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The Logic of Privatization By Abdul-Warees Solanke
Is privatization of public services good for Nigeria? There is no straight to the question, although the country’s public sector is faced with the serious challenge of transiting from a decaying system to one that is manageable, cost effective, efficient and economical so that other vital and potentially productive sectors of the national economy can be afforded funds for growth, which ideally is the purpose of privatization.
According to Saim, hjh S (2007) privatization has received greater emphasis lately as strategy for dealing with lightened budgets in the public sector (and the consequent need for reducing costs and increasing efficiency) and for escaping alleged weakness of government through innovative and flexible ways of delivering public service.
This assertion a very much true of Nigeria where the public sector, despite its strategic importance, is burdened by the subsisting dysfunctional political and cultural environment which makes it difficult for it to deliver according to public needs and expectation despite the huge government commitment into the sector. However, the sordid picture of poor service delivery and challenging socio political and economic environment that compels privatization is not peculiar to Nigeria, as it is a phenomenon of global dimension in the last two decades.
Nigeria’s privatization project began in late 80s when, the government in response to demands from the World Bank, donor countries and other multilateral financial institutions that the country must embark on structural adjustment programme to qualify for assistance and loan. One of the reform strategies prescribed as privatisation of some services of the bloated, expensive yet inefficient public sector.
As at 1999, there were almost 600 public enterprises owned by the federal government of Nigeria. The control spread over such vital sectors as.
Together, they account for 40s of the country’s Gross Domestic Product but not less than one third of the nation’s oil earnings since 1973 were expended on them. .According to estimates of Nigeria’s Vision 2010 Committee, the federal Government’s investment in Public Enterprises as at 1996 stood at US $100 billion. The bulk of Nigeria’s external debt with the Paris Club of creditors, not less than 55%, was due to funds sourced to establish these public enterprises. Yet, returns on them, 0.5% pr annum did not in any way match the huge government investment.
A survey conducted by the Technical Committee on Privatization and Commercialization, the first body charged with executing the privatization programme, public enterprises in Nigeria accounted for 30-40 % of fixed capital investment and nearly 50% of normal sector employment.
From available data and statistic, Public enterprises engaged in economic activities employ far less than half a million citizens in a country whose population exceeds 130 million.
These glaring facts suggest that public enterprises in Nigeria are more of a drain pipe of the country’s wealth, a cesspit of corruption and inefficiency, a field of political intrigues and a strong indicator of why the country was not progressing. Five of the Public enterprises which have been ran aground bears eloquent testimony to the rot that is in the Nigeria public sector.
As at 1998, the total transfer, waivers and subsidies to Nigerian public enterprises stood at N265 billion. Yet all of them were sick and comatose, Coupled with this, they were known to stifle entrepreneurship in the country, fostered economic stagnation, and promoted selfish political objectives. In addition, Nigerian public enterprises suffered from operational interferences just as they contributed to economic redistribution or widening the gap between the rich and the poor as those who controlled them saw the enterprises as honey pots. Looting is the name of the game played in Nigerian public enterprises which unfortunately imposed a burden of not less than US$200 billion on the nation’s economy.
Several commissions set up to find the problem with Nigerian public enterprises always came up with damming reports of abuse of monopoly of powers, defective capital structures (they all depend on the government purse) bureaucratic bottlenecks, mismanagement, corruption and nepotism.
The burden of the inefficient, loss incurring and asset wasting albatross that Nigerian public enterprises became convinced the new government in 1999 to pursue privatization vigorously so as to liberate the government purse from suckers and afford Nigerians, better, competitive and affordable services. The sordid performance would seem to suggest that privatization is one of the best possible ways out of the mess created by past managers of the nation’s public affairs, as the country is still in a process of transition from rot of the past 50 years and embarking on different reform projects in the political economic and social spaces.
In adopting privatization, as a tool of systemic reform in the public sector of any nation, it is not a matter of whether privatization is good or not but determining what should be privatized and justifying why it should be privatized. In order to understand this vital issue, the fundamental objectives and directive principles of state policy of the country have to be taken into account, because these principles state in clear terms the purpose of government or what any government should pursue to be deemed as responsible government.
In essence, if the government is pursuing privatization as a reform option, it should be with a clear awareness that it will assist it to deliver according to the social contract that exists between the government and the governed. Thus, if the government must be seen to be committed to what will satisfy the public interest or the national interest, it will first have to address the relevance of privatization to public or national interest, or to the attainment of the fundamental objectives and directive principles of state policy.
Privatization is not only an economic reform instrument as it has to be understood in the wider context of the country’s overall development framework. The whole of chapter two of 1999 constitut9on of the federal republic of Nigeria detailed the fundamental obligations of the government and the social contract between the government and the governed, It also in greater detail defined the political, economic, social, educational foreign policy, and environmental objectives. In addition, it spelt directive on Nigerian culture, obligations of the mass media, national ethics and duties of the citizen.
Therefore, the salient issue in deciding whether privatization of public services is good for Nigeria is to understand how well it will assist the realization of the fundamental objectives and directive principles of state policy. What must be borne in mind is that privatization of public services does not possess all the answers to re-inventing the nation economy. In fact, it has the potential of increasing the socio-economic imbalance, because it is a market instrument that tends to address the demand of those who can afford it and pay for public services. Yet public goods or services are not about affordability, but about equalizing opportunities and guaranteeing access to all the citizens, regardless of their economic status.
Government involvement in Public service delivery is also about protecting some vital aspects of the national economy that are seen as as national assets and source of national pride. So throwing them open to all-comers can compromise national pride. It is also a form of national identity and the nation could lose its identity and sovereignty in that economic domain when it is exposed to foreigners as privatization oftentimes also entails attracting foreign capital.
Privatization no matter the prospects it holds, and no matter the acclaimed justifications and expertise of its implementing authorities, it will make meaning only if it does not compromise the purpose and essence of government. That is, for it to be meaningful, it must be pursued with the required sincerity of purpose and commitment, avoiding exploitation and excessive profiteering. Privatization in a developing, but not yet advanced market economy should be driven by the utilitarian ideal of providing the greatest good to the greatest number of people in a liberalized environment that gives equal opportunities and access to public utilities and services.
For Nigeria, the challenging of ensuring efficiency in public service delivery is not so much of privatization, but of injecting accountability and dynamism into the administration and management of public services, which is highly emphasized in the concept of new public management (NPM). |