Indigenisation exercise of 1972 and 1977. While there was the need for commerce and industries to be indigenised after the Nigerian Civil war (1967 – 1970) to allow the ordinary Nigerians to participate in the ownership of hitherto foreign firms, today there is greater need to divest government of its shareholdings in public enterprises. The goal of indigenisation was to enable Nigerians have more voice and control of their economy.
There is the belief that ownership is synonymous with control. The institution and implementation of indigenisation and privatization policies have made this control possible. Notably, the indigenization exercise gave the Federal Government the opportunity to take up equity control in all foreign-owned financial institutions in “trust” for Nigerians. During this period, the Federal and State Governments set up corporations, parastatals, and businesses as a machinery to achieve the operative concept and philosophy that government ought to have commending control of the economy. Such concept is interpreted to mean that project areas like electricity, gas, iron and steel, petroleum refining and petro-chemical, must be owned by the government. Recently shortage of funds coupled with the realization that the parastatals have been a drain on the economy, forced the government to re-think its position. the government made the first official statement on privatization in 1986 budget speech. In his address, the president said, “Government has decided to divest its holdings in agricultural production, hotels, food beverages, breweries, distilleries distribution, electrical and electronic appliances and all non-strategic industries. Besides, the government will also consider reducing the holding in banks insurance companies and other financial institutions without losing control. The divestment process will however, give special encouragement to groups and institutions”. The official support for privatization is also enunciated n Nigeria’s Structural Adjustment Programme (SAP) July 1986 to June 1988 which states that one of the main elements of SAP is to encourage rationalization and privatization of public sector enterprises”.
At the international level, the wave of privatization cuts across the globe. Countries like Britain, United State of America, Germany, France, Italy, Spain, Netherlands, Sweden, Turkey, Canada, Japan, Brazil, Mexico, and Argentina are fast privatizing public corporations. However, the context in which privatization measures are considered vary from country to country. the existing degree of involvement in economic activity, the size of local markets and the general political outlook of governments all help to make the distinction clear. These and other factors are bound to affect the choice of the companies to be privatized, methods of roles, decision by government on whether to retain partial share holdings as well as the pace at which divestment is made. These factors notwithstanding, the overriding influence is the wide degree of acceptance that privatization will help to promote market efficiency and wider ownership.
The Nigerian case was prompted by the over stretched ever shrinking matured enough and could if registered take up production and distribution responsibility. It is up till now seen as superior and more efficient that the public sector performance results are characterized by:
-Accumulated loans and bad debts
-High gearing debt equity ratios
-Poor resource management, and
-Political interference
Government confirmed the general claim that privatization has such obvious advantages of:
-Deregulating the economy and reducing government control;
-It will be encouraged and enhanced productive efficiency.
-Increase output and employment in the long run;
-Create opportunity for export-free zones; and enhance economic mass mobilization.
Clearly, privatization process has some constraints, which are categorized into financial, political, social and environmental factors. It has shown that financial resources available to the private sector are limited due to our economic under development, current progressive decline in income, as well as unreliable infrastructural facilities. There are also the pressure groups, such as trade unions and bureaucrats who feel threatened and therefore see privatization as capable of worsening the position of the poor and widening existing income disparity.
In spite of obvious constraints, it is hoped that financial institutions with their huge financial resources and geographical spread, as well as high technical competence will play a vital role to ensure that successful implementation of the privatization programme. Going by the information available we can highly state that privatization is certainly superior to public dominance of economic means of production. The implementation committee will therefore, be cautions, dexterous and the exercise phased over a period of years. While we advocate the establishment of a permanent body to ensure continuity of implementation of programme information dissemination should be carried to the grass-roots countrywide. The researcher share the view that the success of privatization and commercialization of government companies requires a very efficient and honest administration. It is a courageous decision and it is hoped that the initial stock and problems that could result will not make government take panic measures that are capable of reversing the potential gains of privatization.
TABLE OF CONTENTS
Chapter Two
and privatization 23
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