This is why 37% of Nigeria’s privatized public enterprise have gone out of business

Nigeria’s Bureau of Public Enterprises (BPE) on Tuesday reported that 52 public enterprises that were privatized have not been performing to the agency’s expectation.

Alex Okoh, the Director-General of BPE confirmed this to members of the Nigerian House of Assembly committee on Privatization, who were on a visit to the agency.

According to a statement obtained by a Nigerian Newspaper Punch, Okoh noted that the enterprises harsh operating environment had contributed to the exit of some private and privatized public enterprises from the country.

The 52 enterprises are part of 142 public enterprises sold to private sector operators in line with International Monetary Fund (IMF) privatization policy that was introduced to the country in 1988, with the aim to push the Nigerian government to drastically reduce spending on public enterprises so that more money can be available for the servicing of the over $30 billion foreign debts and also to be better placed for the procurement of more loans.

BPE serves as the secretariat of the National Council on Privatization (NCP) and is charged with the overall responsibility of implementing the council’s policies on privatization and commercialization.

Quest for social-economic growth

A persistent quest for social-economic development across the nations of the world occasioned the establishment of public enterprises (PEs) and subsequent privatization policies/programmes. Countries of Africa, especially Nigeria, established large scale public enterprises with the intention of engendering and pursuing social equity among the populace.

However, the public hope and expectations from public enterprises were dashed as the operations of these  PEs were characterized with inefficiency, massive corruption, ineptitude, nepotism and gross mismanagement leading to, not only the  collapse of public enterprises, but also to a paradigmatic change of approach to national socio-economic development.

Though the reforms of PEs via privatization is a worldwide approach to economic transformation and a tool employed by government, its overall effectiveness in Nigeria is in doubt as programme faces myriads of problems that include difficulty in attracting genuine foreign investors, inheritances of salary arrears, unemployment as a result of mass retrenchment; unfunded pension liabilities, debts and lack of political will at the highest level, amongst others.