The Project File Details
The privatization and commercialization of Nigerian enterprises today, faces a
lot of challenges in tackling the menaces of corruption and mismanagement of
public funds. It is because of social issues like economic inequalities,
unemployment that made the state to interfere in economy of Nigeria.
Government chose public sector as a means or medium for economic and social
development due to poor managerial skill, weak technological base etc, this
enhanced the zeal to establish various enterprises institution in Nigeria. Then,
due to inadequate capital and lack of finance, public enterprises in Nigeria are
confronted with many problems by the employees, managers and political
interference in the affairs of public enterprises. This study concluded by saying
that the effect of privatization and commercialization on the Nigerian economy
can only take effective progress when the enterprises are wholly or partially in
some cases handled and controlled by the private owner whom will not relent in
the optimization of profitable enterprises.
Title page Approval page Dedication Acknowledgement Abstract List of tables
Chapter one: Introduction
1.1 Background of the study 1 1.2 Statement of the problem 3 1.3 Objectives of the study 4 1.4 Statement of hypothesis 5 1.5 Significant of the study 5 1.6 Scope and limitation of the study 6 1.7 Definition of terms 7
Chapter two Literature review 2.1 Theoretical framework 8 2.2 Reason for the establishment of the public enterprises in Nigeria 11 2.3 Rational for privatization and commercialization in Nigeria 13 2.4 Privatization and commercialization programme in Nigeria 15 2.5 Technical committee on privatization Act of (1988) (TCPC) 16 2.6 Bureau for public Enterprises Act of 1993 17
2.7 Public enterprises privatization and commercialization Act of 1999 18 2.8 Politics of privatization and commercialization in Nigeria 19 2.9 Privatization and commercialization exercises (1999-2010) 20 2.10 Empirical literature reviews 22
Chapter three 3.1 Research methodology 26 3.2 Model specification 27 3.3 Method of evaluation 27 3.4 Justification of the model 28 3.5 Research Approach 28
Chapter four PRESENTATION AND ANALYSIS OF RESULT 4.1 Presentation and interpretation of results 30 4.2 Economic apriori criteria 32 4.3 Statistical criteria (first order test) 33 4.4 Econometric criteria 36
Chapter five SUMMARY CONCLUSION AND RECOMMENDATIONS 5.1 Summaries of findings 42 5.2 Conclusions 43 5.3 Recommendations 44
1.1 BACKGROUND OF THE STUDY
To be able transform into an industrialize economy; an underdeveloped
economy has to be privately and commercially developed.
The importance of establishing public enterprises or corporation began
during the 19th century with the British telecom in 1884 under the
telecommunication act and gained a worldwide support in Britain thereafter.
Several nations particularly those in Africa, have come to embrace the principle
as a way of eliminating low performance and inefficiency in the public
Following the trend the Nigerian economy has come to embrace privatization as
a cardinal principle of the state’s economic policy. Over the years, the Nigerian
government has encouraged the development of the public sector, since
independence in 1960 and particularly 1970s but has being commonly non
successive because of government attitude towards public enterprises business
management. In Nigeria, most government owned industries and establishments
remain citadels of corruption, studies in inefficiently and consequently a heavy
drain on the economy. As a means of combating this menace, the (IMF) and
(World Bank) have advocated the twin policies of privatization and
commercialization incidentally Nigeria has fully adopted this policy and is
embarking on it with frenzy. For example, Nigerian breweries changed from the
most inefficient and loss-making company before privatization to one of the
most profitable business in Nigeria. Nigeria has more than 1,800 public
enterprises at federal and state levels which can be categorised as follows;-
i. Public utility providing infrastructural services.
ii. Strategic industries such as petroleum and petrochemical, fertilizer plants,
iii. Economic /commercial enterprises such as manufacturing of consumer
goods insurance ,banks and hotel ,and
iv. Departmental / stationary boards designed to serve specific socials or
development roles as university and research institutes. Ake (1981).
It is important to note that the introduction of SAP in 1986 serves as a bench
mark in economic policy-making in Nigeria with the resultant, liberalization,
deregulation, privatization and commercialization measures.
