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Full Project – Privatization of government owned enterprises

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Privatization enter proper usage in Nigeria only recently when people began to question the efficiency, effectiveness of public sector activities especially as demonstrated by the Nigeria Airways, NEPA-National Electric Power Authority, Nigeria Railway Corporation (NRC), etc.

Privatization has been defined in so many ways by so many people and scholars. Privatization is not just denatinled in size of an ineffective and ineffective public sector is reduced by transferring some of its functions to a relatively make efficient private sector. The performance of the private sector is measured in terms of profitability cost serving consumer satisfaction on the other hand, public sector performance is measured in terms of what was intended and its social benefits factor. Privatization has increasingly (SAP). As condition for their support for SAP, both the IMF and the World Bank instead on a significant reduction in public expenditures, selective withdrawal of subsides and adoption of other policies.

To faster, the efficient used of resources so far there are about five hundred (500) companies and parastatals in which the Federal Government invested over N36 billion as equity loans and subvention from which she has been realizing less than N500 billion annually.

These enterprises also incurred huge depts., which are being repaid and serviced by Government. About 2/3 of federal enterprises as commercial ventures. Estimates place the public enterprises. Sector contribution GDP about 35% and nearly 22% of total employment in the formal sector of the economy. He goes on to say that enterprises make large and huge chain on Government resources. The federal government recently estimated that about 40% non-salary recurrent expenditure and 30% of its capital budget have gone annually towards public enterprises.

These investment have provided meager yielding less than N1 billion in dividends and loan repayment from 1980-1985.

Furthermore, it has been argued that economic efficiency results from privatization. Privatization therefore results in higher profit maximization. Privatization improves the general economic environment of nature through “exchange rate” and this encourages capital inflows and arrest capital flight. Where foreign investors are encouraged to acquit interest in privatized state owned enterprises. Incremental equity flows improved the balance of payment position of country and enhances the value of its currency, yet restricting large capital intensive enterprises such as NITEL and NEPA will require foreign investment and infusion of the desire capital. Local and foreign investors most attraction to the privatization programme would most certainly be the allure of participating in the ownership of some of the biggest and potentially most profitable companies in the kind and playing in the vase Nigeria market. Private investments were therefore law. Government with relative large capital based therefore face an irresistible temptation of going into direct investment in economic ventures, thus, a formal commissioner of commerce and industries in the defunct.

In the early days of our political independence government felt obliged to invest directly and to combine its mandatory role of promoting the industries. Given the recently global economic distorting governments, revenues have continued to drop. Moreover, some of this government owned enterprises have burned to constitute a draw on government purse instead of self being financing.

1.2 STATEMENT OF PROBLEMS

The question of privatization came to limelight in Nigeria, not long-ago following public outery against the apparent gross.

Inefficiently hand bottlenecks that seen to have made valid most public enterprises.

Privatization remains an increasing in significant element programme.

So far there are about 500 companies and parastatals in which when the federal government has invested over N36 billion as equity loan and subventions, from such establishments the government loan been realizing less than N500 million annually.

These enterprises have continued to main huge debts, which are being repaid and serviced by government. Ukiwe (1985) indicates that public enterprises make huge claim on government resources.

The federal government recently estimated that about 40% no-salary recurrent expenditure and 30% of unit capital budget have gone annually towards these enterprises.

1.3 OBJECTIVES OF THE STUDY

This project is aimed at achieving the following objectives.

To identify the problems or factors militating against effective privatization of some government establishment with special reference to NEPA.
To ascertain the extent to which government involvements had contributed to the poor performance of public enterprises.
To evaluate how privatization has contributed in many ways to the enhancement of economic development in Nigeria.

1.4 RESEARCH QUESTIONS

Is government involvement in public enterprise instrument to their poor performances as well as the problems confronting them?
Are there some factors that have rendered to militate against the privatization of most public enterprises with specific reference to NEPA?
To what extent has the policy of privatization contributed to economic development in Nigeria?

The research work therefore seeks to address or tackle the above-mentioned problems.

1.5 SIGNIFICANCE OF THE STUDY

At the end of the day, the outcome of the research work will turn out to be great significance as indicated here under.

The outcome of this research work could serve as a reference material for future researchers.
My recommendation will go along way in helping the affected organization to tackle the identified problems.

The research will also be of help to technical committee for privatization and commercializing their objectives.

1.6 SCOPES OF STUDY

Scopes refers to the areas, which the researcher covered while writing the project. Due to the nature of the study/covered NEPA located at Onitsha, since I used it as my case study.

1.7 LIMITATIONS OF THE STUDY

As study of this nature could have taken about one year uninterrupted, but this was not the case in this study. The study covered rather a period less than a year because of academic engagements.

Initial unwillingness of some employees to fill the questionnaire for year of being victimizing glared or sacked.
Initial unwillingness of the authorities of the organization to allow the researcher to conduct the research for fear of revealing their secrets.
Financial constraint, which limited the researcher from adopting or putting up more comprehension approach to the study.
Time constraint, which limited researcher from adopting a more comprehensive approach to the study.
Academic workload, which so much limited the researcher from doing a through and comprehensive work.

DEFINITION OF TERMS

PRIVATIZATION: It is the process of diverting government ownership, control and management of enterprise service and agencies to the private sector consisting of private individuals or firms seeking their own profit. Privatization is not confined to any subject of any nations economic and social structure. Privatization programme could be pursued in manufacturing. Agriculture and transportation, sub sectors or excess in the provision of basic services such as water, power, education and health.
PUBLIC SECTOR: This is an establishment owned financed and managed by the government either state or federal. It is mainly for providing services to the people with little or no profit. Government normally subsidizes them.

PRIVATE SECTOR: This refers to the part of the economy not directly under state control. They are owned, financed and managed by the owners usually individuals or group of individuals.

ENTERPRISE: A business company or firm, local, large-scale, or state owned, it is a business activity developed and managed by individual or state.

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