IMPACT OF PRIVATISATION OF PUBLIC ENTERPRISES ON POVERTY REDUCTION IN NIGERIA (A STUDY OF TELECOMMUNICATION INDUSTRY IN NIGERIA)

IMPACT OF PRIVATISATION OF PUBLIC ENTERPRISES ON POVERTY REDUCTION IN NIGERIA (A STUDY OF TELECOMMUNICATION INDUSTRY IN NIGERIA)

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ABSTRACT
Privatization as an economic policy is of no doubt a good economic tool for development but in Nigeria, the policy has generated many controversies. Some Nigerians argued in its favour while others are antagonistic about its introduction in the country. This research work, therefore, sets out to examine the impact of privatization of public enterprises on poverty reduction Nigeria, using the telecommunication industry as a study.
Private sector-driven economy comes on the heels of the failure of government and its institutions to live up to their responsibilities. Evidence of government failure abounds but thickens with its direct engagement in the creation and supply of goods and services. Public companies are known to perform badly when compared with their private sector counterparts. With sharp reductions in government’s revenue, adequate subventions to these institutions could not be sustained. Some are closed down while a good number operate beneath installed capacity. Salaries of workers are not paid and many of them are disengaged. Privatization is seen as a solution to the problem of public enterprises. In other words, the size of the public sector needs to be reduced, allowing greater share to private sector. Even at that, some fears are entertained as to the workability of privatization in developing countries.
This study is divided into five chapters, chapter one looked at the background study of privatization and statement of problem. Also some hypothesis were formulated to serve as guides on the subject matter. Chapter two discussed the conceptual
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framework, the growth of telecommunication industry and the impact of privatization on the poor.
The research itself was designed to be descriptive, hence the survey research approach was adopted. Chapter three took care of the methodology used for collecting data, which involved questionnaires’ administration and secondary data collection. Chapter four handled data presentation, analysis and interpretation, the Chi - Square (X2) was used for testing the hypotheses formulated.
Finally, chapter five contains summary, recommendation and conclusion which will help the stakeholders to take a stand on the argument about governments’ privatization programmes in Nigeria.
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TABLE OF CONTENT
Title page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Content vi
List of Tables viii
List of Figures ix
CHAPTER ONE:
1.1 Background of the Study 1
1.2 Statement of Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 4
1.5 Formulation of Hypotheses 4
1.6 Significance of the Study 5
1.7 Scope and Limitation of the Study 5
1.8 Definition of Terms 6
CHAPTER TWO
Literature Review 7
2.1 Public Enterprise 7
2.2 Privatization 8
2.3 Poverty 10
2.4 Privatisation of Public Enterprises in Nigeria 12
2.5 Privatisation of Telecommunication Industry in Nigeria 23
2.6 Growth in Telecommunication Industry in Nigeria 25
2.7 Impact of Privatization on the Poor in Nigeria 26
2.8 Benefits of Privatization in Nigeria 34
2.9 Challenges of Privatization in Nigeria 39
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CHAPTER THREE
3.0 Research Design and Methodology 42
3.1 Population and Sampling Technique 42
3.2 Data Collection 44
3.3 Administration and Retrieval of Questionnaires 44
3.4 Method of Data Analysis 45
CHAPTER FOUR
4.1 Data Presentation, Analysis and Interpretation 46
4.2 Data Analysis and Interpretation 47
CHAPTER FIVE
5.0 Summary of Findings, Recommendations and
Conclusion 66
5.1 Summary of Finding s 66
5.2 Recommendations 68
5.3 Conclusion 70
References 72
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LIST OF TABLES
Table
Table 1: Poverty level in Nigeria 1980 – 1997 …… …… ……. ....... ........... ....... 17
Table 2: List of some companies already privatized …… …… ..... ..... ...... 23
Table 3: Distribution of responses to questionnaires
Administration ……… ……… ……… ……… …… ........ ...... ...... ........ 50
Table 4: Distribution of responses to question 1 …… …… ….... ..... ... ...... .... 51
Table 5: Distribution of responses to question 2 …… ……… ....... .......... ....... 51
Table 6: Distribution of responses to question 3 …… …….. ........ ........ ......... 52
Table 7: Distribution of responses to question 4 …… ……. ........ ...... ... ....... 52
Table 8: Distribution of responses to question 5 …… …….. .... ....... ....... ...... 53
Table 9: Distribution of responses to question 6 …… …….. ...... ..... ....... ..... 54
Table 10: Distribution of responses to question 7 …… …… ..... ...... ........ .... 55
