CHAPTER ONE

INTRODUCTION

BACKGROUND OF STUDY

It might be necessary to define from onset what privatization and commercialization means.

A functional definition of privatization is the transfer of ownership of public enterprises to private hands. This means that the government, which has the only or major shareholder in these enterprises, would divest itself of its holding and pass it over to the Nigerian individuals, associations and organization, to own and manage in order to give the enterprises a new lease of life by turning them around.

Commercialization on it's own simply means that the government, whilst retaining ownership, will hands off the funding and management of these enterprises, leaving them to tend for themselves with whatever expertise they may have with this arrangement.

STATEMENT OF PROBLEMS

The introduction of privatization and commercialization on Nigerian Economy poses a lot of questions in the inquisitive minds of most people as to the "Why" and "how" of the introduction.

This brings about reactions from various sectors of the economy. These reactions are the problems this research work is going to face or address itself to.

WHY PRIVATISE?

The poor situation of the nation's economy has compelled the government and people of this great country to continue to search for a better or viable solution. The nation's ailing economy has been brought about by a number of internal and external factors which includes:-

a. The oil and the concomitant decline in oil price;

b. The unprecedent huge external debts into which the national has been plunged;

c. The depletion of our external reserves;

d. The stagnation of the productive sectors of the economy and;

e. The woeful failures of Nigerians in the caution well intentioned national ideas.

OBJECTIVES OF STUDY

Based on the statement of problem of the study, the researcher, intend to x-ray the following issues as to clear the inquisitive minds of the public. The reform which has two inter-related components privatization and commercialization has the following objectives:

1a. To improve on the organizational efficiency and reliability of our public enterprises.

b. To minimize their dependence on the national treasury for the funding of their organizations.

c. To encourage share ownership by Nigerian citizens in productive investments either than owned wholly or partially by the government; and in the process to broaden and deepen the Nigeria capital market.

2. The adequacy of the administrative and monitoring committee for privatization and commercialization.

3. To examine the reactions of the entire public as represented by the various sectors of the economy to privatization and commercialization.

4. To x-ray the problems and prospects of privatization and commercialization.

5. To make recommendations on effective administration of privatization and commercialization and also to make it acceptable to the general public.

SIGNIFICANCE OF STUDY

This way this project has been planned and carried out will offer enough information and explanation to inquisitive minds. The project is armed to be beneficial to the following and int eh following ways:

i. The government

ii. The financial sectors

iii. The general public

iv. The students

v. The foreign interest group

vi. The manufacturing sector.

i. The Government: The programme of privatization and commercialisation has relieved the federal government of what was the huge and growing burden of financing the investment needs and operating deficits of public enterprises. Such funds can now be diverted to other deserving areas such as education or health.

ii. Financial sector: Through this project, enough awareness will be created so that the public's attitude to the enhancing aim of privatization and commercialisation will be achieved.

iii. The general public: The research work will serve as an orientation to many that have not known about the operation of privatization and clear some questions in their minds.

iv. The student: This research will offer a source of secondary data collection for many research students.

v. The foreign interest group: This will offer foreigners the basis for comparism on the operation of privatization and commercialisation with other countries.

vi. The manufacturing sector: This project will create awareness to all the manufacturing sector on how the burden and incidence of privatization and commercialisation on the economy is being borne.

THE LIMITATIONS

In the course of carrying out this project the researcher encountered some problems which affected the project work in one way or the other. Some of the problems are:

a. Inadequacy of Finance: According to economics, wants are numerous but their ends are limited thus because of the limited financial resources as a student and the economy of Nigeria, I was unable to make this research a more standard one.

b. Inadequacy of Data: Privatisation and commercialisation as a new system of economy development in Nigeria is scarcely found in the publications, thus the write up is based on the limited information from few publications.

c. Time constraints: Due to numerous courses we have to cover and limited time we have and as such we had to combine our lecturers with writing of the project. This has also affected the quality of the project.

DEFINITION OF TERMS

The communication of facts, knowledge and ideas in any field depends on the understanding of the terminologies or jargons used. And as such, below is the definition of some relevant terms used in this project.

1. Privatization: Is the transfer of public enterprises to private hands.

2. Commercialisation: it means the reorganization of public enterprises into profit making.

3. Private Company: A company with restrictions on the number of shareholders, whose shares may not be offered to the general public.

4. Private sector: The part of a country's economy owned, operated, etc, by private individuals and firms.

5. Public sector: Government financed industry, social services etc.

6. Implementation: To give effect, or perform the said objectives.

7. Investors: One who invests money.