POLICY OF PRIVATIZATION AND COMMERCIALIZATION OF PUBLIC ENTERPRISES IN NIGERIA: AN APPRAISAL OF TELECOMMUNICATION
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POLICY OF PRIVATIZATION AND COMMERCIALIZATION OF PUBLIC ENTERPRISES IN NIGERIA: AN APPRAISAL OF TELECOMMUNICATION
Abstract
The state intervened in Nigeria’s economy due to societal challenges such as economic disparities and unemployment. Due to insufficient managerial skills, a weak technology basis, and other factors, the government chose the public sector as a method or medium for economic and social growth, which fueled the desire to construct numerous enterprise organisations in Nigeria.
Then, due to insufficient capital and a lack of finance, public firms in Nigeria face numerous challenges from employees, managers, and political involvement in their operations. The project’s title is Nigeria’s Privatisation and Commercialization of Public Enterprises: An Assessment of Telecommunication.
The issues are whether political involvement and misuse of resources are to blame for Nigeria’s poor performance of state enterprises. Could privatisation and commercialization policies improve the efficiency of state enterprises?
In Nigeria, structural-functional theory is employed as an appropriate framework of analysis for the policy of privatisation and commercialization of public companies.
The researcher also used the second approach of data collecting by reviewing several relevant textbooks. He discovered that privatisation is viewed as a means of harnessing the economy or as a strategy to improve the efficiency of the public sector or organisation.
Furthermore, privatisation and commercialization have increased Nigeria’s potential, efficiency, and service delivery by making telecommunications more accessible and inexpensive. These are the recommendations: because privatisation is in the hands of a few persons, the government should ensure that before issuing a licence or chance,
they analyse and pick qualified people who will operate private firms, rather than people of doubtful character. The only thing left is for the government to withdraw its support from those enterprises, as proposed in current or past privatisation and commercialization activities.
Chapter One:
A General Introduction
1.1 Background of The Study
The relevance of establishing public enterprises or companies was realised throughout the nineteenth century and thereafter. Because to industrialization and urbanisation, European society saw numerous transformations.
Social challenges like as unemployment and economic disparities necessitated government engagement in the economy. Britain is widely regarded as the birthplace of public enterprises.
A large number of African countries have chosen the public sector as a means of economic and social growth. This explains why, in addition to its conventional functions such as security and justice, the state has been allocated many other functions such as industrial production, transportation, social services, communication, and so on.
Despite repeated attempts by Nigerian economic policies to boost agriculture, industries, and other activities, the government continues to rely on a monoculture commodity (oil), which has failed to deliver good capital investment and development due to a lack of a technological foundation, low managerial skills, and so on.
This encouraged or increased the urge to develop numerous businesses as well as the vast establishment of government organisations and institutions. The Nigerian constitution of 1979 outlined the official operation of these firms and the governmental officers who administered them, as well as private enterprises.
After analysing the performance of the Nigeria Railway Corporation in 1967, the panel that conducted the evaluation proposed that the corporation have an Executive Board, with the Chairman also serving as the Chief Executive.
Government enterprises require consistent financial support to function properly. Because of insufficient capital and a lack of financial autonomy, public firms in Nigeria face a variety of challenges, including managers and employees, government involvement, insufficient money, technology limitations, and political meddling in the operations of public enterprises in Nigeria.
Because monoculture economies cannot meet demand or provide substantial sums of revenue to run the economy or public enterprises, the government is looking for measures to slow the rapid growth of bad economies by enacting policies to strengthen our economy.
The federal government has implemented privatisation and commercialization initiatives to address challenges caused by public firms. There are economic policies that offer full autonomy to public firms, allowing them to function without government subsidy, control, or interference,
resulting in efficient service supply and high productivity that contribute to national growth and development. Although these two notions share the same goals and objectives, namely the provision of efficient public services, high production, and profitability, they differ in nature and character.
The Federal Government of Nigeria established the Technical Committee on Privatisation and Commercialization (TCPC) in 1988 by Decree No. 25. The TCPC was given the task of privatising and commercialising some selected government enterprises. The primary reason was to encourage higher efficiency and productivity in government enterprises.
1.2 Statement of the Problem
The Federal Government built public enterprises, particularly in the 1960s and early 1970s, when the public sector was viewed as a vital contributor to economic growth and socio-political stability. Nigerian government-established public firms that perform specific social and economic functions for the public.
