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10 June 2012
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. Petroleum
Solid
minerals Development
banking
Telecommunication Power and
steel 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. The National
Electric Power Authority (NEPA) The government
committed billions of dollars into the authority
with the expectation that it would provide the
nation uninterrupted electricity supply, yet
electricity is epileptic causing her a loss of not
less that US$800 MILLION The Nigeria
Telecommunication Limited (NITEL) Between 1975 and
1999, NITEL attracted from the government subsidies
to the tune US$30 billion providing a meagre
service 400,000 lines telephone density in the most
populous nation in
Africa.
Nigeria
Airways in 1979, the airways had more than 30
aircraft flying to all parts of the world which by
1999 were reduced to one. Yet this airline has 2500
workers on its pay roll, with huge debts from
incurred from unpaid aircraft maintenance fees
hanging heavily on its neck. Nigeria
National Shipping Line: as at 1979, it had five
ocean plying vessels, with 19 specially others still
on order. Twenty years later, all but one were gone
with the wind. Nigeria
Railway Corporation: Nigeria Railway Corporation is a
study in irrelevance to growth. Today in Nigeria
railway is the least [preferred mode of
transportation as the services it provides is not in
tune with modern times. Yet on annual basis,
government has to pay N250 million to run the
railway hospital with nothing to show. 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 st 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).
Abdul-Warees Solanke, Head, Voice of Nigeria Training
Centre, Broadcasting House, Ikoyi Lagos studied Mass
Communication and Public Policy and writes via
korewarith@yahoo.com
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