The
history of Privatization is traceable to the ancient Greece, when Government
contracted out almost everything to the private sector and in the Roman
Republic when private individuals and companies performed the majority of
services including tax collection [Tax farming], army supplies [military
contractors], religious sacrifice and construction. As an ideology, perhaps
Privatization is traceable to the golden age of the Han dynasty in china.
Taoism came into prominence for the first time at a state level and it
advocated the laissez faire principles of wu wei. Even during the renaissance
when most of the Europeans practiced feudalism, the ming dynasty of China began
once more to practice Privatization especially with regard to their manufacturing
industries. In more recent times, Winston Churchill’s Government privatized the
British steel industry in the 1950s,
Western Germany’s Government embarked on large-scale Privatization,
including selling its majority stake in Volkswagen to small investors in a
public share offering in 1961 and in 1970s.
General Pinochet implemented a
significant Privatization program in Chile. However it was in the 1980s under
the leadership of Margaret Thatcher in the UK and Ronald Reagan in the USA that
Privatization gained worldwide momentum[1]
similar exercises were carried out in Eastern Europe and the former Soviet
Union with the assistance from the World Bank and the UK agency for
international development; while Japan privatized Japan post. There were Privatization
in France, Belgium, Denmark, Italy, Spain, Peru, etc. in other words,
Privatization transactions took place in developing and transition countries as
well as in industrialized countries. The history of Public Corporations in
Nigeria dates back to the colonial era.
The colonial Government established
some Public Enterprises to provide essential services like railways, roads,
bridges, electricity, ports and harbors, waterworks and telecommunication.
Social services like education and health were still substantially left in the
related hands of the Christian mission. However the report of the presidential
commission on parastatals [onosode commission] which was set up in 1981 under
the sheshu shagari administration recommended that there should be an increased
role for the private sector especially in the parastatals, where security and
other sensitive aspects of public policy are not as paramount as the
satisfactory delivery of service to the people.
Similarly the International
Monetary Fund [IMF], in considering the request by the Federal government for a
loan under shagari’s administration imposed certain conditionalities. One of
them was the divestiture of ownership, management and control of some Public
Enterprises. The debate of whether Nigeria should embark on Privatization
resonated throughout the regime of Buhari/Idiagbon until General Babangida in
his 1986 budget speech announced Government’s intention to divest its holdings
in certain key sectors of the economy and subsequently promulgated the
Privatization and Commercialization Act No. 25 of 1988[2].
Four reasons have been offered for the growth
of Public Enterprises in the immediate post colonial period[3]. The first
reason has to do with the desire of the national petit-bourgeoisie which inherited
political power from the colonial masters to create an economic base for its
political power. Being essentially capitalists without capital, the
petit-bourgeoisie used the instrumentality of the state to empower themselves
economically. Public Corporation serves as a conduit through which public funds
were channeled to private pockets. The second reason has to do with the
struggle by Nigerians for the control of the economy as well as the struggle
for economic independence. Nigerian politicians felt that they have to build up
Enterprises that can compete with the foreign ones. Thirdly, some Public
Enterprises were established as a means of promoting exports and to realize
import substitution. Finally, some of the state Enterprises came into being as
a result of nationalization of foreign owned Private Enterprises.
[1]
amupitan J private placement method of privatization in Nigeria, in new vista
in law, vol2, 2002 pp 343-356
[2]
Federal Republic of Nigeria, report of the presidential commission on
parastatals, Lagos, Federal Government press, 1981, P.63.
[3]
Ake [1981]