CHAPTER ONE
1.0 INTRODUCTION
There is no doubt that privation came in the hesitation of the policy of privatization and the advancing for market based reform. It has also become an important component of Globalization.
Privatization has since been endorsed by multi lateral financial institution as a major plank of adjustment policies , which are being , implemented in a number of developing country including Nigeria, of course in development literature privatization has become the linchpin (things that is most important part of an organization ) economic liberalism.
The advocate of privatization believe that it is very effective stage for improving operational efficiency , broaden share, ownership , attracting foreign investment and reducing the role of the state in these areas where the private sector process the capacity to operate more efficiently and more productivity . (Jerome, 1999; 2)
Several countries in the developed and developing world are increasing privatizing state owned enterprises. (SOES) indeed, between 1988 and 1994, developing country sold about 3300 state owned enterprises.
The rush towards privatization in developing country most especially, has been attributed to the poor performance of publicly owned enterprises which has been largely managed by the staff. In the 70s, state enterprises where prominent in the extractive industries, utilities and infrastructure such as electricity railway, telecommunication etc. in Nigeria, unfortunately this enterprises become money guzzling outfit, rely on regular subsidies from government and survived only on the monopoly status they enjoyed. Many of them were over staffed and were bally managed
All of this deficiency necessitated a rethinking on the roll and structure of publicly owned or state owned enterprises like NEPA. The introduction of SAP in 1986 set the tone for the process of privatization of public enterprises in Nigeria.
In spite of the foregoing justification for privatization, it is important to point out ;that the private s sector in Nigeria as depended largely on the state for; its survival studies have showed that in terms of investment of productivity activities. The private sector in Nigeria has hardly fared better than the government. The privatize sector according to Obadan has not been able to respond adequately to the country desire for increased production an employment and stable prices (Obadan, 1998 :89)
An effective privatization programmed requires the existence of a single private sector, productivity oriented bourgeoisie and not a collection of compradors, speculators, and dealers in foreign currencies that dominate the private sector in Nigeria. The character of the Nigeria private sector and the imperfections that characterize the Nigerian business environment constitute the Achilles heel of the Nigerian privatization exercise.
In sample terms: privatization may be defined as the “transfer of ownership and control tights over firms from the public to the private firms from the public to the private sectors”(Jerome,1999). Privatization is however much more complex in practice than is in theory.
In embanking on privatization, government ought to critically examine the specific cities of their situations in order to avoid situations where privatization becomes counterproductive.
However there is nothing fervently ultra virus or illegal in the decision of privatization the government enterprises by the sales of government equity interest there in either partially no fully, thus recommitting the enterprises under joint government/private, or fully private ownership. It is important for the workers to bear in mind that the basic of relevant legal authorities. Their cooperate employer is well within its legal right if it decides to sell it interest in enterprises. The federal government of Nigeria has legalized its reserve to privatize or commercialize government owned company/parastatals by enactment of the public enterprises (privatization ;and commercialization) act 1999 here in ;after, referred to as the act. ; the act classifies the government owned companies/parastatals that shall be privatize into various categories. There are those where equity head by government shall be fully privatize such as :
>National electric power authority.
On the other hand, there are those that are partially commercialized such as to federal radio corporation of Nigeria. And those that are fully commercialized such as the Nigeria national petroleum corporation.
Therefore this research represent an attempt to search for effect which privatization and commercialization of government owned enterprises has had an the life of these enterprises. The thesis as well seeks to know whether there should be a continuation of the activities on outright rejection based on its findings.
1.1 BACKGROUND OF THE STUDY
The period between 1971 to 1980 was a period described in the history of Nigerian brewery is the period of oil beam, within which tune in coherent application of generated revenue from sale of ;crude oil was made. The various government both states and the federal established may seat industries in various parts of the country some of these industries are established import so much as such of its raw material imputes from overseas countries. The data turn of the Nigerian fortunes which resulted from global oil glut have a great negatives impact on the economic fortunes of the country. Nigeria being a mass cultural economy and which depend on the revenue from crude oil to finance her then import oriented economy to as much as ask was effected.
In 1986, the Nigeria government applied for a loan of 9.3billion from the international monetary funds (IMF) to finance her ceiling country economy. The IMF hence presented a set of constitution which will qualify Nigerians for a loan. One of theses conditionality will the reduction of government expresses an public parastatals
the proposal was exploited by the government as an avenue that will not only reduce government expenditure, portfolio but also made the much needed revenue available to finance other sectors of the economy.
The Nigeria breweries in (NBC) 9th mile corner Enugu incorporated only precisely in the 1993 with (656) sixty five percent ownership by individuals and (356) thirty-five percentage government opened. As it is now the Nigeria breweries is now and young wearing. Strong at its peak- it has not made any loss but to forced with problems.
The thesis as well seeks to know whether there should be a continuation of the activities on outright rejection based on its findings.
1.2 STATEMENT OF THE PROBLEM
According to author C.I. Mbanefor, in his paper *capital restricting for successful privatization. There is no doubt that excessive participation by government of the developing countries like Nigeria in business ownership created great imbalance in their economics. It is obvious that the under lying cause of privatization ecossaise is the attempt to create efficiencies by asking public owned enterprise more productive well as not responsive in the market place and to competitive pressures. Privatization and commercialization of public owned enterprises is expected to block the drain on government revenue by binging profit spirit into such enterprises as well as provide the needed revenue for the execution of public programs.
