BENEFITS AND CHALLENGES OF PUBLIC PRIVATE PARTNERSHIP (P3)
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BENEFITS AND CHALLENGES OF PUBLIC PRIVATE PARTNERSHIP (P3)
Chapter one
INTRODUCTION
Background of the study
This study looks at the advantages and disadvantages of public-private partnerships (P3) in Nigeria’s Akwa Ibom state. Focusing on its problems and rewards as a means of increasing citizen participation in public sector management.
Akwa Ibom, a state dominated by public service, plans to industrialise its economy. To that purpose, the state receives a number of public-sector reform initiatives. Despite efforts to propel her economy forward, inefficiency, corruption, and mismanagement thrive.
It is widely agreed that, in a free enterprise system, the problem of national economic development and growth sustainability is often shared by the public and private sectors.
The public sector combats development obstacles and fosters an atmosphere conducive to effective private sector participation in the development process. While the private sector responds to the beneficial environment by boosting investment in the State (Akpakpan, 2003).
In addition to the foregoing, Ekpo (2007) observes that the pursuit of a country’s economic growth through public sector institutions is generally regarded as slow, bureaucratic, and ineffective in ensuring discipline and risk avoidance. Development through private sector organisations is typically thought to be dynamic, innovative, risk-taking, and forward-thinking.
However, the Manufacturing Association of Nigeria (MAN) believes that the functions of the two sectors must complement one another in order for genuine economic progress to occur.
Toyo (2000) states in his contribution that the productive activity of these two sectors is determined by worker quality, capital accumulation, technological advancement, and managerial effectiveness.
The appropriate utilisation of these components is critical to achieving economic growth. A look at the economic environment in Akwa Ibom State reveals a public sector that is far more dominant than the private sector. This could be attributed to Nigeria’s pre-independence economic structure, which was dominated by international firms.
In reality, in the post-independence era, government involvement in economic activity was viewed as a useful countervailing force to multinationals’ domination. A substitute for the absence of the private sector in critical areas of the economy TOYO (2001).
During this time, public enterprises were crucial in promoting economic progress. Government economic operations eventually grew widespread due to administrative incompetence, corruption, and politics. The upshot was distortions in investment decisions, which led to economic downturn and shortages.
According to Ike (1992), as well-intentioned as government programmes and policies have been, the private sector’s performance has been poor. Even though the economy saw significant growth throughout the Structural Adjustment Programme (SAP) period, as evidenced by GDP growth of 1.2% in 1987, 4.2% in 1988, 4.0% in 1989, and 5.2% in 1990. The private sector is sick.
According to Ejiofor (1991), the private sector has made a minor contribution. This situation has resulted in negative criticism of the sector from top government officials. They especially accused it of taking about 70% of the country’s overall foreign exchange earnings while contributing very little to the economy.
Further accusations include the sector’s incapacity to search inside for raw material supply, instead relying on imported inputs to produce, and the inflation of product prices to maximise profits.
The private sector, through the Manufacturing Association of Nigeria (MAN), has blamed its inability to perform on disagreement and inconsistency in government policies, bureaucracy in policy execution, and economic leakages.
The government has been blamed for prohibiting some vital raw commodities because to a lack of acceptable local substitutes, the high cost of foreign exchange, and other issues.
As stated above, the purpose of this study is to identify the problems and benefits of public-private partnerships in AKwa Ibom State that the intended parties may encounter in their partnership transactions. This constituted the basis for this study.
Statement of the Research Problem
Akwa Ibom State, which has a population of 3.4 million, is rich in oil and solid minerals. As Nigeria’s second largest oil producer, it enjoys considerable financial flows from the federation account. Abundant agricultural resources (land, farm, livestock, forestry, fisheries, and access to the sea/ocean).
Has untapped maritime potential along its lengthy coastline (natural harbour that can be turned into a seaport and beaches for boats of all sizes, as well as tourism and trade). Combine with a substantial presence of human capital, talent base, worldwide goodwill, and much more AK-SEEDS (2004).
According to an AK-SEEDs (2004) survey, Akwa Ibom State has an average per capita income of $10. This suggests that the ordinary inhabitant can survive on N50 per day. Too little money to make a reasonable livelihood.
According to AK-SEEDS, Akwa Ibom State is Nigeria’s seventh poorest state. Poverty is pervasive and deeply ingrained due to a lack of options for a sustainable life.
Youth unemployment is believed to be around 60%; approximately 5% of those who drop out of school find work. This is a human resource wastage crisis. The public sector is the primary job provider, and the potential of fulfilling such a role is rapidly shrinking.
Agriculture is the primary activity, involving more than 90% of the population. This sector, which encompasses cattle, fisheries, forest resources, cash crops, tree crops, and so on, has yet to be fully developed due to a lack of investment and technology.
The informal sector is defined by poor productivity, low income, and the use of manual technology. Akwa Ibom State has a weak small and medium-sized industrial sector.
It inherited a large number of state-owned firms, some of which were moribund and had been privatised. The state’s low level of industrialization has deprived it of dynamic development potential.
As a result, the state becomes increasingly reliant on the public sector for its survival. The state’s low level of industrialization can be attributed in large part to a lack of modern entrepreneurs.
1.3 GOALS OF THE STUDY
In Akwa Ibom State, the public and private sectors collaborate in a variety of human pursuits; thus, this research seeks to assess the benefits and problems that these collaborations bring to the state.
1.4 Significance of the Study
This study aimed to provide more information on the benefits and problems that are now being experienced in Akwa Ibom State as a result of public-private partnerships.
The study will help the public and commercial sectors gain a better knowledge of the potential benefits and problems that exist today, as well as the concerns that may arise in the future if they plan to work together.
It will also be extremely useful for researchers who wish to conduct additional research on the extent to which the people of Akwa Ibom State benefit from P3 and the challenges they face. Finally, this study is significant to the researcher because it serves as a partial fulfilment of his Bachelor of Science in Economics degree.
1.5 Scope of the Study
This study is limited to Akwa Ibom State in order to perform relevant research and produce well-analyzed results. It focuses on the benefits and problems of public-private partnerships in the state.
1.6 Definition of Terms
Some of the terminology used in this study have been defined in order to facilitate understanding of the research activity rather than its usual connotation. This eliminates the possibility of confusion.
Public-Private Partnerships (P3) are arrangements between the government and the private sector to provide public infrastructure and services. This is characterised by partners sharing investment, risk, duties, and advantages (Uzodinma, 2008).
The term “public sector” refers to the segment of an economy whose economic and non-economic activities are controlled and directed by the state. Todaro (1985).
The private sector is defined as the component of the economy whose operations are controlled and directed by non-governmental economic units such as households or businesses. Todaro (1985).
Uzodinma (2008) defines partnership as a mutual connection that requires agreement between two or more interested parties in order to achieve a common goal and benefit the group.
Public servants are those who operate in the public sector (Onu, 2000).
Privatisation is the sale of public-owned enterprises to private individuals for effective management. Iyoha (1998).
1.7 Limitations of the Study
This research was limited to Akwa Ibom State.
The key limitations of this study are time, materials, and financial resources. Despite these hurdles, this investigation was finished at the specified level.
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