The Policy of Privatization and Commercialization of Public Enterprises in Nigeria: an Appraisal of Telecommunication
CHAPTER ONE
Objective of the Study
There are some certain aims and objectives for which the researcher embarked on this work such as:
- To ascertain if political interference and mismanagement of resources is responsible for poor performance of public enterprises.
- To ascertain if privatization and commercialization could enhance performance of public enterprises.
- To discover if the privatization and commercialization of public enterprises has improved the efficiency of service delivery.
CHAPTER TWO
Origin of Public Enterprises in Nigeria
Origin and Development of Public Enterprises in Nigeria.
In most countries of the World particularly the developing ones, the decades following World war II (Particularly, the 1960s and early 1970s) witnessed a massive intervention of the government influence in the economies of these countries by establishing Public Enterprise (PEs), State-Owned Companies (SOCs). Public enterprises were seen as veritable tools for achieving national social-economic development. Thus, since the 1950s, successive governments have used public corporations and state-own companies as tools of public intervention in the development process. This was eloquently stated in the Nigerian Second National Development Plan.
Their Primary purpose is to stimulate and accelerate national economic development under conditions of capital scarcity and structural defects in private business organizations. There are also basic considerations arising from the dangers of leaving vital sectors of the national economy to the whims of the private sector often under the direct and remote controls of foreign large scale industrial combine.
Consequently, the PEs, especially in developing countries, became active in the sectors such as manufacturing, construction, finance, service utilities, transportation, agriculture, natural resources, et cetera. The organization and functioning of Public Enterprises vary from one country to another.
It is important to note the organization and functioning of public enterprises vary in some important respects among countries world wide.
The history of public corporations in Nigeria dates back to 1897 when the Lagos colonial administration by ordinance established the Lagos Race Course Management Board to run, regulate, manage and develop the race course on the Lagos Island. After independence, many public corporations have been established by government. They include: National Television Authority (1962), Nigeria Defense Industries Corporation (1964), Nigeria Airways, Nigeria Produce Marketing Company Limited, etc.
The first generation of state enterprises in Nigeria was established along regional lines. Public enterprises were motivated by the need for regional governments to control the resources in their regions. The Northern Region in 1962 formed the New Nigerian Development Company (NNDC) with its Headquarters in Kaduna the regional capital of the North. The western Region established the Odua Investment Company (Odua’s Group) a holding Company with head office in Ibadan, its regional capital. The Eastern Region established the Eastern Nigeria Development Corporation (ENDC) in 1960. Each of these was a holding company with subsidiaries in real estate, banking, agriculture, insurance and transportation. The regional state enterprises drew their initial capital from state coffers and received regular government subventions. Sub-regional interests vied for positions of responsibility in the management of regional enterprises.
Competition among regional investment institutions was political rather than economic. Performance were secondary, the appointment of board members and management teams was a means of political patronage. Since the regimes needed their enterprises as conduits for public funds for political patronage and personal enrichment the subvention continued to flow to grossly under performing state enterprises.
CHAPTER THREE
Policy of Privatization in Nigeria
History and Development of Public Enterprises in Nigeria.
Firstly, in the twentieth century, there were countries in the world (Eastern bloc) that promoted state ownership of the means of production while others (Western bloc) promoted private ownership of the means of production. A good number of countries practiced what was termed a mixed economy, that is, combination of public and private ownership of the means of production. Today, the received wisdom is that ownership of means of production is the only viable approach to efficient production of goods and services, economic growth and development.
Many countries of the world have embarked on privatization programme at different times. Chile introduced privatization programme in 1974. The United Kingdom implemented a rigorous privatization programme during the regime of Margaret Thatcher in the 1980s. The 1990s witnessed the implementation of privatization programmes in many countries of the former eastern bloc like Russia, Romania etc.
Secondly, Privatization in Nigeria was formerly introduced by the Privatization and Commercialization Decree of 1988 as part of the Structural Adjustment Programme (SAP) of the Ibrahim Badamosi Babangida administration (1985-93). One of the main objectives of SAP was therefore to pursue deregulation leading to removal of subsides, reduction in wage bills and the retrenchment of the public sector ostensible to trim the state down to size. The Privatization and Commercialization Decree of 1988 set up the Technical Committee on Privatization and Commercialization (TCPC) under the Chairman of Dr. Hanza Zayya to privatize public enterprises and commercialize others. In 1999, the Federal Government erected the public Enterprises (Privatization and Commercialization) Act 1999 which created the National Council on Privatization.
The country has gradually realized that privatization appears to be the most viable and economically realistic means of guaranteeing the government’s desire for rapid and irreversible progress. The Bureau for Public Enterprises (BPE) Act 1999-carved up the privatization into three phases.
CHAPTER FOUR
An Appraisal of Telecommunication
History of Telecommunication in Nigeria.
Telecommunications facilities in Nigeria were first established in 1886 by the then colonial administration. These were geared towards discharging administrative functions rather than the provision of socio-economic development of the country. Between 1960 and 1985 the telecommunications sector consisted of the Department of Posts and Telecommunications (P&T) in charge of the internal network and a limited liability company, the Nigeria External Telecommunications (NET) Limited, responsible for the external telecommunication services. NET provided the gateway to the outside world. Telecommunications development during this period was characterized by serious short-falls between planned targets and their realization, principally because of poor management, lack of accountability and transparency and low level of executive capacity.
Telecommunications department was split into Postal and Telecommunications Divisions. The later was merged with NET to form Nigerian Telecommunications Limited (NITEL), a limited liability company, while the Postal Division was reconstituted into another organization called the Nigeria Postal Service (NIPOST). The main objectives of establishing NITEL were to harmonize the planning and co-ordination of the internal and external telecommunications services, rationalize investment in telecommunications development and provide accessible, efficient and affordable services.
