CHALLENGES
OF PRIVATIZATION IN NIGERIA
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 economicsts 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 kingdo,
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 microeconomic 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 geniuses 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 other nwoye said.
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privatization of tertiary
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E. okeke (ed)
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Madueme
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ude, s (2012) consumer appraisal
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Nigeria
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government and industrial
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internatinaljournal of economic and
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Paul cook and
yuichiro uchida, university of Manchester united kingdom
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Sanusis Lamido Sanusi, (2012)
welfare effects of privatization
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Adejugbe, anti –poor policies in
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