Effect Of Privatization And Commercialization Of Government Owned Industries
The privatization and commercialization of government-owned industries have generated significant discourse regarding their impact on economic dynamics, efficiency, and public welfare. Proponents argue that these initiatives enhance operational efficiency, foster competition, and stimulate economic growth. By introducing market forces, privatization is believed to reduce bureaucratic inefficiencies and enhance the financial viability of formerly state-controlled enterprises. However, critics express concerns about potential job losses, increased socio-economic disparities, and a focus on profit over public welfare. The transformation from government control to private ownership often involves intricate negotiations, regulatory adjustments, and strategic shifts, influencing the socio-economic fabric of the affected industries. While proponents emphasize the potential for increased innovation and productivity, opponents caution against neglecting the social responsibilities that government-owned industries traditionally upheld. The ongoing debate underscores the complex and nuanced nature of privatization and commercialization, where economic considerations and social implications intertwine.
the attributed or advantages that would be derived from the privatization and commercialization of government industries.
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose/objectives of the study
1.4 Significance of the study
1.5 Limitation of the study
CHAPTER TWO
REVIEW OF RELATED LITERATURE
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Source of data
3.2 Location of data
3.3 Methods of data collection (literature work only)
CHAPTER FOUR
FINDINGS
CHAPTER FIVE
RECOMMENDATION
CONCLUSION
INTRODUCTION
1.1 BACKGROUND OF THE STUDY.
The period of between 1972 to 1990 was a period described in the history of Nigeria economy as the period of oil boom within which time incoherent application of generated revenue from sale of crude oil was made.
The various government many medium scale industries in various parts of the country same of these industries so established import as much as 90% of its raw material imputer from overseas countries.
The down turn of the Nigeria economic fortunes which resulted from global oil gut has a negative impact on the economy and which depended on the revenue from the crude oil finance her their input oriented economy to as much as 85% could not be unaffected in 1986, the Nigeria Government applied for a loan of $2.3 billion from the international monetary funds of finance her acting economy. The international monetary fund hence presented as set conditional ties which will equal Nigeria for the loan. One of these conditional ties was reduction of government expenses on public parasitical.
1.2 STATEMENT OF THE PROBLEM
According to Wmer Sombert, capitalism has its own spirit which is profit seeking spirit the motives to make profit from investment is considered a moving force which derives investors.
When ever the expected returns from investment is not fourth coming such investment may be considered as avenue of financial loose, such as the economic situation which contributed the Nigerian society when act of total of eleven billion #11 billion investment on parastatal and government owned industries realized a divided of 93.1 million i.e 39% return.
This poor return portrays the fear that such investment is a waste of public following a global recessive in the oil revenue.
The first official public statement on privatization was in the 1986 Budget special by the Head of State. President Ibrahim Banangida, when he said “Government parastatal have for long been subject of the study and policy, review. They too have generally come to constitute an unnecessary high Burden on government resources.
They have been variously classified for purpose of reform government has now decided that as from 1986 the value of non statutory transfer to all economic and quest economic parastalals would constitute not more than 50% of their level. They are to find the balance from increase in the price of their services and products charges, tariffs and rate.
According to Another C.I. Mbarieto in his paper “Capital restricting for successful privatization. There is no doubt that excessive participation by the government of developing in their economic it is obvious that the under lying cause of privatization efficiency by making profit into such enterprises more productive well and to competitive pressures privatization and commercialization of public owned enterprises in expert to block the drain of government revenue by bringing spirit of profit into such enterprises as well as provided the much sought revenue for the art in public program.
1.3 OBJECTIVE OF THE STUDY
The objectives or nationals build privatization of an industries listed below.
1. To improve the management of government owned establishment.
2. To encourage private individuals to invest in the industry
3. To encourage foreigners to invest in the economy
4. To encourage the development of local skill and technology
5. To encourage development of private sectors
6. To encourage healthy competition on the economy etc.
1.4 SIGNIFICANCE OF THE STUDY
This study is essential in the fact that privatization and commercialization of public enterprises is being restored to as a solution for public enterprises, importability, inefficiency and unproductively.
Public enterprises in some western countries were privatized for maximum efficiency and profitability, such enterprises include the British Telephone company. The U.S. poital agency etc.
