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Privatization Of Public Venture In Nigeria Economics Essay

The success of nations developed from several social, political and financial postulations that eventually produced the realities of the present time. This is after group of trials and adjustments. Before now, state governments were commonly run along socialist and capitalist divides. That is especially so regarding USA and previous USSR which been the two most effective world economical blocs. Many other nations then tied their politics and socio-economic ideologies to these capitalist and socialist blocs. Today however, most countries that were toiling the road of socialism have all turned into capitalist economies, out of which privatization and its own numerous paraphernalia also progressed. Monetary systems have been restructured to meet current global challenges. More than 60 countries, including those with capitalist, socialist and Islamic ideologies, have joined the privatization teach since the earlier few ages (Gusau 2000). On the other hand different countries have different objectives for pursuing the coverage of privatization. While some countries used it to balance up their budget deficits, some used it to follow national debt decrease, efficiency of general public businesses and improvement of infrastructural facilities. Privatization is believed to possess the ability of starting ways for new ventures that would create new careers and raise more earnings for government, companies and individuals.

In Nigeria, almost all the above scenarios seem suitable as the country was bedeviled with avalanche of socio-economic malfunctions after her freedom in 1960. For example, Hayatuddeen (2000) opined that our privatization program (in Nigeria) has been essentially driven by the need to put government funds to be able and lessen the existing economic difficulties. Historically, privatization was officially initiated in Nigeria by the Privatization and Commercialization Function of 1998. The Action later create the Complex Committee on Privatization and Commercialization (TCPC), with a mandate to privatize 111 open public enterprises and commercialize 34 others. By 1993, the Committee has privatized 88 out of the 111 corporations under it. Inside the same 1993, the Federal Military Federal government promulgated the Bureau for People Enterprises Work which repealed the 1988 Function and set up the Bureau for People Corporations (BPE) to put into action the privatization program in Nigeria. Furtherance to these, the Federal Government in 1999 enacted the Public Organization (Privatization and Commercialization) Act, which also created the Country wide Council on Privatization. Having laid down the foregoing legal and statutory foundations, privatization became possible in Nigeria, even though many even think that, but also for the pressure from her collectors, Nigeria would not have taken the program as really as it has been taken. This is good assertion of Sayyad (1990) that the center of privation is a World Bank programme for monetary resuscitation, which workers should endeavor to take advantage of the program by taking part in it functionally.

Today, privatization has turned into a subject of strong economic, politics and academic discourse. In Nigeria, and indeed in almost all African countries, this ideology has turned into a sensitive public concern that has generated a constellation of criticisms from interpersonal activists, academia and labour unions on one hand, and commendations from the supporters of administration on the other. There is absolutely no question therefore that such an important public concern needs constant diagnosis, both from the academia and the government itself. The essential tenet of the privatization insurance policy is the idea that efficiency in operating what used to be general population enterprises is assured. This is expected to be attainable through multiple ownership strategy and risk allocation between different contracting celebrations. This interprets that both risk and advantages from such businesses are disperse to as many members of the general public as is feasible. This analysis therefore intends to assess performance of the process thus far, from academic point of view.

1. 2 Affirmation OF THE PROBLEM

Market globalization, driven by knowledge-based technology, brought about keener monetary competition among countries and regions of the planet. It becomes clearer by the day that federal in economics cannot alone cope with the challenges of globalization. Therefore new financial reforms started to emerge, privatization being one of them, and probably the most popular today.

Nwoye (2009) determined economic development, politics expediency, social equity and consumer safeguard, resource (finance) management, and nationwide security as the justification for the establishment of general population corporations. However, the Nigerian country in 1980s witnessed a reliable deterioration of the economy and what Nwoye (2009) described as seemingly faulty economic policies, leading to poor incomes, lack of careers, dilapidating infrastructures, scarcity of foreign exchange and low degree of capacity usage. Towards the end of 1980 therefore, the general public enterprises started to have problems with fundamental problems of inadequate capital structures, high bureaucratic control and treatment, dysfunctional technologies, complex and manpower incompetence and wanton problem. The World Lender and IMF advised Nigeria to divest general public enterprises and embark on privatization as an economical reform that would help cut general public sector inefficiency but revive economic growth.

