Overview of the 7x7 DAS structure

It may be recalled that the economic activities of PEs cut across the entire sectors of the economy in Nigeria. To allow for effectiveness, their formation and organisation take different forms. In this regard, the following forms existed in the country:

i. Public Utilities

These are enterprises producing some hard core infrastructure such as electricity, water, telecommunication and transport services. Such enterprises whose economic activities are related to the production of the foregoing strategic products and services were created under specific Ordinances, Parliamentary Acts or Decrees. With these legal instruments, enterprises in these categories are exempted from competition, being conferred with the monopoly status. These enterprises are usually defined as public corporations/authorities.

Examples are NEPA, NIPOST, NITEL, NRC and the likes.

ii. Central Institutions

Enterprises under this form are expected to get involved in the production of some specific economic functions which are basic and strategic to the effective fiscal and financial operations in the country.

Such enterprises are usually established using a special legislative procedure. Few of such institutions are the Central Bank of Nigeria (CBN), NICON, and The Mint.

iii. Incorporated Companies

There are some enterprises in which government can be classified as the sole/partial beneficial owners. Such enterprises are expected to be incorporated under the 1990 Company and Allied Matters Decree. Such enterprises are defined as incorporated enterprises in form). An example is the Flour Mills of Nigeria.

iv. Special Legislature Enterprises

Given that the economic activities/services of some enterprises are of special nature, their establishment are usually undertaken under special legislation to allow for the performance of such functional duties as health and educational services in which a country can develop hospitals and universities respectively.

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v. Non-Civil Service Enterprises

In some cases, there are some economic activities that of great importance to national development. Such activities could be either outside of the utilities and the civil service as ministerial departments.

When such companies are established, they are regarded as created outside the civil service as departments of ministries. Example is Government Coastal Agency and Inland Waterways. It is important to note that each of the foregoing varying economic formulations has its own independent Board of Directors or Management Board to initiate, formulate and supervise the enterprises operating policies. However, the Ministry of Finance Incorporated (MOFI) constitutes the holding company of all government investment within and outside the country in terms of government’s participation in these varying enterprises. That is, MOFI centrally invested in enterprises on behalf of government. In this regard, it maintained full documentation of such investments in equity or loan.

We may wish to note, however, that consequent upon recent developments with respect to the advent of self-accounting status of ministries, some ministries hide under the status to make direct investment joint venture in enterprise without the knowledge of MOFI.

In fact, in some cases there might be no proper documentation of such investments.

Given the foregoing forms of PEs, it was important for them to aspire for success. Thus, to ensure their success, each one of this PEs as earlier noted had its own independent Management and a Board of Directors of Management to initiate policies. However, the autonomy of PEs was constrained by their attachment to supervising ministries. This suggests that PEs enjoyed operational autonomy within the limits imposed by the supervising ministries using the civil service circulars. This further suggests that although PEs were not usually given the free hand to taking business decision (investment, operation, pricing, projects etc.) which supervising ministries often impose on them, the PEs managers remained accountable for the performance of the business.

However, the ownership structure of PEs in Nigeria, its framework allows the Ministry of Finance Incorporated (MOFI) to stand in for the Federal Government in terms of holding all government investment. In this regard, MOFI performed the under listed functions:

i. Collection of all interests and dividends on behalf of government;

ii. Monitoring investments within the context of the established objectives;

iii. Maintenance of proper adequate and accurate records of government investments and custodian of share certificates and loan agreements;

iv. Provision of guarantees where/when called upon on behalf of government; and

v. Advisory role to ministries on Board representation

Although these functions were anticipated on paper, however in practice it was different as many ventures were arranged and payment made without the knowledge of MOFI. Thus, MOFI is expected to be deficient in terms of appropriate knowledge of the level of investments.

However, whatever the level of investment and given the efficient operation of PEs, they are currently being privatised under Nigeria’s deregulation policy. The success of the policy may probably create a new economic structure for the Nigerian economy. The details of the privatisation of PEs will be broadly discussed in the next module.

4. 0 C ONC LUSION

From the socio-political perspective, Ayodele (1996) conceives PEs (SOEs) as business enterprises affected with public interests, bear intimate connection with the process of transportation, other socio-economic services and distribution, are under obligation to afford their facilities to the public generally upon demand at fair and non-discriminatory rates, enjoy in large measure, an independence and freedom from business competition brought about either by their acquisition of monopolistic status or by the grant of a franchise or certificate from the state placing it in this position. The issue of ownership, management and control of such business enterprises reside in government in order to move the nation to a more desired state in future. Some of the federal level includes NEPA, NNPC, NRC, NAL, NIPOST, NITEL, and River Basin Development Authorities. The justifications for the establishment of PEs are: the need to make provision for some basic services at affordable prices; the need for a rapid socio-economic transformation; bailing the private sector from the risk and uncertainties associated with the capital intensive projects linked with the provision of social services and utilities; the prevention of some crucial sectors of the nation economy from the dominance of foreign private entrepreneurs. PEs are categorizedinto:Public Utilities, Central Institutions, Incorporated Companies, Special Legislature Enterprises, Non-Civil Service Enterprises.

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5 . 0 S U M M A R Y

This is the last unit in this module. Here, we explained the antecedents of public enterprises in Nigeria. We further highlighted the rationales for setting up public enterprises in Nigeria while we discussed various categories and structures of public enterprises in Nigeria. The details of privatisation of public enterprises in Nigeria will be discussed in details in the next module.

6.0 TUTOR-MARKED ASSIGNMENT

Discuss in details the structure and function of any two public enterprises in Nigeria.

7.0 REFERENCES/FURTHER READINGS

Anyanwu, J.C. (1993).Monetary Economics: Theory, policy and Institutions. Hybrid Publishers Ltd.

Anyanwu, J.C., A. Oyefusi, H. Oaikhenan and F.A. Dimowo (1997).The Structure of the Nigerian Economy (1960-1997). Joanee Educational Publishers Ltd. Anambra, Nigeria. 661pp.

Ayodele, A.S (1991). Public Enterprises Institutional Reforms in Nigeria: Paper presented at NCEMA workshop for Civil Servants in Nigeria

Ayodele, A.S. and G.O. Falokun (2005).The Nigerian Economy;

Structure and Pattern of Development. Printoteque, Lagos, Nigeria 301pp.

FRN (1988). The Privatisation and Commercialisation Decree, FederalRepublic of Nigeria, Abuja

Galbraith, J.K (1978). Affluent Society, 3^rd revised edition, New York, New American Library

Samuelson, P. (1983). The Economic Role of Private Activity, Selected Paper No.7, in Mansfield (ed.) Principles of Micro Economics, Rading, Issues and Cases TCPC (1993). The Presidency;

Technical Committee on privatization and Commercialisation, Final Report, Vol.1 (Main Report) , Nigeria

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MODULE 4 GOVERNMENT PLANS, POLICIES AND