COMMERCIALIZATION AND EFFICIENCY OF PUBLIC ENTERPRISES
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COMMERCIALIZATION AND EFFICIENCY OF PUBLIC ENTERPRISES
Chapter One:
Introduction
1.1 Background of the Study
The history of public corporations (enterprises) in Nigeria extends back to colonial times. The private sector had long been the foundation of global economies. Initially, Nigeria’s economy was based on the private sector.
The public sector arose in Nigeria as a result of the necessity to properly harness finite resources to generate goods and services for economic importance as well as the promotion of welfare. Nigeria became relevant during the time after independence in the 1960s.
The railways were likely the first major example of a public sector enterprise in Nigeria. Initially envisioned primarily in terms of colonial strategic and administrative objectives, they swiftly evolved into a welcome economic utility for the conveyance of items intended for purposeful commerce, such as cocoa, groundnut, and palm kernels.
Given the structural structure of the railway in urban countries, it is unlikely that the Nigeria Railway Corporation could have been established as anything other than a public-sector company for mass transit.
The colonial authority provided the required economic and social infrastructural amenities that private sector could not offer, such as trains, roads, bridges, electricity, ports and harbours, waterworks, and telecommunications.
Social services like as education and health were still mostly in the hands of the Christian mission. However, even at this early stage, the government made positive investments in several of the economy’s direct producing sectors. The early stages included the Aro stone quarry, the Udi colliery, and the Ijora sawmill and furniture industry.
The introduction of crude oil into the Nigerian economy following the civil war in the 1970s, together with the resulting boom, increased government participation in production and control of the Nigerian economy.
The Nigeria Enterprise Promotion Decree of 1972, which went into force on April 1, 1974, and was later amended in 1976, established a corporate foundation for the government of enterprises.
Given these developments, the number of federal public enterprises had surpassed 100 by 1985, with operations spanning agriculture, energy, mining, finance, insurance, manufacturing, transportation, and commerce. Between 1975 and 1995, it was projected that the federal government of Nigeria created more than $100 billion in public companies.
A survey conducted in 1991 by the defunct technical committee on privatisation and commercialization (TCPC), the predecessor of the current Bureau for Public Enterprises (BPE), revealed that Nigeria had approximately 1,500 public enterprises, 600 of which were owned by the federal government and the remainder by both state and local governments.
In short, the purpose of this research is to evaluate the impact of the commercialization strategy, specifically the performance of the Power Holding Company of Nigeria (PHCN) as commercialised firms, and to determine whether the policy has increased corporate efficiency or not.
1.2 Statement of Problem
The study named “commercialization and efficiency of public enterprises” seeks to determine if commercialization can effect efficiency in public firms in general. Nigeria’s public enterprises have experienced consistent economic deterioration and appear to be implementing flawed economic strategies since the 1980s.
The country was going through a challenging period at the start of 1980. Scarcity of foreign exchange had set in, and by the mid-1980s, reality had struck the country’s economy. Both the corporate and public sectors experienced widespread layoffs.
There was inflation, a high rate of unemployment impacting both skilled and unskilled people, and a poor level of plant capacity utilisation.
This was attributed to the global economic recession that began in the 1980s. This compelled the federal government, led by President Shehu Shagari, to launch an economic stabilisation initiative.
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