CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY The federal government of Nigeria embarked on political, constitutional, banking, pension and economic reforms having sensed the economic depression of the nation. Privatization is one of the pivots of the economic reforms which the former (President Olusegun Obasanjo) was committed to during his tenure of democratic governance in Nigeria. The economic depression with its deep and severe consequences coupled with the revolution in the union of soviet socialist Republic (USSR) in the late 1930 led to a situation where government dabbled into running enterprises it had no business in. This became possible because private sector enterprises especially in Western Europe collapsed due to recession. Upon the attainment of independence, many African countries embarked on the establishment of public enterprises. At independence in 1960, Nigeria’s economy had a week industrial sector with near absence of basic infrastructure, inadequate capital and weak technological base. The public enterprises were established because the then economy was that of an agricultural sector producing largely primary products for exports.
The oil boom of the 1970s helped the government to enter into ownership and control of economic activities. In view of this, the
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provisions of Telecommunications facilities in the country which was restricted mainly to government business, enforcement of law and order and administration of the country prior to independence, became no longer restricted after independence because of development of trade, commerce, industries and private enterprises which commenced at a fast rate and required such services. However since independence, there has been a number of development plans for the expansion and modernization of Telecommunications Network Services. Under the first development plan, a total of 100,000 telephone services were installed besides other improvements like provision of large capacity cross-bar exchanges at Ikeja and Lagos Main land respectively. Constructions of radio routes to link 23 urban cities in the country including Ibaban, Kaduna, Sokoto, Kano, Jos, Maiduguri, Warri, Calabar among others and trunk dialing at urban centers were in progress. The implementation of this programme was dis-rupted by the civil war (1966 – 1969). At the end of civil war, the status of the first P & T (Post and Telecommunication) plan (1963 – 1968) was reviewed and the second national plant was launched in 1970. This enabled the government to improve on the existing telecommunications facilities by marginal investment in major and industrial areas and gradually extended to some rural and war affected areas.
However, in order to correct some problems in the system, government under the contingency plan in 1977 increased telephone
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lines to 167,000 representing telephone density in the country to approximately 3 per 1000 population. In addition, the communication Ministry had a long-term plan for improvement of telecommunication facilities within the context of the 3rd development plan (1975 – 1980) under which the new modern telephone exchanges with additional 84,000 lines were provided. At the end of this development plan in 1985, the year that marked the birth of NITEL Ltd, only 207,276 telephone lines and 500 Telex lines were introduced into the network, thus bringing a total telephone lines in the system to 220,000. But with the quest for effective and efficient communications services, Global System for Mobile Telecommunication was introduce to alleviate the problems being encountered under NITEL. Hence prior to the emergence of this Global System for Mobile Telecommunications (GSM) in the year 2001, the Analogue system (090) was the only mobile cellular telephone in Nigeria which was introduced in 1992 and its operation was under the supervision of NITEL, the then leading and dominant operator. Hence with the creation of M-tel in 1996, the responsibility of providing (090) services was shifted to M-tel which was basically a subsidiary to NITEL but operates independently of NITEL.
Ironically, inspite of the huge investments in public enterprises in Nigeria, their services could not meet the demand of the populace. During the oil boom of the 1970s, nobody complained but with the dwindling of government revenue and global crisis, it became
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imperative to remove those policies that fostered and encouraged the dominance of the public sector in the Nations economic life. The establishment of parastatals is a popular strategy used in developing Nations for notable reasons which includes; economic leadership, national security, social welfare, profit motives, effective control of resources, De-bureacratic efficiency etc. There are pertinent factors that account for the poor performance of these parastatals despite huge investment. According to Okeke (1985), such factors are lack of accountability, lack of profit motives, monopoly, over staffing, indiscipline, lack of coordination of staff level and partly politics. Other factors recorded by Mbanefo (1985) were failure to conflict objective, not flexible decision making, excessive wastage of resources, underutilization of assets, low activity, motivation, poor attitude to work and company affairs. Hayafu Deen (1985) also believes that over extended and cumbersome organizational structure, recruitments based on extraneous consideration instead of merits, no concrete performance target, parastatals used as vehicle for political patronages etc are some militating problems. 1.2 STATEMENT OF THE PROBLEM
We recognized that parastatals like Nigerian Telecommunications Limited (NITEL) and its subsidiary Nigerian Mobile Telecommunications Limited (M-TEL), Power Holding
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Company of Nigeria (PHCN), Nigerian Ports Authority (NPA), etc, occupied a pivotal position in the search for the Nation’s speedy economic development and self sufficiency. The Nation’s inability to achieve its development goals was partly as a result of the problems of these parastatals. Some of these problems are thus:
- Mismanagement of funds
- Heavy dependence on the national treasury for operational purposes as a result of defective capital
- Mis use of power resulting in corruption and bureaucratic bottleneck
The non-prevention of these long-lasting problems had indicated negatively on the nation’s economic performance. Since the first privatization of NITEL and M-Tel to Transnational Corporation of Nigeria Plc (Transcorp) had failed, the second phase of the privatization exercise already on ground should address the problems of effective privatization. In addition, the possible privatization malpractices of the first indigenization exercise should serve as safety belt for the implementation of privatization policy. Some of these malpractices include;
- Few privileged people buying up most of the shares.
