an assessment of the effort of privatization and commercialization on the nigerian economy

an assessment of the effort of privatization and commercialization on the nigerian economy

ABSTRACT.

When the economic fortune of the organization of petroleum exporting countries (OPEC) nations suffered a tragic experience due to the sudden fall of the oil price in the eighties and nineties, the economy system of its members became a source of concerned as the survival of their organs was greatly threaten. Due to the sudden fall of the oil prices, several developing nations, therefore, evolved strategies that will pull them out of the economic being one of the country affected was not excluded and one of the strategy to be employed was to privatize and commercialize government public enterprises which many believed will lead the country out of her economic wound. Nigeria National Petroleum Corporation (NNPC) is one of the public enterprises owned by the federal government of Nigeria to provide petroleum product to the populace. The wind of the economic recession that spreads across the country didn’t spare NNPC. NNPC got it share couple with mismanagement of resources by those responsible to manage the day-to-day affairs of the organization. These led to their in ability to meet the aims and objectives of setting them up. The only way out seems to privatize and commercialized the sector to have enough funds to meet its service to the populace through selling of shares and foreign investment.

This programme will not only make funds available but also provide better management and managerial skill for effectiveness and efficiency.

The study will examine its positive and negative on the enterprises. The Nigeria economy, employees and Nigerian government.
TABLE OF CONTENT

CHAPTER ONE

1.1 Introduction- – – – – – – – – 1

1.2 Historical background of study- – – – – – 1

1.3 Statement of problems- – – – – – – 3

1.4 Significance of Study- – – – – – – – 4

1.5 Objective of study- – – – – – – – 6

1.6 Hypothesis- – – – – – – – – 6

1.7 Scope of the study- – – – – – – – 8

1.8 Limitation and delimitation of study- – – – – 8

1.9 Definition of terms- – – – – – – – 9

CHAPTER TWO- Literature review

2.0 Introduction- – – – – – – – – 12

2.1 Privatization in Nigeria- – – – – – – – 13

2.2 Commercialization in Nigeria- – – – – – 15

2.3 Policies of privatization and commercialization – – – 18

2.4 Objectives of the policies- – – – – – – 32

2.5 Public enterprises in Nigeria- – – – – – – 34

2.6 Reasons for privatization and commercialization- — – 37

2.7 Conclusion- – – – – – – – – – 40

CHAPTER THREE – Research Methodology

3.1 Introduction- – – – – – – – – 42

3.2 Population of study- – – – – – – – 42

3.3 Sampling – – – – – – – – – 42

3.4 Method of data Collection- – – – – – – 43

3.4.1 Interview – – – – – – – – – 43

3.4.2 Questionnaire- – – – – – – – – 43

3.4.3 Secondary sources- – – – – – – – 44

3.5 Method used in Analyzing Data Collected- – – – 44

CHAPTER FOUR – Presentation and Data Analysis

4.0 Introduction- – – – – – – – – 45

4.1 Analysis and Presentation of Data – – – – – 45

4.2 Summary of the finding- – – – – – – 55

4.3 Test of hypothesis- – – – – – – – 56

CHAPTER FIVE – Summary, Conclusion and Recommendations

5.1 Summary – – – – – – – – – – 59

5.2 Conclusion- – – – – – – – – – 60

5.3 Recommendations– – – – – – – – 62

Bibliography- – – – – – – – – 66

Appendix I – – – – – – – – – 67

Appendix II – – – – – – – – – 68

CHAPTER ONE

1.1 INTRODUCTION

Privatization means the sales of public enterprises to private hands through the sale of share. The privatization programme in Nigeria is mean to benefit almost all Nigerians. While, Commercialization is the selling of share of some of the government to make them operate as profit making venture. It is the re-organization of enterprises in such a way that they shall operate as profit making commercial ventures and without subvention from the federal government. Commercialization can come in two forms;

v Public enterprises are expected to operate profitably on commercial basis and to be able to raises fund from the capital market without government guarantee.

v Public enterprises which may be considered by the government for capital grant to finance their capital intensive project.

1.2 HISTORICAL BACKGROUND OF THE STUDY

Privatization and commercialization was first hinted by the Shagari Government of Second Republic followed by Buhari’s Regime, but was only given priority in 1986 speech when the then president Babangida said that parastatals have constitute an unnecessary high burden on government resources. As from 1986 the volume of non-statutory transfer to all economic and Quasi-economic parastatals constitute not more than 50% of their present levels”

In essence, president Babangida Had went further to expressed out the position of government in relation or with respects to the public enterprises with regard to their performance, and criticized them as follows;

v Been inefficient in their operations.

v They are avenue for corruptions.

v Financial burden on government

v They are not making return in respect to investment made on them.

Other views are that government involvement in enterprises is the failure in economic development and that business is not a venture for government.

1.3 STATEMENT OF PROBLEM

As the country developed and the economy expanded many public enterprises in the country find it difficult to render effective service. A number of problems were responsible for the ineffective performance of these corporations and enterprises. They include;

v In appropriate capitalization from inception.

v Improper definition of roles and objective for setting them up.

v Total government ownership which did not encourage profit orientation operations.

v Influence of political environment.

v Poor funding conditions of service and work environment

v Poor organization structure.

v Poor attitude to work on the part of workers of the corporation who believed that government would always provided subvention for the payment of their salaries and wages.

v Unnecessary interference in the management of the corporation by the supervising agencies of the government.

v The partial failure of the antagonization Degree.

v The windily foreign earning from export of petroleum which had become the main stay of the economy by the end of the 1970’s

v The heavy linkage of natural expenditure and product to imports resulting in heavy foreign debt burden from the early 1980’s and the poor performance of public enterprises and corporations, all combined to create rapid and serious down ward trend in the Nigerian economy.Hence, in 1988, decree 25 was promulgated to recognize such enterprises. Thus, government corporations were commercialized. Now a second phase of the programme was inaugurated by the present administration taking a new step. The focus of the paper the examination of the success or other wise of the programme on public enterprises in Nigeria.

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