REVITALIZATION AND COMMERCIALIZATION EFFECT ON NIGERIAN ECONOMY

By

UBAH OGOCHUKWU G.

Presented To

Department of Accountancy

TABLE OF CONTENTS

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWLEDGEMENT

TABLE OF CONTENT

CHAPTER ONE

1.0 BACKGROUND OF THE STUDY

1.1 STATEMENT OF PROBLEMS

1.2 OBJECTIVE OF THE STUDY

1.3 SCOPE OF STUDY

1.4 DEFINITION

CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

2.1 GOVERNMENT EFFECT TOWARDS THE POLICY

2.2 COST OF PRIVATIZATION AND COMMERCIALIZATION

2.3 EFFECT ON PRIVATIZATION

2.4 EFFECT ON COMMERCIALIZATION

CHAPTER THREE

3.0 SUMMARY OF FINDINGS AND

3.1 RECOMMENDATION

BIBLIOGRAPHY

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

An unintended consequence of the indigenization exercise

is the need to privatize and commercialize government owned enterprises.

At the inception of the indigenization exercise, the intention of the government was to enable the citizens to control the commanding heights of the economy.

However, in the course of implementation, government become an active purchaser of these enterprises formerly owned by aliens. This action became possible because of the sudden government's opulence created only the oil boom wealth of that decade. Government was not only involved in the acquisition of foreign owned enterprises but also dedicated to establish new ones. In the 80's how ever, there was negative down turn in the nation's economic fortune and government was no longer able to fund these state owned enterprises adequately.

Furthermore, there are acute manifestation of managerial inefficiency in the way and manners these state owned enterprises were being administered. Thus, enterprises which were supposed to e revenue generating ventures became government problem children which require massive financial investment before they can survive. It was against this background that the Federal Government decided to privatize and commercialize these enterprises and this decision was put into operation by the promulgation of Decree No.25 of 1988. The Decree aimed at privatizing and commercializing certain public enterprises. The Decree also made provision for the establishment of a Technical Committee on Privatization and Commercialization (TCPC) whose major functions include: -

i. advising on the capital restructuring need of enterprises listed for privatization or commercialization

ii. carrying out-public issues of shares for the listed enterprises

iii. consulting with the security and exchange commission on the need for the shares to be issued

iv. advising the Federal Government on the allotment pattern for the shares to be issued

v. overseeing actual sales of shares and

vi. preparing proposals for the sale of government shares in these enterprises for the approval of the Federal Government.

1.2 STATEMENT OF PROBLEM

Operation of public enterprises where government enjoys

shown some tester of management inefficiency. This case of distress combaters and failure dilatation, low capacity utilization or inefficient performance in some public enterprises and parastatals are pure cases of management brigandage. With the sceneries being played in over national economic life. It is quote clear that government in business enterprises in the country was in the main plausible at the beginning, however, fruit frame the venture is disproportionately how compare with the situation when he said, the poor performance of the state owned enterprises is already threat to national economy and it is under mining economic recovery and development plan of the nation.

One may therefore ask, why this nation statement of affairs in the nations match to economic alvaroda? Therefore are myriad of reasons however, it is my strong conviction that the problems boarders on human factor. Every other problem revolves around it thus, is there any wonders that sound plans are easily circumventer organization on matter how viable are run around.

The above pictures exactly what happens in our system which is run by human beings who are themselves public servants. A negatively disposed human factor is destructive in all facets of human involvement because of goal congruence, an organization bound to fail, this explains why;

1. Our banking sector was rocked to the bottom by cases of distress are out-right failure.

2. Strategic public institutions like NEPA should be give Nigerians more hours of power outage than right, quantum of financial investment made in it notwithstanding.

3. Why there are so many cases of round peg in squad holes in our institutions and enterprises.

4. Rules and order have been thrown to the winds in the operation of public business.

5. Our school children enjoys more holiday in our homes than staying in school for their studies the list is endless no wonder Rita Ejiofor posted that the worst enemy of the public is a corrupt public servant.

