Abada, Ifeanyichukwu M.
Department Of Political Science
University Of Nigeria, Nsukka
Public Enterprises are established by the government for the purpose of providing essential technical and infrastructure services to the public at affordable prices. They are expected to an extended be se/f-supporting, relying little on the government for their operations. But unfortunately, pg have Jailed to live up to expectations. They have persistently relied on the government Jar assistance and become a burden on the government. To reposition itself on its primary activities to the public, the federal government decided to commercialize and privatize some of its public utilities. This, it did, by establishing some agencies such as Technical committee on privatization and commercialization, which later metamorphosed to Bureau of Public Enterprises (BPE) with the national council on privatization as its umbrella. Most of the public utilities have been privatized through the BPE. This article identifies the role played by the BPE in the privatization programmes and the impact of such an exercise on both the nation’s economy and the general public.
Public enterprise has for long been an important part of the public sector in most developed and developing countries. It is a particular statutory authority, which sells goods and services to the public on a large scale with the financial returns accruing in the first instance, to the authority itself. Public enterprises provide many services including utilities such as telecommunications, electricity,
gas supply, water and sewerage, transport; financial services, notably banks and insurance companies; oil and agricultural marketing. These enterprises are controlled by the ministers in charge of different ministries and the nature of control determines the effectiveness of such enterprises. The Federal Government has invested over $100 billion in the establishment of over 600 public enterprises with over 7000 board appointments done on political patronage basis. This has led to a situation whereby these enterprises were seen as conduit pipes for government budgets by constituting unnecessary financial burden on the government. The government realizing the amount spent annually for the upkeep of these enterprises including the remunerations of the staff, with little return from them, came up with the national policy to disengage the public sector from those areas where the private sector has the comparative advantage to perform while letting the state concern itself with the provision of infrastructure, security and an enabling environment for business to thrive through enhanced wealth creation. (Uduma 2003: 377). The public enterprises sector has since become a focus of political controversy with its very existence now in question. This has led to the question whether or not government should retain enterprises and the circumstance and methods for disposing of them (Hughes 1998). To inject new ideas and strategies on how to revamp and resuscitate existing public enterprises, the federal government under successive regimes initiated reforms in the form of commercialization policy. Unfortunately, in spite of these reforms they were observed to have failed to live up to their expectations. As Nafziager (1997) puts it, the huge amount of money which government spends on these establishments in the form of subventions, growths and air subsidiaries, plus the money generated by these enterprises, have not led the country to the desired economic growth.
The failure of these reforms to resuscitate the dwindling economy of public enterprises made the government to finally adopt privatization policy option. Consequent upon this, the Technical Committee on Privatization and Commercialization (TCPC) was re-constituted in 1988 based on the reports on administrative problems of public enterprises studies, under the leadership of Ali AI-Hakim in 1984. The TCPC was actually backed with Decree, 25, 1988, which gave the agency powers to execute the privatization and commercialization policy of the federal government.
By 1999, another Act on privatization and commercialization of public enterprises was promulgated. This same act empowered government to establish some other agencies such as National Council on Privatization, and the Bureau of Public Enterprises under the office of the Vice-President, who incidentally is the chairman, to ensure effective coordination and proper implementation of the programme. This article shall try to examine the activities of the BPE in the privatization programme between 1999-2003 in order to ascertain the impact of the Bureau on the development of national economy, and the general public.
Definition of Concepts
Privatization: Privatization refers to governments selling of commercial enterprises that had been state monopolies. It is also the government’s use of the private sector both for profit, and not- for profit to deliver public policies and improve the content, and implementation of public programmes. (Nicholas 2001: 318). Privatization could also mean the policy of selling public enterprises to individuals, groups and organizations so that as private organizations, they should operate under the principles of profitability, effectiveness, efficiency and viability, rather than in the public interest. (Uduma, 2003). It is also seen as the systematic and programmed withdrawal of government from those activities, which private enterprises can perform more efficiently than government enterprises. (Kilby 1971).
Public Enterprises: it is a particular kind of statutory authority: one, which sells goods and services to the public on a large scale, with financial returns accruing in the first instance, to the authority itself. Public enterprises provide many services including utilities such as telecommunications, electricity, gas supplies and urban public transport (Hughes 1998: 11 0).
Commercialization: Commercialization as a concept could be explained as rendering government subsidies and other transfers, requiring state owned firms to operate in a more autonomous non-subsidized fashion (Nwankwo, 1992).
