General Introduction

1.1 Background of the Study

The importance for the establishment of public

enterprises or corporations was felt in 19th Century and there

after. There were a lot of upheavals in European society

because of industrialization and urbanization. Social issues

like unemployment and economic inequalities necessitated

state intervention in economies. Britain is widely referred to as

the father of public enterprises.

A good number of African Countries chose the public

sector for economic and social development. This account for

the reason why many more functions like industrial

production transport social services communication etc were

assigned to the state in addition to its traditional functions

like security justice etc.

Despite the several exercises of Nigeria economic policies

to promote agriculture industries and other activities

government still depend on monoculture commodity (oil)

which failed to provide good capital investment and

development due to weak technological base poor managerial

skill etc. This promoted or enhanced the desire to establish

various enterprises and massive establishment of government

agencies and institutions. 1979 constitution of Nigeria

described the official operating of these enterprises and public

servants they managed as well as private enterprises. After

reviewing the performance of the Nigeria Railway Corporation

in 1967 the commission that carried out the exercise

recommended that corporation should have an Executive

Board whose Chairman would also be the Chief Executive.

The government enterprises require constant financial

backing for the smooth running. Due to inadequate capital

and lack of financial autonomy public enterprises in Nigeria

are confronted with a lot of problems by managers and

employees government interference inadequate capital

technological limitation and political interference in the affairs

of public enterprises in Nigeria.

Since monoculture economy cannot meet the demand or

generate large sum of revenue to run the economy or by public

enterprises the government seeking ways to reduce the rapid

increase of bad economy by adopting policy to boost our

economy.

Privatization and commercialization policies are adopted

by federal government as a remedy to problems that emanated

from public enterprises. There are economic policies which

grant full autonomy to public enterprises so that they can

operate without government subvention control and

interference which ultimately resulted in efficient provision of

service and high productivity that contribute to national

growth and development. Although these two concepts have

identical goals and purpose that is provision of efficient

services to the public high productivity and profitability yet

they are different in nature and character.

The Federal Government of Nigeria in (1988) through

Decree No. 25 set up the Technical Committee on Privatization

and Commercialization (TCPC). The TCPC was charged with

the responsibility of privatization and commercializing some

selected government enterprises. The main reason was to

promote greater efficiency and productivity in the public

enterprises.

1.2 Statement of Problem

Public enterprises were established by the Federal

Government especially in the 1960s and early 1970s

when the public sector was seen as a major contributor

to economic growth and socio-political stability. The

public enterprises of Nigeria set up by government to

perform definite social and economic functions for the

public.

The functions that informed the establishment of

these public enterprises are to control the resources and

raise funds for the provision of certain infrastructure

facilities particularly in service requiring heavy financial

investment e.g. Railway Electricity Telecommunication

etc. also to perform the function of generating revenue

that will add for financing development programme and

projects as veritable instrument for creation of jobs.

Therefore since those functions are not performed

creditable or efficiently privatization and

commercialization policy is introduced by Federal

Government of Nigeria. In identifying the problems

militating against their performance the problems are

stated clearly below:

(1) Is political interference and mismanagement of resources

responsible for the poor performance of public

enterprises in Nigeria?

(2) Could policy of privatization and commercialization

enhance the efficiency of public enterprises?

(3) Does the privatization and commercialization improve the

potential the efficiency and service delivery in Nigeria

telecommunication?

1.3 Objective of the Study

There are some certain aims and objectives for which the

researcher embarked on this work such as:

(1) To ascertain if political interference and mismanagement

of resources is responsible for poor performance of public

enterprises.

(2) To ascertain if privatization and commercialization could

enhance performance of public enterprises.

(3) To discover if the privatization and commercialization of

public enterprises has improved the efficiency of service

delivery.

1.4 Significance of the Study

The importance of any research is tied to find out

solutions to the various problems that face mankind in

the environment or society. The study creates awareness

to every citizen of this country and economic planners on

the implications of these privatization and

commercialization of the public enterprises in Nigeria

economic development.

