IMPACT OF PRIVATISATION OF PUBLIC ENTERPRISES ON POVERTY REDUCTION IN NIGERIA (A STUDY OF TELECOMMUNICATION INDUSTRY IN NIGERIA)

ABSTRACT

Privatization  as  an  economic  policy  is  of  no  doubt  a  good  economic  tool  for development  but in Nigeria, the policy has generated many controversies.  Some Nigerians argued in its favour while others are antagonistic about its introduction in the  country.  This research  work,  therefore,  sets out to  examine  the impact  of privatization   of  public  enterprises   on  poverty   reduction   Nigeria,   using   the telecommunication industry as a study.

Private sector-driven economy comes on the heels of the failure of government and its institutions to live up to their responsibilities.  Evidence of government  failure abounds but thickens with its direct engagement in the creation and supply of goods and services. Public companies are known to perform badly when compared with their private sector counterparts. With sharp reductions  in  government’s revenue, adequate subventions to these institutions could not be sustained. Some are closed down while a good number operate beneath installed capacity. Salaries of workers are not paid and many of them are disengaged. Privatization is seen as a solution to the problem of public enterprises. In other words, the size of the public sector needs to be reduced, allowing greater share to private sector. Even at that, some fears are entertained as to the workability of privatization in developing countries. This study is divided into five chapters, chapter one looked at the background study of privatization and statement of problem. Also some hypothesis were formulated to serve  as  guides  on  the  subject  matter.  Chapter  two  discussed  the  conceptual framework, the growth of telecommunication industry and the impact of privatization on the poor.The  research  itself  was  designed  to  be  descriptive,  hence  the  survey  research approach  was  adopted.  Chapter  three  took  care  of  the  methodology used  for collecting data, which involved questionnaires’  administration and secondary data collection. Chapter four handled data presentation, analysis and interpretation, the Chi – Square (X2) was used for testing the hypotheses formulated. Finally, chapter five contains summary, recommendation and conclusion which will help  the  stakeholders  to  take  a  stand  on  the  argument  about  governments’ privatization programmes in Nigeria.

CHAPTER ONE

1.1    BACKGROUND OF THE STUDY

Privatization  (the  transfer  of  government  owned  share-holding  in  public enterprises  to  private  shareholders)  is  one  of  the  revolutionary  innovation  in economic  policies  of  both  developed  and  developing  countries  (Igbuzor  2003: Chambers 2008).The ultimate goal of any credible and legitimate government is to ensure sustained improvement in the standard of living of the citizenry. Towards this end, Nigerian government found it necessary to design a developmental plan that will facilitate effective mobilization, optimal allocation and efficient management of national resources. To achieve this aim, public enterprises were established across the country to carry out these  obligations. Towards the end of 1980, the public enterprises which had grown too large began to suffer from fundamental problems of  defective  capital  structures,  excessive  bureaucratic  control  and  intervention, inappropriate  technologies,  gross incompetence  and blatant corruption  (Aboyade,

1974). With the deep internal crises that included the high rate of inflation  and

unemployment, external debt obligation and foreign exchange misalignment, Nigeria and many other African countries were strongly advised by the World  Bank and I.M.F  to  divest  (privatize)  their  public  enterprises  as  conditions  for  economic assistance (Nwoye,1997).

This  economic  policy  (Privatisation)  is a  product  of  neo-liberal  economic reforms  that  became  popularised  and  globalised  through  the  World  Bank  and International Monetary Fund (I.M.F). As an innovative economic policy, Privatisation started in Chile under the Military Government of General Augusto Pinochet in 1974 and was adopted in Britain between 1986 and 1987 as a central part of economic policy shift (Hanke, 1987). Privatization in Nigeria started in 1986 as an integral part of Structural Adjustment Programme (SAP) (F.G.N, 1986: Ndebbio, 1991).

Prior to this period, the Nigerian  state has participated  actively in  public

enterprises  (Nwoye,  2003).  This  trend  continued  until  1988  when  privatization programme  was  officially  launched  (Anya,  2000;  Igbuzor,  2003).  The  Federal Government privatized 89 Public Enterprises (PEs) between 1988 and 1993 in the first phase while 32 enterprises were privatized in the second phase which ran from

1999 to 2005 (Mkpuma, 2005). It was envisaged that privatisation would improve

operational efficiency of our inefficient public enterprises (PEs), reduce government expenditure, increase investment and employment as well as ensure job security in Nigeria (Subair and Oke, 2008; Jerome, 2008).

Surprisingly, since the official introduction of privatisation in 1988, the policy has been a subject of intensive debate and has remained highly  controversial in Nigeria (Nwoye, 2010). Most Nigerians hold divergent views on the contribution of the  privatization  programme  to the Country’s  economic  development  in its two decades  of  existence  in  Nigeria.  Therefore  this  study  attempts  to  convey  the message that privatisation is in the interest of the masses both in terms of poverty alleviation and enhancement of national  development, through a careful study of Nigerian telecommunication sub-sector.

