Roles of accountants in privatization and commercialization of public enterprise in Nigeria economy in EEDC
- Back Ground of the Study
Government involvement in business enterprises in Nigeria and the predominance of state owned enterprises, reflected a desire to control the economy after wrestling political control from the colonialists enterprise and viable indigenous private sectors, the government had to move into the large empty space left by society to take over the budding economy.
Government played a very important role in many area of economic and industrial development. Moreover, provision of services in such areas of business like, insurance, petroleum manufacturing, supping and banking where government acquired equity interests in twelve commercial and merchant banks. In all these, Nigeria had a rather bloated public sector with well over 1, 500 public enterprises at the federal and state levels enterprise at the federal and state levels with a regulated private enterprise. These enterprises accounted for between 30-40% of fixed capital investments as stated in the final report of the technical committee on privatization and commercialization (TCPC). As the case may be wake of the economic recession which started in 1981 and it possible for attention to focus on the activities of these parastatals.
The 1983 presidential commission on parastatatal with a view to determine the basis for a new funding scheme, appropriate capital structure, as well as incentive measures to enhance the productivity and general efficiency. The report of the commission showed the following:
- misuse of monopoly
- Defective capital structure, resulting in heavy dependence on loan by the treasury for funding.
- Bureaucratic bottlenecks in their relation with supervising ministries.
- Mismanagement, corruption and nepotism.
The federal government could not fund the enterprises with problems such as ill conscious investments, political interference in making decision etc.
The federal government of Nigeria in the year 1985 for example, had invested a total sum of N23 billion in the public sector. In addition to this, a total of N1.15 billion was recorded as sublimation to various parastatals and companies.
The government revealed that the total dividends received from this investment, during the period of 1980 to October 1985, was N933. 7 million averaging approximately N155 million per year.
The structural adjustment programme was first announced in 1986 as part of the bread efforts to reduce budgetary allocation to public sector efficiency and support the aim of fixed balance. Divested holding will be takes care of to avoid it being concentrated in the hands of a few individuals.
In order to enable all interested citizens own shares in the private enterprises, commercial banks were directed to grant credit facilities for the purchase of shares under the programmer (CBN 1989) i.e. the central Bank of Nigeria programme. Another programme was introduced and it was then, that bank was first privatized in Nigeria in 1992.
The federal government structural adjusted programme is the drive toward higher efficiency in the promulgation of the privatization and commercialization Decree N0 25 in 1988 by the federal Government which reflected that government will divest its holding in agricultural production, Electrical appliances and non-strategic industries and reduction of its holdings in banks, insurance companies and other financial enterprises without losing control.
The year 1989 was ear marked the first of implementation of the privatization and commercialization programme of the federal government.
Privatization as the lbie opined, it is a process by which the size of an inefficient and ineffective public sector is reduced by transferring some introduction of privatization in Nigeria brought in the opinion of many intellectuals such as Adebayo (1985) who was of the opinion that privatization and commercialization to succeed, there must be a reshuffling in the economic policies. He said that it was only as a result of this, that public enterprise would be able to perform better.
Umar (1992) was of the opinion that the issue of the absorption of the capital markets would be solved by following the procedure accepted during the indigenization excise of 1972. He observed that Nigeria capital market now has more experienced financial experts than before and that they could be put to work. He suggested that, for the policy to achieve orderly implementation, this process should be emphasized over a period of 2-3 years to enable a proper structure of the company that were to be privatized first and the subsequent ones as follows:
Expression of fears were raised by individual and workers, in the sense that, it will bring employment as a result of massive retrenchment of workers in the public enterprises.
Chief of general staff, commander Ebitu Ukiwe gave a dismissal picture of federal government investment parastatatal and companies as at October31, 1995, total dividends receipts by government amounted to N93. 9 million on investment of N11 billion i.e 1.3% returns. This reflected the more reason why the government felt the need to reduce the financial burden with the belief that the private sector would be able to record higher profits.
In the light of these issues raised as regards the privatization programme, the federal Government of Nigerian set up a technical committee on privatization and commercialization implement the programme. The technical committee (TCPC) was inaugurated on July 1988 and its secretariat in Ikoyi, Lagos.
Commercialization under the Decree N0 25 of 1988 on privatization and commercialization was defined as, there-organization of enterprise wholly or partly owned by the federal government such that these enterprises shall operate as profit- making commercial ventures and without subvention from federal government.
