CHALLENGES OF PRIVATIZATION IN NIGERIA
Since the beginning of the democratic administration in 1999, the bureau of public enterprises has been dynamic with the sale of public firms to local and foreign private interest
The policy of the government is to make Nigeria a private sector driven economy where the government will regulate but leave business to those who cn run it. But privatization, which transfers ownership of production and control of enterprises from the public to the private sector, has been very controversial. It has generated strong debates, everywhere especially in developing countries,
where it is perceived to have more negative impact.
1. Unemployment: While proponents of privatization see it as an efficient way of promoting competition and enhancing growth, critics argue that it makes the poor poorer by increasing unemployment and reducing access of the poor to basic goods and services through increase in prices . in Nigeria, there have been several protests by unions that are opposed to the proposed sell off because of the fear of losing their jobs.
The most recent were the auctions of the egbin power plant to KEPCO, a Korean firm, Kaduna refinery to china national petroleum company and port Harcourt refinery to a local consortium. Apart from the fear of job losses, many workers argue that the sale of public enterprises to either foreign owners or domestic investors is an infringement on their rights as Nigerians. The privatization journey in Nigeria may be said to have really started in the 1980s when the country witnessed economic deterioration
2. Global economic recession: The socio-economic difficulties of Nigeria were traceable to the global economic of performance of the public sector enterprises in Nigeria were complicated by the downturn in socio- economic development in the country due to the global economic recession and the collapse of the oil market
thus, Nigeria precarious fiscal and monetary posture could no longer sustain the requirements of its public sector enterprises particularly since they perform below expectations in terms of their returns on investments and quality of services. “towards the end of 198s, The public enterprises, which had grown too large, began to suffer from fundamental problems of defective capital structures, excessive capital structures excessive bureaucratic control and intervention, inappropriate technologies , gross incompetence and blatant corruption inflation and unemployment, external debt obligations and foreign exchange misalignment, nigieira and many other lending agencies, particularly the international monetary fund and the world bank, to divest their public enterprises as one of the conditions for economic assistance
“With the intensified push for economic liberalization , Nigeria and other African leader were told that privatization as an economic reform would help cut public sector inefficiency and waste, attract more investments, bring in new technologies, and hence review economic growth.
3. Economic Exploitation< /u> : Many countries, including Nigeria , embarked on privatization and other market oriented reforms to pull them out of the structural imbalances” . since the drive for privatization in developing countries emanated largely from international creditors, many experts believed it could be a form of economic exploitation. The views of critics may not be discarded as minority of the companies being privatized are purchased by foreign companies.
4. Not Human Development Oriented: the accompanying mass retrenchment has shown that privatization is not human development –oriented. The sale of public enterprises to few privileged Nigerian had only succeeded in making a few people rich at the expense of the vast majority. This in addition to other anti –poor polices, . Ade Adejugbe said, had made unemployment higher and poverty deeper despite the recorded improvement in growth indicators. Other economicsts have also said that in developing countries, privatization must be pursued with utmost caution paul cook and yuichiro uchida, of the university of Manchester, united kingdo, in a study on privatization and economic growth in developing countries, found that the effects of privatization on these counties, found that the effects of privatization on these counties might be negative/. The claimed that since theoretical literature argue that change in ownership alone at the microeconomic level was not sufficient to guarantee greater enterprise efficiency, then other reforms more directly related to enterprise development , might play a crucial role. The world bank, which could be described as the originator of privatization, also has its reservations, particularly in the poor developing countries. Otive igbuzor in his paper on privatization in Nigeria quoting the world bank, said, “most privatization success sorties come from high income and middle income counties. Privatization is EASIER TO launch and more likely to produce positive results when the company operates in a competitive market friendly policy environment and a good capacity to regulate
5. “The poorer the country, the longer the odds against privatization producing its anticipated benefits, and the more difficult the process of preparing the terrain for sale “. If this assertion is a pointer, then privatization in Nigeria is bound to be controversial. Nigeria, by international and domestic standard is a poor country. The world banks annual human development index is a comparative measure of life expectancy, education, and standards of living for countries worldwide. It could also be measure of the impact of economic polices on quality of life
6. Inadequacy of the private sector to provide certain goods and service: economists say there are certain reason why some major enterprises must be publicly controlled. These include the inadequacy of the private sector to provide certain goods and services that require enormous investments, the fact that the financially incapable in the society must not be totally deprived of access to basic goods and services and national security. The indivisibility clause also requires that facilities such as roads, railwasys and streetlights be provided by government and financed through taxation.
However, experts have said that privatization may not be inherently good or bad. It is the mode of greed that had been displayed by past Nigerian leaders in their quest to a mass ridiculous wealthy has made the geniuses and ultimate efficiency of the ongoing privatization programme questionable” an expert said. In this regard, Nwoye said, “one of the most important issues in privatization is the concern for transparency and accountability. “if there is transparency, citizens may not be too suspicious of privatization moves because it creates a perception of honesty and accountability. “ if privatization is carried out with sincerity of purpose, almost every group will come out ahead as a result of divestment. Workers will be shareholders. Consumers will be better off because of better service. New graduates and the unemployed will get jobs because of expansion and government will be relieved of the burden of subsidies among other nwoye said.
REFERENCES
Madueme I S (2003) privatization of tertiary institutions in Nigeria
E. okeke (ed) implication of privatization for education in Nigeria
B. iffih (ed) modern textbook of social science, Nigeria joen associates
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Madueme i.s and ude, s (2012) consumer appraisal of the implementation of electronic banking system in Nigeria
Nwosu c (2011) private investment behaviour in Nigeria
Madueme, i.s (2011) government and industrial securities and market capitalization in Nigerian stock exchange market
Madueme, i.s (2010) capacity utilization rates in Nigieran Economics sectors: an analysis internatinaljournal of economic and development issues 9 (1 &2)
Madueme (1997) staategies for self sustaining naitoanl development programs in less developed nations, journal of liberal studies, UNN, 5 (2) 167-173
Olive Igbuzor, (2010) pa
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Paul cook and yuichiro uchida, university of Manchester united kingdom
Peter O Osalor, (2009) Entrepreneurialism Africa confidential, (2011) analysis facing Nigeria economics reforms
Africa confidential, (2011) analysis facing Nigeria’s economic reforms.
Malam (Dr) Sanusis Lamido Sanusi, (2012) welfare effects of privatization and commercialization of public enterprises
Prof. Ade Adejugbe, anti –poor policies in Nigerian economy
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