The summary point is that, if
Privatization and Commercialization Program is carried out with sincerity of
purpose, almost every group will come out ahead as a result of divestiture. The
idea of Privatization is that the state should ensure that essential goods and
services are provided but not aimed to be the sole producer or deliverer,
whereas the past Government was seen as often squeezing out market supplies,
it
is now expected to support their development and promote competition.
Meanwhile, in the three years of the implementation of Privatization, the
Technical Committee on Privatization (TCPC) has been able to complete
Privatization work on 62 out of the 73 enterprises slated for full
Privatization, and 22 out of the 25 enterprises slated for partial
Privatization. On the commercial aspect of the program, the number of Public
Enterprises whose performance agreements have been entered into stood at 22 as
at mid 1992. So far, the exercise has generated (for the Government) over N1.6
billion as Privatization revenue, created over 600,000 new share holders in the
country, bridging both income and geo-political dividers, radically changed the
structure and depth of the Nigerian Capital Market and created awareness of the
virtue of share ownership as a form of savings. The program has relieved the
Federal Government of what was the huge and growing burden of financial debts
and deficits of Public Enterprises. It has improved the allocation efficiency
of the National Economy and enhanced the volume of corporate taxes accruing to
the National Treasury. However, Privatization is not a blanket solution for the
problems of poorly performing state owned enterprises. It cannot in and of
itself make up totally for the lack of competition, for weak capital markets or
for the absence of an inappropriate regulatory framework. But where the market
is basically competitive, or when a medium of regulatory capacity is present,
private ownership yields substantial benefits,
CONCLUSION AND
RECOMMENDATION
At this juncture, one must acknowledge
that all over the world, the right of Government to participate in the economic
activities has been established and there is no Government which completely
abdicates its economy to the private sector. The degree of intervention varies
from country to country. Government also needs to generate funds for the provisions
of its social responsibility which it cannot abandon to the private sector.
Thus enterprises which render essential services and are virtual monopolies in
their industries need not be privatized. They are better commercialized. Full
commercialization usually indicates the strategic nature and the high profit
potentials of an enterprise. Commercialization of such an enterprise will
enable Government to earn the high profit which it can then use for the
performance of its social duties and economic development. Deliberate care must
be taken never to replace Government monopoly with private monopoly.
Accordingly, enterprises such as NITEL, PHCN and NNPC etc. should not be
privatized in the absence of any competition in the market. They are better
fully commercialized so as to enable them to be financially independent and
improve their economic performance.
The above does not however suggest that
Commercialization is the only means of achieving Public Enterprise reform where
Privatization is not suitable. But what lessons are there for Nigerian, Africa
and the Third World countries; undertaking similar programs? Our experience in
Nigerian points to the fact that it is difficult if not impossible for the
Government in developing countries to divest its interest in enterprises
completely. In many African countries, the institutional infrastructure for
viable option for most African countries is to subject a substantial part of
the Public Enterprise sector to reforms that will help them achieve management
and productive efficiency.
So far, there have been provisions of
the Act that appeal to me, yet there have likewise been some I think are in
need of repeal or at least an amendment.
In general however, I see the Act as
being worthy of existence provided certain amendment are made.
1.
The
present constitution of the council seems improper. It makes it too dependent
on the Chief Executive of the Federation. Therefore S.9 of the Act should be
amended and members of the Council reconstituted in such a way that makes it independent
of both the President and the National Executive Council. It is only this
independence that can guarantee that the Privatization and Commercialization
Program shall be carried out in a transparent, impartial, selfless,
dispassionate and uninfluenced manner.
2. One of the
factors that informed the Privatization and Commercialization of our Public
Enterprises was that the management of these companies where inefficient. It is
in a bid to solve this problem that S. 5(3) of the Act was enacted. The subsection
mandates staffs of the Public Enterprise to be privatized to buy not less than
1% of the shares of the enterprises to be privatized
This provision
is inefficient. A commitment to only one percent of the shares is too meager to
make the staff handle affairs of the enterprise with seriousness.
Since in most of
the privatized companies individual Nigerian investors are allowed to hold 20%
of the share and its strategic investors 40%[1]
and since both these individual investors and strategic investors form the bulk
of the staff, making up to 60% share-holding. I recommend that up to 20% of the
shares of the privatized companies be held by staff, as this will make them see
the companies as theirs and then put in their best to ensure its efficiency[2].
3. As established
earlier, the Council is the supreme regulation body overseeing the whole
Privatization and Commercialization Program.
The Bureau is
responsible for the actual implementation of policies of the Council. It will
be improper therefore for the Act to give functions of the Council. S.