The functions that guided the development of these public businesses are to regulate resources and raise revenue for the provision of certain infrastructural facilities, notably in services that need significant financial investment,
such as transportation. Railway, electricity, telecommunications, and so forth, to generate revenue that will be used to fund development programmes and projects as a veritable tool for employment creation.
As a result, because such functions are not being fulfilled in a credible or effective manner, the Federal Government of Nigeria has implemented a privatisation and commercialization programme. In identifying the issues impeding their performance, the following issues are mentioned clearly:
(1) Is political intervention and misuse of resources to blame for Nigeria’s poor performance of state enterprises?
(2) Could privatisation and commercialization policies improve the efficiency of state enterprises?
(3) Does privatisation and commercialization improve Nigeria’s telecommunications potential, efficiency, and service delivery?
1.3 Objectives of The Study
The researcher began this endeavour with the following goals and objectives in mind:
(1) Determine whether political intervention and misuse of resources are to blame for poor performance of public enterprises.
(2) Determine whether privatisation and commercialization may improve the performance of state firms.
(3) Determine whether the privatisation and commercialization of state firms has enhanced service delivery efficiency.
1.4 Significance of the Research
The significance of any research is linked to the discovery of solutions to the different challenges that mankind faces in the environment or society. The study raises awareness among all citizens and economic planners about the repercussions of privatisation and commercialization of state firms in Nigeria’s economic development.
It assists policymakers in evaluating NITEL’s performance following the privatisation and commercialization policies. It enables contemporary issue scholars to gain firsthand knowledge about the performance of privatised and commercialised public companies.
1.5 Literature Review
Many researchers have varied points of view on privatisation and commercialization of public businesses. The federal government has reiterated its commitment to the privatisation initiative, stating that it will not be swayed by impediments.
According to Ukwu (1982:87), the persistent problem of public company stems from the makeup of the Board of Directors and its connection with management. In particular, there is a tension between the chairman and the chief executive himself, who is frequently a direct appointee who is hired for political patronage rather than any contributions they can make to improve performance.
According to Ugoo.E. Abba (2008: 248), several public enterprises whose establishments are based on regulatory ideology have also failed to meet expectations. Officials take bribes and sever their basic grounds for establishment as a result of rampant corruption in these firms.
However, in his assessment of the decline in Nigeria’s public enterprises, Chief Olusegun Obasanjo (1999) asserts that these enterprises suffer from fundamental problems such as defective capital structure,
excessive bureaucratic control or intervention in appropriate technology, gross incompetence and mismanagement, blatant corruption, and crippling complacency that monopoly engenders.
According to Ogunna (1999:246), excessive ministerial supervision and political meddling undermine the core goal of living-off public enterprises and are thus antithetical to good performance.
Ryndima et al. (1980:45-55), writing on the political economics of surplus, stated that “in order to increase productivity or output, commonly known as “surplus value,” exploitation of workers in public corporations must be intensified.”
These measures can include lengthening labour hours, where these can be measured; there are alternative ways to achieve their desired goal, such as speeding up work (output) over time and underpaying workers.
According to Ogunna (1999), poor performance of public enterprises in Nigeria can be attributed to a lack of financial and material resources, poor management, corruption, and a lack of continuity of public corporation boards.
On the other hand, the civilian governments of the first and second republics recognised the necessity for a privatisation and commercialization policy, which was reflected in the different committees constituted to that end.
Ollor (1986:4) agreed, stating that given the government’s economic recovery goal, “privatisation will relieve the financial burden of government and release funds for it to use in other areas.”
When General Abdusalami Abubakar (rtd) came to power in June (1998), he continued the policy with vigour and planned to privatise or at least commercialise all public enterprises, believing that this would not only salvage the ailing public enterprises and make them more effective, but would also provide enormous funds to the government for other public services.
Obadan suggests that the major goal of a privatisation strategy should be increased efficiency. This is due to the fact that optimum efficiency will result in more sustained gains, which may then be allocated to a larger segment of society.
Lewis (1994:178) endorses the efficiency viewpoint, arguing that the private sector should be more efficient, productive, and profitable. In sum, privatisation would enhance government revenues while reducing or eliminating waste and superfluous bureaucracy, according to him.
