PROBLEMS AND PROSPECTS OF PRIVATIZATION OF PUBLIC ENTERPRISES IN ENUGU STATE (A CASE STUDY OF EBONYI PAINTS AND VANGUARD INDUSTRIES LIMITED)


PROBLEMS AND PROSPECTS OF PRIVATIZATION OF PUBLIC ENTERPRISES IN ENUGU STATE (A CASE STUDY OF EBONYI PAINTS AND VANGUARD INDUSTRIES LIMITED)  

ABSTRACT:                           

This study principally seeks to examine the problems of privatization and commercialization of public enterprises in Enugu state  for this purpose, two privatized corporation were used for the study.  These are Ebonyi Paints and Vanguard Industries Limited.

        In understanding this research, questionnaires were administered among the staff of the two corporations used for the study.  One hundred and forty questionnaires were administered to the various categories of the staff of the corporation.

        From the empirical data gathered and analysed, the study has shown among other that.

1.          Government ownership and control of public enterprises in Enugu state had their inefficiency, loss and unprofitability.

2.          This efficiency, loss and unprofitably which characterized the public enterprises and which created the excuse for their privatization emanated from the government’s undue intervention in the day-to-day running of these enterprises.

3.          This intervention took different forms which includes the imposition of uncommercial policies, appointment of unqualified personal, and the control of prices at which products sere sold among others.

4.          The public enterprises where operating at a loss before privatization and there, very unproductive, unprofitable and consequently, constituted a financial burden on the government, hence their privatization.

5.          The privatization exercise has endangered efficiency, productivity and profitability.

CHAPTER ONE

INTRODUCTION

The practice of mixed economy appears to be global issue. Thus it is ever present in the economic and political system of most countries of the world. Observation this point, almost all economic are to some extent mixed, in that no socialist economy is with out degree of private enterprise while capitalize economics invariable have some safe regulated industries.

However, the degree is what distinguishes one country from another. Consequently, while mixed economy and active safe intervention is a dominant policy in some countries, it is slim in others.

This variation is a result of a combination of factors, historical antecedent stage of development and the extended role of government as well as political ideology.

In the developing countries which event through the process of colonization and decolonization, there is the tendency for more active intervention of the state in the economy.

This development is due to the fact that most of them inherited weak economic structures that could not make any headway without active government intervention. Pointing to this, Sosna (1983) maintained that principle task facing the development countries is to build on independent economy, over come their economic under development accelerate the development of the productive force. State intervention can take various forms, it ranges from direct intervention of regulatory nature to direct intervention through industrial participation by the state, acquisition of private industries or by the creation of new state enterprises where previously there was no activities.  

As Punnets (1980) puts it, rather than attempting to modify and improve the private enterprises.

In Nigeria or in other developing nations, the commending heights of the economy belong to the public sector. These public enterprises in Nigeria since independent have been occupying key area of the economy.

This study is there, devoted to an examination of the

privatization and commercialization

exercise in Nigeria with regard and their problems and prospects for purpose of clarity, this introduction, in addition to the above discussed will examine the following background to the study, statement of the study, research question, scope and limitation of the study.

BACKGROUND OF STUDY

The history of the economic crisis facing Nigeria is a long one. Suffice it to say that its genesis is traceable to the Arab oil embargo of (1973) which culminate in the quadrupling of oil price. Prior to the advert of petroleum and its products, the Nigeria economy has relatively robust and discuss. Agriculture was then the mainstay of the Nigeria economy and her major source of Foreign exchange earning.

        As observed by professor Akpala (1987) in his study of management and economy, stated that between 1960-1965, agriculture contributed 81.6 percent foreign exchange earnings.

        However, the era of the oil boom in the middle of the 1970’s saw the expediency of petroleum and allied product. In the export list and consequent dethronement of agriculture as the mainstay of the Nigeria economy and major source of foreign exchange earnings. Thus, the situation is now altered and Nigeria entered with a new economic odyssey. According to Egbunam (1980) the contribution of crude oil as a foreign exchange earner amounted to our 95% in the 1970’s and early 1980’s.

        Consequently, agriculture and manufacturing sector which were, “IPSD FACTO” export-oriented were paid slant attention because of the illusion of oil money. This boom could not indefinitely, there was a down turn in the Nigeria economy as a result of the oil decline was triggered off by the collapse of the world price as well as decline in the volume of crude oil exports. There was world-wide economic recession giving rinse to glut in the world market for crude oil Nigeria depend almost completely n the export of crude oil for foreign exchange earning.  In 1982, the Shagari administration introduced the economic stabilization act as a reaction to the harsh economic realities facing the nation.  This action ushered in a period of strict restriction of imports and by 1985, the foreign exchange budget had been cut by less than a third of per-austerity period.

        The military men arrival into the political and economical scene once more in 1984 to resuscitate the economy as they claimed.  The International Monetary Fund (IMF) loan which the Shagari administrational debate, and eventually was rejected.  It is obvious from the on-going discussion that the town-turn in the oil market and the inadequate policies of the past in the area of prudent management of Nigeria reserve’s led to unhealthy economy situation which the country now finds herself.

        To resuscitate the ailing economy the country and, therefore, place Nigeria in a sound economic footing, the federal military government introduced the Structural Adjustment Programme (SAP) in 1986.  The main element of the programme include inter-alia, the adoption of a realistic exchange rate policy, further rationalization and restructuring of the tariff in order to aid the promotion industrial diversification, reduction of complex administration control-encouragement of rationalization privatization of public enterprises which is our topic of study.

SIGNIFICANCE OF THE STUDY

        The significance of the study derives from the fact that privatization appears to be a policy being talked and adopted by most countries of the world.  The wind of privatization ahs also been extended to the communist world; with the collapse of the soviet union, American, Britan and other advanced capitalist nations have privatize most of their business formally owned by the government.

Nigeria adopted privatization as a policy in 1988.  Since then, systematic efforts have not been made to examine the actual effects of this policy thus the recent nature of the policy underlies the significance of this study.

Again, the study will enable us to know the problems and prospect of the privatization exercise with a view to either modifying or abandoning it.  What is more, it will enlighten the people and government of Nigeria more with regard to the viability or otherwise of the policy as a solution to public enterprises, inefficiency.  The study may be of immense benefit to theoreticians and operators public enterprises in developing countries.  Finally, it is expected that the research will stimulate further research will stimulate further research.

RESEARCH QUESTIONS

The following research questions are designed to guide this study:

1.          What are the major problems confronting that execution of the privatization exercise in Nigeria.

2.          What are the reasons for the privatization of public enterprises in Nigeria?

3.          What are the processes of privatization in Nigeria?

4.          What are the prospects of the exercise in Nigeria?

5.          What are the economic effect of privatization?

THE SCOPE OF THE STUDY      

        Although the exercise crisis – crossed the entire nation, this study will be limited Enugu state.  In order words, the study will examine the privatization exercise in Enugu state.

        The determination was reasons which include proper handling for it becomes 50 large, it will be difficult to handle.

DEFINITION OF TERMS

        Public enterprises:  This is any organization institution or enterprise which is operated under auspices of the state, either as a commercial concern or as an instrument of social and welfare services.

PRIVATIZATION

        This is the process of diverting government off the ownership, control and management of enterprises, service, constituting of individual or firms seeking their own profit.

COMMERCIALIZATION

        This is the retention of government equity shares in public enterprises but with the realignment of the orientation of effected enterprises towards commercial operation practiced in private enterprises.

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