Posted at 10.03.2018
Keywords: privatization in nigeria, impact of privatization
Privatization is an essential component of the reform procedure for buildings and economies in the globalized world today. Producing countries have embarked on intensive development
programmes some documented as successful plus some a failure. Despite the impressive level of
privatization in Africa, the empirical knowledge of the program is limited. Aside from theoretical
predictions, very little is well known about the procedure and results of privatization exercises in Africa
in spite of the impressive degree of activism and execution.
As generally in most African growing countries, Nigeria witnessed the growing engagement of state in
economic activities until when the united states used the Structural Modification Programme (SAP) in
1986 and the Privatization and Commercialization Decree (1). The Privatisation and
Commercialisation Function of 1988 and the Bureau of Open public Enterprises
Act of 1993 described privatization as the relinquishment of part or all the collateral and other
interests presented by the government or some of its firms in companies whether wholly
or partly had by the government. Although privatization is not defined in the
Public Enterprises (Privatisation and Commercialisation) Act, we can assume that it
is deemed to have the same meaning.
Privatization became the forefront as a significant component of Nigeria's monetary reform process.
With the federal government trading over N36 billion in form of loans, eqity and give in over 500
companies between your period of 1973- 1990, there was not much development throughout the market. This lead
to serious fiscal deficits which business lead to the inefficient open public sector opportunities to be questioned.
In both developed and expanding countries, privatization and in a few cases
commercialization have become in acceptance and acceptability. It has also become an
important tool that government can use to promote monetary development,
improve the creation and syndication of goods and services, stream line
government structure, and reinvigorate establishments controlled or monitored by their state.
( Rondinelli and Iacono 1996).
The articulation of federal government insurance policy on Privatisation in Nigeria was concretized in the Structural
Adjustment Programme (SAP) embarked after in July 1986, 2 through the Ibrahim
Badamasi Babangida supervision (1985 - 1993). As McGrew has argued, SAP is a
neo-liberal development strategy devised by international financial institutions to
incorporate countrywide economics in to the global market. In his words:
The vision of any "global market civilization" has been reinforced by
the procedures of the major organization of global financial government
namely up to the mid 1990's. Root them as Structural
Adjustment Programmes has been a new-liberal development
strategy - known as the cleansing on consensus which
prioritizes the checking of countrywide economics to global market
forces and the necessity for limited government intervention in
the management of the economy.
One of the aims of SAP therefore, was to follow deregulation and Privatisation
leading to removal of subsidies, decrease in wage expenses and the retrenchment of the
Pubic Sector ostensibly to cut the State down to size. 4
To actualize this goal, in July 1987, the federal government create a Tech Committee
on Privatisation and Commercialisation (TCPC) which was backed up by the
Privatisation and Commercialisation Decree5; which grouped all State-owned
enterprises and parastatals into four main groupings, namely:
(a) Those to be partially privatized
(b) Those to be fully privatized;
(c) Those to be partly commercialised
(d) Those to be fully commercialised.
Those slated for full privatisation included 13 insurance companies where the Federal
Government possessed between 25 percent and 49 percent shareholding; 10 medium - to large
- scale creation businesses; 2 hotels; 4 companies in the travelling sub-sector and
15 agricultural and agro-allied businesses. The total value of shares that your government
expected to market in these organizations was approximated at about N150 million. Corporations billed for
partial privatisation were made up of 27 commercial and merchant lenders, 23 major
manufacturing companies spanning cement creation, vehicle and car set up plants,
fertilizer factories, newsprint and newspaper mills, anatomist and electricity component
plants. In addition they included three metallic rolling mills, papers, engine oil companies, shopping
and air range companies, and so forth. The total value of federal government holdings in these firms
was put at over 2. 1 billion naira. Towards the finish of 1989, the four commercial vehicle
assembly crops in the united states were put into the set of businesses to be privatised. About 10
major Status Owned Businesses (SOEs) were to be fully commercialised, and 14 others
to be partially commercialised. (THE LEGAL AND INSTITUTIONAL FRAMEWORKS OF PRIVATISATION IN NIGERIA: A DISCOURSE. )
This paper is aimed at learning the impact of privatization in Nigeria with regards to the case of
utilities especially the Electricity Source company and the Telecomm company. The newspaper has 5
major parts, the ideology of privatization, privatization in Nigeria, the electricity company in
Nigeria, the telecoms company and the fiscal impact of the whole privatization process on the
Nigerian market and labour market; while the newspaper is concluded with remarks on the
privatization of the specific utility companies ; what exactly are the conclusion regarding the efficiency of the privatization activities in the united states.
Privatization is becoming an acceptable paradigm in politics economy of claims.
