Commercialization

The Concept Of Privatization And Commercialization

    Nwabuzor (1992:39) given a dearth of capital and indigenous entrepreneurial capability and a distrust of foreign capital most countries choose the path of stated industrialization building on the colonial heritage, virtually every aspect of the economy was subject to varying levels of state intervention. Government administered price controls and increasingly regulated and intervened in labour markets, mining agriculture, manufacturing and financial markets.

    Onuoha (1999:101) states that government ownership of business represents the ultimate in regulation of private business. In Nigeria, government participation in business dates back to the colonial days when those business were considered as vehicles for the “maintenance of minimum civilized standards as well as facilitating the maintenance of law and order in the territories.
    On the other hand, the performance of public enterprise is not encouraging, Nwabuzor (1990:15) has this to say about public enterprise, the one point in which virtually all Nigerians will agree is that state-owned enterprises over the years have performed frustratingly poor.
    It is necessary to attempt a clear definition of the concept, “privatization” and “commercialization’ before we can go further.
Commercialization
    Commercialization can be defined as a substitute policy meant to imply the adoption by public enterprises of strict commercial objectives in all aspects of their operation including investment, recruitment, board appointment, pricing, setting new projects.
    Under the Decree No. 25 of 1988 on privatization and commercialization, 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 subventions from the federal government.
    Commercialization can be full or partial. Commercialized enterprises have powers to:
a.    Fix rates, prices, and charge for goods and services rendered.
b.    Capitalize assets
c.    Barrow money and issue debenture stock
d.    Sue and be sued in their corporate names    
Privatization
    Dike (2002:12) defined privatization as the transfer of state-owned enterprises to the private sector. He went further to say that in commercialization, only privatization of management contracts, leases and concession may be involved.
    Under the Decree No. 25 of 1988, defined, privatization as the relinquishment of all or parts of the equity and other interests held by the government or its agents in the enterprise.
    Privatization has served the strategic role of transforming state controlled economies and hence, changing the role of the state in economic development.
Public Enterprises
    Public enterprises are business organizations established to provide certain services and carry out specific activities. They are state participation in production activities, which includes public owned enterprises controlled by the federal government or state-owned enterprises.
    In Nigeria, they are defined to comprise all organizations run by employees of any of the government or in the equity holdings.   
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