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PRIVATIZATION AND COMMERCIALIZATION GOVERNMENT OWNED COMPANIES, PROBLEMS AND IMPLICATIONS AND DEPRESSED ECONOMY (A CASE STUDY OF NITEL ENUGU)
CHAPTER ONE
1.0 INTRODUCTION
This research work seeks to look at eh major problems and prospect of an extebtual privations on of theNigeriatelecommunication ltd
Through a careful and systematic collection and analysis of data which were we done in chapter four the researcher was able to ascertain the important problems which the company is currently experiencing and determining the extent at which privatization will going providing solutions to these problems.
However, the fears and doublets expressed by both the workers and the final consumer of the service(s) provide by most of this privatization not withstanding, the fact remains that privatization to a great extent helps to solve some vital problems that has led to the untimely death of most of this companies one of this most devastating problems is the syndrome of not-my father –work” which has greatly and negatively affected both smooth running and performance of the parastatals or organization
Therefore, privatization simply put is aimed at injecting the private
sector efficiency into most of this ailing organization/parastatals. This desired efficiency lings on the fact that best and competent hands recruited and employed which all the other hand gives rise to quality services and production. The essence of privatization is equally aimed at making this parastatals to be self sustaining from the profits made form it’s services or production as the government either partly or totally withdraws its subventions.
Hence our finding also reveled there is widespread panic resulting form the fear of rampant and unwarranted retrenchment which may follow form the planned privatization of this vital federal government establishment.
Never the less, there is still a pervading sense of commitment and dedication form the worker, the imminent privation notwithstanding.
This going to dedicate that the progarmme will be necessarily helpful to the corporate health of Nitel if and when it is fully implemented.
However, this should be done in such a way that it will not threaten the general welfare an security of he workers , thereby undermining the essence of privation in relation to the company.
1.1 BACKGROUND OF THE STUDY
in any developing economy the government is the main initiator apromoter of economic development especial in Nigeria in developing countries, government usually intervene in some area of the economies in which the private sector cannot preformed
.in other to facilitates the achievement of the national development objectives ,the federal government has instituted ,and made use of many public enterprise over the years ,it would be recalled however .that in the fifties and sixties agriculture was the main study at the Nigerian economy .the early services was the era of oil boom and it earned for Nigerian huge crude oil revenues at a level that was never anticipated .this new dimension got government involved more pronouncedly with widely diversified investment in area that spend both the traditional public sector and exclusive private sector business
As a result of this development in crude oil agriculture that was the main study of the economy was later given less attention .owing to this circumstances the government investment ware sponsored mostly by the oil revenues ,the oil boom are 1973/1979,has been described as the golden are for public investment ,the government invested in over 30 parastatals and companies within this period. Most of than have been unprofitable some cannot even meet their operation casts and have depended on government subventions for there survival
Public corporations inNigeriahave been considered as inefficient and wasteful. This is because they have viewed it with the profit criterion. According to a school of thought assessing the activities of public enterprises with the profit criterion is not always a fair judgment. This is because when attempting to gigue; the efficiency of government economic activities, ti is usually not appropriate to use the performance standard of the private sector, “they are horses of different colours” the objective of private business in service to the society or promotion of general welfare.
Unfortunately, theNigeriapublic sector enterprise have also failed in the efficient and efficient provision of the services for which they were established. Infect it was this feeling of failure and hopelessness arising form the increased difficulty on the government that prompted the proposition of privatization policy inNigeria.
Privatization was given priority by the Shagan administration of the second republic (1979-1983) again by the general Buhari’s regime (1984-1985) but not until. 1986 during the regime of Babangida that privatization was given serious attention. In is budget, speech in 1986 the erstwhile head of state noted that parastatals have generally come to constitute an unnecessary high burden an government resources. As form that year the volume of statutory transfer to all economic and quasbi economic parastats would constitute no more than 50% of the present levels.