It helps policy makers to assess the performance of

NITEL following the privatized and commercialization

policy. It helps researchers on contemporary issues have

first-hand knowledge of the performance of privatized

and commercialized public enterprises.

1.5 Literature Review

There are various kinds of opinions by many

scholars on activities of privatization and

commercialization of public enterprises. The federal

government has restated its commitment to the

privatization programme saying that it would not allow

obstacles to make it change its focus.

Ukwu (1982:87) said that the perennial problem of

public enterprise arise from the composition of the Board

and its relationship with management. In particular the

conflict between the chairman and the chief executive

himself usually a direct appointee are appointed for

reasons of political patronage rather than any

contributions they are capable of making to enhance

performance.

Ugoo .E. Abba (2008 : 248) argued that some public

enterprises whose establishments are hinged on

regulatory philosophy have also not lived up to standard.

Due to endemic corruption in these enterprises officials

collect bribes and truncate their primary reasons for

establishment.

But in the words of Chief Olusegun Obasanjo (1999)

in his assessment of the decline in Nigeria’s public

enterprises asserts that these enterprises suffer from

fundamental problems of defective capital structure

excessive bureaucratic control or intervention in

appropriate technology gross incompetence and

mismanagement blatant corruption and crippling

complacency which monopoly engenders.

Excessive ministerial control and political

interference according to Ogunna (1999:246) defeat the

primary objective of living-off public corporations and

therefore are anti-thetical to effective performance.

Ryndima et al (1980:45-55) dealing on the political

economy of surplus argued that for there to be an

increase on productivity or output commonly known as

“surplus value” there will be intensified exploitation of

the workers in the public corporations”. These measures

can be lengthening the hours of work were these can

measure up; there are other ways of getting their desired

objective example by speeding up work (production) over

time and underpayment of workers.

In the words of Ogunna (1999) the poor

performance of public enterprises in Nigeria can be

approached from the perspective of inadequate financial

and material resources poor management corruption

and lack of continuity of public corporation boards.

On the other hand the civilian governments of first

and second republic appreciated the need for the policy

of privatization and commercialization which was

reflected in the various panels to that effect which they

established.

Ollor (1986:4) was in support when he said that

given the economic recovery objective of government

“privatization will relieve the financial burden of

government and release fund for it to use in other areas.

General Abdusalami Abubakar (rtd) came to power

in June (1998) he continued with the policy with much

more vigor and planned to privatize or at least

commercialize all public enterprises which he believed

would not only salvage the ailing public enterprises

make them more effective but would in addition provide

enormous funds to government for other public services.

Obadan hints that the enhancement of efficiency

should be the primary objective of a privatization

programme. This is because maximum efficiency will

bring more sustained gains which can then be

distributed to a wider segment of the society.

Lewis (1994:178) supports the view of efficiency

that the private sector is to be more efficient more

productive and more profitable. In short privatization

according to him would increase government revenues

and cut down or eliminate waste and unnecessary

bureaucracy.

Nellis (1999) in Obadan 2000:19 agreed with above

assertion by saying that in empirical terms various

assessment of privatization outcomes particularly in the

industrial and middle-income countries have concluded

that privatization leads to improve performance of private

companies and that privately owned firms outperforms

“state owned firm”. He posits that increasing evidence

also shows that privatization yields positive result in

lower income and transition countries as well.

Guislain (1997:173) is of the view that the move for

privatization is that most government find themselves

facing deep budget deficits and public finances crisis”.

The state no longer has the financial resource either to

offset the losses of state-owned enterprise (SOEs) or to

provide the capital increases necessary for their

development. Thus emphasizing that privatization is the

answer as most of SOEs are deeply involved in corrupt

practices that have depreciated its values to achieve the

basic requirement expected of it.

The Director General Bureau of Public Enterprises

(BPE) Dr. Christopher Anyanwu said that government

would hinder it from meeting its privatization objectives.

He listed the objectives of the privatization among other

things to include the restructuring and rationalization of

the public sector in order to lesson the dominance of

unproductive investments beside privatization was

targeted at raising funds for financing social-economic

development in areas such as health education and

infrastructure.