- Partial privatization and not full (total) privatization thereby creating rooms for government and political intervention.
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- The Chief Executive Officers and Managing Directors were not appointed on merit but on political benefits.
The research work attempts to examine the problem of the institutional framework for the guided privatization in terms of government transparency. It will attempt to restate the importance of the valuation of assets and investment in NITEL and M-TEL through the Bureau for public Enterprises (BPE). Since the Nigeria factor has been a major set back in the implementation of many laudable economic and political policies geared towards national development, this research would attempt to examine the success story of NITEL and M-TEL privatization in Nigeria. It will also examine the responses from people on the problem of economic activities of the nation. 1.3 OBJECTIVE OF THE STUDY The objective of the study are as follows:
i. To examine the problems of privatizing federal parastatals in the country.
ii. To examine the institution frame work guiding effective privatization in terms of government transparency
iii. To examine the effect of privatization on the labour market and employees of such parastatals.
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iv. To examine the type of privatization adopted by the government and her agencies that will suit the aspiration of the citizenry.
v. To ascertain the faith of the retained staff of the parastatals after privatization.
1.4 RESEARCH QUESTIONS The research questions for this study are as follows:
i. What are the problems on privatizing federal parastatals in the country?
ii. What are the institutional frame work guiding privatizations in terns of government transparency?
iii. What are the effects of privatization on the labour market and employees of the affected parastatals before and after the privatization?
iv. What type of privatization exercise was adopted by the federal government and her agencies and how was it accepted by the citizenry?
v. To what extent does the faith of the retained staff of the privatized parastatals be guaranteed in terms prompt payment of salary/allowance and out right dismissed for flimsy reason?
HYPOTHESES
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For the purpose of this study, the following assumptions will be subjected to critical text. Hypothesis 1 Ho: There is positive correlation between privatization of federal parastatals and associated problems Hi: There is no positive correlation between privatization of federal parastatals and associated problems. Hypotheses 2 Ho: The privatization exercise is not directly related to the due process as such lacks transparency. Hi: The privatization exercise is directly related to the due process as such does not lack transparency. Hypotheses 3 Ho: The privatization has negative effect on the labor market as well as the employees. Hi: The privatization has positive effect on the labour market as well as the employees. Hypotheses 4 H0: Ownership of the company partly by the federal government and partly by the private sector (partial privatization) is not the aspiration of the citizenry.
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Hi: Ownership of the company partly by the federal government and partly by the private sector (partial privatization) is the wish of the people. Hypotheses 5 H0: The retained staff of the company are not well taken care of after privatization Hi: The retained staff of the company are well taken care of after privatization. 1.5 SIGNIFICANCE OF THE STUDY The significance of the study can be viewed from the major standpoints: Practical and academic (a) Practical Significance This kind of study will assist in broadening understanding of the followings:
- To employees of paratatals in general, it will expose the relationship existing between them and their employers, which will be of interest to them in their respective paratatals.
- Specifically to retained staff of NITEL and M-TEL understudy; it will expose to a large extent the going-on in this
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organizations with regards to the relevant variables and comparative analysis of government actions over some relevant years.
- To policy makers and regulators like BPE; it will present through its analysis that could assist them in enunciating polices that will not only have positive impact but also to remain relevant in the policy by performing such functions as proper guide lines for privatization and employees safety and protection in such manifestation.
(b) Academic Significance (i) It will contribute to the enrichment of the literature on privatization and its associated problems. (ii) It will support ways (of interest to academics) based on the empirical evidence of enhancing the employment situation rather than out rightly lay off staff on the pretence of privatization which affects the economy. (iii) The study will serve as a body of reserved knowledge to be preferred to by researchers. 1.6 SCOPE AND LIMITATION OF THE STUDY
In researching the topic “Problem on Privatization of federal parastatals in Nigeria”, the researcher focused on strategies and due process used by the federal government and Bureau for public
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enterprises in privatizing NITEL and M-TEL. However, the privatization exercise is still in its infancy in Nigeria as such, detailed information on this study is lacking which makes the study difficult to adequately access the outcome of the exercise. In addition, the researcher does not claim to have identified all parameters used in the privatization exercise. This is as a result of some limitations which includes; time constraints, financial constraints and data constraints. 1.7 DEFINITION OF TERMS NITEL: Nigerian Telecommunication Limited M-TEL: Nigerian Mobile Telecommunication Limited GSM: Global System for Mobile Communication BPE: Bureau for Public Enterprises Transcop: Transitional Corporation of Nigeria Plc. Privatization: Removing the government ownership of an organization to the private sector. (Comas C.D 2005;20): The Pain and Gain of privatization.

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