CHAPTER FIVE
Summary, Conclusion and Recommendations
Summary:
In the chapter we explored the meaning and the main objective of privatization including, improving economic efficiencies against the background of poor economic performance of Public Enterprises, reducing government interference in the economy, reducing the administrative burden of government, providing opportunity for competition etc.
Generally, this research work was designed to analyse the implication of privatization and commercialization of public enterprises with an over view or special reference to Nigeria Telecommunication Plc.
In the year 1960s and 1970s public enterprises were regarded as veritable tools for achieving national socio-economic development particularly in the developing countries. It noted that public enterprises enjoy freedom in the management of their affairs.
It noted that the performance of public enterprises especially in Nigeria has been generally disappointing due to excessive political interference, absence of competitive environment, corruption and poor infrastructures.
The policy of privatization and are more efficiently and effectiveness strictly on socio-political and economic growth rather than public enterprises. The policy contributed a lot in improvement of productivity. Privatization was seen as a means of harmonization of economy or as a measure to increase efficiency of the public sector or organization.
It was seen that inefficiency of the most government enterprises were due to incompetent leaders or mal-administration and nonchalant attitude of leaders.
Finally, the two most common forms of public enterprises reforms and commercialization were identified and discussed. Privatization is seen as solution to all these infectiveness and inefficiency of public enterprises.
Conclusion
In conclusion privatization has been seen as a means to get government interested in fostering a new division of labour between the public and private sectors in order to increase the effectiveness and contribution to development of both sectors. Therefore, the success of privatization should be judged not in terms of the sale, the price paid to government or expansion of enterprises sold but rather, on the basis of wealth.
It is very clear that we cannot exclude economic from politics and it is well-known that the basic problem facing public enterprises in Nigeria is control or management. This cannot be addressed through privatization. Honestly, the exercise reduces real income and encourages people in economic recovery.
As the Federal Government of Nigeria (FGN) 1993 also currently observed the primary agreement for privatization and commercialization is of course, that the efficiency and profitability of the investments will improve after the exercise.
Therefore, the National Telecommunication Policy presents the policy objectives of the Federal Government of Nigeria in promoting the development and utilization of telecommunications infrastructure and services, accelerating the socio-economic and political development of the nation and enhancing the quality of life of the Nigerian citizens. The Federal Government of Nigeria is confident that if the policy is implemented citizens will reap the benefits of improved and affordable telecommunications as the engine of growth of national economy.
Finally, it is work of government to restructure the economy of the country and harness the political and economic power. These exercises bring about competition from various private enterprises in Nigeria Telecommunications sector such as; Mobile Telecommunication Network, ETISALAT, Global COM, Zain, etc. Also, since those private enterprises have performed efficiently and effective, means of communication is very easy, cheap and the programme create job opportunities, economic development etc.
Recommendations
This research work has analysed the reasons and rationale for privatization and commercialization on the citizens and on the productive efficiency of the public enterprises. The researcher suggested the following:
- As the privatization programme are in the hands of few, Government should ensure that before granting the license or opportunity, they should examine and select the competent people who will handle private enterprises and not people of questionable character.
- The necessity of telecommunication is to improve the low level of communication in the country. Government should provide enabling environment to all the thirty six states so that, there will be harmony of interest in different geographical location.
- The only thing left is for government to hands – off from those enterprises as advocated in the current or present privatization and commercialization exercises.
Finally, the above recommendations are aiming to be considered and embarked on. The programme will enhance the economic stability and development. Also, reduce or exterminate the unequal distribution of resources. Since public enterprises are gradually replaced by private sector, it will bring more efficiency in the production or economic development
References
- Abba, U.E. (2008) Modern Public Administration. Onitsha: Abbot Book Ltd.
- Eze, O.E. (2005) Fundamental of Public Administration. Enugu: John Jacobs Classic Ltd
- Obi, E.A. (2005) Political Economy of Nigeria. Onitsha: Book Points Ltd, and Abbot Communication Ltd.
- World Bank (1994) “World Development Report. 1994: Infrastructure for Development”, Oxford: Oxford University Press.
Bibliography
Text Books:
- Almond, G. (1980) Comparative Politics Today. Stanford: Stanford University Press
- Almond, G.A and Sidney, V.P (1965). The Civil Culture. Boston: Little Brown.
- Abba, U.E. (2008) Modern Public Administration. Onitsha: Abbot Book Ltd.
- Ewanya, A.N. (2009) Public Administration in Nigeria. Lagos: Palm Grove.
- Eze, O.E. (2005) Fundamentals of Public Administration. Enugu: John Jacobs Classic Ltd.
- Godson, D. (2006:103) Political Economy of Democratization in Nigeria Lagos. Palm Grove.
- Marx, K. (1970), A Contribution to the Critique of Political Economy. Moscow.
- Nellis, I. (1986) Public Enterprises in Sub-Saharan Africa. Washington D.C: World Bank.
- Nnoli, O. (1981) Path to Nigeria Development.. Dakar: Codersia. Obi, E.A (2005) Political Economy of Nigeria. Onitsha: Ltd, and Abbot Communication Ltd.
- Okoli, F.C and Onoh F.O (2002) Public Administration in Nigeria. Enugu: John Jacobs Classic Ltd, No. 1 Okpara Avenue.
- Parson, T. (1966) Societies: Evolution and Comparative Perspectives. London: Prentice Hall.
- Ryndina et al (1980:45-55) Political Economy of Surplus. New York: Longman.