Objectives Of Privatization And Commercialization
To enable us understand and appreciate the intention of government and what it has set out to achieve using the Bureau of Public Enterprises (BPE), it is imperative to highlight the objectives of privatization and commercialization. President Ibrahim Bahangida by 1986 was vehement on restructuring the Nigerian economy by employing privatization as its main tool for achieving the objective. As stipulated in the Guidelines of Decree No, 25, 1988, the objectives of privatization are as follows:
• To restructure and rationalize the public sector in order to lessen dominance of unproductive investment in that sector;
• To minimize their dependence on the national treasury for the funding of their operations;
• roll back the frontiers of state capitalism and emphasize private sector; initiative as the engine of growth;
• to improve on the operational efficiency and reliability of Nigerian public enterprises;
• to encourage share ownership by Nigerian citizens in productive investments hitherto owned wholly or partially by the Nigerian government and in the process to broaden and deepen the Nigerian market;
• to initiate the process of gradual cession to the private sector of such public enterprises, which by their nature and type of operation are best performed by the private sector.
The federal government established the Technical Committee for Privatization and Commercialization backed with Decree N025 of 1988, to implement the privatization and commercialization programmes of the government. In 1993, the TCPC was transformed to the Bureau of Public Enterprises (BPE) and empowered to continue the privatization and commercialization policy of the government known as guided privatization under Abacha administration.
General Abdulsalami Abubakar having noticed the improvements made so far under his immediate predecessor promulgated Decree NO.28 in 1999 to back the privatization and commercialization policy of the Federal Government on public enterprises. The decree made it possible for the second phase of privatization under the Bureau of Public Enterprises to commence. Under this second phase, the decree empowered the BPE to take full charge of the privatization exercise and handle it in the best interest of the country. About sixty one enterprises were listed for partial and full privatization to the ratio of 36 and 25. Obasanjo upheld the same privatization policy in December 1999, which made him to establish the National Council on Privatization (NCP) with the Vice President of the Federal Republic of Nigeria, Alhaji Atiku Abubakar as the chairman. The Council is empowered to determine the political, economic and social objectives of the privatization and commercialization programme, approve guidelines and criteria for the evaluation of public enterprises marked out for privatization including the choice of strategies, investors, identification of enterprises to be privatized or commercialized and approve the prices for share and assets of the public enterprises to be offered for sale. (Akpan 1999).
Organigram of the BPE
Office of the D.G. Core Services
|Oil and Gas
The Functions of the BPE
The main functions of the BPE are as follows:
• To complete the outstanding TCPC assignment as enshrined in the decree N0.25of 1988.
• To develop fresh initiatives for further privatization and commercialization.
• To ensure that public enterprises are managed in accordance with sound commercial principle and prudent financial practices through provision of guide on budgeting, accounting, and administrative procedures.
• To receive and analyze periodic and annual reports and prepare inter industry compassion.
• To arbitrate between organizations to ensure optimum use of resources and particularly, reduce or remove duplication of efforts.
• To implement the Council (NCP) policy on privatization.
• To prepare public enterprises approved by the Council for privatization.
• Advise the Council on further public enterprises that may be privatized.
• Advise the Council on the capital restructuring needs of the public enterprises to be privatized.
• Carry out all shares and sale of assets of public enterprises to be privatized.
• Make recommendation to the council on the appointment of consultants, advisers, investment backers, issuing houses, stockbrokers, solicitor, trustees, accountants, and other professionals required for the purpose of privatization.
• Advise the council on the allotment pattern for the sale of shares of public enterprises listed for privatization
• Oversee the actual sale of shares of the public enterprises to be privatized by the issuing houses in accordance with the guidelines approved from time to time by the Council.
• Ensure the success of the privatization exercise taking into account, the need for balance and meaningful participation by Nigerians and foreigners in accordance with the relevant laws of Nigeria.
• Perform such functions with respect to privatization as the council may from time to time assign to it.
Considering the functions of the Bureau of Public Enterprises (BPE) stated above, it is imperative to state that the BPE is not an independent agency. It is just an organ through which the National Council on Privatization (NCP) implements the privatization programmes. In other words, it takes instructions and directives from the NCP. This over dependence on the NCP coupled with other external influences such as the World Bank and IMF etc. contributed to its poor implementation of the privatization programme and poor result recorded by the programme so far.
