A full appreciation of the legal framework for Privatization in Nigeria entails not only an understanding of the laws governing the process, but of the process itself. Indeed, every stage of the Privatization process has legal implication[1].

The walls of our Privatization structure will not stand unless the right legal, institutional and financial framework exists in the country. This has two broad positive effects. First, the right framework engenders a conducive environment for private sector participation and growth. Secondly, it enables the Privatization agency to carry on more confidently, being conscious of the definite parameters within which to operate.
The laws governing and regulating the Privatization Program in Nigeria can be categorized into three as follows:
1.      The Public Enterprise (Privatization and Commercialization) Act, 1999.
2.      Specific laws establishing and regulating the enterprises to be privatized. These are specific laws enacted to establish and regulate the business of a particular enterprise that is being privatized. These laws are the instrumentality from which a particular enterprise derives its existence and they set out the guidelines for their operations. Eg NICON ACT, NIGERIAN RE-INSURANCE ACT, NIGERIAN PORTS AUTHORITY ACT etc.
3.      General laws regulating the business and conduct of publicly owned enterprises. These general laws includes[2]:
a.      Sector specific laws such as Nigerian Communications Act, the Mining Act, and the Insurance Act etc.
b.      Commercial laws such as Companies and Allied Matters Act and the Investment and Securities Act.
c.      The Land Use Act and other use laws.

Analysis of the Privatization and Commercialization Decree of 1988
Privatization in Nigeria was formally introduced by the Privatization and Commercialization Decree which was promulgated on the 5th of July, 1988 as part of the structural Adjustment Program (SAP) of the Ibrahim Badamosi Babangida administration (1985-1993). As McGrew argued, SAP is a neo-liberal development strategy devised by international Financial Institutions to incorporate national economics into global market.
One of the main objectives of SAP was therefore to pursue deregulation and Privatization leading to removal of subsidies, reduction in wage bills and the retrenchment of the public sector ostensible to trim the state down to size. Consequently, user charges for social services and utilities which are statutorily established in the past will be decontrolled and allowed to reflect the scarcity or values of the resources committed into their production. Also investment funds based on statutory allocations, grants and loans will be scrapped since it will be the responsibility of the financial market on their own. Furthermore, all types of administrative controls will be eliminated.
The Decree defines “Privatization” as “the relinquishment of part or all of the equity and other interests held by the Federal Government or its agency in enterprises whether wholly or partly owned by the Federal Government”[3]
“Enterprises” (Public) is defined by the Decree to mean “any corporation, board, company or parastatal established by or under any enactment in which the Federal Government or any of its departments, ministries, or agencies has ownership or equity interest and shall include a partnership, joint ventures or any other form of business or management of organization”
The Decree also defines “Commercialization” to mean “the re-organization of enterprises wholly or partly owned by the Federal Government in which such commercialized enterprises shall operate as profit-making commercial ventures and without subventions forms from the Federal Government”
The Decree has two schedules, each of which contains two parts. Part I of the first schedule lists forty three (43) companies which are to be partially privatized. This category comprises enterprises in which the Federal Government’s existing equity holdings are to be maintained, and those where the Government is to divest partially to a specified percentage. Included in this group we have Commercial and Merchant Banks, Agricultural Cooperative and Development Banks, oil marketing companies, Sugar companies, Cement and Steel Rolling Mills etc. Part II of the same schedule comprises of the largest category (65 enterprises) which are to be fully privatized. Most of these have been existing as incorporated companies before the decision to privatize them. These enterprises are mainly in the sub groupings of Agro-allied, manufacturing, Insurance, Hotels and Construction. Etc.
The second schedule similarly consists of two parts. Part I lists fourteen (14) enterprises which are to be partially commercialized. These are in diverse categories and include the Iron and Steel plants, Radio and Television, utility and the Nigerian Security Printing and Minting Company. Part II of the same schedule, lists eleven (11) enterprises to be fully commercialized. These comprise enterprises in exploration and mining, Telecommunication service and insurance.
A quick examination of the schedules will reveal that the Government intends to retain its control in strategic enterprises such as iron and steel, currency and minting, electricity generation, airport, railway, radio and television network, mining and telecommunications.
However, sections 1(3) and 12(3) of the Decree empowers the president or Head of state to make orders at any time to alter, modify, add to, or delete from or amend any of the enterprises listed in both schedules to the decree so as to alter the category to which any enterprise belongs. By section 2 of this decree, “The control, management and composition of the boards of director of privatized enterprises shall as from the date of Privatization reflect the ownership structure of the enterprise”. The provision appears to have limited the scope of Government interference, though it has not eliminated it, given the likelihood that Government’s minority stake of up to 35% in some cases may well decide the fate of the Public Enterprise slated for partial Privatization. This is because of the implication of the situation in which the Federal Government has 40% equity and as it is possible by virtue of the provisions of S. 7(2) and 7(6) of the Decree, no other shareholder, cooperate or individual can have more than 1% equity in the hands of bureaucratic Government officials, and as usual, Government’s undue interference in Public Enterprise operational activities, high turnover in the board membership and top management of such enterprises. It is therefore submitted that ‘Partial Privatization’ with Government singly owning 40% equity while the remaining 60% is spread in infinitesimal and insignificant proportions over a large number of individual shareholders will not remove the elements that characterize the failure of Public Enterprise also ‘Partial Privatization in the context of Decree No. 25 is not a sufficient cure for the ills of the Public Enterprise unless it is accompanied by a private control and management. It is submitted that anything short of private control and ownership should not be regarded as Privatization at all.
However, no specific guidelines as to principles, procedures and modalities are provided by the decree in respect of enterprises that have been given limited autonomy in fixing rates, prices and charges and may capitalize their assets in order to improve their access to the capital market. They are also allowed to borrow on their own and issue debenture stocks[4]. There is also the general requirement that they should now operate as profit making commercial ventures without subventions from the Government[5].

1 Abdullahi Ibrahim. The legal framework for Privatization in Nig: modus International law and Business Quarterly. Vol. 6, No. 3, September, 2001 at P.70
[2] Akin Kekere Ekun;
[3] S.14 of the 1988 Decree.
[4] Sections 12 and 13
[5] Section 14
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