Table 11: Distribution of responses to question 8 ……… …... ........ ...... ..... .. 57
Table 12: Distribution of responses to question 9 …… ……. ....... ....... ......... 59
Table 13a: Distribution of responses to question 10 …… …....... ....... ...... .... 59
Table 13b: Distribution of responses to question 10 …… …..... ......... ........ 60
Table 14: Distribution of responses to question 11 …… …...... ........ ........ ... 61
Table 15a: Distribution of responses to question 12 …… ....... .... ...... … ..... 62
Table 15b: Distribution of responses to question 12 …… ....... .... ... …... ....... 62
Table 16: Distribution of responses to question 13 …… …..... ..... ......... ...... 63
Table 17: Distribution of responses to question 14 …… …... ... ..... ....... ... 64
Table 18: Distribution of responses to question 15 …… ........ …. ........ ... 65
Table 19: Distribution of responses to question 16 …… ….. .... ...... ....... ... 65
Table 20: Distribution of responses to question 17 …… ..... ..... ....... ....…. 66
Table 21: Distribution of responses to question 18 …… ..... ..... . ...... …. 67
Table 22: Distribution of responses to question 19 …… ..... .... ..... ..... ...... 68
Table 23: Distribution of responses to question 20 …… ..... ....... ... ... ...… 69
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LIST OF FIGURES
Figure 1: Normal distribution curve for hypothesis one ….. ..... ..... .... .... .... 58
Figure 2: Normal distribution curve for hypothesis two ….. ..... ...... ....... ..... 60
Figure 3: Normal distribution curve for hypothesis three ….. ...... ...... ...... ... 63
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CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Privatization (the transfer of government owned share-holding in public enterprises to private shareholders) is one of the revolutionary innovation in economic policies of both developed and developing countries (Igbuzor 2003: Chambers 2008).The ultimate goal of any credible and legitimate government is to ensure sustained improvement in the standard of living of the citizenry. Towards this end, Nigerian government found it necessary to design a developmental plan that will facilitate effective mobilization, optimal allocation and efficient management of national resources. To achieve this aim, public enterprises were established across the country to carry out these obligations. Towards the end of 1980, the public enterprises which had grown too large began to suffer from fundamental problems of defective capital structures, excessive bureaucratic control and intervention, inappropriate technologies, gross incompetence and blatant corruption (Aboyade, 1974). With the deep internal crises that included the high rate of inflation and unemployment, external debt obligation and foreign exchange misalignment, Nigeria and many other African countries were strongly advised by the World Bank and I.M.F to divest (privatize) their public enterprises as conditions for economic assistance (Nwoye,1997).
This economic policy (Privatisation) is a product of neo-liberal economic reforms that became popularised and globalised through the World Bank and International Monetary Fund (I.M.F). As an innovative economic policy, Privatisation started in Chile under the Military Government of General Augusto Pinochet in 1974 and was adopted in Britain between 1986 and 1987 as a central part of economic policy shift (Hanke, 1987). Privatization in Nigeria started in 1986 as an integral part of Structural Adjustment Programme (SAP) (F.G.N, 1986: Ndebbio, 1991).
Prior to this period, the Nigerian state has participated actively in public enterprises (Nwoye, 2003). This trend continued until 1988 when privatization programme was officially launched (Anya, 2000; Igbuzor, 2003). The Federal Government privatized 89 Public Enterprises (PEs) between 1988 and 1993 in the first phase while 32 enterprises were privatized in the second phase which ran from 1999 to 2005 (Mkpuma, 2005). It was envisaged that privatisation would improve
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operational efficiency of our inefficient public enterprises (PEs), reduce government expenditure, increase investment and employment as well as ensure job security in Nigeria (Subair and Oke, 2008; Jerome, 2008).
Surprisingly, since the official introduction of privatisation in 1988, the policy has been a subject of intensive debate and has remained highly controversial in Nigeria (Nwoye, 2010). Most Nigerians hold divergent views on the contribution of the privatization programme to the Country’s economic development in its two decades of existence in Nigeria. Therefore this study attempts to convey the message that privatisation is in the interest of the masses both in terms of poverty alleviation and enhancement of national development, through a careful study of Nigerian telecommunication sub-sector.
