Since the beginning of the democratic
administration in 1999, the bureau of public enterprises has
been dynamic with the sale of public firms to local and
foreign private interest
The policy
of the government is to make
Nigeria a private sector driven economy where
the government will regulate but leave business to those who cn run it.
But privatization, which transfers
ownership of production and control of
enterprises from the public to the
private sector, has been very controversial. It has generated strong
debates, everywhere especially in
developing countries, where it is
perceived to have more negative impact.
1. Unemployment: While proponents of privatization see it
as an efficient way of promoting
competition and enhancing growth, critics argue
that it makes the poor poorer by
increasing unemployment and reducing
access of the poor to basic goods and
services through increase in
prices . in Nigeria, there have been several protests by unions that are opposed to the proposed
sell off because of the fear of losing their jobs.
The
most recent were the auctions of
the egbin power plant to KEPCO, a Korean
firm, Kaduna refinery to china national petroleum company and
port Harcourt refinery to a local consortium. Apart from the fear of job losses, many
workers argue that the sale of public
enterprises to either foreign owners or domestic investors is an infringement on their rights
as Nigerians. The privatization journey in Nigeria may be said to have really started in the 1980s
when the country witnessed
economic deterioration
2.
Global
economic recession: the
socio-economic difficulties of
Nigeria were traceable to the global economic
of performance of the public sector enterprises in Nigeria were complicated by the downturn in socio-
economic development in the country due to the global economic recession and the collapse
of the oil market
thus,
Nigeria precarious fiscal and monetary posture could no longer sustain
the requirements of its public
sector enterprises particularly
since they perform below expectations in terms
of their returns on investments and quality of services. “towards the
end of 198s, The public enterprises, which had
grown too large, began to suffer from fundamental problems of defective
capital structures, excessive capital
structures excessive
bureaucratic control and intervention,
inappropriate technologies , gross incompetence and blatant corruption
inflation and unemployment, external
debt obligations and foreign exchange
misalignment, nigieira and many other lending agencies, particularly the
international monetary fund and the world bank, to divest their public
enterprises as one of the conditions for economic assistance
“With the intensified push for economic liberalization , Nigeria and
other African leader were told that privatization as an economic reform would help cut public sector inefficiency and waste, attract more investments, bring in new technologies, and hence review economic growth.
3.
Economic exploitation: many countries, including
Nigeria , embarked on privatization and other market oriented
reforms to pull them out of the
structural imbalances” . since the drive for privatization in developing
countries emanated largely
from international creditors, many experts believed it could be a form of economic exploitation. The views of
critics may not be discarded as minority of the companies being privatized are purchased by foreign
companies.
4. Not human
development oriented: the
accompanying mass retrenchment
has shown that privatization is not
human development –oriented. The sale of public enterprises to few privileged Nigerian had only succeeded
in making a few people rich at the
expense of the vast majority. This in
addition to other anti –poor polices,
. Ade Adejugbe said, had made
unemployment higher and poverty deeper
despite the recorded improvement in growth indicators. Other economists have
also said that in developing countries, privatization must be pursued with
utmost caution Paul cook and Yuichiro Uchida, of the university of Manchester,
united kingdom, in a study on
privatization and economic growth in
developing countries, found that the
effects of privatization on these
counties, found that the effects of privatization on these counties might be
negative/. The claimed that since theoretical literature argue that
change in ownership alone
at the micro-economic level was not sufficient to guarantee greater enterprise efficiency, then
other reforms more directly related to enterprise
development , might play a crucial
role. The world bank, which could be described as the originator
of privatization, also has its reservations, particularly in the poor developing countries. Otive Igbuzor in his paper on
privatization in Nigeria quoting
the world bank, said, “most
privatization success sorties come from
high income and middle income counties.
Privatization is EASIER TO launch and more
likely to produce positive results when the company operates in a competitive market friendly policy environment and a
good capacity to regulate
5. “The poorer the country, the longer the odds against
privatization producing its anticipated
benefits, and the more difficult
the process of preparing the terrain for sale". If this assertion is a pointer, then privatization in Nigeria is bound to be controversial. Nigeria, by international and domestic standard is
a poor country. The
world banks annual human
development index is a comparative measure of
life expectancy, education, and standards of living for countries
worldwide. It could also be measure of
the impact of economic polices
on quality of life
6. Inadequacy of
the private sector to provide certain
goods and service: economists say
there are certain
reason why some major enterprises must be publicly
controlled. These include the inadequacy of the private
sector to provide certain goods and services
that require enormous
investments, the fact that the financially incapable in the society must not be
totally deprived of access to basic goods and services and national security. The indivisibility clause also requires that
facilities such as roads, railwasys and streetlights be provided by government and financed through
taxation.
However, experts have said that privatization may not be inherently good or
bad. It is the mode of greed that had
been displayed by past Nigerian leaders in
their quest to a mass
ridiculous wealthy has made the genuineness and ultimate
efficiency of the ongoing privatization programme questionable”
an expert said. In this regard, nwoye said, “one
of the most important issues in privatization is the concern for
transparency and accountability. “if there is transparency, citizens may not be too suspicious of privatization
moves because it creates a perception of
honesty and accountability. “ if
privatization is carried out with
sincerity of purpose, almost every group will come
out ahead as a result of divestment. Workers will be shareholders. Consumers will be better off because of better service. New graduates and the unemployed will get
jobs because of expansion and government will be relieved of the burden
of subsidies among others Nwoye said.
REFERENCES
1.
Madueme
I S (2003) privatization
of tertiary institutions in Nigeria
2.
E.
okeke (ed) implication of privatization
for education in Nigeria
3.
B.
iffih (ed) modern textbook of social science, Nigeria joen associates
4.
Madueme
(ed) foreign policy of a developing nation
5.
Madueme
i.s and
ude, s (2012) consumer appraisal
of the implementation of electronic banking system in Nigeria
6.
Nwosu
c (2011) private investment behaviour in
Nigeria
7.
Madueme, i.s (2011)
government and industrial
securities and market capitalization in
Nigerian stock exchange market
8.
Madueme,
i.s (2010) capacity utilization rates in Nigieran
Economics sectors: an analysis
internatinaljournal of economic and
development issues 9 (1 &2)
9.
Madueme (1997)
staategies for self sustaining naitoanl
development programs in less developed nations, journal of liberal studies, UNN, 5 (2) 167-173
10.
Olive Igbuzor, (2010) paper on privatization in Nigeria
11.
Paul
cook and yuichiro uchida, university of Manchester united kingdom
12.
Peter
O Osalor, (2009) Entrepreneurialism
Africa confidential, (2011) analysis
facing Nigeria economics reforms
13.
Africa
confidential, (2011) analysis facing Nigeria’s economic reforms.
14.
Malam
(Dr) Sanusis Lamido Sanusi, (2012)
welfare effects of privatization
and commercialization of public
enterprises
15.
Prof.
Ade Adejugbe, anti –poor policies in
Nigerian economy
ARTICLE SOURCE:
DEPT: BANKING AND FINANCE
FACULTY:
MANAGEMENT SCIENCES
COURSE CODE:
BAF 334
COURSE TITLE :
PUBLIC FINANCE
QUESTION: Discuss The
Challenges Of Privatization In Developing Economy. (THE NIGERIAN EXPERIENCE)