Privatization and commercialization of public sectors has been a dream in the mind of Nigerian Government in the past years now that its need arise further for growing the economy of the nation. His Excellence Chief Olusegun Obasonjo the president of federal republic of Nigeria as at 2003 brought to focus again the programme to privatize and commercialize public sectors in order to invest profit and enhance political, social and economic development on a sustained basis.
The parastatals to be privatized or commercialized include: EDDC, NITEL, Nigeria Railway Corporation to mention but few. It is with this goal in mind that she realigning its policies and programme to create the enabling environment for efficient government and put in place a viable private sector.
As at 2004 federal Government resolved to commercialize refineries to sale up its 51 percent equity in each of the four refineries in the country while the balance will be retained with the NNPC. In order to realize this objectives a four man presidential panel to oversee the sale of the refineries was formed headed by Dr Edmund Dankoru with other five (5) Members including Engr. Funson kupolokun, group managing director of NNPC and Dr Julius Bala, Director general of the bureau of public enterprises (BPE). Consequently, the panel in her successful Juacture did comprehensive and conclusive work which was noticeable when it was published in Daily times early 2006 that the nation’s oil refineries have sold up its 51 percent equity to private enterprise and that the major shareholders was Dangote. This information or report is being the future bleak of the nation’s economy. When the new administration came on throne on 29th may 2009 president Musa Yaradua had to stop the process in responses to the clamour of many Nigerians.
- Statement of Problem
The researcher in his meticulous need to establish those problems that might have been the heart beat for the course of this work among other problems is:
The federal Government could not fund the monumental Waste and inefficiencies of these public enterprises with problems such as ill conceive investments, political interferences in decision making, costly and inefficient use of public resources, growing budgetary burden the issue of national cake syndrome etc.
- OBJECTIVE OF THE STUDY
In view of the identified problems militating against public enterprise the study:
- Analysed the problems facing the management of these public enterprises.
- Identified how privatization and commercialization of government parastatals will help in profit orientation in the growing economy like ours.
- Established how the management of public sector can be improved.
- Offered suggestions on how to put the government enterprises in order, so that they will survive.
- Research questions
- In what ways will the privatization and commercial of oil sector for instance help Nigeria economy?
- How will privatization and commercialization of the public sector change its form from dependent to market driven and private sector oriented?
- To what extent will the privatization of public enterprise ensure more efficiency thereby satisfying the economy and the general public?
- Formulation of Hypothesis
H0 privatization and commercialization will not make public enterprises more efficient thereby satisfying the general public.
H1 privatization of public enterprise will not change it from public sector dependent to market driven and private sector oriented?
H2 Removing the problems of public enterprises executives will enable them to act properly.
- the significance of the study
The study is no doubt of a great importance to the federal and state government of Nigeria in the sense that it will help to enhance their policy inputs to the public enterprises.
The out public sector and examine the preserve as an abase for solution to other economic problems confronting the various government to understand the implications of their unhealthy encroachment on the government parastatals.
The study will also be useful to students of business studies who may in their various research programmes as well as other authors who may wish to write on this outcomes, that is the general public and government to be more efficient to the large size of the population like information got from a sample size cannot apply one hundred percent to the population.
- Scope and Limitation of the Study
The researcher was able to embrace in his study restraint factors that have necessitated sectors, the barring flaws traceable to typing or the indicative of the inadequate competence in the presentation of some aspects of this study tenable actor affected the entire work.
One of which is that the study was cost intensive because of the high cost involved in transporting the researcher to different are as in search of relevant data.
Undoubtedly, time meant for the completion of this research was so short that it was difficult to extend the research beyond its present scope which is the EDDC General public, private sector and government ministries
Move so, the in ability of researcher to meet the appropriate officers at the scheduled time for filling up the questionnaires and engaging them in oral discussion, most of time, officers were either not on seat or too busy to attain to the researcher.
Effort to still complete the research not withstanding to the researcher’s approach and due explanation made him to give access to necessary information.
- Definitions of Terms
This section will aim at defining some of the technical terms used in the course of this project writing.
- Militating: it is defined as a kind of situation making things difficult to happen.
- Promulgation can be defined as an announcement of a new law of system officially or publicly.
- Privatization: it is a process of diverting government ownership control and of enterprises and agencies to private individuals and or group of individual
- Monumental: This is defined as a very large task ahead.
- Commercialization: This means that the designated enterprise will be excepted to generate enough revenue to cover their operation expenditure while government gives capital grant to finance their capital project