Could further privatization suit the Nigerian economy?

The disparity in trading Naira on the global market became the source of market tragedy for multiple business till the Central Bank of Nigeria finally decided to float the Naira.

A Gross Domestic Product (GDP) is a powerful way to gauge a thriving economy in all its controversy. A GDP is the sum total of all the goods and services produced in a country as against the period in calculations, usually a year and it aids on clarity.

Across all his chatter about becoming the Nigerian President, ex-Nigerian Vice President Alhaji Atiku Abubakar has clamoured for privatization of Nigerian economic functionalities and certain sectors across agriculture and through empowerment. Although his modalities were very faulty, with holes the size of gulfs, his insistence upon privatization are not far-fetched.

For big businesses, he plans to review major high-profile investment incentives such as export expansion grants, import duties and other tax incentives. He also plans to attract $250million of private sector funding for an SME Venture Capital Fund to provide longer-term capital. His goal is to have a GDP worth $900 million by year 2025.

Why privatization?

A key example of industries that could flourish with privatization and getting the control away from the government are the oil and sports industries – the upstream and active sports industries especially. The dastardly state of Nigerian government-owned upstream sector screams for privatization, with the government still holding ample power.

Equally, the football space for example, where the league is in constant stall, underdevelopment and shameful lack of development makes Nigerians want to stab their eyes out requires privatization.

A key problem is that the inability to constantly entertain Nigerians with their brand of football and the problem of improper funding that leagues in South Africa and North Africa enjoy.

While privatization is only peripheral ideal that requires adequate planning, a legal framework and nurturing to truly come to fruition, the Nigerian problem will be slightly alleviated by even its initiation.

Numbers

Discussing the matter, Nwamaka Ogbonna wrote for Stears Business that, “In the immediate post-independence period, Nigeria’s industrialisation strategy involved running state-owned enterprises and also providing credit to private sector businesses.

"This led to some initial success as manufacturing value-added grew by 11.4% p.a. in the first three years, however, by the 1970s many of these enterprises became poorly managed leading to a debt crisis in the 1980s.”

Although the inflow did not trickle down to the masses, the Olusegun Obasanjo-led government, which embarked on a privatization blitz led Nigeria to an average GDP growth of 7.1% between 2003 and 2006 and led to an FDI inflow of $652 million.

Employment

During this time, the telecommunications and banking sectors became larger and took on more employment power that empowered the youth and promoted cash-flow.

The scheme also reduced the toxic governmental interference in things that should ordinarily be corporate, geared towards a stable generation of income and not selfish lining of pockets – which will never be truly eradicated, even with privatization, but at least then, we would have reduced it.

Freshness

There are about 600 public enterprises in Nigeria run or controlled by the Federal Government. These corporations took a sizeable portion of the federal budget and account for over 5000 appointments into their management and board.

A seeming cliché that everyone talks about, but never really back up with substance, but a needed shift from the internalized Nigerian norms of selfishness and interference, crippling the system and preventing growth. Asides that, it is the new direction towards capitalism that the rhetoric of fake national interests destroying our resources and assets.

Interestingly too, privatization brings new and bright ideas into our Nigerian resources are run like a business, with policies and interests switched for the business and for those who have vested in this business a hope for success. The personnel that come in will also not be civil servants.

The problem with this, according to Dare E. Arowolo and Christopher S. Ologunowa in their special issue, “Privatisation in Nigeria: A critical analysis of the virtues and vices,” there are risks for the average person.

They wrote, “While the critics argue, however, that privatization inflicts damage on the poor through loss of employment, reduction in income and reduction in access to basic social services as well as increase in prices of consumer products, making it unavailable and unaffordable to the poor.”

Listing other advantages of privatization, Dare E. Arowolo and Christopher S. Ologunowa wrote;

1. It increases productive and operational efficiency; and reliability of public enterprises;

2. It stimulates national economy by providing job opportunities for the teeming unemployed youths.

3. It improves the financial health of public services with savings from suspended subsidies;

4. It creates more resources for allocation to other sectors of the economy that need urgent attention. For instance large sums of money hitherto used for subsidies could be used for rural development and provision of infrastructural facilities;