BACKGROUND OF THE STUDY
Today, we are witnesses to sweeping changes that are taking place in the
economies of both developed and developing countries. These changes
relate to efforts to move away from government ownership, control or
participation in the economy towards free enterprise and increased
operation of market forces. On the whole, the changes ar3e making for the
reduction in the role of government in the economy with a corresponding
expansion in private sector ownership control and participation.
Despite the numerous measures in form of economic policies
consisting of several incentives to promote industrial, agricultural, and other
activities, the Nigerian economy for example still exhibits very prominent
features of underdevelopment and such features includes poor managerial
skill, heavy reliance on a single commodity oil, which has failed to provide
the much needed capital
in huge sums as expected for the conscious implementation of a single
strategy of development.
Public business enterprises creates a solution in which national funds
that would have been better spent to guarantee new economic activity and
employment opportunities for the army of unemployed is being used to
subsidize deadwood that would neither grow nor change. Public
enterprises are enterprises that are controlled by the state, they are non-
profit oriented enterprises.
The participation of the states in enterprises in Nigeria dated back to the
colonial era. The task of providing infrastructural facilities such as railway,
road, bridges, water, electricity and port facilities fell on the colonial
government due to the absence of indigenous companies with the required
capital as well as the inability or unwillingness of foreign trading companies
to embark on this capital intensive projects.
This involvement was expanded and consolidated by the colonial
welfare development plan (1946 – 1956) that was formulated when the
labour party came to power in the United Kingdom. This trend continued
after independence such that by 1999, it was estimated that successful Nigerian governments has invested
up to 800 billion naira in public owned companies.
The privatization and commercialization net of the 1988 and the
Bureau of Public Enterprises Net of 1995 defined privatization as the
relinquishment of part or all of the equity and other interests held by the
federal government or any of its agencies in enterprises whether wholly or
partly owned by the federal government.
Although the public enterprises have been subjected to criticisms, one
to poor management and inefficient utilization of resource and mostly
regarded to a dead wood that will neither grow nor change, it was these
construct criticism levied against them that led to the idea of privatization
and commercialization in which the exercise would enhance efficiency in
the economy, rid firms of the crude and undue governmental interference
which have been the bane of most public enterprise in Nigeria and other
developing countries and also limit the drain by the public enterprise on
government resources but the basic objective of the exercise is to enhance
efficiency and profitability in the government owned industries.
STATEMENT OF THE PROBLEM
Privatization takes an existing government services, and replaces it
with a private service. But over the years in Nigeria for instance the sheer
waste and inefficiency of government owned industries became glaring
from the early 1980s in with the onset of economic crisis, by then, public
companies had become heavily dependent on the national treasury for the
financial operation and their activities were characterized by
mismanagement of the funds and operations, corruption, misuse of
monopoly power and bureaucratic suffocation from supervising ministries,
Obadan (2000; Olukeshi; 1993:16)
However, as noted by some writers, the actual performances of many of
the public enterprises have left much to be discussed. Many of them were
not responsive to the changing environment of the growing and dynamic
economy and they did not posses the necessary tools for translating into
reality the hopes of successful commercial operations. It was obvious that
the commission‟s report of cost effectiveness and insufficient attention to
by parastatals. If recommended an increased role of the private sector
especially in non sensitive or non security related parastatals Olukeshi
Therefore, the policy of privatization and commercialization of the
development of the nation‟s economy has been called to restructure and
reverse the economy in the country and make it a better place.
OBJECTIVE OF THE STUDY
1. To find out the effect of privatization and commercialization of
government owned industries in developing econmoy.
2. To know the reason why governmernt embark on privatization and
commercialization of their own industries in developing economy.
3. To find out if privatization and commercialization of government
owned industries improved the efficiency of service delivery on
4. To identify the problems militating against privatization and
commercialization of governmental owned industries on developing
5. To determine whether privatization and commercialization help to
solve the problems of government owned industries on developing