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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university of Manchester united kingdom
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