INTRODUCTION
The issue of privatization has been a subject
of intense global debate in recent years. In Africa, it has remained highly
controversial and politically risky. Privatization in Nigeria has not been a
popular reform; it has received so much criticism from labor, academia, and
individuals. There have been numerous strikes against proposed sell-offs by
unions fearing loss of jobs. While proponents of privatization see that aspect
of economic reform as an instrument of efficient resource management for rapid
economic development and poverty reduction, the critics argue that
privatization inflicts damage on the poor through loss of employment, reduction
in income, and reduced access to basic social services or increase in prices.
Whatever are the views of the two parties, the only group that has no voice in
the matter is the poor. The author is of the view that privatization is not
inherently good or bad, but the poor performance or effectiveness depends on
implementation (Nightingale and Pindus, 1997).
WHAT IS POLICY?
A policy is a principle or rule to guide
decisions and achieve rational outcomes. A policy is a statement of intent, and
is implemented as a procedure or protocol. Policies are generally adopted by
the Board of or senior governance body within an organization whereas
procedures or protocols would be developed and adopted by senior executive
officers. Policies can assist in both subjective and objective decision making.
Policies to assist in subjective decision making would usually assist senior
management with decisions that must consider the relative merits of a number of
factors before making decisions and as a result are often hard to objectively
test e.g. work-life balance policy.
WHAT IS PRIVATIZATION?
Privatization can be defined as the
transfer of ownership and control of enterprises from the state to the private
sector. Iheme, (1997) defines privatization as any of a variety of measurers
adopted by government to expose a public enterprise to competition or to bring
in private ownership or control or management into a public enterprises and
accordingly to reduce the usual weight of public ownership or control or
management.
PRIVATIZATION PROGRAM IN NIGERIA
Privatization in Nigeria was formally introduced
by the privatization and commercialization Decree of 1988 as part of the structural
Adjustment program (SAP) of the Ibraham Badamosi Babangida administration
(1985-93). As McGrew argued, SAP is a neo-liberal development strategy devised
by international financial institutions to incorporate national economics into
the global market.
The vision of a “global market civilization”
has been reinforced by the policies of the major institutions of global
economic government namely up to the mid 1990s. Underlying their structural
adjustment programs has been a new- liberal development strategy, referred to
as the washing on consensus which prioritizes the opening up of national
economics to global market forces and the requirement for limited government
intervention in the management of the economy.
One of the main objectives of SAP was
therefore to pursue deregulation and privatization leading to removal of
subsidies, reduction in wage bills and the retrenchment of the public sector
ostensible to trim the state down to size.
TECHNICAL COMMITTEE ON PRIVATIZATION AND
COMMERCIALIZATION ACT OF (1988) (TCPC)
The privatization and commercialization Decree
of 1988 set up technical committee on privatization and commercialization
(TCPC) under the chairman of Dr. Hamza Zayyad to privatize 111 public
enterprises and commercialize 34 others in 1993, the TCPC concluded its
assignment and submitted a final report having privatized 88 out of the 111
enterprises listed in the decree. Based on the recommendation of the TCPC, the
federal military Government promulgated the Bureau for public enterprises Act
of 1993, which repealed the 1988 Act and set up the Bureau for public
enterprises (BPE) to implement the privatization programs in Nigeria.
The overall objectives of the privatization
exercise were:
1. To improve on the operational efficiency
and reliability of our public enterprises;
2. To minimize their dependence on the
national treasury for the funding of their operations;
3. To roll back the frontiers of state
capitalist and emphasize private sector initiative as the engine of growth;
4. To encourage share ownership by Nigerian
citizens in productive investments hitherto owned wholly or partially by the
Nigerian Government and, in the process, to broaden and deepen the Nigerian
market.
BUREAU FOR PUBLIC ENTERPRISES ACT OF 1993
The TCPC transformed to Bureau for public
enterprises (BPE). The Bureau was to monitor the performance of the enterprises
privatized in the past exercise and plan for the future phases. Because of the
success of the past exercise, the military government under General Abdulsalam
Abubakar promulgated the public enterprises (privatization and
commercialization) Decree No. 28 in early 1999 (before the hand-over to a
democratically elected government). The Decree allows BPE to alter, add, delete
or amend the provisions in the document in the best interest of the country.
Initially, sixty-one (61) enterprises were slated for privatization ( 36
partial and 25 full privatization) but because of the new powers granted BPE,
it has increased the list by 37 extra enterprises (some of which were
originally meant for commercialization) some of the big government companies
being privatized now include – National Insurance Corporation of Nigeria
(NICON), Nigerian Reinsurance Corporation, Nigerdock Plc, National Aviation
Handling company (NAHCO), Nigeria Railways Corporation (NRC), Nigerian postal
services (NIPOS) and Savannah sugar company. This is an indication of the
enhanced interest in and success that privatization has achieved in Nigeria.
