ROLE OF COMMERCIAL BANK IN THE PRIVATIZATION OF PUBLIC ENTERPRISES IN NIGERIA

CHAPTER ONE

INTRODUCTION:

1.1    BACKGROUND OF THE STUDY

Banking started in Nigeria a of 1892 when the first commercial bank was introduced in the  country.  With the help of SAP, that is structural Adjustment programme and deregulation more commercial banks came to existence.

Commercial banks has contributed immensely to privatization in our economy.  The word privatization refers to point of changing ownership   of government firms and parastetals into the hand of individuals some of the problem which  these government enterprises encountered are   inadequate fund to operate them, mismanagement of fund etc.  This as a result leads to privatization of these enterprises.

However, commercial banks play important roles in privatization, in the since that, the private sector generate the fund for running the affairs of such enterprises through the commercial bank credit facilities such as loan overdraft etc.  more still, commercial banks help in monitoring  any project when thin private sector took any credit facility from them thereby making it impossible for such fund borrowed on the project to be mismanaged.

Commercial banks act as a “pit of blood” to privatization because when a government enterprise is about to die off the private sector seek for fund to revive such an enterprise from dying off when privatized.

Another point is the issue of capital base. From all point of view, capital base of public enterprise are always higher then that of private ones and as a result of this, when a public enterprises is privatized into a private enterprise, such  private sector must seek for fund from commercial bank to make the capital base to be up to the one required for the privatization as stipulated by the government, infact without the existence of commercial banks, the objectives of privatization will be difficult to be achieved in the economy.