(13)(1)(e) of the Act provides that the Bureau can carry out all activities
required for the successful issue of shares and sales of assets of the Public
Enterprise to be Privatized and S. 11(h) of the same Act provides that the
Council shall approve the prices for shares or assets of the Public Enterprise
to be offered for sale.
It occurs to me
that the implementation of this similar function given to the two disparate
bodies will surely lead to conflict.
The Legislature
can avoid this conflict by drawing up the functions of each of the bodies in
thematic confinements.
4. S. 23(1) of the
Act which provides that the provisions of the Public Officers’ Protection Act,
shall apply in relation to any suit instituted against any officer or employee
of the Bureau, is lagging behind in the quest for advancement of our law. It
makes caricature of the old internationally accepted doctrine of the rule of
law.
I hope that when
the legislature finds the opportunity it shall amend it to restore the dignity
of the rule of law.
5. S. 23(3) of the
Act provides that an intending litigant who wants to bring an action against
the Bureau shall file a notice to that effect to the Director General of the
Bureau in the principal office of the Bureau; this provision does not seem to
have anything to contribute to the judicial process of dispute settlement. It
rather has the unavoidable effect of frustrating litigants and their actions. I
do not see any reason why the Bureau should be treated as a sacred cow. If an
intending disputant does not succeed in filling this notice to the Director at
the said place and within the specified one month, what else does he do? I
humbly submit in this respect that if at all there is any need to file such
notices, the Bureau should create state or Zonal officers where they should be
received.
6. S. 27(4) of the
Act provides that the five members of the arbitration panel to adjudicate on
matters between the Council and any enterprise. The law on the appointment of
members of an arbitration panel (Tribunal) is that both parties to the dispute
appoint arbitrators on equal basis.
I have searched
all through the Act in vain to find any justification for this provision.
If the council
solely appoints arbitrators in this case, then it has become a judge in its own
cause. This is against the Nemo judex in
causa sua Rule of Natural Justice and as such needs to be amended[3].
7. S. 28(3) of the
Act provides that the ruling of the arbitral panel shall be binding on the
parties and no appeal shall lie from a decision of the panel to any court of
law or tribunal, this is against the Audi
alteram partem Rule of Natural Justice.
8. In respect of
the privatized enterprises, Government should put in place effective control
machinery to monitor and regulate general business conducts in the economy. To
achieve an effective control does not necessarily require Government ownership
of the business.
9. Government
should endeavor to win over labor’s acceptance of Privatization by giving them
ownership of shares in the enterprises. Workers could be allocated a percentage
of the shareholding at a special discount price. There is need for good follow
up on privatized enterprises, there is need to keep a record of accurate
figures on pre- and post- Privatization employment levels including statistics
to show whether employment is declining or increasing to calm the fear of labor
unions. Other statistics should include how much of capable and qualified labor
will be absorbed by the buyers, etc. labor on the other hand must also realize
that many of the jobs also might have been cost anyway by retrenchment, since
Government could not keep subsidizing crises ridden Public Enterprises
indefinitely; the only exercise that could be guaranteed is constant lay off.
10.
Inclusion
of labor is often a good strategy in boosting the Privatization Program because
one of the major mistakes that is common in Privatization in Nigerian is taking
the workers for granted. When the unions are not involved in the organized
process, it may be difficult to gain their corporation.
11.
Accountability
and transparency should be given adequate attention and this can only be
achieved where there exists a separate auditing and House of Assembly oversight
committee to help in the monitoring process. It is also my considered opinion
that money realized from sale of Public Enterprises and those saved through
withdrawal of subsidies should be invested in the hinterland for provision of
infrastructures.
12.
There
is also the need to make strategic administrative re-engineering to enable BPE
staff interact extensively with stakeholders in the exercise especially the
staff and consultants of bidding firms.
13.
On
the whole, government should avoid policies that are likely to stymie private
initiatives or entrepreneurship.
14.
Lastly,
the Nigerian economy will also require financial market expansion to include
derivative future and options, credit and debts swaps etc. several of these
foreign investment funds are willing to invest in Nigeria on the condition that
the country puts her financial house in order.
However, it is
quite instructive to note that successful structural reform cannot be recorded
unless:
a.
The
Government trusts, respects and most importantly informs the public adequately
every step of the way, as to why certain actions are taken.
b.
Privatization
is done properly with no special concession, or privileged when selling Public
Enterprises and
c.
The
creditor countries consider Nigeria’s specific circumstances while mounting
pressure on the speed of Privatization exercise because ours is a low-income
country characterized by poverty.