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ABSTRACT
The government felt that some public sector businesses are performing below expectations. Some incurred debts, which are being repaid and serviced by the government. The government also became worried that substantial part of its capital votes were used to support public enterprises whose provision of goods and services were often expensive, inefficient and subject to political manipulation. The Federal government therefore decided to privatize and commercialize these enterprises as a way of saving and instilling the spirit of efficiency in the effected areas of enterprises.
An explicit step by step procedure is to be used in the research methodology. The use of primary and secondary sources of data collection is to be applied. The research based with in Enugu metropolis. An elaboration discussion and interview with specialists and members of staff of Nigeria Breweries (NBL) is to be done. Also the use of real materials by professionals and learned men is applied.
However, the research is confronted with a good number of factors which constricts the research .time being the first constricts the combination of my lectures, Assignments and personal chores is a bit furious. Money which has ordinarily constituted a hindrance is not adequately provided for the research, which needed enough cash for transportation, information and material. The protocols to be observed is not welcoming, things are unnecessary prolonged. The last and never the leastwise inadequate braise, material, research guidance and experts in the project research topic who suppose to give a professional advice.
Meanwhile, I believe this research topic has a long way in reducing financial malpractice, bringing financial relief for the government, bringing productivity and quality, help raise government revenue, lesson the dominance of unproductive investments in the public sector, develop capital market and promote enterprises and industrialization etc.
CHAPTER ONE
INTRODUCTION
There is no doubt that privation came in the hesitation of the policy of librization and the advancing for market basedreform..It has also become an importantcomponent
Globalization.
Privatization has since been endorsed by multi lateral financial institution as a major plank of adjustment policies , which are being , implemented in a number of developing country including Nigeria of course in development literature privatization as become the linchpin (things that is most important part of an organization ) economic liberalism.
The advocate of privatization believe that it is very effective stage for improving operational efficiency , broaden share ownership ;, attracting foreign investment and reducing the role of the state in these areas where the private sector process the capacity to operate more efficiently and more productivity . (Jerome, 1999; 2)
Several countries in the developed and developing world are increasing privatizing state owned enterprises. (SOES) indeed, between 1988 and 1994, developing country sold about 3300 state owned enterprises.
The rush towards privatization in developing country most especially, has been attributed to the poor performance of publicly owned enterprises which has been largely managed by the staff. In the 70s, state enterprises where prominent in the extractive industries, utilities and infrastructure such as electricity railway, telecommunication etc. in Nigeria .unfortunately . this enterprises become money guzzling outfit, rely on regular subsidies from government and survived only on the monopoly status they enjoyed. Many of them were over staffed and were bally managed
All of this deficiency necessitated a rethinking on the roll and structure of publicly owned or state owned enterprises like NEPA. The introduction of SAP in 1986 set the tone for the process of privatization of public enterprises in Nigeria.
In spite of the foregoing justification for privatization, it is important to point out ;that the private s sector in Nigeria as depended largely on the state for; its survival studies have showed that in terms of investment of productivity activities. The private sector in Nigeria has hardly fared better than the government. The privatize sector according to Obadan has not been able to respond adequately to the country desire for increased production an employment and stable prices (Obadan, 1998 :89)
It is a sad commentary on the state of the private sector that real investment and production have taken a back seat while service sector activities, speculative activities, distributive trade and foreign exchange deals remain the main focus of private sector. the private sector depends almost exclusively on government patronage and manipulation of government policies for survival.
For a country to rely on such a private sector for its economic rejuvenation will amount to economic suicide.
An effective privatization programmed requires the existence of a single private sector, productivity oriented bourgeoisie and not a collection of compradors, speculators, and dealers in foreign currencies that dominate the private sector in Nigeria.
The character of the Nigeria private sector and the imperfections that characterize the Nigerian business environment constitute the Achilles heel of the Nigerian privatization exercise.
In sample terms: privatization may be defined as the “transfer of ownership and control tights over firms from the public to the private firms from the public to the private sectors”(Jerome,1999). Privatization is however much more complex in practice than is in theory.
In embanking on privatization, government ought to critically examine the specific cities of their situations in order to avoid situations where privatization becomes counter productive.
Although, a number of Latin American counties such as Argentina and Chile have implemented privatization programs, these programs have not had the same effects in these countries. Argentina spite of privatization has been engulfed in deed economic and political crises.
