AN ASSESSMENT OF THE EFFECT OF PRIVATIZATION AND COMMERCIALIZATION ON THE NIGERIAN ECONOMY
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AN ASSESSMENT OF THE EFFECT OF PRIVATIZATION AND COMMERCIALIZATION ON THE NIGERIAN ECONOMY
Chapter one
1.1INTRODUCTION
Privatisation refers to the transfer of state firms to private ownership through the sale of shares. The privatisation initiative in Nigeria is intended to benefit nearly all Nigerians. While commercialization is the sale of some government shares in order for them to function as a profit-making company.
It is the reorganisation of firms so that they can run as profitable commercial endeavours without receiving federal government subsidies. Commercialization can take two forms.
v Public enterprises are expected to function profitably on a commercial basis and to be able to raise funds in the stock market without government guarantees.
v Public enterprises that the government may consider for capital grants to finance capital-intensive projects.
1.2 Historical Background of the Study
Privatisation and commercialization were originally hinted at by the Shagari Government of the Second Republic, followed by Buhari’s Regime, but were not given priority until 1986, when then-President Babangida stated that parastatals were an unnecessary heavy load on government resources. Since 1986, the volume of non-statutory transfers to all economic and quasi-economic parastatals has not exceeded 50% of their current levels.”
In essence, President Babangida had gone further to express the government’s opinion in relation or with regards to the public firms in terms of their performance, and criticised them as follows;
v Been inefficient in their activities.
v They provide an avenue for corruption.
v Financial burden on the government.
v They are not making a return on the investment.
Others believe that government engagement in firms is a failure in economic development and that business is not a government undertaking.
1.3Statement of Problem
As the country’s economy grew, many state enterprises struggled to provide adequate service. A variety of issues contributed to the inadequate functioning of these organisations and enterprises. They include:
v In suitable capitalization from the start.
v Improper description of roles and goals for establishing them.
v Total government control did not promote profit-oriented operations.
v The influence of the political environment.
v Poor financial conditions for the service and work environment
v Poor organisational structure.
v Employees of the corporation had a negative attitude towards work since they believed that the government would always offer a subsidy to pay their salaries and wages.
v Unnecessary meddling in corporate management by government oversight bodies.
v A partial failure of the antagonization Degree.
v The windfall foreign earnings from petroleum exports, which had become the mainstay of the economy by the end of the 1970s
v The substantial connection of natural expenditure and product to imports, resulting in a heavy foreign debt burden since the early 1980s, as well as the poor performance of state companies and corporations, all contributed to a rapid and dramatic decline in the Nigerian economy.
As a result, in 1988, decree 25 was issued to recognise such enterprises. Thus, government corporations became commercialised. The current administration has initiated a second phase of the initiative by taking a new step. The article examines the success or not of the programme on public companies in Nigeria.
1.4 Significance of the Study
The significance of this work can be considered from three angles, as follows.
1. The Researchers’ Point of View
2. Nigerian Public Enterprises
3. General public.
Finally, it is hoped that our research will serve as a variable guide for our policymakers and future policy inquiries into this field.
The study is relevant to the research since it provides an opportunity to learn more about privatisation and commercialization.
It is also important to public enterprises or government organisations that have been privatised or commercialised, or that are about to be privatised or commercialised, as is the situation with this research. As it will bring attention to their business. The recommendations offered in this study will benefit them in particular, as well as share holders.
Finally, the project will be extremely beneficial to the general public, whether for research purposes or simply to increase their knowledge and raise awareness about the concept of privatisation and commercialization programmes, as well as the problems and solutions to Nigeria’s public problems.
1.5 Study Objective
The goal of this study is to critically examine the privatisation and commercialization process. The fundamental purpose of this study is to:
a) Investigate the potential and challenges of implementing the privatisation and commercialization programme on state companies.
b) Determine the extent to which the programme can eliminate ineffectiveness and inefficiency in public companies.
c) Determine its potential for promoting economic development in Nigeria.
d) Determine whether it will improve the welfare and standards of public workers.
Finally, this study aimed to offer solutions to the difficulties confronting Nigeria’s public enterprises.
1.6HYPOTHESIS
In accordance with the aims of this study endeavour, the following hypotheses were developed:
H1
H0 – Privatisation of public firms will have a detrimental impact on the Nigerian economy.
Hi – The privatisation of public firms will benefit Nigeria’s economy.
H2
Ho -The commercialization of public enterprises will have a negative impact on the Nigerian economy.
H1 -The commercialization of public enterprises will benefit Nigeria’s economy.
H3
H0 – That privatising state firms will not improve their operations and services, as well as the welfare and working conditions of its employees.
H1 – That privatising state firms will improve the operation and services, welfare, and standard of workers in the
Public enterprises.
1.7 Scope of the Study
These studies aim to evaluate the impact of privatisation and commercialization on public firms in Nigeria.
The research will be limited to the Kaduna Refining and Petrochemical Company (KRPC), which will serve as the case study for this research.
1.8 Limitations and Delimitations of the Study
1.8.1 LIMITATION.
Conducting a study of this sort is difficult because it is a broad topic of study with several limitations and problems.
The first limitation is that the success of every research project is dependent on the availability of funding. The funds will be used to purchase materials, browse, and so on.
In the context of primary data. The respondent may not be permitted an audience for the interview; another limitation is a high-cost location or more recent information on the internet.
Along the way, the organization’s administrative bottleneck may jeopardise the researcher’s efforts in those cases where management refuses to share crucial information as a matter of policy.
Most of the time, questionnaire administration fails to meet its objectives because filling them out is incomplete, and returning them is frequently delayed beyond the time limit.
Finally, the time for compiling and submitting work is always too short. And the researcher is expected to achieve numerous tasks at once, which is unfair to the quality of the research.
1.8.2 DELIMITATION
This study will focus on Kaduna Refining and Petrochemical Company (KRPC) and examine the effort of privatisation and commercialization in the context of the Nigerian economy. The study will extend from 1983 until the present.
1.9 Definition of Terms.
a. PRIVATISATION: The sale of public firms or corporations owned by the government to private individuals for management using shares.
b. PARTIAL PRIVATISATION: The sale of a portion of the public enterprise to a private individual.
c. FULL PRIVATISATION: The selling of public corporations to private individuals.
c. COMMERCIALIZATION: This is when government enterprises are operated for profit.
g. PARTIAL COMMERCIALIZATION: When businesses are operated to maximise profits.
c. FULL COMMERCIALIZATION: When government enterprises are run to maximise profits.
g. DEREGULATION: To liberate trade, business activities, and so on from regulations and control.
h. B.P.E: Bureau for Public Enterprises: This is an administrative body in Nigeria that is in charge of closely evaluating public enterprises.
i. SHARES: A share of the desired amount that is divided among general or individual contributors.
j. SHARE HOLDERS: Shareholders of the Business Company.
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