1.3 OBJECTIVE OF THE STUDY

Privatization and commercialization Act No.28 of 1999

outlines the policy's objectives as: -

i. To gradually hand over to the private sector those public enterprises, which they are better in managing.

ii. To expose the country to international competition so as to acquire new knowledge and technology

iii. To raise fund for financing social economic development such as health, education and other infrastructural facilities

iv. To reoriented the enterprise towards perfect improvement and al efficiency

v. To ensure private return on public sectors investment through more efficient management

vi. To check the present dependence on the treasury of finding by commercially oriented parastatals by ensuring that their fund requirement are sourced from Nigerian stock exchange instead of subversion from government.

vii. To actualize these objective the national council on privatization was established with established with twelve (12) members, however the actual implementation of the programme is by the Bureau of public enterprises (BPF).

1.4 SCOPE OF THE STUDY

The researcher in his effort to come up with a work of the

nature encountered a number of hindrances. Although he later overcome the difficulties and were able to come up with this thesis. The following are the proved hindrances the researcher encountered: -

i lack of data

ii. time constraint

iii. lack of finance

iv. inconsistency of data

1. LACK OF DATA

The business environment which is worked upon to provide the data, make research as a mere academic exercise which has no relationship with their business. This negative attitudes is very rampant even among the academicians. Most of them belief that it is a waste of time to give out any information or sit to receive oral interview with the researcher. Thus the researcher did not find it easy at all to collect data especially since most of the needed data were capital composition of the firm.

2. TIME CONSTRAINT

Time factor is another hindrance the writer encounted. This produce very limited factor to the quality. This research work intended to achieve a more comprehensive study of other management board and professed bodies could have been conducted if additional time was available to the writer.

3. LACK OF FINANCE

money created immeasurable problem to the writer in his effort to come up with this project. Quote unfavourable to the writer it is during this period that Nigeria were in problem with money. Nevertheless the researcher was able to turn over something which is hoped will contribute to the existing body of knowledge.

4. INCONSISTENCY OF DATA

The issue of inconsistency of data posed. Another problem in writers effort to come up with this nature of thesis with some data collected were inconsistency with each other while some are absolute. The same data gathered from two different sources sometimes proved to be conflicting with each other.

1.5 DEFINITION OF PRIVATIZATION AND COMMERCIALIZATION

Privatization: This is the process of transferring the

ownership and management of enterprises previously owned and managed by the government to private investors. In other words, privatization involves the transformation of an enterprises from the public to the private sector of the economy.

Commercialization: This is the granting of permission for public enterprises to make decisions which would make them to become more commercially viable and profit oriented. Towards this end, they have the right to decide what prices they would charge for the services rendered by them by their numerous customers.

Government still retain ownership of the enterprise unlike privatization where the government is expected to divest itself of ownership in the privatized enterprises.

The essence of commercialization is to make the enterprises involved to become more efficient and profit oriented as well as to make them more self financing.

Since the implementation of the decree, many state owned enterprises have been privatized either in full or part. Such companies include Ohuwa Glass company Ltd., Okitipupa Oil-Palm Company Ltd, Owena bank Nig. Ltd. similarly, have been made to make enterprises like the Nigeria National Petroleum Corporation (NNPC) etc. more commercially viable. These enterprises now determine the prices of their products independent of the government.

With privatization, those enterprises which formally have limited or corporation in their names have now been adding plc. (Public Limited Company) to their names. They are now required to be formally registered with the Registrant of Companies in order to obtain a certificate of incorporation. Also, they are no longer to be run on the directives imposed by the provisions of the statues which established them but to be directed by their memorandum and Articles of Association as well as other provisions of the company and Allied Matters Decree. 1990. with incorporation, they are not only financially independent of the government but are also a financial contributor to government funds because they will now be expected to pay taxed such as excise duties, income tax end withhold taxes on dividends.