PUBLIC ENTERPRISES PRIVATIZATION AND
COMMERCIALIZATION ACT 1999
In December 1999, the democratically elected
government of President Olusegun Obasanjo picked interest in the privatization
exercise and gave it a boosts by establishing the National Council on
privatization (NCP) with the Vice- president, Alhaji Atiku Abubakar, as its
chairman. The council is empowered among other things:-
i. To determine the political, economic and
social objectives of the privatization and commercialization program
ii. Approve guidelines and criteria for
valuation of public enterprises marked out for privatization includes choice of
strategic investors.
iii. Identification of enterprises to be
privatized or commercializes
iv. Approve the price for shares or assets of
the public enterprise to be offered for sale
v. Determining the timing of privatization of
particular enterprise.
vi. Interfacing with the public enterprises,
together with the supervising ministries, in order to ensure effective monitoring
and safeguard of the managerial autonomy of the public enterprises.
The Act also established the Bureau of public
Enterprises (BPE) as the secretariat of the National council on privatization.
The functions of the Bureau include:
i. Implementing the council’s policy on
privatization and commercialization
ii. Preparing public enterprises approved by
the council for privatization and commercialization
iii. Advising council on further public
enterprises that may be privatized or commercialized
iv. Ensuring the update of accounts of all
commercialized enterprises for financial discipline
v. Making recommendations to the council in
the appointment of consultants, advisers, investment bankers, issuing houses,
stockbrokers, solicitors, trustees, accountants and other professionals
required for the purpose of either privatization or commercialization.
vi. Ensuring the success of the privatization
and commercialization exercise through effective post transactional performance
monitoring and evaluation.
vii. Providing secretarial support to the
council
POLITICS OF PRIVATIZATION IN NIGERIA
Former Nigerian presidents from Ibraham
Badamosi Babangida (IBB) to Obasanjo passed the ownership and control of
Nigeria’s state owned enterprises to their friends, family relations and
themselves in the name of privatization. For example, some of the most
celebrated Nigeria’s privatized public assets during Obasanjo’s regime
(1999-2007) include Ajaokuta steel Mill; Delta Steel Complex; Jos still Rolling
Mill; Oshogbo Machine Tools and Itakpe Iron Ore Company. Others include Nigeria
Airways; Nigeria Telecommunication company (NITEL) and its Mobile phone
subsidiary company- MTEL; NICON Hilton Hotel (Transcorp Hilton Hotel); African
petroleum Limited (AP); National Oil and Petrol Chemical Company; National
Fertilizer Company (NAFCON); Cement companies; Oil blocks and Banks, just to
mention but a few. The way and manner in which these assets changed hands and
the selection of who owns what and at what price are still generating many unanswered
questions and concerns in Nigeria. There concerns and questions were some of
the challenges former president Yar’ Adua confronted.
Some of the reasons why the Nigerian public is
not happy with Obasanjo’s privatization policy and programs are largely that
they were done in bad faith and were out of tune with the principles of
transparency, accountability and due process. Moreover, they widened the
existing gap between “haves” and “have-nots”. In addition, the much taunted
expected improvements of service and products delivery did not happen. The
scheme created lasting sense of injustice, parochialism and nepotism in the
polity. Furthermore, it discredited the anti- corruption stance of the
administration. The political economy implications of the affair are many. For
example, the scheme created a new crop of oligarchs in the mould of Transcorp
and other similar outfits with concentrated economic and political powers in
their hands. Theses concentrated economic and political powers are dangerous to
the sustainability of democracy institutions, rule of law and good governance
in Nigeria. Privatization also serves as a money laundering instrument to a
great extent, in order to legalize illegally accumulated wealth, such as income
from international drug trafficking.
PRIVATIZATION AND COMMERCIALIZATION EXERCISE
FROM 1999 TO 2010
The Bureau of public enterprises recorded only
one deal worth $32.5m (about #4.27bn) within the few years that former
president Yar’Adua stayed in the saddle, (Everest 2009). This contrasts sharply
with the speed of privatization under form president, Chief Olusegun Obasanjo,
when many public companies and enterprises that had been poorly managed were
sold to private sector operators. In 2006, for instance, the privatization
agency handled 39 transactions that fetched 134.74bn while in 2005, it handled
45 deals that fetched # 98.08bn. in 2004, the agency succeeded in selling seven
companies that brought in #50.11bn.
In 2000, the year Obasanjo marked his first
years in office, BPE handled six (6) major transactions that raked in #14.65bn
into the treasury and got rid of ailing organizations that continued to drain
federal Government’s purse. It followed this up with 11 transactions in 2001
that brought #12.14bn into the Government. The single deal that has been
recorded under the Yar’Adua presidency is the sale of the Nigerian Newsprint
manufacturing company Oku/bokun, Akwa-Ibom state, which was sold to Negris
Holdings for $32.5m on August 12, 2008.
The administration of late president Yar’Adua
have relocated the sale of Nigerian Telecommunication Limited (NITEL) to
TRANSCORP by the federal Government over non-adherence to due process of
privatization of companies by the Bureau of public enterprises (BPE) from 1999
to date. Deputy Chairman of the House committee on privatization and
commercialization, Rep. Abbas Braimoh (PDP Edo), confirmed the effort to launch
a comprehensive investigation into the privatization of Federal Government
owned companies by former president Olusegun Obasanjo in Abuja, said:
We have just done a nationwide tour of all the
privatized companies’ n different geo-political zones and I can tell you
without any doubt that most of the companies we visited are not doing well
Elombah 2009).
