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Wednesday, August 24, 2011

NIGERIA’S PRIVATIZATION: 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 pretence 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 later misunderstanding with his boss Obasanjo, that later jeopardized his chairmanship. The past weeks revelation by the senate committee on privatization has once again revealed to us how rotten the Nigerian system is and how greed can turn supposedly well intentioned programs into means of personnel aggrandizement. Privatization as at the time it originated (with lot of promises)  during the early 1980s, with the then British prime minister Margaret Thatcher divesting of large chunk of government companies to the private sector, was introduced as a means of reducing wastage inherent in the bureaucratic running of public companies and to improve efficiency. The belief was that government should concentrate on provision of such things as defense, law and policing, external relations and leave 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 that further spurs 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 democracy) that the process was undertaking without the people and country paying dearly for it. A good example here is post Soviet privatisation and liberalization of the former communist countries in Eastern Europe, apart from the selling of government properties at give away prizes to government cronies, there was the socio-economic hardship that was caused by that IMF-World Bank engineered movement toward 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 increasing crime and social disorder. Majority of current post Soviet billionaires got their wealth from the privatisation of Russian state properties; like in Nigeria, billion of dollars worth of assets were sold to those political cronies at give away prices. The same thing happens in South America when countries like Chile, Peru, Brazil and Guatemala embraced privatisation and liberalization.
    The large scale thievery that happens in the case of 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 government; I told myself there is something else to this Obasanjo rush to sell government properties than just efficiency and economic gains. When I read in the headline of a pan African business magazine published from London (in the year 2000) 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 know better.  Unlike in the former communist bloc and South America where despite what has happen in the sell of these companies the privatized entities are now national champions, the same cannot be said of their Nigeria counter parts who are now in a more 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 declare the process as a failure, what is next for this government? Should the whole process of privatisation be reversed as was the opinion of some commentators; and government, therefore, buy back it former assets, or a selective measure be taken where those auctions where it becomes clear that the government was cheated be cancelled and the bidding process start a new in the most transparent of manners? To me the second option should be taking, 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 been run by government agencies from developed countries like France, Italy and Canada to Asian giants like China, India and Malaysia. Now that Jonathan is serious about management of the economy and the attraction of foreign investors into the country, the entire privatisation process should (for a start) form part of his strategic moves toward achieving that aim. Any foreign investor who is expected to commit his capital in Nigeria will definitely be interest in what happen to our privatisation program. Therefore, the earlier Jonathan economic team realizes this the better for this administration drive toward attracting Foreign Direct Investment (FDI), which is unlike the highly speculative portfolio investments that are targeted at government Bond and equities.

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