In Nigeria today, the failure of many open public companies and even major infrastructures is consequently of the small stranglehold of the government on businesses and public facilities. The federal government has made concerted attempts since the former one 10 years to actualize huge spectra of its privatization insurance policy. Nevertheless the success from it is yet to be fully actualized. Several reasons accounts for this. Insufficient proper education, corruption and weak finance institutions are parts of the problems. This research will be concerned with 'to what extents' have these been influencing the success of the privatization plan. It will also unveil the reality or elsewhere in governments declare that privatization has thus far improved the socio-economic lot of money of Nigerians. Amali (2000) asserted that the Nigerian economy is dominated by the general public sector, which is seen as a inefficiency. A big chunk of general population finance and bulk money from bankers were used to determine and run almost all of the existing businesses. The direct and indirect impacts of the on public account and the banking companies' financial resources have been incapacitating. It also has negative effect on small-scale enterprise sector whose growth has been stunted by the afore-mentioned problems. A GLOBAL Bank Statement (1999) puts it that the scale, weight and poor performance of the general public business sector added 25 percent to the cost of jogging private business in Nigeria. The discussion and only government's relinquishing the responsibility of running general population enterprises in Nigeria to private investors, as well as embarking on the new global idea of public-private-partnership (PPP) has also held sway because the past ten years in Nigeria. It is believed that such collaboration will engender more powerful economy. The main target of the privatization as earlier mentioned is therefore to eliminate inefficiency in public enterprises by turning them over to private companies and running them on 100 % pure business ideas (Amali 2000). No marvel a standard slogan of the Obasanjo administration (1999-2007) which pursued the privatization insurance plan with great vigor is that "government does not have any business in conducting business". The foregoing seem to claim that there is the general consensus, globally, that governments should reduce their direct involvement in every profit-oriented public companies and invite private business managers to take care of them. Nigerian administration has taken pro-active step in this course, and many erstwhile businesses are now basically in the hand of private shareholders. The concern of this study is to attempt a critical appraisal of the privatization issues and regulate how well it has fared in reaching public prospects in Nigeria.


Emerging from the background above will be the research questions and targets highlighted below:

1. 3. 1 Research questions

Has privatization business lead to era of more employment and higher income for individuals and the government?

Has privatization business lead to increased efficiency of the privatized general public enterprises?

Has privatization lead to making more goods, public services and infrastructure more accessible and more affordable to the people?

What is the amount of awareness, belief and contribution of the Nigerian people on the government's privatization coverage?

1. 3. 2 Research Objectives

The objectives of the research include the following:

1. To assesses the socio-economic impact of privatization, with focus on the following spheres:

- Employment technology;

- Income generation (government, firms, individuals);

- Development of ancillary business;

2. To evaluates the level of Nigerian public understanding; perception and participation in the privatization process;

3. To assesses the issues militating against the policy of privatization in Nigeria;

4 To proffer appropriate coverage platform for ameliorating the existing challenges facing the privatization coverage in Nigeria.


2. 0 Books REVIEW


The concept of "infrastructure" can be used in a broad sense to suggest, collectively, the transport of people, goods and information; and the provision of general public services and resources, such as water and vitality, and the removal, minimization and control of waste products. It also includes environmental recovery (Nubi 2003).

Infrastructure has been described as the aggregation of all facilities that allow a society to operate effectively. Additionally it is seen as a variety of economic and social activities imperative to creating an allowing environment for economical growth and increased standard of living. They include housing, electricity, pipe-borne normal water, drainage, waste disposal, streets, sewage, health, education, telecommunications and institutional set ups like police train station, banks and postoffice. It is simply, the engine unit needed to drive the town. Nubi asserted that by its very dynamics, physical infrastructure must be responsive to social goals such as health, security, economics, employment and recreation. The changes in these public targets, however, will normally find expression in the body politic, which allocates the money because of its provision and maintenance. The above mentioned description is pertinent to the problem under this research as virtually all government establishments being privatized semester within it, and they are germane to societal socio-economic livelihoods.