Relievingly, former president Umar Musa
Yar’Adua had reversed number pf policies, actions like the privatization of the
refineries, projects and appointments undertaken at the last hour by the OBJ
administration among others. As Barr. Rafindadi noted.
Most of them (privatized enterprises) are
found to be anti people, inimical to their interests and a rip off of their
national pride and assets.
Some of the most interesting actions of the
late president Yar’Adua include the reversal of the sale of former vice
president Atiku’s official guest house which he declined to buy and in a
memorandum asked his former boss Obasanjo to leave it for the use of the
incoming vice president. But because of sheer ego that was not to be, El Rufai,
as the chairman of the committee on the disposal/ sales of government houses in
the FCT under its monetization program went ahead and sold the house to him at
a giveaway. Also on this same vein, house sales to former president Obasanjo’s
aides were cancelled.
Another landmark decision of Yar’Adua is the
cancellation of the 419 sales of the Kaduna and Port Harcourt refineries also,
at a giveaway price to Obasanjo’s economic friends, Aliko Dangote and Femi
Otedola. In fact, one of the major issues that necessitated the last labor
strike in the country was the case of asking government to reverse the sale of
the refineries among others as they saw it as the biggest rip off of Nigerians
ever in the strongest terms ever about that the dashing out of public assets to
OBJ’s friends under the guise of privatization.
However, in his usual patronage of his
business political associates, Obasanjo also sold African Petroleum, AP to his
number one business stooge, Femi Otedola’s Zennon Oil at a give away. For the
avoidance of doubt, AP was first sold to Barrister Jimoh Ibrahim’s Global Fleet
Group through a near due process at the cost of #17.5 billion. But in his usual
dictorial style, Obasanjo overruled the transaction and single handedly offered
the prime shares of the federal government in AP sold to Global Fleet at the
first instance are according to Barr. Rafindadi (2009) far below its current
value. The NNPC had earlier on in 2005 acquired AP in a #10billion debt swap.
It is again a fact that the fortunes of AP
began to reduce shortly after the 30% government equity was sold to Sadiq
Petroleum, the country’s fuel market was dominated by a handful of
multinational and local retailers including AP. This was an indication that AP
was prior to that period a very viable government owned enterprises. All it
needed was competent management and board teams to push it through. No more, no
less. It is also a statement of fact that the present managing Director/ chief
Executive of AP, Zira Maigadi has certainly turned the fortunes of the company
for good. As a proven astute administrator and manager, Maigadi has proven his
worth as an asset to the company for the few years he has been on the saddle of
leadership. Under his stewardship, AP recorded a turn-over of #8193 billion
last two years showing an increase of more than 86% against its record in 2005.
the company under Maigadi, a Chiaddeved accountant of repute who rose from a
senior manager and later an executive Director before becoming an MD also
showed it, recording a profit of #2.44 billions in 2006 as against a loss of
#3.37 billion in 2005. if these figures are truly correct, is it not then
possible that the company can do better under government control with Nigerians
like Maigadi putting in the expertise to work.
The Independent Petroleum Marketers
Association, IPMAN President, Engineer Tunde Runsewe, as an interested party in
the AP sale of the company and called for cancellation of the sales to Zenon
oil. According to IPMAN, AP can be better managed under the government control
with the present crop of management at the helm of affairs however; Nigerians
are hoping the president Goodluck Jonathan will cancel the sale of AP to Zenon
Oil for the sale of nation interest now he has started revisiting past privatization
exercise.
CONCLUSION
The program of privatization and
commercialization is a major opportunity for reform of Nigeria’s ailing public
enterprises and to prepare them to save the needs of the Nigerian economy in
the 21st century. Enterprises will be made more efficient more accountable and
more responsible to the needs of the clientele it is meant to be serving the
Nigerian public. The Nigerian private sector will also benefit tremendously in
the creation of new investment opportunities and a better investment climate. A
lot of new shareholders have been created and now have a say in the affairs of
the organized private sector. The performance of the Nigerian Capital Market
will be enhanced greatly, as well the growth potentials of the Nigerian economy.
REFERENCES
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Aboyade, O. (1974). “Nigerian Public Enterprises an Organizational
Dilemma” In Public Enterprises in
Nigeria: Proceeding Of the 1973 Annual Conference Of The Nigerian
Economic Society.
·
Adoga Onjetu (2008) “A Critical Appraisal of Privatization in
Nigeria” Hhp”//Www.Hg.Org/Article.Asp?=5491.
·
Amaefule, E. (2009: 18) Privatization: Bpe Records Only One Deal
Under Yar’adua. The Punch.
·
Leenneth J. (1951, 2nd Ed.,
1963). Social Choice and Individual Values.
·
Black, Duncan (1958). The Theory of Committees and Elections.
Cambridge: Cambridge University Press
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