This study is very timely especially since privatization and commercialization of public owned enterprises is currently pursued in Nigeria with many potential investors still ignorant of the benefit derivable from such investment.
Considering the fact that there are limited literature on effect of the activities, this research therefore seek to enlighten the general public about the effects of privatization and commercialization as a policy option for the revitalization of our inefficient public enterprises. It is also hoped that research work will definitely create or stand as detain reference for further research work of the issue.
1.5 SCOPE AND LIMITATION OF THE STUDY.
There is no doubt that the privatization and commercialization of the government owned industries have many effects on the economy of the nation on infrastructure development of the nation, on the standard of living of the nation in the development of manpower of the nation but this study is only concern
On the effect of this privatization and commercialization government owned industries. That is to say that this study is limited to the effect of privatization and commercialization of government owned industries which were privatized, example of government owned establishment which we are talking about are NEPA, NITEL, NIPOST, Nigeria cement company, etc.
Therefore this research represents an attempt to search for the effects which the privatization and commercialization of government owned enterprises had on the life of these enterprises. That is on the management of these enterprises, on the effectiveness of these enterprises on the productivity of these enterprises etc.
1.5 DEFINITION OF TERMS
1. Privatization – Transfer from state to private ownership
2. Commercialization – To make money out of some thing
3. Government – Method on system of governing or body of persons governing a state that is Nigeria government.
4. Establishment – To set up or establishing or being established. That is government owned companies.
5. policy – Plan of action, statement of aims and ides e.g one made by a government, political party, business company etc.
SHARE PROJECT MATERIALS ON:
Effect Of Privatization And Commercialization Of Government Owned Industries:
Privatization and commercialization of government-owned industries refer to the process of transferring ownership and management control of state-owned enterprises (SOEs) to private entities or introducing market-oriented reforms to make these industries operate more efficiently and profitably. The effects of these processes can vary based on the specific context, industry, and the approach taken. Here are some potential effects:
Advantages:
- Efficiency and Innovation: Private companies are often more focused on efficiency and innovation due to the competitive pressures of the market. They are incentivized to cut costs, improve productivity, and introduce new technologies to stay competitive.
- Increased Investment: Private ownership can attract domestic and foreign investment, leading to improved infrastructure, expanded facilities, and technology upgrades that may have been lacking under government ownership.
- Reduced Fiscal Burden: Privatization can relieve the government of financial burdens associated with operating and subsidizing loss-making SOEs. This can free up government resources for other critical areas like education, healthcare, and infrastructure.
- Improved Management: Private companies generally have more flexibility in decision-making and can adopt modern management practices, potentially leading to better performance, reduced bureaucracy, and quicker response to market changes.
- Job Creation: While there might be short-term job losses due to restructuring, privatization can lead to more job opportunities in the long run as efficient and growing businesses tend to expand and create new positions.
Disadvantages:
- Job Losses: Privatization can lead to job cuts as private companies aim to optimize operations and reduce costs, which could result in layoffs and potential social unrest.
- Loss of Public Control: Government ownership provides a degree of public oversight and control, which might diminish when industries are privatized. This loss of control can raise concerns about accountability and the protection of public interests.
- Unequal Access: Privatization might result in the exclusion of certain segments of society, particularly if private companies prioritize profit over public welfare. Essential services could become less accessible to vulnerable populations.
- Monopoly Power: In some cases, privatization could lead to the creation of private monopolies or oligopolies, which might stifle competition and lead to higher prices for consumers.
- Short-Term Focus: Private companies might prioritize short-term profits over long-term sustainability or social and environmental considerations. This could result in neglecting investment in infrastructure and research.
- Foreign Control: If foreign companies acquire government-owned industries, there could be concerns about national security, loss of control over strategic assets, and potential repatriation of profits.
Mixed Results:
The effects of privatization and commercialization are context-dependent. Some countries and industries have witnessed positive outcomes, while others have faced challenges and negative consequences. The success of these processes depends on factors such as the regulatory framework, competition policies, transparency, the degree of market development, and the strategic planning associated with the transition.
To draw meaningful conclusions, a careful assessment of the specific circumstances and goals of the privatization and commercialization efforts is essential.