SYNOISIS; a workshop hold by NECA on JAN 2006 ask is privatization the right approach they are of the believe that enterprises could transform from a state monopoly to private monopoly. It is not certain that the enterprises will become viable and efficient after privatization.
While many rating the council on privatization, during the regime of president Obasanjo, in 2006 stated that *state enterprise suffer from fundamental problems of effective capital structure, excessive bureaucratic control or intervention, inappropriate technology, gross incompetence and mismanagement, blatant conception and crippling complacency which monopoly engenders *(privatization hand=book, 2000, 4). He went further to state that.
*we are privatizing for the benefit our economic recovery and serial life.
We are not embarking on the exercise to posse the world bank
And the IMF. It is not abort to replace public monopoly with private monopoly.
Rather, in our determination to be unyielding and uncompromising in the pursuit of the best interest of the country, we writ to remove the financial burden which these enterprises constitutes on the public and release resources for the functions of government (IBID)
PRIVATIZATION IS NOT AN ECONOMIC BUT POLITICAL MATTER. THERE IS NOTHING; ECONOMIC ABOUT WHAT GOVERNMENT IS CURRENTLY DURING UNDER THE ATTEMPT TO PRIVTISE. IT IS MERELY TAKING A PARTIAL DECISSION, WHICH SUNTS. THIS POLITICS, IDEOLOGY SILLIES AND FIONTSBOTH LOCAL AND INTERNATIONAL. THIS IS BECAUSE NOT ALL ENTERPRISES CURRENTLY BEING PRIVITISED OPERATED AT A LOSS. MANY OF THEM WERE/ARE VICTIONS OF POLITICISATION AND BUREUCRATISATION.
Government is merely responding to the ideology of globalization, which is uncritically pursuing. The federal government decree 28 states it all, that the goal of privatization and commercialization is to reintegrate Nigeria back into the global economy, as a past form to attract foreign direct investment. (FDI) (Gulotel in ec. Rufei, 2001:5).
This is the primary reason why government is privatizing every other reason is secondary if not unimportant.
1.3 OBJECTIVES OF THE STUDY
The major objective of this study is to economies the impact and extent privatization and commercialization has gone so far in Nigeria as reports the set objects.
The questions to ask:
The study is very important especially since privatization and commercialization of publicly owned enterprises is currently-being pursed in derivable with many potential investors still garrant of the benefit derivable from such investment. Considering the fact that there are mixed literatures on the effect of the activities this research therefore seeks to enlightens the general public about the effect of privatization and commercialization to our inefficient public enterprise. It will also help the researcher on privatization and commercialization to know more about it.
The study is very essential as it reveals the experience of government in managing business both in Nigeria and round the world. Governments expenses in running business, it the local and international level are depicted to follows:
= Inefficient
= Uncommitted.
Reliance on subvention
Bureaucratic
Loss of earning.
While experiences round the world are experiences else where different from Nigeria. This does act appear to be the case.
Government owned enterprises were notoriously ineffective in meeting demand for services that had become crucial to economic development, for instance.
IN THRILLAND, BE PUBLIS ENTERPRISES ACCOUNTED FOR MORE THAN60% of government’s foreign debt in 1988.
There were inefficiencies from lack of competition and the absence of the checks and balances that come with private organizations.
In Poland, Hungary, formers soviet union and may Latin American countries, costs did not enter into business strategies and operational decisions. Most of the joint slots, were overstaffed and had absent technology to compete with western multinationals in the global market. Eg the state railway of trailed= the government controlled the taffies and nether below the cost, of carryings passengers and fright is the real costs increase
Lesion incurred by SOE, in uk were nearly 6,million.
In the light of these experiences, it has become glazing that the era of government involvement in which private sector could do so well is over. It has also become imperative that where government wants the companies it containing to be competitive they have to head of the control of this enterprise.
This research work is limited to a production oriented enterprise work by government which has been partially privatized and was classed as an industrial and commercial enterprise concerned with the development, production, sales and maintenance of wide range of products of public consumption and commercial bases. Hence, they are expected to make profit while change competitive prices.
The delimitation to our case study Nigeria breweries LTD was prompted by the fact that it was newly privatized and has gotten deep into the programme. Hence, the research intends to asses efficiency in terms of monetary and financial goings and this can be done effectively with production and industrial based public enterprises which are by law expected to make profit while charging reasonable price.
PRIVATIZATION: Going by privatization and commercialization ACT 1999,…. Privatization is the relinquishment of part of all of the equity and other interests hold by the federal government or its agency in enterprises weather wholly owned or partly owned by the federal government.
COMMERCIALIZATION: defined in the ACT 1999 as the reorganization of enterprises wholly or partially owned by the federal government in which such commercialize enterprises shall operate its profit making commercial ventures and without subvention from the federal government.
BAJOMO (1):Commercialization is seen as a reward system involving a more towards the pursuit of efficiency and effectiveness in attainment style that takes profit as one of its major goals.
GOVERNMENT OWNED INDUSTRIES: This is where the government has up to 30pencent of equity ownership of company.
SOE – State – Owned Enterprises.
IMF – International Monetary Funds.
FDI – Foreign Direct Investment.
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