General Ibrahim Babangida’s administration was

the first to take concrete steps towards privatization and

commercialization of some public enterprises.

Having reviewed some books on administrative and

management problems of public enterprises and possible

ways of reformative measures and the cause of these

problems that have engulfed these public enterprises

especially from the external and internal factors and also

having reviewed some books and articles on these

privatization and commercialization policy has been

detrimental to the poor in the society. Let us now attempt

a review of some books and articles that see privatization

and commercialization as an exploitative tool in the

hands of ruling class and its foreign allies.

Nnoli .O. (1981:4) historically introduced the issues

of initial rationale why government involved in business

activities that those reasons should not be sacrificed at

alter of bourgeoisie inclined profit maximization. He

contends because public parastatals was only peripheral

to the interest of the foreign capitalist conditions of work

in it particularly the wages were attractive than in the

private companies with a consequent lowering of workers

moral and productivity. That the public sector should not

be blamed for its inefficiency because at the dawn of

independence change has occurred in public sectors

most of its activities were performed by private

contractors and their failure is the success of the private

sector.

Another article assessed the different dimensions of

which privatization and commercialization have been

viewed by various scholars. I think the programme from

the on set had no clear focus. The government was not

really sure what it wanted from the programme and

consequently the TCPC itself did not know where its true

mission was. They never knew whether their mission was

raising money for the government or sharing of the

national cake.

Furthermore Bala (2004) found out that the

privatization in Nigeria has been able to replace the

public monopoly with private monopoly. However the

major impact of the reform has been in the area of

increased competition and efficiency. These were evident

in the telecommunication petroleum and banking

sectors.

According to Garba on Vanguard Thursday

September 10 2009 today the world has virtually

become a global village in terms of communications and

doing business is gradually shifting from boardrooms to

individual homes courtesy of teleconference. In view of

these developments two countries are looking up to you

the experts to ensure that their relations are boosted by

the content innovative trends in Telecommunications.

Mr. John Odey the Minister of Environment (2009)

said although the telecommunications industry had

impacted positively on the economy and lives it should

not be allowed to hamper people’s health and

environment. We must balance the social economic and

environmental aspects of our developmental areas.

Kalu (1999) contributed that as at the end of 2005

over 10 enterprises have been privatized while over 30

enterprises have been commercialized. For example

National Electric Power Authority (NEPA) now Power

Holding Company of Nigeria (PHCN) Nigeria

Telecommunications Limited (NITEL) now Nigeria

Telecommunication Plc etc.

According to Federal Government of Nigeria (1993)

the long term goal of a telecommunication enterprise is

not only to be self financing but also to generate a

reasonable return on investment and provision of digital

exchanges; transmission links gateways and cellular

telephone system all over the country.

Amechi argues that with the Nigerian belief which

holds that government enterprises are nobody’s property

every one inside and outside then strives to loot them

and no one preserves them. He argues that privatization

is a step fighting this ugly trend.

1.6 Theoretical Framework

According to Ogban-Iyam who sees theory as a set

of interrelated concepts that are used to explain

describe interpret and predict the relationship between

phenomena or variables. Theory helps to provide us with

a way of looking at the real world.

Here Structural – Functional theory is used as

suitable framework of analysis for the policy of

privatization and commercialization of public enterprises

in Nigeria. Structural – Functionalism as a theoretical

framework is intended to explain the bases for

maintaining order and stability in society and relevant

arrangement within the society. This theory originated in

the biological and medical sciences. It was adopted as a

mode of analysis in sociology and anthropology as

evidenced in the work of Emile Durkhim and Talcott

Parson. It was developed for political analysis by Gabriel

Almond S.P Verma who stressed that

structural-Functionalism involves two main concepts

such as structures and functions. Structure refers to the

arrangements within the system which perform the

functions. Also structure is the way in which the parts

are connected together in order to be arranged or

organized. Function has been defined by Merton Robert

as those observed consequences which make for the

adoption or adjustment of a given system. According to

Oran Young function is generally defined as the objective

consequences of a pattern of action for the system in

which it occurs.

