IMPACT OF PRIVATIZATION ON THE PERFORMANCE OF PUBLIC ENTERPRISES (A CASE STUDY OF CHAMPION BREWERIES PLC, UYO)

IMPACT OF PRIVATIZATION ON THE PERFORMANCE OF PUBLIC ENTERPRISES (A CASE STUDY OF CHAMPION BREWERIES PLC, UYO)

CHAPTER ONE

1.0   GENERAL INTRODUCTION

This issue of privatization has been a subject of intense global debate in recent years. In Africa, it has remained highly controversial and politically risky. Privatization in Nigeria has not been a popular reform. It has received so many criticism from labour, academic and individuals. There have been numerous strikes against proposed sell–offs by unions yearning loss of jobs. While proponents of privatization see that aspect of economic reform as an instrument of efficient resource management for rapid economic development and poverty reduction, the critics argue that privatization inflicts damage on the poor through loss of employment, reduction in income, and reduced access to basic social services or incomes in prices. Whatever are the views of the two parties, the only group that has no voice in the matter is the poor. The researcher is of the view that privatization is not inherently good or bad, but the poor performance of effectiveness depends on implementation (Nightingale and Pindus,)

The participation of government owned enterprise in Nigeria date back to the colonial era. The task of providing infrastructural facilities such as railways, roads, bridges, water, electricity and other fall on the colonial government due to absence of indigenous companies with the required capital, technical competence as well as inability of foreign trading companies to embark on this capital extensive project. The involvement was extended and consolidated by the colonial welfare development plan that was formulated when the labour party came into power in the United Kingdom. Privatization in Nigeria began in 1988 through a degree known as privatization and commercialization degree of July 1988. This is to enable government both at federal and state level sell off its corporation to the private sectors. Therefore, after its establishment in 1988 the Bureau of public enterprises, a state agency, invited local and international investors to flag their interest in more than two dozen state – owned companies slated for privatization.

Companies up for sales ranged from giant state telecommunications and power utilities to cement, Sugar and vehicle plant, as part of what government says is a comprehensive programme of privatization and commercialization of public enterprises. Government officials says the aim is to turn around poorly managed and cash trapped state enterprises whose inefficiency have hampered economic development in Africa’s most populous nation.

General Abdulsalami Abubakar, who came to power in June following the death of his predecessor, General Sani Abacha, aims to get the privatization programme on track before restoring Civilian democratic rule, now scheduled for May 29, 1999. His commitment to market oriented reform has won him praise from western creditors and international financial institutions. Resumption of a serious privatization effort has been one of the pre-conditions set by the International Monetary Fund (IMF) for negotiating an interim programme monitored by fund staff that would open the way for talks on a medium – term economic strategy agreement for Nigeria. Nigeria also needed an accord with the IMF and the World Bank to pave the way for debt relief talks with the pairs club.

Its members account for 70 percent of the country’s total foreign debt of roughly $31bn (in 1996). During a visit to Nigeria in mid-September by world bank officials told Africa Jean- Louis Sarbib, Bank officials told reporters they where encourage by the reforms introduced by General Abubakar, including privatization. Under the new