Britain which has also has experience in privatization only recently lamentation that it ought to have more cautions in its decision to privatize public utilities.
The lesson in all these is that a developing country like Nigeria must not ruche into privatization where the “angels” of the developed world like Britain fear to tread. A public utility like brewery is so strategic and central to nation well being and social that we must be very careful in rushing to privatize it.
Dilemma of privatization: THE EXAMPLE BREWERIES.
There is no doubt that brewery as organization has been dogged by inefficiency, sabotage, waste and poor performance. Governmental neglect and bad management also cause breweries problems. For instance in 1998, report indicated that over 36 percentage its equipment/facilities are over 20years old, 48 percentage over 15years old, and 80percentage of its installed capacity over 10 years old.(news watch,1999: 14). This accounts for the be low performance and collapsing of virtually all the bottling/brewery companies.
Release of funds for the operation of breweries has been generally epileptic. Only the Abubakar and Obasanjo regimes showed some commitment to revitalization through the allocation of hung sums of money for operations.
It is dear that the problem of state owned enterprises in Nigeria does not necessarily be in the fact of their ownership by the state. Some of the problems are manageable and can be solved by some radical restructuring of these enterprises and the imposition of sanctions on officials that have contributed to the collapse of SOEs.
The tragedy of our circumstance is that those who ran state owned enterprises around went away with it and even position themselves to purchase the remnants of these enterprises with the money they loot from these enterprises which they obtained.
The economic and technological changes taking place on a global seal are as palatable, as they irritable. Nation of the world, both developed and developing alike are competing with one another in devised appropriate strategies to cope with the imparked dynamism of the international business environment, which is highly characterized by intense and interminable competition in production, trade and services. In response to these sweeping changes, Nigeria has at various stages, attempted to effect some fundamental and resisting at boosting efficiency and economic competitiveness in national and international performance.
The advent of democracy has given further encouragement to the actions leadership to pursue with renewed confidence the goals of attaining improved efficiency and economic competitiveness by resolving to make privatization the lady engine of growth for the national economy.
Inescapably therefore the democratic government of chief Oluseya Obasing gave tangible expression of its determination to take the bully the homes whom it instated a comprehensive privatization and commercialization act 1999. this important political and legal framework, encapsulates some of the critical success factors that needed to be assigned pursued as a precondition for meaning full transformation of the economy. The component of the framework provides for the establishment of institutional machinery whereby different responsibilities, such as selection of public enterprises for privatization excess are well defined and clearly articulated. The law governed process approach adopted by the government serves to under line a strong political commitment to the privatization process, in addition to serving as a vessel of transparency and accountability
O, may add that it is at the heart of the fundamental difference, between the on going economic restricting through the medium of privatization, and the arbitrary and failed experimentations conducted by the preceding milting administrations on the ailing economy.
The straggle for democracy and good government, which took place throughout the 1990s and resulted into the enthronement of democracy in our beloved country, are all forms of restricting efforts which seen to confirm the in flinching determination of the people to achieve the cherished goals of having a restructured economy based on a competitive system of PRIVATE enterprise with sound and reasonable regulatory policies.
-efficient markets in products, services, labour and capital.
-a well defined property rights
-effective and clear enforcement of contractual obligations;
- an efficient administration based on mechanism and process for goal governance, accountable, open and transparent leadership at all levels;
- as well as 0 efficient and sustainable social and physical infrastructure, constantly driven by the intent technology.
- However, the monoculture economic nature of Nigeria brought into the country economy, a short fall in foreign exchange generation were the global plot reduced the unit cost of barred of oil to as low as ninety naira (90) the fantastic earnings from states of crude oil lead effectively by conform states of crude oil had effectively by cushioned the poor returns of divided from investment holding in public enterprises in Nigeria.
- The economy of Nigeria can highly be described as a mixed economy that is an economy in which the ownership of productive machinery has in the hand of ;the public authority and or private capable individuals.
- The history of efforts towards privatization and commercialization started in 1980 by the letter from the security and exchange commission to the then federal ministry for finance Mr. Victor Age ,
- Novae the commission called on the federal government to divest. Itself of its investment portfolios notably the economically and politically non-sensitive does. By 1985 the federal government invested a sum of eleven billion naira (11.b) in central banks of Nigeria (IBN). Billion on parastatal and made total dividend receipt as at October 1985 to ninety three million, seven hundred thousand (N93,700,000 and 1.39pecentt return. ; the poor return confirmed the observation that most of the government parastatal if not all have constituted as unnecessary burden on loan government receive. In 1988, the federal government set up a technical committee on privatization and commercialization (TCPC) by decree 25 of 1988 as a legal framework for implementing its privatization and commercialization policy to sell all or some of her equity holdings on its parastatals ranging from agricultural established, hotels ;food ;and beverage, breweries , distilleries, distribution, electrical and electronic appliances and non-static industries etc. there was also government policy design to reduce its holding in banks, insurance, and other institutions without loosing control.
