The effect of privatization and commercialization on the nigerian economy

Thesis Overview

<p> INTRODUCTION<br>1.1 BACKGROUND OF THE STUDY<br>To be able transform into an industrialize economy; an underdeveloped<br>economy has to be privately and commercially developed.<br>The importance of establishing public enterprises or corporation began<br>during the 19th century with the British telecom in 1884 under the<br>telecommunication act and gained a worldwide support in Britain thereafter.<br>Several nations particularly those in Africa, have come to embrace the principle<br>as a way of eliminating low performance and inefficiency in the public<br>enterprise sector.<br>Following the trend the Nigerian economy has come to embrace privatization as<br>a cardinal principle of the state’s economic policy. Over the years, the Nigerian<br>government has encouraged the development of the public sector, since<br>independence in 1960 and particularly 1970s but has being commonly non<br>successive because of government attitude towards public enterprises business<br>management. In Nigeria, most government owned industries and establishments<br>remain citadels of corruption, studies in inefficiently and consequently a heavy<br>drain on the economy. As a means of combating this menace, the (IMF) and<br>9<br>(World Bank) have advocated the twin policies of privatization and<br>commercialization incidentally Nigeria has fully adopted this policy and is<br>embarking on it with frenzy. For example, Nigerian breweries changed from the<br>most inefficient and loss-making company before privatization to one of the<br>most profitable business in Nigeria. Nigeria has more than 1,800 public<br>enterprises at federal and state levels which can be categorised as follows;-<br>i. Public utility providing infrastructural services.<br>ii. Strategic industries such as petroleum and petrochemical, fertilizer plants,<br>iron steel.<br>iii. Economic /commercial enterprises such as manufacturing of consumer<br>goods insurance ,banks and hotel ,and<br>iv. Departmental / stationary boards designed to serve specific socials or<br>development roles as university and research institutes. Ake (1981).<br>It is important to note that the introduction of SAP in 1986 serves as a bench<br>mark in economic policy-making in Nigeria with the resultant, liberalization,<br>deregulation, privatization and commercialization measures.<br>The critical question here remains how many of these policies have been able<br>to restructure the political economy of Nigeria and in turn alleviating the<br>yearnings and aspiration of the working class.<br>10<br>The world no doubt is moving towards capitalism and liberalization and<br>any nation that is not moving towards this direction is seen as either not<br>developing or even retrogressing. A capitalist economy is a free market<br>economy which allows most economic decisions to be guided by the twin<br>forces of demand and supply. Since capitalism discourages monopoly but<br>encourages competitive market, it therefore enhances efficiency and high<br>productivity which is very vital in any developing economy.<br>1.2 STATEMENT OF THE PROBLEM.<br>In a developing country like Nigeria, privatization and commercialization of<br>public enterprises is considered by many as a vital tool for the growth and<br>development of the economy. In Nigeria some of the problems facing<br>privatization and commercialization program include;<br>a) lack of accountability<br>b) corruption<br>c) lack of transparency<br>d) inconsistency<br>it is important to note that the major function that informed the establishment<br>of these public enterprises are to control the resources and raise funds for the<br>11<br>provision of certain infrastructural facilities particularly in services requiring<br>heavy financial investment e.g. railway, electricity, telecommunication etc,<br>also to perform the function of generating revenue that will add to financial<br>development program and projects as veritable instrument for the creation of<br>jobs; and ultimately facilitate economic growth and development.<br>However it is based on the problems, that the basic propositions of this<br>privatization and commercialization program are being hindered. In trying to<br>look into these discrepancies and proffer a way forward towards a state of<br>privatization and commercialization of public enterprises in Nigeria, that<br>enhances economic growth and development, this research work emanated.<br>1.3 OBJECTIVE OF THE STUDY.<br>This study has the main objective of ascertaining the effect of privatization and<br>commercialization of enterprises on the Nigerian economy.<br>Specifically we intend to compare the pre and post privatization and<br>commercialization era, so as to determine the specific effect. <br></p>