The Project File Details
- Name: The Impact of Privatization and Commercialization Policy in Nigeria :An Assessment of Nigerian Telecommunications Ltd
- Type: PDF and MS Word (DOC)
- Size: [1.57 KB]
- Length:  Pages
The history of public enterprises in Nigeria dates back to the time of thk
colonial masters. To facilitate their business activities and administrations,
the colonial government undertook the provision of roads, telephone and
postal services, railways, coal, law and order, public safety and so on.
Later, after Nigeria’s independence in 1960, the Nigerian government faced
with the problem of under-development also invested directly in industries
and was also involved in the management of the resultant finns for the
purpose of influencing all the sectors of the economy towards rapid industrial
and technological growth. The oil boom of the 1970s further improved these
investments in public enterprises such as NITEL, NEPA, Ajaokuta steel
complex, Nigerian Railway corporation and so on.
However, most of the public companies established to aid industrial and
technological development in the country failed to accomplish the purpose
for which they were set up. Rather, they became ‘Sick babies’ of the
economy. Thus what started as a theoretical justification for public
intervention ends up in the re-establishing of what is to be reformed or
vi i i
In line with this, the Federal Government of Nigeria in 1988 announced the
Privatisation and Commercialisation Policy as a reform strategy for ailing public
enterprises. Also in 1998, the government of Nigeria at that time revisited the
Privatisation and Commercialisation policy as a strategy to further improve the
The need to determine how far the strategies have been used to improve our economy
precipitated this research work. To do this, a critical assessment of NI’TEL LTD was
In the cause of this investigation, it was discovered that, Commercialisation policy
has benefited NITEL greatly.
Falling export revenue in many developing countries is severely hampering
their ability to finance recurrent needs. Devaluation and other austerity
measures have had little impact.
Loss-making companies have further compounded the government’s fiscal
needs. Strong voices opposed to the government’s continuing participation
in the financing and running, of such companies have touted their surrender
to private ilidividuals or groups. The government of Nigeria on its own part
is determined to correct this econoiilic imbalance by building a truly market
driven economy. According to the 1998 budget, the following were among
the objectives for the 1998 fiscal year’.
* Expanded production
* Improvement of Social and Econornic Infrastructure
* Improved revenue generation
* Human capital development.
To achieve these policy objectives, the following strategies were adopted:
Guided privatisation of the existing state owned enterprises; economic
liberalisation: Commercialisation and so on. It was believed that if these
strategies were well implemented it will not only make the country a member
of the global economy but will launch it into the league of developed nations.
Today, comn~ercialisationa nd privatisation appear to be the panacea public
companies require to be efficiently turned around and become profitable.
Before we go into details on the benefits of these strategies, let us briefly
examine the history of public ownership in Nigeria.
1.1 PUBLIC OWNERSI-111′ IN NIGERIA: HISTORICAL
The basis for the intervention in Nigeria has varied from time to time.
During the Labour Government in Brazil after world war 11, the colonial
government in Nigeria adopted the Labour Party’s ideological basis for
government intervention. There were, historically, some undertakings
inherited as government responsibilities from the colonial era, such as roads,
telephone and postal services, railways, coal, public safety, law and order.
The government also son~eti~neins tervened in production as a result of
perceived imperfectioos in the market or as a result of market failure or to
reduce the strong inequalities in the distribution of income and wealth or to
reduce the perceived exploitation of the consumer or of the worker. In
agriculture, for instance, which shows the classical example of perfect
competition, the producer appeared so weak against the operators in the
world market that the state had to intervene to protect him by organising the
market for his export commodities. This perception led to the establishment
of marketing boards which served their purpose to cushion the peasant farmer
from the vagaries of price fluctuations in the world market.
Later, after Nigeria’s Independence in 1960, the country faced the problem
of addressing its economic under-development. The priority of the
government then was to influence all the sectors of the economy towards
rapid industrial and technological growth. Hence, the government invested
directly in industries and was also involved in the management of the
resultant firms. ‘I’lius, post colonial governments added electricity, shipping,
airlines, iron and steel, publishing, radio and television. The Nigerian
government therefore, intervened in direct product of some goods and
services in part froni colonial heritage and in part on casual empiricism.
Following the oil boom in the early 1970’s the government stepped into the
production of goods such as textiles, leather and dairy amongst others,
because indigenous entrepreneurs were not yet ready to undertake the
investment needs of the country. Again, activities that appeared too complex
or required investment well beyond the capacity of local indigenous
investors, seemed viable only if either foreign investment was forthcoming
or government took up the challenge by investing directly in such
undertakings. Examples: Ajaokuta Steel Complex, Delta Steel, River Basin
Developnlent Authority, Northern Nigeria Development Corporation and so
Also, during this period, the government moved into an assortment of
activities like hotels, superniarkets, long distance road transport even while
private domestic investors were ready to enter same activities.
For whatever the reason for direct government intervention, the outcome
was, in most cases, either the establishment of a government nlonopoly
which, in time, created more imperfections in these markets or the
establishment of grossly inefficient facilities such as NEPA, NYTEL . . . . . . . . . .
that became white elephants. According to Professor Pita Ejiofor, “these
public enterprises have remained the sick babies of the economyN2. ‘Thus
what starts as a theoretical justification for public intervention ends up in the
re-establishing of what is to be eliininated.
Some of the key features wllich militated against the success of these public
owned enterprises include nonchalant attitude of staff towards work,
persistent losses of very high magnitude, large scale fraud at all levels of the
organisations, high degree of inefficiency, nepotism, tribalism, hazy
objectives, inconsistency in policy administration, poor strategic and tactical
planning habits, excessive intervention by controlling government ministries,
poor budgeting and implementation system and nlanagerial myopism.
In its effort to improve productivity and rescue the deteriorating performance
of these firms, the government often had to change the board of directors,
increase the subvention level to them on several occasions and retired or
dismissed some of the unproductive or erring members of staff. In addition,
the government took other rnore far-reaching decisions aimed at making some
of its enterprises stand on their feet. For instance, the federal government
handed over the management of Nigeria Airways to a Dutch Firm, KLM,
under a three year agreement and the Nigeria11 Railway Corporation to an
Indian Firm3. These agreements, having been completed, and the foreign
technical partners gone, the companies went back to the woods, hence, one
call say that some key people involved in the management of these firms
were incompetent in carrying out their assignments.
As a result, eminent scholars, seminar groups, economic watchers and other
well meaning Nigerians have arguably called for Privatisation and
Commercialisation as the panacea to the problem. Even the Central Bank of
Nigeria lent its voice to this call4.
Why has privatisation and com~nercialisatio~sui ddenly become so topical?
Business Management all over the world requires a set of skills and attitude