The basic assumption of the structural functional

framework is that all system have structures which can

be identified and these structures perform functions

within the system necessary for its persistence. It refers

to the structures that are found in any system and

functions performed by structures. Thus political system

is defined as the various structures and institutions in

the society that perform political functions or that bear

on political decision – making policy. Eme Awa (1976)

clearly defines political system as “the peculiar structures

in any particular system performing political functions”.

In analysis there are three branches or structures

of government such as legislature executive and

judiciary. The structure can be analyzed from three main

levels as person institution and subsystems. The whole

of structure is analyzed into parts – each dealing with a

particular sphere of activities for instance political

economic and social subsystem.

Therefore structure of government lead to

substructure. It is government and their bureaucracy

makes rules administering adjudicating and formulated

those economic policies through legislature and

implemented those policies by the executive for economic

growth of the country. Substructure is the basis of

analysis of this research work. It studies the economic

laws or policies governing the production and

distribution of material benefits on human society at the

various stages of its development. It is by means of

productive activity that he is able to obtain the economic

means that he needs to sustain life. Functions have their

parallel in three branches of government perform

important functions.

If the economic structure such as Industries

Nigeria Telecommunication Limited Power Holding

Company etc which are established by the government

are well organized and harmonized also their various

functions are performed smoothly there must be well

stable economic development in public enterprises. This

theory can achieve purpose of privatization and

commercialization if the Government makes use of it and

apply it to the various structures of government or

substructure to perform effective functions for smooth

running of government activities which enhance

economic growth of Nigeria. Take for instance

Telecommunication which is privatized brought about

positive change in Telecommunication sector and

contributed in economic development of the country.

In application all political systems are therefore to

perform two basic functions such as input and output

functions. Privatization and commercialization of

telecommunication of public enterprises (Input) are

demand from government the legislature and other

organs of government help to process some of the

demands that have reached the system in which certain

functions should be performed and give out or allocate

values by means of the “Output” Law or policy.

Structural – Functionalism according to Marxist

concept of substructure; superstructure is wholly

determined by the substructure. The argument perhaps

appears to be that the economic sphere is omnipotent

and that the individual consciousness is prisoners of

material forces. Also functions must be related to the

structure of society. All other activities in the society

revolved around economics both social and political

activities are based on economic activities.

1.7 Hypotheses

According to learner’s dictionary hypothesis is an

idea or explanation of something that is based on a few

known facts but that has not yet been proved to be true

or correct.

Therefore based on the nature of this work the

researcher possesses the following hypotheses to guide

the study.

(1) Political interference could affect the efficiency or

performance of public enterprises.

(2) The policy of privatization and commercialization could

enhance the efficiency of public enterprises.

(3) The privatization and commercialization has improved

the potential efficiency and service delivery in Nigeria by

making telecommunication easily accessible and

affordable.

1.8 Method of Data Collection/Analysis

The researcher makes use of secondary sources of

data collection and it involves Journals Text books

Newspapers Magazines etc.

The method of the data analysis was content

analysis. The various data correction were edited it

involved objective systematic and qualitative description.

1.9 Scope of the Study

The scope of this study is limited to the activities of

privatization and the commercialization of public

enterprises in Nigeria which was enhanced as a result of

the inadequacy and failure surrounding its activities and

programmes to the public which are the major

benefactors of the services been rendered by these public

corporation. It is limited to 1985-2009.

1.10 Definition of Concepts

Privatization: Privatization is the policy of selling off public

enterprises to individuals groups and organizations; they

should operate under the principle of profitability

effectiveness efficiency and viability than in public interest.

Commercialization: Commercialization is a policy in which

government grants full commercial status to corporations

which enable them to operate strictly under business

principles and practices without government control or

interference and exercising absolute financial autonomy.

Public Enterprises: According to Ogunna (1999) who sees

public enterprises as enterprises set up by government to

perform definite social and economic functions for the public .

Telecommunication: According to Oxford Learner’s

Dictionary telecommunication can be known as the technology

of sending signals images and messages over long distances

by radio mobile phone satellite etc.

Political Interference: It can be defined as a situation

whereby the government or leaders are in control of the

affairs or activities of the public for their own interest.

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