13 November 2008
editorial
In July 1988 General Ibrahim Babangida promulgated Decree No.25 on Privatization and Commercialization of Public Enterprises, and appointed an11-persons technical committee to implement the programme. A decade later the Bureau of Public Enterprises was established.
Nigeria has thus had about two decades of experience with divesting government from business and with private sector provision of certain public services, otherwise known as privatization. So far it has been a mixed blessing.
It is time to take stock, especially after the admission of the Director General of the Bureau of Public Enterprises Mrs Irene Chigbue that most of the firms that have been privatized are not doing well, and that some firms are resisting the monitoring role of her organisation while some are even questioning why BPE is still around after the sales. The fallacy behind selling all public assets to the private sector has been pointed out, and as has been seen, they do not provide better services more efficiently. The continuing existence of hundreds of public sector entities in Europe and America has shown this very clearly. Recently, even the oldest and biggest outfits in global finance are being nationalised or re-nationalised by these same high-priests of privatization.
Of concern also is lack of transparency or due process in the sales of these public enterprises typified by undervaluation of assets and the inexperience of the core-investors selected. The manner Eleme Petrochemicals, Ajaokuta Steel Complex, NITEL and many others were given away to cronies, friends and rapidly created companies, and the mess these companies are still in, underlines the challenges dogging the policy. The entire privatization programme needs to be honestly re-appraised, beginning with its rationale. Privatization was sold to the Nigerian public as another means of providing goods and services faster, better and more efficiently, without recourse to government budgets. It was not meant to simply be an exercise in creating a self-serving clique of nouveau riche living fat on super profits from quasi-monopolies 'dashed' to them by their friends in power.
We should continue to search for new, more efficient and socially acceptable ways to deliver public services. Governments, at both the federal and state levels, will continue to face ever-increasing need to find sufficient financing to pay for, develop and maintain the infrastructure required to support our growing and rapidly urbanising population. Since public resources are limited, privatization is indeed one way out of this quagmire. Structured correctly, privatization should be able to mobilize previously untapped resources, from Nigeria and elsewhere, to provide the required goods and services efficiently and cost-effectively. Private sector's experience, managerial expertise and technological innovations are clearly assets to be harnessed, but with qualifications.
First, not everything is open to privatization. It is more efficient in sectors not traditionally considered public services such as manufacturing, construction, or the hospitality industries. Education, health and agriculture, for example, have equity and social concerns that cannot be ignored and are therefore not very suitable for privatization. There also must be sector-specific regulatory arrangements to take account of social and policy (especially pricing) concerns related to provision of services and continuing operation of assets used for these public services. Governments cannot just sell public assets or transfer some of its service-provision responsibilities without conditions and regulatory oversight.
Public-Private Partnerships through concessions and Build- Operate-and- Transfer (BOT) are new ways of ensuring social services are run efficiently particularly in areas such as ports, airports, roads and other infrastructural constructions and maintenance. These need to be seriously considered, packaged and monitored. Government must ensure the provision of adequate, affordable and regular services for the public and set the terms and conditions for all operators including private sector partners. The privatization programme needs re-visiting along these lines.
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