According to Nellis (1999) in Obadan 2000:19, various empirical assessments of privatisation outcomes, particularly in industrial and middle-income countries, have concluded that privatisation leads to improved performance of private companies and that privately owned firms outperform “state owned firms.” He claims that growing research suggests that privatisation has a favourable impact in low-income and transition nations as well.
According to Guislain (1997:173), “the move towards privatisation is a result of most governments facing deep budget deficits and public finance crises.” The state no longer has the financial resources to balance state-owned enterprise (SOE) losses or provide the capital increases required for their expansion.
As a result, emphasising that privatisation is the solution, as most SOEs are heavily involved in corrupt practises that have degraded their worth in order to meet the minimal requirements demanded of them.
Dr. Christopher Anyanwu, Director General of the Bureau of Public Enterprises (BPE), stated that the government would prevent it from fulfilling its privatisation goals.
He outlined the goals of privatisation, which included restructuring and rationalising the public sector in order to reduce the dominance of unproductive investments, as well as raising funds for financing social-economic development in areas such as health, education, and infrastructure.
The administration of General Ibrahim Babangida was the first to take significant moves towards privatisation and commercialization of some public firms.
Having read some books on administrative and management problems in public enterprises, as well as possible reformative measures and the causes of these problems that have engulfed these public enterprises, particularly from external and internal factors,
and having read some books and articles on how privatisation and commercialization policies have harmed the poor in society. Let us now look at some publications and articles that regard privatisation and commercialization as an exploitative tool in the hands of the ruling class and its international supporters.
Nnoli O. (1981:4) highlighted the issues of the initial reasoning for government involvement in corporate activities, arguing that such reasons should not be sacrificed at the altar of bourgeoisie-inclined profit maximisation. He claims that because public parastatals were merely peripheral to the interests of foreign capitalists, working conditions, notably pay,
were more appealing than in private enterprises, resulting in poorer worker morale and productivity. That the public sector should not be condemned for its inefficiency because, since independence, most of its functions have been undertaken by private contractors, and their failure is the private sector’s triumph.
Another essay examined the diverse perspectives on privatisation and commercialization held by various academicians. I believe the programme from the set lacked concentration. The government was unsure of what it expected from the programme,
and as a result, the TCPC was unsure of its genuine goal. They had no idea whether their objective was to raise funds for the government or to share the national cake.
Furthermore, Bala (2004) discovered that privatisation in Nigeria was successful in replacing public monopolies with private monopolies. The main impact of the change, however, has been improved competition and efficiency. These were noticeable in the telecommunications, energy, and finance industries.
According to Garba on Vanguard on Thursday, September 10, 2009, the globe has almost become a global village in terms of communications, and doing business is progressively transferring from boardrooms to individual houses, thanks to teleconference.
Given these developments, two countries are looking to you, the professionals, to ensure that the content creative trends in telecommunications strengthen their relations.
Mr. John Odey, Minister of Environment (2009), stated that while the telecommunications business had a significant impact on the economy and people’s lives, it should not be permitted to harm people’s health and the environment. We must strike a balance between the social, economic, and environmental dimensions of our development efforts.
According to Kalu (1999), as of the end of 2005, over ten enterprises had been privatised and over thirty had been commercialised. For example, the National Electric Power Authority (NEPA),
which is now known as the Power Holding Company of Nigeria (PHCN), Nigeria Telecommunications Limited (NITEL), which is now known as Nigeria Telecommunication Plc, and others.
According to the Federal Government of Nigeria (1993), the long-term goal of a telecommunications enterprise is not only to be self-sufficient, but also to generate a reasonable return on investment and to provide digital exchanges, transmission links, gateways, and cellular telephone systems throughout the country.
According to Amechi, with the Nigerian attitude that government businesses are nobody’s property, everyone inside and outside of government attempts to steal them and no one maintains them. He contends that privatisation is a necessary step in combating this heinous trend.
1.6 Theoretical Structure
Ogban-Iyam defines theory as a collection of interconnected concepts used to explain, describe, interpret, and forecast the link between phenomena or variables. Theory provides us with a lens through which to see the real world.
In this case, structural-functional theory is used as a viable framework of analysis for Nigeria’s privatisation and commercialization policies of public firms. Structural – Functionalism, as a theoretical framework, seeks to explain the foundations for preserving order and stability in society, as well as relevant arrangements within society.
This theory evolved from biological and medical sciences. As indicated by the work of Emile Durkhim and Talcott Parson, it was embraced as a mode of analysis in sociology and anthropology. It was created for political analysis by Gabriel Almond and S.P Verma, who emphasised the importance of two fundamental concepts: structures and functions.
