By way of highlight, the specific reasons which informed the inefficiency and dissatisfaction in our previous Public Enterprises regime, which are also what I shall now regard as the mischief the Act has come to cure are as follows:-

i.        Divorce of ownership from management: Our Public Enterprises are always managed by people who are different from the owner. These managers often do not pay maximum attention to the success of the enterprises because they have little or nothing at stake. This is perhaps why S. 5(3) of Act now mandates staff of the Public Enterprises to be privatized to own not less than 1% of the shares to be offered for sale to Nigerians. According to the subsection:- “Not less than I percent of the shares to be offered for sale to Nigerians shall be reserved for the staff of the Public Enterprise to be privatized and the shares shall be held in trust by the Public Enterprise for its employees”
According to the Act,[1] the percentage of equity share holding offered to the Nigerian Public after Privatization is 20%. It means that only 1% of 20% of its employees. This I think is too insignificant to actually challenge the employees to be committed to the company’s success. This disadvantage has not yet been corrected by the Act.
One would have expected the Act to come close to S.251 of the Companies & Allied Matters Act 1990 which allows the Article of Association of a company to state the share qualification of its directors.
ii.     Excessive Government Intervention: Experience shows us that instability in government leads to undue interferences with Government Enterprises. One regime comes after the other and demands to make radical changes in existing corporations. A case study is the sitting of the Ajaokuta Steel Industry.
iii.   Ineffective Funding: No enterprise, private or public, small or large can function without money. Most of the time due to dwindling or unstable Government resource, these enterprises are not efficiently funded. The country is littered with abandoned projects. This gives rise to need for Commercialization and Privatization.
iv.   Fraud and Corruption:  If there is a fraud charge over a Public Enterprise, that enterprise is gone. Its profit will not be accounted for. Its employees will not be paid. Capital projects will not be embarked upon, and good and efficient staff will not be employed. This constitutes a major reason for the Nigerian History of inefficiency in public enterprises.
v.      Policy Instability: Like we pointed out before, political instability is an albatross to Public Enterprising. Every new Government that comes into power has something new, good or bad, for the company. Most of these changes affect the fundamentals of the company. It is not always the best for it.
vi.   Poor Management: If the wrong person, I mean a person with insufficient skill, technique or experience, is employed to do a job that requires skill, technique, or experience, obviously that job must be poorly done. In Nigeria, people are appointed to do some jobs like managing a company not because they have the requisite skill, technique, experience or qualification, but simply because they are related or connected to the authorities. This is one of the problems in our Public Enterprises.
vii. Lack of Accountability: This is a fall-out of corruption and fraud. Most managers of Public Enterprises only seek money for Public Enterprises only for their pocket and not what to do to move the company forward.
viii.          Unconducive Work Environment: Every employee of an enterprise needs a conducive work environment to put in his best. If the facility is not available, the work environment will not be conducive. And this spells doom for the company. These and lots more constitute reasons why our Public Enterprises have to be privatized and commercialized.

[1] First schedule part 1 Cap 38,2004
Share on Google Plus


The publications and/or documents on this website are provided for general information purposes only. Your use of any of these sample documents is subjected to your own decision NB: Join our Social Media Network on Google Plus | Facebook | Twitter | Linkedin