1.1 Introduction
Privatization as any one of a number of government-adopted strategies intended to reduce the traditional weight of public ownership, control, or management of a public enterprise, expose it to competition, or incorporate private ownership, control, or management into a public enterprise (Iheme, 2020). The goal of privatization is to efficiently raise economic growth and productivity, which will raise capital income and living standards. In Nigeria, the private sector has established sufficient awareness.
Restructuring public companies, deregulatory measures, and significant economic reforms are implemented through privatization. Through the introduction of new technology, participation in foreign equity, and core international investors, it draws in foreign capital. Nonetheless, privatization strictly speaking refers to the handing over of ownership of a public company to private investors. The benefit of the latter interpretation is that it makes it easier to distinguish between privatization and other types of public enterprise transformation. It is also the meaning that Nigerian statutes have assigned to the phrase.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.
1.2 Background of Study
Privatization as a tool for economic management came to the front burner when Chile became the first country to turn public assets/businesses Ito private operators in the early 1970s, since then over 140 countries both developed and developing have embraced privatization as a tool to economic development (Anger, 2008). But privatization became the major policy thrust of the former civilian government of Chief Olusegun Obasanya on assumption of office on May 29, 1999.
There is no doubt about the fact that privatization is a very topical issue in Nigeria today and it means to make private and Includes the entire process by which government transfers its interest in a corporation or enterprise, by way of selling its investments to private individuals or groups (Johnson, 2004).
The idea of privatization dates back to the position articulated by the classical economist who assumed that there exists unerring pendulum that always tend towards equilibrium as the interaction of the market forces; demand and supply are believed to be capable of regulating the economy. The move towards economic development has been the key aim of the Nigeria government since independent. However, the methodology of attending this rapid structural growth and development has been a problem to this extent, Nigeria since independence has been adopting different tactics towards development but, the implementation has been a problem. Besides, the use of state power, authority and resorts as to promote the economic well being of individuals and groups in society was introduce by the government.
In actuality, public service has a reputation for not being able to generate riches all around the world. in the meanwhile, public businesses are typically seen as drains on government spending, which puts unnecessary strain on the economy and limits budgetary options. The emphasis on ineffective and subpar service delivery, financial waste, bad management, and other unspecified issues has permanently harmed employees and the organization's objectives of effectiveness and efficiency. It turns into a national policy sector from the areas where the private sector can operate with a comparable advantage, allowing the data to focus on infrastructure provision and prosper through increased wealth generation.
The issue of mismanagement and under utilization which led to hugs waste of resources and man power potentials pave the government of the day number. Other option but, to pursue quickly the privatization programme privatization is an economic policy, which entails the transfer of ownership or control of public enterprises into private hand via government divestment and sales of shares. However, this involves the private participation in the management and operation of public enterprises.
Several reasons ere usually adduced for the unsatisfactory performance of most public enterprises, such as inability to fund their own programmes without seeking assistance elsewhere, total disregard for financial procedures e.g. non-auditing of accounts for year, poor debt recovery mechanism, failure to remit taxes collected to the relevant authorities, corruption, stealing of public funds and award of highly inflated contracts (Johnson 2004).
Dissatisfied with the poor performance of state enterprises in the country, the government was determined to sell off all unprofitable government-owned companies so that the federal government could spend its dwindling resources on other vital sectors of the economy. In order to remedy the situation, there have been tendencies towards privatization in order to gained economic development (Johnson, 2004:95).
Gusau (2000) noted that different countries have pursued different objectives using the privatization policy. Some have used it to address increasing budget deficit; some have used it to pursue the goal of national debt reduction; some have used it to fight inefficiency, etc. according to him, some of the goals that privatization has been used to pursue have direct bearing on development. Thus privatization in Nigeria cent on eh above objectives, ·has direct bearing on development.
In the context of economic development, a look at the conceptualization of economic development will help us to appreciate privatization. The encyclopedia of Wikipedia argues that economic development includes the process and policies by which a nation improves the economic, political and social wellbeing of its people. It was also considered as a static theory that documents the state of economy at a certain time. According to Schumpeter (2003), the changes in this equilibrium state to document in economic theory can only be caused by intervening factor coming from outside. Now, privatization will be a working tool in this respect, for efficiency and effectiveness which will eventually result into economic development.
Power Holding Company of Nigeria (PHCN) embraced this idea as she took privatization as a priority and this is done for a number of reasons which among others includes: economic development, regular supply of services, improved standard of living and increase the performance of the company. It is important to note that in order to achieve privatization, there must be competition according to the Market Conditions Model and not ownership per se according to the Schumpeterian Model.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Privatization as a Viable Tool for Economic Development.
1.3 Statement of Problems
Investigation revealed that inefficiency is one of the issues plaguing Nigerian public enterprises, particularly those providing vital services to the populace like Power Holding Company of Nigeria (PHCN). One of these businesses' main responsibilities is to advance national development by lowering the rate of poverty and generating jobs, both of which raise people's standards of living.
Due in significant part to the numerous issues they have faced, these government parastatals have underperformed throughout the years. Several academics who have conducted in-depth studies on these businesses have proposed a wide range of causes for their poor performance, including inadequate funding, corruption, poor management, political meddling, and other issues too numerous to list.
Diverse factions have endorsed distinct methodologies that may be employed to extricate these enterprises from the abyss of inefficiency. These tactics are intended to save these companies from these apparently insurmountable problems.
