It is important to recall that under the regulatory developed devices, prices of utilities and social services were stated below their production costs. This explains why government adopted the subsidisation policy to augment the established prices.
However, with the privatisation policy, all forms of subsidies have been eliminated.
Besides, all affected PEs are to be self-reliant, self-financing and self-sufficient. There is therefore the fear of high price movements arising from arbitrary fixing of tariffs in PEs processes of allowing such prices to reflect their production costs and have some mark-up to allow for self-financing operations.
SELF ASSESMENT EXERCISE 5
Weigh the pros and cons of the privatisation policy in Nigeria
international political diplomacy. This is necessary because international commodity pricing is more or less currently determined by geo-political factors rather than by the free interplay of market forces. This fact becomes recognised if it can be noted that bilateral economic relations, are increasingly becoming more meaningful and sustainable between the south-south than north-south economies.
Operational Framework
The public sector should be pre-occupied with issue of laws and order which would make the privatisation programme thrive in spite of its ideological undertone. Under this framework, government should establish an operational framework couched under the establishment of the legal, social, economic and competition framework in the processes of production, management and allocation of resources.
SELF ASSESMENT EXERCISE 6
Apart from the aforementioned suggestions in moving the privatization process forward in Nigeria, what other options are available?
4.0 CONCLUSION
Owing tohuge external and internal debts, chronic fiscal deficit and serious economic decline occasioned by the ineffective production efficiency of the public enterprise, the privtisation policy has become an imperative integral policy of the developing economies such as Nigeria. The Objectives of Privatisation include among others the rationalisation and restructuring of the public sector to lessen the dominance of unproductive investments and the reduction of enterprises budgetary burdens;The re-orientation of enterprises towards a new horizon of performance improvement, viability and overall efficiency, relying on the private sector andChecking the absolute dependence on the treasury for funding by otherwise commercially oriented enterprises. Privatisation and Comercialisation Policy is a four-pronged programme ofPartial Commercialisation, Full Commercialisation, Partial Privatisation and Full Privatisation.The Nigerian Concept of privatisation is a guided type with the Independent Focal Point Methodology as the underlying approach. Enterprises were privatised through the Public Sales of Share, Private Placement, The Sales of Assets, Management Buy Out and Deferred Public Offer. Nigeria has gone through different phases of privatisation with the following accumulated benefits:fairly wide spread equity share holding ownership across the ethnic and income groups which has led to the expansion of the capitalisation of the Nigeria Stock Exchange; improvement of the market awareness of citizens; The high price movement from the pre-policy bases, in the process of allowing such prices to reflect their production cost, such that the privatised enterprises have consequently generated high capital appreciations and turnovers to sustain business operations. However the programme is still largely constrained by socio-political and ideological problems, Inaccessibility to credit,
Uncooperative attitude of some public officials, Problems of Labour retrenchment and the fear of fixing arbitrarily high prices among others.
5.0 SUMMARY
In this unit, we commenced our discussion with the meaning and objectives of privatisation programme. This was followed by a discussion on the theoretical basis of privatisation and the general institutional arrangement and approaches, especially the one adopted in Nigeria. We finally appraise the merits and demerits of privatisation policy in Nigeria and suggest ways of improving the programme. Monetisation policy is next on our discussion in the immediate next unit.
6.0 TUTOR-MARKED ASSIGNMENT
What is your opinion on the ongoing privatisation programmes in Nigeria, how will it benefit the citizenry?
7.0 REFERENCES/FURTHER READINGS
Ajakaiye, D.O. (1984).Economy-wide Effect of Privatising and Reorganizing
Nigeria’s Public Enterprise, Some Critical but Neglected Issues. NISER, Ibadan, Nigeria.
Ariyo, A. and Jerome, A. (1999). Privatisation in Africa: Appraisal, World Development, 27 (1)
Ayodele A.S (1991).Public Enterprise Institutional Reforms in Nigeria. Paper Presented at NCEMA Workshop for Civil Servants in Nigeria.
Ayodele A.S. (2001).Privatisation/ Commercialisation Policy in Nigeria: Some
Theoretical and Empirical Issues. In: Umamikogbo ed. Issues in Privatisation and Commercialisation of Public Enterprises in Nigeria, Krafi Books Ltd., Ibadan.
Ayodele, A.S. and G.O. Falokun (2005).The Nigerian Economy; Structure and Pattern of Development. Printoteque, Lagos, Nigeria. 301pp.
Bureau of Public Enterprises (1996).Public Enterprise Monitor. A Quarterly
Newsletter of the Bureau of Public Enterprises, Preview Edition. January-March
Expo, H.A (1997).Public Policy, Private Sector and Development evidence from Nigeria. A Paper Presented at the Third Biennial Conference on African Issues, Cotonou, Benin Republic
Federal Republic of Nigeria (1988).The Commercialisation and
privatization Decree. Federal Republic of Nigeria. Abuja, Nigeria.
Jerome, A. (1999). Restructuring Economies through Privatisation.
Bullion, Publication of CBN, 23(3): 28-34
Obadan M.I. (2000). Privatisation of Public Enterprises in Nigeria; Issues and Conditions for Success in the Second Round. NCEMA Monograph Series, No1 Odeleye, A.T. (2009).Nigerian Economy in Perspective (Vol.1) (Pre-colonial Era
till Date). Larritone Books International, Ibadan Nigeria, 120pp TCPC (1991). Annual Report and Audited Accounts, 1989/90, 1990/91
Yesufu, T.M. (1996). The Nigerian Economy : Growth Without Development, Benin Social Series for Africa. University of Benin, Benin City ,89-110
UNIT 2 MONETISATION POLICY