However there is nothing fervently ultra virus or illegal in the decision of privatization the government enterprises by the sales of government equity interest there in either partially no fully, thus recommitting the enterprises under joint government/private, or fully private ownership. It is important for the workers to bear in mind that the basic of relevant legal authorities. Their cooperate employer is well within its legal right if it decides to sell it interest in enterprises. The federal government of Nigeria has legalized its reserve to privatize or commercialize government owned company/parastatals by enactment of the public enterprises (privatization ;and commercialization) act 1999 here in ;after, referred to as the act. ; the act classifies the government owned companies/parastatals that shall be privatize into various categories. There are those where equity head by government shall be fully privatize such as :
>National electric power authority.
Nigerian national petroleum corporation
Jos steel rolling company limited .
Oshogbo steel rolling company limited
Durbar hotel limited.
Crusader insurance company limited
Dekr steel company limited
Nigeria port authority.
On the other hand, there are those that are partially commercialized such as to federal radio corporation of Nigeria. And those that are fully commercialized such as the Nigeria national petroleum corporation.
Therefore this research represent an attempt to search for effect which privatization and commercialization of government owned enterprises has had an the life of these enterprises. The thesis as well seeks to know whether there should be a continuation of the activities on outright rejection based on its findings.
In an attempt to research the risk and came of the topic this research was done in five chapters with chapter one leading on introduction, statement of the problem, objective of the study research questions, significance of the study, formulation, scope and limitation of the study and definition of teams.
Chapter two deals with the review of related literature and among other things treaded on the national objectives of privatization and commercialization with particular attention to Nigerians own laces. ; it ;also trampled some arguments put forward by certain concerned citizens.
Chapter three touched the areas of the methodologies used in carrying out the research work. Data was collected through pricing source of data collection questionnaire and personnel . interview and through secondary sources of data collection which companies the management, subordinate staff and selected company which constitute the sample size and real materials by well ;known authors.
Chapter four deal with the presentation of data and analysis with this its of tables percentages and chi=square approach and decision taken on the basis of the data collected, analyzed and tested..
Chapter five was basically taking that the whole research work in a not shell by way of summary, conclusion and recommendation. It is a pleasure to say that such privatization and commercialization programmed as embarked yaupon there are providing sense of committing and delectation amongst the workers of the companies, this gives a long way to indicate that the programme is necessarily helpful to the corporate health of the company- the Nigerian breweries, 9th mile corner Enugu, a company licensed by the board of customs and service as a brewers of beers and other associated product and the entire country and all the interested persons in some dealing.
BACKGROUND OF THE STUDY
The period between 1971 to 1980 was a period described in the history of Nigerian brewery is the period of oil beam, within which tune in coherent application of generated revenue from sale of ;crude oil was made. The various government both states and the federal established may seat industries in various parts of the country some of these industries are established import so much as such of its raw material imputes from overseas countries. The data turn of the Nigerian fortunes which resulted from global oil glut have a great negatives impact on the economic fortunes of the country. Nigeria being a mass cultural economy and which depend on the revenue from crude oil to finance her then import oriented economy to as much as ask was effected.
In 1986, the Nigeria government applied for a loan of 9.3billion from the international monetary funds (IMF) to finance her ceiling country economy. The IMF hence presented a set of constitution which will qualify Nigerians for a loan. One of theses conditionality will the reduction of government expresses an public parastatals the proposal was exploited by the government as an avenue that will not only reduce government expenditure, portfolio but also made the much needed revenue available to finance other sectors of the economy.
The Nigeria breweries in (NBC) 9th mile corner Enugu incorporated only precisely in the 1993 with (656) sixty five percent ownership by individuals and (356) thirty-five percentage government opened. As it is now the Nigeria breweries is now and young wearing. Strong at its peak- it has not made any loss but to forced with problems.