It is a strategy for reducing how big is government and moving investments and service
functions from open public to private possession and control. Privatization is dependant on the ideas that:
a. Federal is intruding into private venture and lives more than it should be;
b. Government is unable to provide useful and effective services to the public;
c. government officials and government agencies are not properly responsive to the general public;
d. Government uses too many resources and in so doing threatens economic development. ( D. O Adeyemo, A. Salami (2008), AN ASSESSMENT of Privatization and Public Enterprise Reform in
Nigeria. Modern Management Research pp 401-418, Vol. 4 No. 4, Dec, 2008. )
Early economists such as Adam Smith claim that the government in expanding countries(Africa)
; giving ownership of its companies to the private sector would lead to monetary benefits to the
society. Expanding countries also need a competitive market that is effective and such can only just be
attained by private business people (thesis). The traditional economists believe economic
development is an activity attained through earnings accrued from positive fruitful activity that is
beneficial to all sectors in the economy. The Keynesian college on the other hand have the notion that
government plays a crucial role in controlling economic crisis and stop economic unhappiness.
Keynes proposes that the issues in expanding countries are based in investment behavior of
capitalist organizations under conditions of inadequate aggregate needs for goods and services ( davino
Privatization is a trend concept which became more and more important in the 20th century
especially the 80's when it commenced to rise. Privatization has different meanings to different people.
To some it is the a competition of public businesses in a competitive market although some just think
of it as a monopoly situation which can be subdivided into natural monopolies by restricting the
ability of the other enterprises to enter the marketplace.
However privatization is defined, it is intimately destined with the public, political and economic
agenda of the government. The idea of privatization is inherently ideological.
This chapter will review the concepts, priorities and problems of privatization most especially
within the Nigerian context.
Since the Margaret Thatcher age when privatization was introduced in the united kingdom, many other countries
adapted the ideology of privatization including developing countries that have launched
privatization programs in pursuit of its mandate of further monetary development by encouraging
the growth of fruitful enterprises. Nigeria was not left out in this new ideology of fostering
Nigeria's political overall economy after self-reliance from Britain in 1960 was an adopted form colonial
capitalism alongside the British isles model of parliamentary system of Federal government. The private sector
was at its first stage. Because of the first armed forces coup in 1966, a fresh form of politics economy emerged
in the state in the form of hybrid of status capitalism and socialism. All Federal government functions and
responsibilities were delegated to Federal Ministries, Departments, and Agencies. The Federal
Government also became a major player in the economy by creating statutory organizations and
private investment companies. It also invested substantially in other private companies. From the 70's
the Indigenization Decree of 1973 was promulgated. It guaranteed the conversion of private controlled
international companies in Nigeria into point out owned organizations. The result was the
creation of over 1000 talk about owned corporations in practically all areas of the overall economy operating
as monopolies without competition from the thin private sector. These corporations were funded by Nigeria's
new found olive oil wealth. Their scope of operation covered coal and oil, agriculture, lenders,
mass transit, cover, ability, security, education and manufacturing, etc
By the early eighties, the olive oil prices crashed and the most common vast amounts of Naira
pumped into these organizations annually could no longer be suffered by the government.
At once, annual profits of the firms tumbled down as a consequence largely to convey corruption
and inefficiency. There have been also the operational problems of gross incompetence in general management, complacency increased bureaucracy, defective ownership structures, faulty capital
structures, lack of effective control and guidance by the federal government, out-of-date technology,
international competition etc. Because of the later eighties, these factors worsened the already
stunted and extended Nigeria private sector market. It became essential to encourage private
participation in the countrywide economy and increase the Nigerian market by direct deregulation. The
alternative option was the collapsed of the whole Nigerian overall economy.
The establishment of an exclusive sector motivated market became imperative to ensure the provision of
efficient and quality services, improve infrastructure, improve local manpower
development while lowering the amount of revenue the federal government spends for public services
such as defence and security. As in those days privatization of public corporations, businesses, companies
and services became the most feasible economical solution.
In 1988, the Federal Government of Nigeria (FRN) duly responded to the recommendation of the
International Monetary Finance (IMF) and the planet Bank; that loss making corporations have for
many years been draining the federal government resources in producing countries and such enterprises
burden the government authorities into borrowing to assist their fund operating losses. This business lead the IMF to
refuse subsequent lending options applied by Nigeria hence; led to the adoption of the
Structural Adjustment Program (SAP). SAP was targeted at reforming the market and making it
The rule for privatization in Nigeria commenced in 1999 with desire to to diversify totally or
partially the shares owned by the government, its companies and parastatals in public
enterprise productive or dormant.
