CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The key component of the federal Government Adjustment programme is the drive towards higher efficiency in the public sector. This necessitated the promulgation of privatization and commercialization Decree 25 in 1988 by the federal Government in which was reflected that government will divest it holdings in agricultural production, electrical appliances, hotels, foals and non strategic industries. Government will also reduce its holdings in banks insurance companies and other financial enterprises without losing control.
Privatization is thus, process of divesting government ownership control and management of enterprises and agencies to private individuals and or groups of individual or business firms that are seeking their profit. This is transfer of government owned industries or parastatals to the private sector.
Hemmings aptly, described privatization as a laudable policy to help moderate the quantity of securities available for dealing on the stock exchange the described further as the transfer of ownership and control of assets from the public to private sector.
Commercialization on the other hand means that the signaled enterprise will be excepted to generate enough revenue to cover their operation expenditure while government gives them capital grant to finance their capital intensive projects.
As a matter of feet, commercialization under the Decree 25 of 1988 on privatization and commercialization was defined as the re – organization of enterprises wholly or partly owned by the federal Military Government such that these enterprises shall operate as profit these making commercial ventures and without subvention from the federal Government.
The Government involving itself in business enterprises came as a result of predominance of state owned enterprises reflected a desire to control the economy after the colonial rule in the country.
The 1983 presidential commission on parastatals, examined the operating all the parastatals with a view to determine the basis for new funding scheme appropriate capital structure as well as incentive measured to enhance their productivity and general efficiency.
Following the commissioning, the year 1989 was earmarked was earmarked, the first year of implementation of the privatization and commercialization programme of the federal government of Nigeria.
It was firs announced in 1986 as part of the board efforts to reduce budgetary allocation to public sector efficiency and support the aim of fiscal balance. Divest holding will be taken care of to avoid it being contra-concentrated in the hand of few individuals.
1.2 Statement of Problem
Public enterprises were established by the Federal Government especially in the 1960s and early 1970s when the public sector was seen as a major contributor to economic growth and socio-political stability. The public enterprises of Nigeria set up by government to perform definite social and economic functions for the public.
The functions that informed the establishment of these public enterprises are to control the resources and raise funds for the provision of certain infrastructure facilities particularly in service requiring heavy financial investment e.g. Railway, Electricity, Telecommunication etc. also, to perform the function of generating revenue that will add for financing development programme and projects as veritable instrument for creation of jobs.
Therefore, since those functions are not performed, creditable, or efficiently privatization and commercialization policy is introduced by Federal Government of Nigeria. In identifying the problems militating against their performance, the problems are stated clearly below:
(1) Is political interference and mismanagement of resources responsible for the poor performance of public enterprises in Nigeria?
(2) Could privatization and commercialization enhance the efficiency of public enterprises?
(3) Does the privatization and commercialization improve the potential, the efficiency and service delivery in Nigeria telecommunication?
1.3 Objective of the Study
There are some certain aims and objectives for which the researcher embarked on this work such as:
(1) To ascertain if political interference and mismanagement of resources is responsible for poor performance of public enterprises.
(2) To ascertain if privatization and commercialization could enhance performance of public enterprises.
(3) To discover if the privatization and commercialization of public enterprises has improved the efficiency of service delivery.
1.4 Significance of the Study
The importance of any research is tied to find out solutions to the various problems that face mankind in the environment or society. The study creates awareness to every citizen of this country and economic planners on the implications of these privatization and commercialization of the public enterprises in Nigeria economic development.
It helps stake holders assess the performance of NITEL following the privatized and commercialization of public enterprise. It helps researchers on contemporary issues have first-hand knowledge of the performance of privatized and commercialized public enterprises.
1.5 Literature Review
There are various kinds of opinions by many scholars on activities of privatization and commercialization of public enterprises. The federal government has restated its commitment to the privatization programme saying that it would not allow obstacles to make it change its focus.
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.
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