STATEMENT OF THE PROBLEM
WILL CONSULTANT LIMITED Referred—a discussion on workers and privatization process from the legal perspective is bound to be futile, on less at the outset celebrate effort is made to appreciate the diverging of power and interests involved in the industrial establishment between labour and capital, that is management and workers furthermore, this should furnish a cleaner insight into the relative strength of the stance of other side on the issue of privatization and or commercialization, presenting, while the sell of stores is going on the stand of the labour has been in opposition to any such more since the ides was molted mid 1983.
The senior staff association of statutory corporations and government owned companies issued on Dec, 23,1983 the following press statement. *the result of the firming out can only the a social and economic development debasement of the means of this country an attempt to alienated the masses from ;the public wealth of the country. It is an attempt to alienated the masses from the public wealth of this country. It is an attempt while concentrating in the hands of fail capitalists who its not care if the rest of its and our urban children reason in reform practically.
The Nigeria labour congress also had this to say the sales of public companies and corporations would inerasably lead to economic strong not pauperization of the nation to want reorganize under printed control is to pressure that accruing profit goes into printed pockets and this will lead to retrenchment in public sector and bring untold hardship to working people of this country.
According to Warner sorbet capitalism has its own spirit, which is pert seeking the motive to ask profit from investment is considered a moving ford which drives investors whenever the expected returns from investment is not forthcoming, such investment may be considered on means of financial less such will the economic situation which confronted the Nigeria society when out of a total of eleven (N116) investment on parastatals and government owned industries realized a dividend of 93.7million, that is 1.39 return. The poor return portrays the fear that such investment is a waste of public revenue, which was, then on a deciles following a global recession on the oil revenue.
The first official publis settlement on privatization was in the 1980 budget speech by the then head of state president IBRAHAM BABANGADA, when he said government parastatals have for long been subject of study policy review. They too have generally come to constitute on unnecessary high burden on government resources they have been variously classified for purpose of reform. Government has not decided that as from 1980, the volume of un=statutory transfer to all economic and great=economic parastatals would constitute not more than 50% of their levels. to balance from increase in the price of their service and producing changes, transfer and rate..
According to author c.i. mbanefor, in his paper *capital restricting for successful privatization. There is no doubt that excessive participation by government of the developing countries like Nigeria in business ownership created great imbalance in their economics. It is obvious that the under lying cause of privatization ecossaise is the attempt to create efficiencies by asking public owned enterprise more productive well as not responsive in the market place and to competitive pressures. Privatization and commercialization of public owned enterprises is expected to block the drain on government revenue by binging profit spirit into such enterprises as well as provide the needed revenue for the execution of public programs.
SYNOISIS; a workshop hold by NECA on JAN 2003 ask is privatization the right approach they are of the believe that enterprises could transform from a state monopoly to private monopoly. It is not certain that the enterprises will become viable and efficient after privatization.
While many rating the council on privatization, president Obasanjo stated that *state enterprise suffer from fundamental problems of effective capital structure, excessive bureaucratic control or intervention, inappropriate technology, gross incompetence and mismanagement, blatant conception and crippling complacency which monopoly engenders *(privatization hand=book, 2000, 4). He went further to state that.
*we are privatizing for the benefit our economic recovery and serial life.
We are not embarking on the exercise to posse the world bank And the IMF. It is not abort to replace public monopoly with private monopoly.
Rather, in our determination to be unyielding and uncompromising in the pursuit of the best interest of the country, we writ to remove the financial burden which these enterprises constitutes on the public and release resources for the functions of government (IBID)
privatization is not an economic but political matter. there is nothing; economic about what government is currently during under the attempt to privtise. it is merely taking a partial decission, which sunts. this politics, ideology sillies and fiontsboth local and international. this is because not all enterprises currently being privitised operated at a loss. many of them were/are victions of politicisation and bureucratisation.
Government is merely responding to the ideology of globalization, which is uncritically pursuing. The federal government decree 28 states it all, that the goal of privatization and commercialization is to reintegrate Nigeria back into the global economy, as a past form to attract foreign direct investment. (FDI) (Gulotel in ec. Rufei, 2001:5).
This is the primary reason why government is privatizing every other reason is secondary if not unimportant.
OBJECTIVES OF THE STUDY
The major objective of this study is to economies the impact and extent privatization and commercialization has gone so far in Nigeria as reports the set objects
RESEARCH QUESTIONS
The questions to ask:
What is the implication of privatizing may social service sectors for a developing economy?
Will that sense a common good?
