IMPACT OF PRIVATISATION OF PUBLIC ENTERPRISES ON POVERTY REDUCTION IN NIGERIA (A STUDY OF TELECOMMUNICATION INDUSTRY IN NIGERIA)

ABSTRACT

Privatization as an economic policy is of no doubt a good economic tool for development but in Nigeria, the policy has generated many controversies. Some Nigerians argued in its favour while others are antagonistic about its introduction in the country. This research work, therefore, sets out to examine the impact of privatization of public enterprises on poverty reduction Nigeria, using the telecommunication industry as a study.

Private sector-driven economy comes on the heels of the failure of government and its institutions to live up to their responsibilities. Evidence of government failure abounds but thickens with its direct engagement in the creation and supply of goods and services. Public companies are known to perform badly when compared with their private sector counterparts. With sharp reductions in government’s revenue, adequate subventions to these institutions could not be sustained. Some are closed down while a good number operate beneath installed capacity. Salaries of workers are not paid and many of them are disengaged. Privatization is seen as a solution to the problem of public enterprises. In other words, the size of the public sector needs to be reduced, allowing greater share to private sector. Even at that, some fears are entertained as to the workability of privatization in developing countries.

This study is divided into five chapters, chapter one looked at the background study of privatization and statement of problem. Also some hypothesis were formulated to serve as guides on the subject matter. Chapter two discussed the conceptual framework, the growth of telecommunication industry and the impact of privatization on the poor.

The research itself was designed to be descriptive, hence the survey research approach was adopted. Chapter three took care of the methodology used for collecting data, which involved questionnaires’ administration and secondary data collection. Chapter four handled data presentation, analysis and interpretation, the Chi – Square (X²) was used for testing the hypotheses formulated.

Finally, chapter five contains summary, recommendation and conclusion which will help the stakeholders to take a stand on the argument about governments’ privatization programmes in Nigeria. 

TABLE OF CONTENT

Title page                                                                                                     i

Certification                                                                                                  ii

Dedication                                                                                                    iii

Acknowledgements                                                                                        iv

Abstract                                                                                                       v

Table of Content                                                                                           vi

List of Tables                                                                                                 viii

List of Figures                                                                                                ix

CHAPTER ONE:

1.1     Background of the Study                                                                       1

1.2     Statement of Problem                                                                          3

1.3     Objectives of the Study                                                                        4

1.4     Research Questions                                                                              4

1.5     Formulation of Hypotheses                                                                    4

1.6     Significance of the Study                                                                       5

1.7     Scope and Limitation of the Study                                                  5

1.8     Definition of Terms                                                                               6

CHAPTER TWO    

          Literature Review                                                                                 7

2.1     Public Enterprise                                                                                  7

2.2     Privatization                                                                                        8

2.3     Poverty                                                                                               10

2.4     Privatisation of Public Enterprises in Nigeria                        12

• Privatisation of Telecommunication Industry in Nigeria          23
• Growth in Telecommunication Industry in Nigeria                   25
• Impact of Privatization on the Poor in Nigeria            26

2.8     Benefits of Privatization in Nigeria                                                34

2.9     Challenges of Privatization in Nigeria                                                      39

CHAPTER THREE

3.0     Research Design and Methodology                                                         42

3.1     Population and Sampling Technique                                                       42

3.2     Data Collection                                                                                    44

3.3     Administration and Retrieval of Questionnaires                              44

3.4     Method of Data Analysis                                                                       45

CHAPTER FOUR

4.1     Data Presentation, Analysis and Interpretation                           46

4.2     Data Analysis and Interpretation                                                            47

CHAPTER FIVE

• Summary of Findings, Recommendations and

Conclusion                                                                                           66

5.1     Summary of Finding s                                                                            66

5.2     Recommendations                                                                                68

5.3     Conclusion                                                                                           70

          References                                                                                          72