The main aim of the privatization in Nigeria is to reduce the dominance of the general public sector in
the economy and invite the private sector to experience its proper role as the best engine of progress.
Nigeria established the Tech Committee on Privatization of Community Companies
(TCPC). Its commitments and goals were the removal of Administration equities in the Nigerian
capital market, the privatization of commercial and vendor bankers, etc. This
movement had drastic yet successful results. The immediate impact was the expansion of the
Nigerian market buoyed by private sector involvement. Public services upgraded in the
selected corporations as well as their financial bases by the injection of private sector capital. To
build on these financial landmarks, the Bureau for People Businesses (BPE) was founded in
1999 as a successor to the TCPC. The Country wide Council on Privatization (NCP) was also established
as the supervising body to BPE. Both of these regulatory organizations on Nigeria's privatization were
established through the promulgation of the Public Corporations Privatization and Commercialization
The directive of the BPE and NCP was to formulate guidelines on privatization and
commercialization, approve guidelines and requirements for valuation of general population enterprises slated for the
exercise, approve selection of strategic shareholders, approve show prices and property of condition owned
enterprises, designate and approve privatization advisers and consultants, approve companies for
commercialization etc. The BPE is the Secretariat of the NCP specified to perform all the above
functions of the NCP.
The statutory mandate of the BPE and NCP are specifically spelt out in the Public Enterprises
Privatization and Commercialization Work 1999. The specific mode, constructions and timetable of
privatization of Nigerian public businesses were also spelt out in the 1999 Take action. All designated
Nigerian state corporations were categorized into broad sector communities with the name of the venture,
shareholding framework, expected level of ownership to be sold out, privatization policy put together, and
Some of the cardinal categories are the financial corporations group comprising NICON Insurance,
Nigerian Reinsurance, Nigerian Bank for Commerce and Industry, Guarantee Bank, FSB Bank or investment company,
Afribank BIAO shares. State owned Industries group comprised NAFCON, National Super
Phosphate Fertilizer Company, Nigerian Machine Tools, Nigerian Newspaper Manufacturing Company
Limited, Nigerian Sugar Company, Bachita, Ashaka Concrete, Sunti Sweets Company, Benue Cement
Company, Calaber Concrete, Leyland, Peugeot Auto Nigeria Limited, Volkswagen Nigeria
The electricity and steel group comprised Oshogbo Metal Rolling Mills, Jos Metallic Rolling Mill, Delta
Steel Rolling Mill, Ajaokuta Steel Rolling Mill, Aluminum Smelter Company Small, National
Iron Ire Mining Company Small etc. Solid mineral deposits comprised Nigerian Mining Firm,
Nigerian Coal Corporation, Nigeria Uranium Company Limited etc. The info sector group
contained Daily Times of Nigeria, National Radio Corporation of Nigeria, New Nigerian
Newspapers, News Organization of Nigeria and Nigeria Tv Authority etc. In the travel sector,
several state companies were slated for privatization. They are simply Nigeria Ports Power, Nigeria
Railways, Nigerdock, NAHCO etc. The petroleum sector group comprised Nigerian National
Petroleum Organization, Eleme Petrochemicals, Kaduna, Dock Harcourt, Warri refineries, Nigerian
Gas Company, Petroleum and Pipelines Marketing Company, African Petroleum, UniPetrol,
National petrol, Dresser Nigeria Limited, Baker Nigeria Limited etc. Within the housing sector, we had
Federal Mortgage Bank, Federal Mortgage Money Limited, Federal Cover Authority etc. In
natural resources, all 12 Normal water River Basin Development Government bodies were slated for privatization.
In agriculture, we'd National Park Mother board, Ore Oil Palm, and Ihechiowa Olive oil Palm etc. Hotels were
grouped to add Nigeria Hotels Limited and Festac 77 Hotels. Telecoms and postal services
group comprised NITEL, MTEL and NIPOST. Condition power firms group contained NEPA and its
subsidiaries. Airlines and airports were grouped into Nigeria Airways, FAAN, NEMA etc.
As at May 1999 the government investment in these general population enterprises was in your community of
US$100 billion. In spite of these massive purchases, however, public companies have failed to
perform the functions and attain the aims for which these were set up.
The gross inability of these businesses to surpass expectations is partly accountable for the current
move towards economic liberalization, competition and privatization. The beliefs behind
privatization therefore is to restructure and rationalize the public sector not only to lessen the
dominance of unproductive purchases in the sector but also to initiate the procedure of gradual
cession to the private sector of general population enterprises which are better controlled by the private sector. It
is also expected that the privatization program provides the route for reintegrating Nigeria
back in to the global economy as a program to attract foreign direct investment in an open, reasonable and