Privatization is one potential solution that has been suggested. According to Johnson (2004), privatization is the process by which the government gradually removes itself from economic activity in order to maximize efficiency and effectively promote economic progress. Opposition and support for the privatization of public businesses as a means of enhancing their effectiveness have emerged from various quarters.
Although the proponents of privatization believe it will increase system efficiency, the opponents vehemently disagree with this idea. They contend that privatization raises the rate of poverty and causes unemployment. The government's attempts to privatize the country's public enterprises appear to have been impeded by this unresolved issue, as various interest groups consistently oppose government initiatives.
The major problem this study intends to investigate is whether privatization can truly be used as an effective and efficient tool for economic development as advocated by the protagonist group.
1.4 Aim and Objectives of Study
The aim of the study is to validate the fact that privatization as a Viable Tool for Economic Development in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
- To investigate how privatization can crease regularity in the supply of goods and services.
- To investigate how privatization can improve the standard of living of the people in Nigeria.
- To examine the effect of privatization on the performance of public enterprises in Nigeria.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Is privatization an effective and efficient tool for economic development in Nigeria?
- Can privatization create regularity in the supply of goods and service?
- Is there any relationship between privatization of public enterprise and improvement in the standard of living of the people in Nigeria?
- How can privatization improve the performance of the company or organization in view?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
- H01: There is a positive relationship between privatization as effective and efficient tool and economic development.
- H02: There is a direct relationship between privatization and regularity in the supply of goods and services by public enterprises in Nigeria.
- H03: There is a relationship between privatization and standards of living of people in Nigeria.
- H04: Privatization tends to enhance the performance of public enterprises in Nigeria.
1.7 Significance of Study
This research project will be of major significance to the government. Government serves as the wheel of the state, the machine which runs the affairs of a state. To run the affairs of any state, one deserves a good knowledge of what goes on within the state, how to run the state, how the state can be improved, how economic development or activities in such state can be enhanced. For this purpose, this study can be of significance to the government.
This study will also be of significance to policy makers who make potlces for implementation. Policy is the bedrock of any organization and its effectiveness and efficiency determines an organization. Policy is what an organization does to do and what it chooses not to do, therefore, this study can provide knowledge to policy makers when making polity on the issue of privatization.
This study will also be of significance to scholars, students and other researchers who will also want to undertake similar topic and serve as secondary source of data to them and also give them insight into what the topic is about.
This research study will be of significance to the organization under study that is Power Holding Company of Nigeria (PHCN). One of the objectives of any organization is to attain certain degree of productivity that would help in improving level of performance to achieve economic development. It is necessary for organization to be effective and efficient in achieving its goals, it is in the tight of this, that this study will provide more knowledge about privatization which serves as a tool for enhancing performances.
The study will also be of significances to the general public by enlightening them on the essence or importance of privatization and how it affects their standard of living and their general wellbeing.
1.8 Scope of the Study
The scope of the research is focused on the Privatization as a Viable Tool for Economic Development in Nigeria.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Privatization:
Privatization involves the selling of state enterprises to the private sector. Is an ‘umbrella term' which encompasses, among others, direct sale of public assets into private bands, the transfer of functions previously carried out directly by the state into the private sector and the withdrawal of the state from responsibilities previously undertaken, leaving such matters to be faced by individual citizens.
Commercialization:
Commercialization entails detaching the enterprises from government departments and ministries and making them to be a cost accountability centers as done in the private sector. Commercialization on the other hand, can be defined as the re organization of enterprises, wholly and partially owned by the government, in which such commercialized enterprises shall, operates as profit making commercial ventures without subvention from the government.
Economic Development:
Economic development is the increase in the amount of people in a Nation's population with sustained growth from a simple, low income economy to a modern, high-income economy. Put in another way, is the analysis of the economic progress of nations.
Power Holding Company of Nigeria:
The Power Holding Company of Nigeria abbreviation as PHC or PHCN), was formerly the National Electricity Power Authority abbreviated as (NEPA) is an organization governing the use of electricity in Nigeria.
Public Enterprises:
Public enterprises is defined as organizations whose primary function is the production and sale of goods and or/ services and in which government or other government controlled agencies have no ownership stake that is sufficient to ensure their control over the enterprises regardless of how activity that control is exercised.
Performance:
Performance is activities carried out to the benefit of any organization, members and the public. That is the, sum total of individuals and group effort to the benefit of the organization in particular and the public in general.
1.11 Organization of the Study
This study is organized into five (5) sections or chapters:
Chapter one is on introduction which will include background to the study, statement of problem, objectives of the study, research questions, research hypothesis, significance of the study, scope and limitations of the study, definition of terms and organization of the study.
Chapter two shall review the current relevant literature which will include introduction, review of related literature and other sub headings such as: criteria for privatization, objectives of privatization, methods of privatization, process of privatization, ages and disadvantages of privatization, and theoretical framework.
Chapter three is on the methodology used in the study and shall include: re-statement of research questions and hypotheses, research design, population of the study, sample and sampling techniques, data collection instrument, administration of data collection instrument and limitations of the methodology.
Chapter four is on data analysis and presentation which shall include: introduction, respondent characteristics and methodology used in the study and shall include: re-statement of research questions and hypotheses, research design, population of the study, sample and sampling techniques, data collection instrument, administration of data collection instrument and limitations of the methodology.
Chapter five shall include summary of findings, conclusion, recommendation and suggestions for further studies.
