THE CHALLENGES OF EFFECTIVE PRIVATIZATION OF PUBLIC ENTERPRISES IN NIGERIA
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background To The Study
Public enterprises were established, to enhance Nigeria’s socio economic development, especially after independence in 1960. The major concern in this regard had been to accelerate development and economic self-reliance through “economic nationalism”. Public enterprises thus reflect one of those instruments by which government intervenes in economic development rather than allow market forces to dictate the pace of development. According to Ayodele (2004), Nigeria relied heavily upon public enterprises, up to themed-1980s, for the development, management and allocation of utilities and social services.
They were seen as major instruments not only for the mobilization and allocation of public investment resources, employment generation and income redistribution, but also for determining government finances and the acceleration of overall economic development.
Adeyemo (2005), reflecting Turkey, Mexico, India and Nigeria, noted that the establishment of public enterprises was premised on what he considered as obstacles to economic development in the past-independence states. It is also instructive to note that in Nigeria like many developing countries, public enterprises are used as employers of last resort. According to Hemmina and Mansor (1988), states owned enterprises enable government to pursue goals of social equity that the market ordinarily ignores. Similarly, Ugorji (1995) observed that public enterprises had been established for political reasons. Many government undertakings were used to provide jobs for constituents, political allies and friends. The location of public enterprises and the distribution of government employment have further been defended on the need to maintain federal character and promote national integration.
Other factors that accelerated the growth of Nigeria’s public sector were the indigenization policy of 1972 as enacted by the Nigerian Enterprises Promotion Decree. It was designed to control the commanding heights of the economy. The policy further provided the much needed legal basis for extensive government participation in the ownership and control of significant sectors of the economy.
According to Adesanmi (2011), the government, set up the Bureau of Public Enterprise (BPE) to privatize and commercialize, as the case may be, public enterprises with the objective of reducing or eliminate the drain on public treasury. It also seek to reducing corruption, modernize technology, strengthen domestic capital markets, promote efficiency and fiscal deficit, resolve massive pension funding problems, broaden the base of ownership of business. Other include generating funds for the treasury, promoting governance, attracting foreign involvement and attract back flight capital. Whether the BPE has met and realized these objectives is a matter that is open for debate.
1.2 Statement of the Problem
Recent time in Nigeria, there has been a policy to privatization of public enterprises. This was aimed at enhancing their level of productivity and ensuring overall national development.
However, the performance of these privatized enterprises has been replete with varying contradictions. This study appraised the post-privatization performance of the privatized enterprises in Nigeria. In assessing the challenging of privatization in Nigeria, certain indices were used for analysis such as profitability. Analysis showed that certain factors such as corruption, lack of transparency, lack of co-operation from some government official, geo-political and income group spread and other problems.
Also suggestion will be made for Nigeria to embark on a better privatization policy for better level of productivity in Nigeria.
1.3 Objectives of the Study
The objective of this study seeks to covers the challenges of effective of privatization of public enterprises using Nigeria Telecommunication Limited (NITEL). These are objectives of this study:
1. To identify and discuss the need for privatization of NITEL.
2. To identity the effective privatization of NITEL.
3. To recommend measures to enhance the effective privatization of NITEL.
1.4 Significance of the Study
Nigeria has suffered a great deal from mono-cultural dependence in the export commodity, she has also neglected agriculture that used to account for the occupation of more than half of the total population of million people as at 1960.
Therefore, a country that was predominantly agrarian producing enough food crop for the domestic consumption and export, eventually turned to be a net importer of food items. The import of between (1974 – 1984) were remarkable for excessive increase in importation of most commodities even though ones that we have resources to produce with negative impact in one balance of payment position, the resulting problems made Nigeria to resort to self seeking economic policies geared towards achieving self reliance. Therefore the emphasis was on increasing our industrial base.
But greater percentage of government industrial policies were directed to public investment neglecting private sector initiative but not exist (tolls on federal and state high ways) reduction in existing subsidies. Again industrialization cannot be complete without private sector.
Problems and challenges of privatization in Nigeria contributed a whole lot in terms of national output and employment.
1.5 Scope of the Study
The scope of this study covers the study of the challenges of effectives of privatization of public enterprises using Nigeria Telecommunication Limited (NITEL).
1.7 Research Questions
1. What are the effective privatization of public enterprises in Nigeria?
2. Do privatizing in Nigeria public sector help to alleviate our problem?
3. Do you think that privatization will lead to inadequacy of the private sector to provide certain goods and services that require enormous investment?
4. Challenges of privatization can it be tackled by strong policies?
1.8 Research Hypothesis
The following hypothesis has been formulated based on the objectives of the study and the statement of the problems as follows:
H0: Challenges of privatizing industries is associated with inappropriate technology.
H1: Challenges of privatizing industries is not associated with inappropriate technology.
H0: Privatization would aggravate the problem of unemployment?
H2: Privatization would not aggravate the problem of unemployment.
1.9 Definition of terms
Some definitions of terms as used in the study were as below;
a. Authority: It means power or right to give order and make others to be obeyed.
b. Commercialization: This is concerned with the reform of public enterprises to achieve high efficiency and productivity, without change of ownership.
c. Electric: This means all the phenomena associated with electrons (negative charged) and protons (positive charge the study of these phenomena.)
d. Privatization: This means transfer of ownership of enterprise between the government and the private sector.
e. Problem: This stands for questions to be solved or decided.
f. Public: The citizens of people of a country.
g. Public enterprises: This means any corporation, board, company or parastatal established by or under any enactment in which the government federation has ownership or equity interest.
h. Strategic investor: It means a reputable core investor or group of investors having the requisite technical expertise, the managerial experience and financial capacity to effectively contribute to the management of the enterprises be privatize
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