The Activities/ Impact of the Bureau of Public Enterprises on the Economy and General Public
Privatization of public enterprises in Nigeria was initiated to improve or advance the Nigerian economy and to facilitate the socio-political and economic development in Nigeria. The primary beneficiaries of this programme or exercise should be the public, but unfortunately, the way and manner in which these public utilities were privatized raised a lot of questions to be answered. One of the questions is who executes the privatization programmes, how, and for whom? Some people saw the ongoing privatization exercise as an effort in futility, which is not even directed towards improving, economy and reducing poverty level of the people, but, which is directed towards the satisfactions of the interests of a few individuals and the international capitalists like the IMF and the World Bank. The people are not considered in the exercise. As Angbode (2000:58) argued, Obasanjo was succumbing to IMF and World Bank pressure to implement the unpopular policy, pretending that he is taking a decision in the interest of the people. For him, privatization programme is deceitful; it is going to compound the poverty situation immensely. Chidobem, (2003) was of the view that the BPE under the leadership of Mallam Nasir El-Rufai was the greatest institution of western imperialism and that it was the great instrument of the government against the poor as their collective owned enterprises which were established with their own sweat in the form of tax to provide for them certain basic services, are being sold out without their consent. The essence of privatization is to turn around the economy, to enhance productivity and strengthened the economy; but, the agency responsible for this has actually performed below expectation. The people are supposed to be the main beneficiaries of this programme aimed at reducing their long suffering, but unfortunately, the agency has placed the majority offers in the hands of a few which actually led to more polarization of income in the society. The privatization of public utilities has actually relieved many people of their jobs, thereby, increasing their hardship. The majority of the people is poor
and cannot afford to buy shares if not economically empowered. If the government is sincere and transparent in its efforts to privatize these public utilities, and has the public at heart, it would have made money available to the general public possibly in form of loans to enable them buy some reasonable shares. But, the government did not do this; rather, a few privileged top officials of the government hijacked the sales of these public utilities by having majority shares. This is why Kayoed (1999:51) insists that if the privatization exercise were to be carried out through public ‘offer’, there would be equitable distribution of shares amongst the public. Considering the fact that the objectives of the BPE as highlighted earlier in this article were not strictly adhered to in the course of carrying out its functions, the goals of the exercise were not achieved by the BPE. This government has invested huge amounts since 1986 to reduce poverty in Nigeria thinking it could be achieved through these reforms, but it was discovered that more than 70% of the people still live below poverty level as at 2003 (NEEDS 2004; 15). Up till 2005, no positive result or achievement has been realized through BPE. It is observed that the Bureau of Public Enterprises is just used as an agent by a few top government officials to allocate or distribute the major shares to themselves. The major public utilities already privatized attest to this. This has gone a long way to widen the gap between the haves and they have-nots in the society.
It is argued that the Bureau of Public Enterprises under EI-Rufai lost a lot of financial proceeds accruing from privatization exercise, which would have been used as possible financing item for budget deficit. This actually made the Senate Committee on Appropriation to suggest for a probe of the activities of BPE, which the Senate concurred to. It was also noticed that the Senate Public Accounts Committee (PAC) discovered some shady shabby deals in the 2001 audited accounts of BPE, and refused to sign its 2002 accounts. According to the Committee (PAC):
This particular anomaly had prevented the vetting of the account books by the National Privatization Council (NPC) headed by Vice-President Atiku Abubakar. It was suggested that this omission may have been made to shield the huge deficit in the BPE purse. (InsiderNo.49,2004:37).
The sale of Federal Government estates at Ikoyi has really exposed the government in their handling of issues and this is not different from the way the BPE carried out its privatization programmes in Nigeria. The people (the residents of the estates) were not given the option to buy the estates; rather they were allocated to the top government functionaries who did not even pay for the property. This is how the public property established with the tax payers money are usually hijacked by a few privileged individuals at the express of the general public. To buttress or rather substantiate the point, see tables A and B.
Those Allegedly Offered Government Properties
STELLA OBASANJO’S SIBLINGS
Dr. Yemisi Abebe
Mrs. Franca Abebe (in-law)
Dr. John Abebe
Peter Odili Olagunsoye Oyinlola Gbenga Daniel Bukola Saraki Donald Duke Adamu Muazu
23, Milverton Rd, Ikoyi 12, Ikoya Ave, Ikoyi 7b, Maroko Close 1 b, 1m Close, Ikoyi
16, Alexander Av. Ikoyi
Nl 58.1m N80.4m N57.6m N64.8m
Fabian Osuji (former)
Dr. Dora Akunyili (DG, NAFDAC)
Emeka Anyaoku Ibrahim Gambari
Adolphus Wabara Musiliu Obanikoro John Azuta-Mbata Isa Maina Ben Obi
41, Glover Rd, Ikoyi 9, Alex. Av. Ikoyi
23, Queen Drive, Ikoyi
Sadiq Yar’ Adua
Source: Insider Weekly, No. 14,2005, p. 22.
