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Wednesday, August 24, 2011

NIGERIAN PRIVATIZATION PROGRAMM: BETWEEN GREED AND ECONOMIC GAINS


“The well-conceived and well-intentioned privatization programme, which was designed to, transparently, transfer state-owned assets to private hands to ensure better service delivery, has gradually been personalized and our prized economic assets and choice enterprises have been cornered and auctioned off to a tiny cabal of private sector interests closely associated, or in full partnership with those in the corridors of power, with little or no pretense at due process or transparency … (They) used the privatisation programme to auction our crowned jewels to themselves at rock-bottom prices” (ATIKU ABUBAKAR, The News, March 5, 2007)




        The above were the words of former vice president Atiku Abubakar, himself  an ex-chairman of national privatization council, before his misunderstanding and disagreement with his boss Obasanjo, that would later jeopardized his chairmanship of the council. The past weeks revelations by the senate committee on privatization has once again revealed to the poblic how rotten the Nigerian governance system is and how greed can turn supposedly well intention programs into means of personnel aggrandizement. Privatization itself as at the time it was originally championed  in the early 1980s, when former British prime minister Margaret Thatcher divested large chunk of government companies to the private sector, was introduced as a means of reducing wastage in the bureaucratic running of public companies and to improve efficiency of government agencies. The consensus about privatization was that government should concentrate on provision of things like Defense, Law and Policing, external relations while leaving the provision of things such as running of Airline, Hotel, and production of soap to the private sector who are better at doing that.

    It was the success of privatisation elsewhere around the world that further spurred the machinery of privatisation in the developing countries. The strengthening of the private sector in countries like Britain, Germany and South Korea later lent credence to the belief that any thing private sector is good while any business that bears the foot print of government is bad. In general privatisation is good but it has it own price too, it was only in hand full of countries (mostly developed democracies) that the process was undertaking without the citizens and the country itself paying dearly for it. A good example here is the post Soviet union privatisation and liberalization carried out by the former communist countries in Eastern Europe. Apart from the selling off of government properties at give away prizes to government cronies, there was the socio-economic hardship caused by that IMF-World Bank engineered movement toward free market economy. Millions of workers from Moscow to Kiev to Warsaw loss their jobs in addition to scarcity of basic good and service that caused prices to sky rocket resulting in increase in crime and social disorder. Majority of today's post Soviet Billionaires got their wealth from the privatisation of Russian state properties. Like here in Nigeria, billion of dollars worth of assets were sold to political cronies at give away prices. The same thing happened in South America when countries like Chile, Peru, Brazil and Guatemala embraced privatisation and liberalization.

    The large scale thievery and subsequent distribution of government assets that happened in Nigeria in the name of privatisation did not come to many as a surprise. Right from the time the process began in the early years of Obasanjo's government, I told myself there is something else we were not been told about this Obasanjo rush to sell government properties than the talks of efficiency and economic gains. When I read in the headline of a pan African business magazine published from London that Nigeria is to realize 100 billion Dollars from sell of government assets, I told myself that somebody somewhere is going to get rich at the expense of the Nigerian masses. Now that strategic government assets such as Ajaokuta Iron and steel mills, NICON Insurance, ALSCON aluminum smelting company, Nigerian Airways, steel rolling mills in Delta and Katsina to mention but a few have all been auctioned off, Nigerians knew better about a shenanigans call privatisation.  Unlike in the former communist bloc and South America where despite what has happen in the process of selling these companies, the privatized entities are now national champions. But, the same cannot be said of their Nigerian counter parts who are now in a sober state than before the privatisation.
   

           Now that about 80% of the privatized companies are not functioning as was the confession of Vice President Namadi Sambo (and the president himself declared the process as a failure), what is next for the government? Should the whole process of privatisation be reversed according to some commentators? Therefore, government buy back it former assets or a measure be taken where in auctions where it becomes clear that government was cheated the process shall be cancelled and the bidding process start a new in the most transparent of manners. To me the second option should be adopted, the sell of Ajaokuta, ALSCON, NICON and few others should be cancel immediately. Thereafter, these companies should be left under the care of government for some time to come. After all who say government cannot run companies, big companies are still being run by government agencies starting from developed countries like France, Italy and Canada to Asian giants like China, India and Malaysia. Now that President Jonathan is serious about management of the economy and the attraction of foreign investors into the country, the entire privatisation process shall form part of his strategic plan toward achieving his economic objectives. Any foreign investor who is expected to commit his capital in Nigeria will definitely be interested in what happen to our privatisation program. Therefore, the earlier Jonathan's economic team realizes this the better for this administration drive toward attracting Foreign Direct Investment (FDI), which is different from the highly speculative portfolio investments that are mean for government Bond and equities.