The Public-Private-Partnership (PPP) and Concession is one of the modern and widely used approaches towards actualizing the privatization plan of government the world over. It's been effectively applied in USA, China, UK and lots of the emerging economies about the world to provide housing, electricity, health services, vitality, even the operating of jail. In Nigeria both federal government and state government authorities has used the model in the provision of electricity, travel and urban housing among others, and they're highly relevant to this review.

Adetola (2010) discovered four types of this PPP. They are:

Management and rent contracts (which includes federal investment and possession with management by private sector for a cost),

Concessions (management of public enterprise by a private outfit for a period. The 105 kilometres Lagos-Ibadan Expressway happens to be under this layout at the cost of 90billion naira),

Greenfield jobs (design, build, funding and operate as well as build, own, operate and copy among others) and

Divestiture (full or partial transfer of authorities equity to a private sector in a government-owned business).


Hayatudeen (1990) in his newspaper entitled the macro-economic implication of privatization and commercialization seen that the Technical Committee on Privatization of Companies (TCPC) was inaugurated in 1988 to boost efficiency in the country's companies, by changing the orientation toward management under private ownership. He analyzed the expansion of open public companies, the macro-economic repercussions of privatization as experienced by other countries and exactly how to utilize the gains accrued. He said further that the thought of 'source creates demand' had not been questioned before 1920's major depression, when Keynesian idea backed the need for government treatment and involvement in the method of creation was considered a succor to the masses. That is to ensure that natives has source in local business and make essential needs affordable. The primary objective of the programme is to improve cash flow by reduction of administration subvention and arousal of appropriate allocation of resources.

Economic benefits of the insurance plan are economic development due to decrease in unproductive spending, it generates usage of capital at reduced price, increased efficiency, create job upgraded exchange rate, introduction of new businessman, better labour-management romance while the dished up capital can be channel to infrastructure improvement.

Odushola (2001) in a paper entitled Socio-economic Implication of Privatization of Open public Utilities in Nigeria opined that the procedure was necessitated by the performance of multinational companies and that changing of possession may bring pain relief to the privatized ones. He said permit atmosphere should be provided to enable those companies survive and government should not interfere with their insurance policy. This connotes that federal should only play regulatory assignments.

An thoughts and opinions of economic analysts has been in the same direction-in favor of privatization. Among the list of proponents of the insurance plan is Awopegba (2001) who analyzed privatization of commercialized public businesses in Nigeria and its own implications for better efficiency, labour output, and enhanced individuals welfare. He figured government took over some essential services to accomplish egalitarian gain for the population. He mentions the case of THE UK where privatization ushered in efficiency, reduction in labour and overhead costs. He concluded that privatization enhances efficiency through improved upon human factor, and promotes competition, efficiency and earnings for the nation. They are the crux of this analysis with particular case of Nigeria.


In attempting a wider perspective of the issue, Adoga (2008) asserted that privatization has been defined by economical scholars and jurists to encompass a variety of options for engagement of private capital and management in the jogging and operations of public venture. It may require the total copy of public possession and asset buildings to private companies. It may also be a conversion of general public businesses to private entities, or the incorporation of new private entities instead of public corporations. Another option could be public-private involvement in the going of public businesses, that can be by management transfers, leases, operational concessions, development leases, build, operate and exchanges etc.

2. 5 Benefits AND Negative aspects OF PRIVATIZATION

Privatization has many perks. This, relating to Adoga (2008) includes reduced government bureaucracy, reduced status monopolies and ensuring level playing areas. Others are reduced inadequate management, correct defective capital and financial buildings, increase competitiveness, raise the quality of goods and services, reduce problem and control by Administration, increase staff quality and guidance, improve market analysis, free up federal government funds, create occupation, re-invigorate the local economy, extend local businesses, attract direct foreign assets, expand capital markets, redistribute wealth, improve technological copy, enhance trade control laws etc.

Globally however, privatization has been engulfed with sophisticated problems with each country having its own peculiar alternatives. These problems include private businesses concentrate on income making to the detriment of essential general public service, private businesses render more costly services, private organizations fail to invest in infrastructure. They also reduce public workforce and experience. On the other hand these problems range from country to country; he figured specific privatization models catch the attention of specific types of problems.