Is it not a fear individuals that are coming forward to bid for these enterprises?
Can Nigerians in whose names and interest these enterprises were required ear beings from such sale?
Why the research topic=commercialization and privatization?
Will it have any effect on individuals?
Does the enabling government exist?
Is the required legislation in place?
SIGNIFICANCE OF THE STUDY This study is essential in the fact that privatization and commercialization of public enterprises is being resulted to as for public enterprise. Unprofitability, inefficiency and unproductively. Public; enterprises in same western countries were privatized for maximum efficiency and profitability Such enterprises include the British telephone company the British air ways the management of panama- canal the via postal agency etc.
The study is very important especially since privatization and commercialization of publicly owned enterprises is currently-being pursed in derivable with many potential investors still garrant of the benefit derivable from such investment. Considering the fact that there are mixed literatures on the effect of the activities this research therefore seeks to enlightens the general public about the effect of privatization and commercialization to our inefficient public enterprise. It will also help the researcher on privatization and commercialization to know more about it.
The study is very essential as it reveals the experience of government in managing business both in Nigeria and round the world. Governments expenses in running business, it the local and international level are depicted to follows:
= Inefficient
= Uncommitted.
Reliance on subvention
Bureaucratic
Loss of earning.
While experiences round the world are experiences else where different from Nigeria. This does act appear to be the case.
Government owned enterprises were notoriously ineffective in meeting demand for services that had become crucial to economic development, for instance.
Average waiting period for telephone installation in Indonesia wasnearly eight years seven years in Philippines and ten years in soviet union and Pakistan.State and enterprises were less makers rather than revenues generators.World bank studies should that 50e,in developing countries accounted for one=guarter to one=half of all our standing domestic debt and for a substantial portion of foreign borrowning.
in thrilland, be publis enterprises accounted for more than60% of government’s foreign debt in 1988.
There were inefficiencies from lack of competition and the absence of the checks and balances that come with private organizations.
In Poland, Hungary, formers soviet union and may Latin American countries, costs did not enter into business strategies and operational decisions. Most of the joint slots, were overstaffed and had absent technology to compete with western multinationals in the global market. Eg the state railway of trailed= the government controlled the taffies and nether below the cost, of carryings passengers and fright is the real costs increase
Lesion incurred by SOE, in uk were nearly 6,million.
In the light of these experiences, it has become glazing that the era of government involvement in which private sector could do so well is over. It has also become imperative that where government wants the companies it containing to be competitive they have to head of the control of this enterprise.
RESEARCH HYPOTHESIS
The following question? Statements constitute the research hypothesis
Privatization and commercialization will enhance the performance of affected company.
in what extent is the company coping with the apparent problem of privatization.
what are the major implications of the privatization and commercialization programme as it affects the Nigerianbreweries ltd.
privatization and commercialization programmed will stop the drain o public revenue and I increase the number of shareholder.
SCOPE AND LIMITATIONS OF THE STUDY
This research work is limited to a production oriented enterprise work by government which has been partially privatized and was classed as an industrial and commercial enterprise concerned with the development, production, sales and maintenance of wide range of products of public consumption and commercial bases. Hence, they are expected to make profit while change competitive prices.
The delimitation to our case study Nigeria breweries LTD was prompted by the fact that it was newly privatized and has gotten deep into the programme. Hence, the research intends to asses efficiency in terms of monetary and financial goings and this can be done effectively with production and industrial based public enterprises which are by law expected to make profit while charging reasonable price
DEFINITION OF TERMS.EFFECT: Extent or outcome of privatization and commercialization of government owned industries.
PRIVATIZATION: Going by privatization and commercialization ACT 1999,…. Privatization is the relinquishment of part of all of the equity and other interests hold by the federal government or its agency in enterprises weather wholly owned or partly owned by the federal government.
COMMERCIALIZATION: defined in the ACT 1999 as the reorganization of enterprises wholly or partially owned by the federal government in which such commercialize enterprises shall operate its profit making commercial ventures and without subvention from the federal government.
BAJOMO (1):Commercialization is seen as a reward system involving a more towards the pursuit of efficiency and effectiveness in attainment style that takes profit as one of its major goals.
GOVERNMENT OWNED INDUSTRIES: This is where the government has up to 30pencent of equity ownership of company.
SOE – State – Owned Enterprises.
IMF – International Monetary Funds.
FDI – Foreign Direct Investment.
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