1.2 STATEMENT OF PROBLEM
The operational inefficiency of some privatized companies like Electric Meter Company of Nigeria Zaria and National Electric Power Authority (NEPA) now Power Holding Company of Nigeria (PHCN) among others is even more worrisome. The supply and distribution of electricity to consumers is still grossly inadequate (Subari and Oke, 2008). These variables and others have provoked more arguments, some in favour of privatization and others against it. The position of the critics over privatization in Nigeria is that the economic reform is a plot by few elites to sell public enterprises to themselves at the expense of the masses and that privatization cannot rescue Nigeria from its precarious economic situation. Those in favour of privatization argue that it aids poverty reduction through efficient operation, increase in productivity, employment, and job security. They are also of the opinion that privatisation widens the distribution of wealth in our society (Jerome, 1999; 2005).
More than twenty years of privatization in Nigeria, there are still mixed feelings about the efficacy of the policy, especially as government is set to fully privatize the Power Holding Company of Nigeria (PHCN) and to complete the second phase of the privatisation programme (Iba, 2010). Some have asked for total stoppage of the programme while others still see privatization as a revolutionary policy with the ability of addressing the inadequacies of our PEs. The last school of
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thought has argued that what the government needs to do is to reassess and rethink on the implementation of the programme.
1.3 OBJECTIVES OF THE STUDY
This study is therefore set to reassess the privatization of telecommunication industry in Nigeria and its effects on poverty reduction, specifically in the areas of consumer satisfaction, job creation, public enterprises’ management, reduced government debts, strengthened capital market, ownership of capital, competition and technology and skill transfer etc.
1.4 RESEARCH QUESTIONS
- What are the relationships between privatization and poverty reduction in Nigeria?
- What are the greatest impacts/ benefits of privatization to the Nigerian economy?
- What are the challenges faced by the on- going privatization programme in Nigeria?
1.5 HYPOTHESES
Ho: Privatization of public enterprises has a significant relationship with poverty reduction in Nigeria.
H1: Privatization of public enterprises has no significant relationship with poverty reduction in Nigeria.
Ho: Privatization of public enterprises has created more job opportunities to the citizens in Nigeria.
H1: Privatization of public enterprises has not created more job opportunities to the citizens in Nigeria.
Ho: Privatization of public enterprises has encouraged price increase of goods and services in Nigeria.
H1: Privatization of public enterprises has not encouraged price increase of goods and services in Nigeria.
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1.6 SIGNIFICANCE OF THE STUDY
 This study shall be of immense importance to a cross-section of people, Organization and the government.
 It will assist the government on the implementation of the on-going privatization exercise and improve on the existing policy.
 It will help to provide a clear assessment on some of the privatized enterprises.
 It will provide an avenue for the people to decide on whether to support the privatization programme or to kick against it and equally assist students as a reference material in their libraries and for future research work.
1.7 THE SCOPE OF THE STUDY
The scope of the study shall be limited to the effects of privatization on poverty reduction in Nigeria through a proper coverage of telecommunication sub sector of the economy only. The major constraint faced in trying to address privatization issues in Nigeria, is the lack of adequate data on the quantitative impact of privatization. Several studies have been conducted but most of these covered developed countries in general with little emphasis on Nigeria. Despite this shortcoming, however, an attempt has been made to conduct a thorough analysis based on the limited information available. Secondly, time and money is required for transportation to meet appointment with those to be interviewed, procurement of relevant research materials and the preparation and administration of research instruments.
1.8 DEFINITION OF TERMS:
PRIVATISATION: Is the transfer of government business (ownership) interest to private individuals and organisations.
PUBLIC ENTERPRISES: These are capital-intensive business units established by government and empowered by law to render certain crucial services which in the
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opinion of the government cannot be effectively rendered by private entrepreneurs apparently because of their profit maximization posture.
POVERTY REDUCTION: Is the reduction of human suffering in a society or improving the well-being of citizens in a particular society. It is increasing the standard of living of individuals in a particular society.
TELECOMMUNICATION INDUSTRY: Is devices and systems that transmit electronic or optical signals across long distance, which enables people around the world to contact one another, to access information instantly and to communicate from remote areas.

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