Background

Aided by the oil price boom of the early 1970s, government in massive state corporations. Over time, however, it became evident that the corporations could not drive industrialization nor achieve other objectives towards which they were established. Annually it was estimated that they were consuming about US$3 billion of national resources, while – because of corruption – not serving their customers, their employees, or the taxpayers well.

Past Reform and Achievements

Government commissioned several studies, which included Adebo (1969), Udoji (1973), Onosode (1981), and Al- Hakim (1984), to identify the reasons why the state corporations had failed. Factors identified often included inefficiency, corruption, misused monopoly powers, heavy dependence on the treasury, defective capital structure, and incessant political interference. In 1999, the federal government enacted the Public Enterprises (Privatisation and Commercialisation) Act that established the National Council on Privatisation (NCP), and the Bureau of Public Enterprises (BPE); with the BPE implementing the policies directives of the former. About 122 enterprises were privatized from 1999-2014, and a sum of ₦251.5 billion was realised as gross proceeds (excluding power).

The removal of monopoly power in the telecoms and licensing of several service providers created many new jobs, and revolutionised the country’s telecom sector; such that from a teledensity of 0.42% teledensity grew to 82% by June 2013. The Debt Management Office (DMO) has been able to curtail arbitrary borrowing by government agencies, keeping the countries debts under control. The transport and power sector reforms unbundled complex bodies and transfer the various constituents to various concessionaires for enhanced operational efficiency. Moribund cement, agro-allied, and other industries were resuscitated.

Challenges and Next Steps

Future privatisation efforts from 1999 onwards need to be institutionally transparent to prevent review of sales and policy in constituency. Sales should be made to bidders with ascertained capacity to pay the full amount bidder, and with track record of respecting contract stipulations. Labour issues should be better managed to prevent further clogging of the privatisation process. Important bills needed for more privatization efforts need to be quickly passed by the National Assembly.