The critical question here remains how many of these policies have been able
to restructure the political economy of Nigeria and in turn alleviating the
yearnings and aspiration of the working class.
The world no doubt is moving towards capitalism and liberalization and
any nation that is not moving towards this direction is seen as either not
developing or even retrogressing. A capitalist economy is a free market
economy which allows most economic decisions to be guided by the twin
forces of demand and supply. Since capitalism discourages monopoly but
encourages competitive market, it therefore enhances efficiency and high
productivity which is very vital in any developing economy.
1.2 STATEMENT OF THE PROBLEM.
In a developing country like Nigeria, privatization and commercialization of
public enterprises is considered by many as a vital tool for the growth and
development of the economy. In Nigeria some of the problems facing
privatization and commercialization program include;
a) lack of accountability
c) lack of transparency
it is important to note that the major function that informed the establishment
of these public enterprises are to control the resources and raise funds for the
provision of certain infrastructural facilities particularly in services requiring
heavy financial investment e.g. railway, electricity, telecommunication etc,
also to perform the function of generating revenue that will add to financial
development program and projects as veritable instrument for the creation of
jobs; and ultimately facilitate economic growth and development.
However it is based on the problems, that the basic propositions of this
privatization and commercialization program are being hindered. In trying to
look into these discrepancies and proffer a way forward towards a state of
privatization and commercialization of public enterprises in Nigeria, that
enhances economic growth and development, this research work emanated.
1.3 OBJECTIVE OF THE STUDY.
This study has the main objective of ascertaining the effect of privatization and
commercialization of enterprises on the Nigerian economy.
Specifically we intend to compare the pre and post privatization and
commercialization era, so as to determine the specific effect.
1.4 STATEMENT OF HYPOTHESIS.
The hypothesis tested in this study is stated in its null form as follows:
Ho: privatization and commercialization has no significant effect on the GDP in
1.5 SIGNIFICANCE OF THE STUDY
This research work will help the government and readers to understand those
benefits that privatization and commercialization program embodies which we
have neglected and politicized within the past. In understanding this on the side
of the government, it will allow them to rethink and work towards real
implementation of it and thereby creating a room for the rapid growth and
development of this country.
At the other hand, it will go a long way to create an avenue for more academic
research. The importance of any research is to finding out solutions that faces
mankind and the environment or society. The study creates awareness to every
citizen of this country and economic planners on the implication of these
privatization and commercialization of public enterprises in Nigeria economic
1.6 SCOPE OF THE STUDY
The scope of this research work focused strictly on the effect of privatization
and commercialization programmes on the Nigerian economy 1970 to 2010.
1.7 DEFINATION OF TERMS
PRIVATIZATION AND COMMERCIALIZATION; – Privatization can be
defined as the transfer of ownership and control of enterprises from the state to
the private sector.
IKEME,(1997) define privatization as any of the variety of measures adopted
by the government to expose a public enterprises competition or to bring in
private ownership , management or control in to public enterprises and
accordingly to reduces the weight of public ownership or control or
The privatization and commercialization net of 1988 and Bureau of public
enterprises defined privatization as the relinquishment of part or all of the
equity and other interest had by the federal government or any of its agencies
whether wholly owned by the federal government.
Although privatization is not defined in the public enterprises (privatization and
commercialization) Net of 1999, we can assume that it deemed to have the
same meaning. From the definition three things are clear first for privatization
to take place, there must be the existence of public enterprises which need to be
converted into private enterprises; secondly there is the reasoning that private
ownership control would be better that public o ownership.
Finally privatization is premised that there is problem with the public
ownership of enterprises and privatization is part and parcel of the reform a
gender to turn around. They are enterprises so they can deliver goods and
services efficiently and effectively. As we shall show later, this is reasoning
ideologically loaded and cannot be substantiated by the existential reality of
PUBLIC CORPORATIONS; – public corporation or enterprises as defined by
Ademolekun (1983), are organization that engage as a result of government
activity in the capacity of an entrepreneur. These can be seen as those
enterprises or corporation built, owned and managed by the government. They
are being financed by public funds especially through taxation and also operate