LIST OF TABLES

Table

Table 1: Poverty level in Nigeria 1980 – 1997 …… …… ……. ……. ……….. …….   17

Table 2: List of some companies already privatized …… …  ……          23

Table 3: Distribution of responses to questionnaires

   Administration    ……… ……… ……… ……… …… …….. …… …… ……..     50

Table 4:  Distribution of responses to question 1 …….. … …… ….    51

Table 5: Distribution of responses to question 2  …. ………. …….    51

Table 6: Distribution of responses to question 3  …… …….. …….. …….. ………    52

Table 7: Distribution of responses to question 4  ….. …… … …….     52

Table 8: Distribution of responses to question 5 … …. ……. ……. ……     53

Table 9: Distribution of responses to question 6 …… … ….. ……. …..      54

Table 10: Distribution of responses to question 7 …… ……. …….. ….      55

Table 11: Distribution of responses to question 8 ……… …… ….. ..     57

Table 12: Distribution of responses to question 9 …… ……. ………      59

Table 13a: Distribution of responses to question 10 … ……. …… ….     59

Table 13b: Distribution of responses to question 10    ……… ……..      60

Table 14:  Distribution of responses to question 11 …. …….. …….. …     61

Table 15a: Distribution of responses to question 12    …… …          …..     62

Table 15b: Distribution of responses to question 12 ….. …… …….    62

Table 16:  Distribution of responses to question 13 …… …….. ….. …….. ……     63

Table 17:  Distribution of responses to question 14 ….. …..  …….  …    64

Table 18:  Distribution of responses to question 15 …… …….. …        65

Table 19:  Distribution of responses to question 16 …… ..  ……. …     65

Table 20:  Distribution of responses to question 17 ………. ….….       66

Table 21:  Distribution of responses to question 18 ….. . …… ….        67

Table 22:  Distribution of responses to question 19 ….. ….. ….. ……       68

Table 23:  Distribution of responses to question 20 …… … … ……        69

LIST OF FIGURES

Figure 1: Normal distribution curve for hypothesis one …. …. …. ….      58

Figure 2: Normal distribution curve for hypothesis two ……. ……. …..      60

Figure 3: Normal distribution curve for hypothesis three ….. …… …… …      63

                                             CHAPTER ONE

1.1     BACKGROUND OF THE STUDY

Privatization (the transfer of government owned share-holding in public enterprises to private shareholders) is one of the revolutionary innovation in economic policies of both developed and developing countries (Igbuzor 2003: Chambers 2008).The ultimate goal of any credible and legitimate government is to ensure sustained improvement in the standard of living of the citizenry. Towards this end, Nigerian government found it necessary to design a developmental plan that will facilitate effective mobilization, optimal allocation and efficient management of national resources. To achieve this aim, public enterprises were established across the country to carry out these obligations. Towards the end of 1980, the public enterprises which had grown too large began to suffer from fundamental problems of defective capital structures, excessive bureaucratic control and intervention, inappropriate technologies, gross incompetence and blatant corruption (Aboyade, 1974). With the deep internal crises that included the high rate of inflation and unemployment, external debt obligation and foreign exchange misalignment, Nigeria and many other African countries were strongly advised by the World Bank and I.M.F to divest (privatize) their public enterprises as conditions for economic assistance (Nwoye,1997).

          This economic policy (Privatisation) is a product of neo-liberal economic reforms that became popularised and globalised through the World Bank and International Monetary Fund (I.M.F). As an innovative economic policy, Privatisation started in Chile under the Military Government of General Augusto Pinochet in 1974 and was adopted in Britain between 1986 and 1987 as a central part of economic policy shift (Hanke, 1987). Privatization in Nigeria started in 1986 as an integral part of Structural Adjustment Programme (SAP) (F.G.N, 1986: Ndebbio, 1991).

Prior to this period, the Nigerian state has participated actively in public enterprises (Nwoye, 2003). This trend continued until 1988 when privatization programme was officially launched (Anya, 2000; Igbuzor, 2003). The Federal Government privatized 89 Public Enterprises (PEs) between 1988 and 1993 in the first phase while 32 enterprises were privatized in the second phase which ran from 1999 to 2005 (Mkpuma, 2005). It was envisaged that privatisation would improve operational efficiency of our inefficient public enterprises (PEs), reduce government expenditure, increase investment and employment as well as ensure job security in Nigeria (Subair and Oke, 2008; Jerome, 2008).

          Surprisingly, since the official introduction of privatisation in 1988, the policy has been a subject of intensive debate and has remained highly controversial in Nigeria (Nwoye, 2010). Most Nigerians hold divergent views on the contribution of the privatization programme to the Country’s economic development in its two decades of existence in Nigeria. Therefore this study attempts to convey the message that privatisation is in the interest of the masses both in terms of poverty alleviation and enhancement of national development, through a careful study of Nigerian telecommunication sub-sector.

1.2     STATEMENT OF PROBLEM