Privatisation as a Means of Solving Nigerian Social Economic Probelms

Topics: Economics, Public sector, Privatization Pages: 25 (8111 words) Published: February 22, 2011
CHAPTER ONE

1.0 INTRODUCTION
All over the world, the public service as a matter of experience, has not been known for their capacity to create wealth. Consequently, public enterprises have usually been perceived as drain pipes for government budget, thus creating budgetary strains and avoidable burden on the economy. It became a national policy imperative therefore to disengage the public sector from those areas where the private sector has the comparable advantage to perform, while letting the state concern itself with the provision of infrastructure, security and the enabling environment for business to thrive through enhanced wealth creation. It is important to observe that for many developing countries like Nigeria it was perhaps unavoidable for the government, in an earlier epoch, to promote the initial investments in the early phase of national development when the private sector was almost non-existent. Unfortunately the government got herself so involved in business that could best be tackled by the private sector, that government could no longer perform her traditional functions: the provision of infrastructure and security through the maintenance of law and order as well as the promotion of an enabling and conducive environment for investments and wealth creation. 1.1 PRIVATISATION AND COMMERCIALISATION

Privatisation as a tool for economic management came to the front burner when Chile became the first country to turn public assets/businesses to private operators in the early 1970s. Since then, over 140 countries (both developed and developing) have embraced privatisation as a route to economic growth and prosperity. While the details and strategies of the privatisation exercise may vary in each of these countries, the ultimate objective is to liberalise the economies through increasing private sector involvement and capacity utilisation. A critical aim is to free enterprises from control by rigid and bureaucratic structures, and make the management of such enterprises more flexible in their management and investment strategies. In Venezuela, it is termed Capitalisation while Brazilians call it Flexibilisation. In other countries such as Argentina, United Kingdom and Mexico where it has worked, different tags have been adopted but the aim and purpose have remained the same. It is worth noting that over 120 countries have embraced the idea of privatisation. In the process of privatisation, more investible capital have been injected into the various economies through local and foreign investors to the benefit of the country at large. In the process, funds that would have been committed to the maintenance of otherwise inefficient enterprises have been freed into more productive sectors of the economy. In the case of Nigeria, the issue of mismanagement and under-utilisation which led to huge wastage of resources and manpower potentials gave the government of the day no other option but to pursue quickly the privatisation programme.

Commercialisation on the other hand is defined by the Nigerian commercialization and privatization Decree No 25 of 1988 as “ the reorganization of enterprises wholly and partly owned by the government in which such commercialized enterprises shall operate as profit-making ventures and without subvention from government”.

1.2 NIGERIA SOCIO-ECONOMIC PROBLEMS
The economic problem stems from the fact that as humans, we have unlimited wants and needs. A need is something that can be seen as being essential to survival, such as food, water, shelter and warmth. A want is something that we would like to have but which is not essential to survival - a car, the latest version of the PlayStation, that new top you have seen in Top Shop, the mobile phone with all the latest gadgets on etc. The problem is that the world and every individual in it have limited resources in relation to the wants and needs we have. We never have enough money to get what we 'want'. There are never...

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APPENDIX
Prices of selected Privatized Enterprises as at September, 2006
Source: Obadan and Ayodele(1998) and BusinessDay( 2006).
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