TABLE B: JUDGES
Adolphus Karibi- Whyte O. Ejiwunmi Roseline Ukeje
Martin Luther Agwai Adeyinka Adebayo Lawrence Onoja A. Ajibade Adimiral Aclesokan J. B Akinyemi Olufemi Olutoye Michael Onah E. A.Abolarin M.C Osahon A. A Abubakar
Sunday Ehindero Mike Okiro Bello Labaran Musa Abdulkadir
Festus Odimegwu Alhaji Abubakar Malam Chief Ogunlewe Grace Egbagbe
Atrain Prop. Ltd Polysonic Nig. Ltd Glorem Inv. Ltd Prop. Dev. Coy Forth Prop. & Inv. Ltd.
I, Gerald Rd. Ikoyi Temple Rd. Ikoyi
4a, Bourdillion Rd. Ikoyi
la, Oroke Drive, Ikoyi 9, 9 Bank Rd. Ikoyi 8, Ikoyi Crescent, Ikoyi 19a/21 b, Madano Cl. Ikoyi
N564m NI0.4m N93.6m N130m
23, Habere Close, Ikoyi 27, Cameron Rd. Ikoyi 23,Cameron Rd. Ikoyi 33,Queens Dr. Ikoyi. 18,OsbomRd. Ikoyi
Chifrank Nig. Ltd.22, Thompson Rd. Ikoyi
Union Craft Dev. Ltd.46, Alex, Av. Ikoyi
Just Prop. Ltd.25, llabero Close. Ikoyi
Adenoll Elect. Engr. Ltd. 34, Coker Rd. Ikoyi Source: Insider Weekly, No. 14,2005, p. 23.
N94.8m N70.8m N84.5m N60m
High hopes expressed by many people on the establishment of Bureau of Public Enterprises and the implementation of privatization programmes have been dashed. It was initially argued by some people that privatization will definitely lead to greater discipline and efficiency which ultimately leads to profitability. The Bureau of Public Enterprises in its yearly publications (2004) accessed in the internet, argued that experience worldwide has shown that public enterprises have failed to live up to expectations and that they (PES) tend to consume a large proportion of national resources without discharging the responsibility trusted upon them. It was equally argued that privatization will reduce the poverty and strengthen the economy of the country. Incidentally, from the research conducted, it was discovered that the people who are supposed to be the main beneficiaries of the privatization exercise were rejected, while the officials and their foreign agents were favoured. This has actually helped to polarize the income of the people, thereby, increasing the poverty level in the country. The Bureau of Public Enterprises being an agent of the National Council on Privatization (NCP) did not have the general public in mind, but rather, concentrated highly on the core investors to satisfy the interests of the imperialists and the international community such as the World Bank and the International Monetary Fund (IMF). Contrary to the expectations of Nigerians on the gains of privatization on the economy, the economy has turned out to be worse than it was before the privatization programme. What the government officials have succeeded in doing is to use their positions in government to allocate different public utilities to themselves at prices which most of them have not even redeemed till date. Therefore, the BPE has actually been used by some highly placed in the society to actualize, legitimize and legalize these sharing and both the people and economy of the country have seriously suffered as a result of this exercise. This has really shown that there is a wide gap between what the BPE actually set out to achieve and what they really achieved so far.
Aharami Yair (1991), “On Measuring the Success of Privatization”, in Ravi Rama Murh and Raymond Vernon (eds.), Privatization and Control of State Owned Enterprises, The Word Bank” Washington DC: EDI Development Studies.
Aniagoh V.A and Ejiofor, P.N.O. (1984), The Nigeria Manager: Challenges and Opportunities, Longman: Nigeria Ltd.
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FEDERAL GOVERNMENT OF NIGERIA OFFICIAL GAZETTES
Federal Republic of Nigeria’s Official Gazette: (1988), Privatization and Commercialization, Decree No. 23, 1993. Government Printer.
Federal Republic of Nigeria (1999), Promulgation of the Privatization and Commercialization Decree, Lagos: Federal Government Printer.
Federal Republic of Nigeria (1984), Study-Owned Corporations, Lagos. Government Printers.
The Medium Plan Programme of the BPE (2000-2005). Ministry Of Finance. The National Economic Empowerment and Development Strategy.
MAGAZINES AND NEWSPAPERS
“Federal Government Shifts Nitel’s Privatization”, The Source, April, 18, 2005. Mba-Afollabi, Janet (2005), Bidders in Disguise. Weekly Insider April, II. Uweru, Nick (2004), “The Lies EI-Rufai Told”, Weekly Insider, Dec. 6
Chidobem, J (2003), “Privatization, a Means for Exploitation”, Public Newspaper, Jan. 15
Angbode M. (2000), “Between Privatization and the Masses”, Newswatch
Soludo, C. (2003), “The Benefits of Privatization to a Developing Economy”. A Paper Presented As The National Seminar On Privatization Organized By The Bureau of Public Enterprises (PBE) in Abuja.