The arrangements within the system that accomplish the functions are referred to as the structure. Structure is also the way elements are joined together in order to be arranged or organised.
Merton Robert defined function as “the observed consequences that lead to the adoption or adjustment of a given system.” Oran Young defines function as “the objective consequences of a pattern of action for the system in which it occurs.”
The structural functional framework’s primary assumption is that all systems contain structures that can be identified, and these structures perform functions within the system that are required for its survival. It refers to the structures found in any system as well as the functions performed by them.
Thus, the political system is defined as the many structures and institutions in society that execute political functions or have an impact on political policy decision-making. According to Eme Awa (1976), a political system is “the peculiar structures in any particular system performing political functions.”
In general, there are three branches or structures of government: the legislature, the executive, and the judiciary. The structure can be broken down into three major levels: individual, institution, and subsystems.
The entire structure is divided into segments, each dealing with a certain sector of activity, such as the political, economic, and social subsystems.
As a result, government structure leads to substructure. It is the government and their bureaucracy that set regulations, administer, adjudicate, and formulate economic policies through the legislative,
which are then implemented by the executive for the country’s economic progress. This research work’s analysis is based on its substructure.
It investigates the economic laws or policies that control the production and distribution of material benefits to human society at various phases of development. He is able to gain the economic means he requires to support life through constructive effort. Functions have parallels in three branches of government that execute critical functions.
If the economic structures established by the government, such as Industries, Nigeria Telecommunication Limited, and Power Holding Company, are well organised and harmonised, and their various functions are carried out smoothly, there must be well stable economic development in public enterprises.
This theory can achieve the goal of privatisation and commercialization if the government uses it and applies it to the various government structures or substructures to perform effective functions for the smooth running of government activities that contribute to Nigeria’s economic progress.
Take, for example, privatised telecommunications, which resulted in good changes in the industry and contributed to the country’s economic prosperity.
In practise, all political systems must perform two basic roles: input and output functions. Privatisation and commercialization of public enterprises’ telecommunications (Input) are demands from the government;
the legislature and other government organs assist in processing some of the demands that have reached the system in which certain functions should be performed and give out or allocate values through the “Output” Law or policy.
Functionalism based on the Marxist concept of substructure; the superstructure is entirely defined by the substructure. The thesis appears to be that the economic world is all-powerful and that individual awareness is a prisoner of material forces.
Furthermore, functions must be tied to the social structure. All other societal activities revolved around economics, and both social and political activities are founded on economics.
1.7 Hypotheses
A hypothesis, according to the learner’s dictionary, is a notion or explanation for something that is based on a few known facts but has not yet been proven to be true or correct.
As a result of the nature of this activity, the researcher has the following hypotheses to lead the study.
(1) Political intervention may have an impact on the efficiency or performance of public enterprises.
(2) Privatisation and commercialization policies may improve the efficiency of state firms.
(3) Privatisation and commercialization have increased Nigeria’s potential, efficiency, and service delivery by making telecommunications more accessible and inexpensive.
1.8 Data Collection/Analysis Method
Secondary data sources used by the researcher include journals, textbooks, newspapers, magazines, and so on.
The data analysis method used was content analysis. Various data corrections were edited, including objective, methodical, and qualitative descriptions.
1.9 Scope of The Study
The scope of this study is limited to the privatisation and commercialization of public enterprises in Nigeria, which was enhanced as a result of inadequacy and failure surrounding its activities and programmes to the public, who are the primary beneficiaries of the services provided by these public corporations. It is only valid from 1985 to 2009.
1.10 Definition of Terms
Privatisation is the strategy of selling off public enterprises to individuals, groups, and organisations; they should function on the basis of profitability, effectiveness, efficiency, and viability rather than in the public interest.
Commercialization is a programme in which the government provides corporations full commercial status, allowing them to function strictly under business principles and practises without government oversight or interference and with complete financial autonomy.
According to Ogunna (1999), public enterprises are enterprises established by the government to provide specific social and economic functions for the public.
Telecommunication: Telecommunication, according to the Oxford Learner’s Dictionary, is the technology of transferring signals, images, and messages over great distances via radio, cell phone, satellite, and so on.
Political interference is described as a situation in which the government or leaders have control over the affairs or activities of the public in order to further their own interests.
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