1.2    STATEMENT OF PROBLEM

The operational inefficiency of some privatized companies like Electric Meter Company of Nigeria Zaria and National Electric Power Authority (NEPA) now Power Holding Company of Nigeria (PHCN) among others is even more  worrisome. The supply and distribution of electricity to consumers is still grossly inadequate (Subari and Oke, 2008).  These variables and others have provoked more arguments, some in favour of privatization  and others against  it. The  position  of the critics over privatization in Nigeria is that the economic reform is a plot by few elites to sell public enterprises to themselves at the expense of the masses and that privatization cannot rescue Nigeria from its precarious  economic situation. Those in favour of privatization argue that it aids poverty reduction through efficient operation, increase in productivity, employment, and  job security. They are also of the opinion that privatisation widens the distribution of wealth in our society (Jerome, 1999; 2005).

More  than  twenty  years  of privatization  in Nigeria,  there  are  still  mixed

feelings about the efficacy of the policy, especially as government is set to  fully privatize the Power Holding Company of Nigeria (PHCN) and to complete the second phase  of the  privatisation  programme  (Iba,  2010).  Some  have  asked  for  total stoppage of the programme while others still see privatization  as a revolutionary policy with the ability of addressing the inadequacies of our PEs. The last school of

thought has argued that what the government needs to do is to reassess and rethink on the implementation of the programme.

1.3 OBJECTIVES OF THE STUDY

This study is therefore set to reassess the privatization of telecommunication industry in Nigeria and its effects on poverty  reduction, specifically in the areas of consumer  satisfaction,  job  creation,  public  enterprises’  management,  reduced government debts, strengthened capital  market, ownership of capital, competition and technology and skill transfer etc.

1.4    RESEARCH QUESTIONS

–        What are the relationships between privatization and poverty reduction in

Nigeria?

–         What are the greatest impacts/ benefits of privatization to the  Nigerian economy?

–         What are the challenges faced by the on- going privatization programme in Nigeria?

1.5   HYPOTHESES

Ho:    Privatization of public enterprises has a significant relationship with poverty reduction in Nigeria.

H1:       Privatization of public enterprises has no significant relationship with poverty

reduction in Nigeria.

Ho:    Privatization of public enterprises has created more job opportunities to the citizens in Nigeria.

H1:    Privatization of public enterprises has not created more job opportunities to

the citizens in Nigeria.

Ho:    Privatization of public enterprises has encouraged price increase of goods and services in Nigeria.

H1:    Privatization of public enterprises has not encouraged price increase of goods and services in Nigeria.

1.6    SIGNIFICANCE OF THE STUDY

  This study shall be of immense importance to a cross-section of     people, Organization and the government.

  It  will  assist  the  government  on  the  implementation  of  the  on-going privatization exercise and improve on the existing policy.

  It  will  help  to  provide  a  clear  assessment  on  some  of  the  privatized enterprises.

  It will provide an avenue for the people to decide on whether to support the privatization programme or to kick against it and equally assist students as a reference material in their libraries and for future research work.

1.7   THE SCOPE OF THE STUDY

The scope of the study shall be limited to the effects of privatization  on poverty reduction in Nigeria through a proper coverage of  telecommunication sub sector  of  the  economy  only.  The  major  constraint  faced  in  trying  to  address privatization issues in Nigeria, is the lack of adequate data on the quantitative impact of privatization. Several studies have been  conducted but most of these covered developed  countries  in  general  with  little  emphasis  on  Nigeria.  Despite  this shortcoming, however, an attempt has been made to conduct a thorough analysis based on the limited information available. Secondly, time and money is required for transportation to meet appointment with those to be interviewed, procurement of relevant  research  materials  and  the  preparation  and  administration  of research instruments.

1.8    DEFINITION OF TERMS:

PRIVATISATION: Is the transfer of government business (ownership) interest to private individuals and organisations.

PUBLIC ENTERPRISES: These are capital-intensive business units established by

government and empowered by law to render certain crucial services which in the

opinion of the government cannot be effectively rendered by private entrepreneurs apparently because of their profit maximization posture.

POVERTY  REDUCTION:  Is  the  reduction  of  human  suffering  in a  society  or

improving  the  well-being  of citizens  in a particular  society.  It is increasing  the standard of living of individuals in a particular society.

TELECOMMUNICATION  INDUSTRY:  Is    devices  and  systems  that  transmit electronic or optical signals across long distance, which enables people around the world to contact one another, to access information instantly and to communicate from remote areas.

₦5,000.00 – DOWNLOAD FULL PROJECT DOWNLOAD FULL PROJECT Added to cart

---

---

---

---

Related Project Topics :