Against this background, there has been much comes over the desirability of privatization. Captions of industries and other economic as well and the general public has added their voices for or against the privatization of public enterprises. Some people fear that with the prevalent negative social/ political tendencies that is synonymous with the Nigerian society privatization may fail to achieve the mouth watering objectives for which they were aimed. While others insist that privatization is and remains the only panacea for our sick public enterprisers. They maintain that privatization has the potential of rescuing these corporations, from the pit of mismanagement, inefficiently corruption and other vices that tend to constitute impediment to their progress.
1.2 STATEMENT OF THE PROBLEMS
In a bid to build the economic development in Nigeria T. Killick maintained that many people strangely advocate more public ownership as essential to further economic progress. But at least, as many others see public ownership as synonymous with inefficiency and waster of public of resources. This belief is often translated into presumptive institutional hypothesis that public enterprise are inefficient and inferior to private enterprises.
Apparently, efficiency and effectiveness are abstract measures of organizational performance. Both concepts however evaluate the conditions under and the degree to which organizations are attaining the various goals and thus provide useful indicators of organizational performance.
In view of the dwindling national economy, coupled with widespread public. Discontent with the Nigeria public enterprises due to poor performance, the government send in the institution, a colossal wastage of public investment characterized by non profit making, red tap son unproductively, ineffectiveness and gross inefficiency. This I opposed to government objective. Pubic enterprises have other the years transformed into the biggest single source of wastage. Instead of generating growth , they are found to be consuming for more than there source they generate. Ti has been know that public enterprises have consumed staggering amount of money in terms of total investment equity and in guaranteed naira loans, including guaranteed foreign debts.
However, the estimated number of federal and state government owned enterprises was about 300 by early June 1987 by 1986 the established investment at federal government about 100 federal state was than N 223 billion naira yet the total dividends received by the federk government within that period is approximately 2% of investment return, which is for less than 2% of investment return, which is far less than anticipated. This was far below a comparative figure of 15 return in the private sector according to theNigeria stock exchange (NSE)estimate. The inability of public enterprise to return significant finance; profits is an unequivocal proof that public enterprise are economic waste pipes.
However, this policy for government raise a number of questions of example what are public enterprises for? Are they rally dispensable at this stage of our development? If so, what are the implication of such public policy? Indeed, is it not really correct to say that public enterprises have performed poorly, all this as considered. If yes, why is it that Nigerians in the private sector can perform more effectively than those in the public sector, lastly, is privatization the only option that would best serve the interest of the public and who defines its nature and scope of that interest?
1.3 SIGNIFICANCE OF THE STUDY
As an academic study, it will serve as a base for further research on the subject areas. This study is essential in the fact that privatization and commercialization of public enterprises is being resorted to as a solution for public enterprises impartibility inefficiency and unproductively public enterprise in some western countries were privatized for maximum efficiency and profitability, such enterprises include the British telephone company, the British Airways, the management of panama-canal, he U.S postal agency etc.
The study is very timely especially since privatization and commercialization of public owned enterprises is currently being pursued in Nigeria with many potentials investors still ignorant of benefits desirable form such investments considering the fact that there are limited literature on the effect of the activities, this research therefore seeks to enlighten the general public about the implications of privatization and commercialization as a policy option for the privatization of our inefficient public enterprises. It also hoped that this research work will definitely create or stand as medium of reference for further research work on the issue. And help to create awareness to the problem and obstacles in privatization.
1.4 SCOPE AND LIMITATION OF THE STUDY
In any study, it is important to state its scope and limitation so that criticism and/or praises will be based on that areas and the extent one has covered. The same applies to this study.
Although, there are many implication of privatization inNigeriaeconomy, we will milt ourselves to management and finances implication of the policy in the Nigerian telecommunications limited (NITEL)
Can the basic of this limitation we shall not involves ourselves in the full debate of the proponents and opportune of privatization We shall rather discuss why the government has decide to privatization these enterprises.
Finally, quaking to time and financial constrains involved in investigating this issue in all privatized companies we confined our selves toNigeria telecommunication ltd. We however hope that results obtained form this study will be adequate for making a general statement in the policy.