2. 6 PRIVATIZATION OF Community Businesses IN NIGERIA

The issues of privatization have been a topic of extreme global in recent years (Nwoye 2001). In his work entitled Management Techniques and Performance Determinants of Public and Private Sector Businesses in Anambra, Edo and Delta State governments of Nigeria: a Factor Research opined that in Africa, it includes remained highly controversial and politically risky which privatization in Nigeria is not a favorite reform as they have received a lot criticism from diverse interest communities. Comparing the effectiveness of open public versus private service delivery, the evaluation shows no clear facts that private service delivery is inherently more effective or less effective than general public service delivery but instead that every sector has its own advantages and weaknesses. This analysis intends to determine more businesses and their socio-economic influences.



A study of this nature takes a relatively diverse and large level of data and information required for answering the research questions and actualizing the research objectives. The approaches to realize this should go the following:


3. 1. 1 Main Data will be sourced through reconnaissance research, direct observation, images, oral interviews, and supervision of organized questionnaires to both employees and employers of the determined industries.

3. 1. 2 Supplementary Data will be obtained from archival materials, which shall include publications such as books, journals, convention proceedings, company twelve-monthly reports and federal government gazettes. Also electronically-posted data and information through the web is being looked for.


3. 2. 1 Sample Frame and Size

The sample framework for this review is the 111 privatized open public businesses in Nigeria, that the test size will be attracted. The sample size will be five prominent privatized enterprises in Nigeria. ten percent sample size of every of these will be targeted for questionnaire administration. Complementary dental interviews will be slated with relevant senior management representatives in each company.

The meant sampling strategy is the stratified and random sampling method. Stratified sampling method is an example of a population that is proportionally representative of the various strata or passions in the survey. The labor force of the five organizations proposed for the study may also be stratified into three, viz: the management personnel, the mature/intermediate, and the junior personnel, all on proportional representation basis.

The research method being considered for the analysis is justified by the next considerations:

It gives correct analytical and validity end result;

It will save you time and reduces cost;

The test size will be able to produce a generalize result which can give insight to insurance plan review, and wide open way for further scholarly research

The review will be capable of expanding the current frontiers of data, information, and knowledge on the privatization insurance policy in Nigeria.

For the arbitrary sampling technique, the subject matter in each stratum will be arbitrarily selected as representative of this group. Visible privatized business organizations in Nigeria and the Bureau for General public Businesses (BPE) will be targeted for sampling, using both main and secondary data-gathering methods to elicit information on socio-economic characteristics, technology and infrastructure among others.


Data from the study is expected to have centered and independent factors. These will be carefully collated, coded and analyzed with the use of Statistical Deal for the Public Sciences (SPSS) Version 16. Both descriptive and inferential figures would be used to investigate and depict the majority of the factors and their interrelationships.




As presented in Desk 1, the study will course through an interval of twelve weeks, within the procedure for reconnaissance, data gathering, data control, writing final report and submission. The research exercise will be sent out over four Research Assistants who be used, trained and mobilized for field work under the supervision of the Principal Researcher.

Table 1: Time Range and Resources





1 Week


Recruitment and Orientation of Research Assistants

3 Days


Data Gathering

2 Weeks


Data Collation and Coding

1 Week


Data Processing

2 weeks


Report Writing

3 Weeks


Data Cleaning and Editing

2 Weeks

** 2

Submission of Last Report

1 Day


* = Primary Researcher only

** = Main Researcher and the amount of Research Assistants indicated


This analysis was encouraged by the discovered distance in the available research works on the socio-economic perspective of the privatization program in Nigeria. It really is expected that analysis will bridge the existing research spaces created by over-generalization by past scholarly works. Such gaps stemmed out of the fact that preceding studies mingled Nigeria's circumstance with the bigger global privatization issues without in-depth appraisal of the precise industries in national case. This study will expand the existing frontier of insights, data basic and knowledge required by academic scholars, traders, and policy producers in their individual development concerns.

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