Commercialization and the effectiveness of public enterprises: A case study of the Nigerian company ABUJA Electricity Distribution (AEDCN)
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ABSTRACT
Our empirical understanding of commercialization in Nigeria is limited despite the amazing amount of Commercialization activities worldwide and the increase in research on the operating performance of Commercialized enterprises in both developed and emerging economies. This study evaluates the post-Commercialization performance of state enterprises in Nigeria, focusing specifically on AEDC. Profitability, production efficiency, employment, and capital expenditure are the specific indicators considered. Through questionnaire interviews and public sources, data were obtained. Simple [percentage and the chi-square test were used, respectively, to test the hypothesis. The major advantage of Commercialization is unquestionably the reduction of politically motivated resource allocation, which has resulted in significant increases in technical efficiency within the impacted organization. The researcher suggested that privatization will significantly boost AEDC Plc’s efficiency in the Nigerian economy.
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The establishment of public corporations in Nigeria stretches back to the colonial era. The private sector was the conventional economic structure of the world. Initially, the Nigerian economy was driven by the private sector. During the post-independence era of the 1960s, the public sector evolved in Nigeria as a result of the need to utilize finite resources to generate goods and services of economic significance and for the promotion of the public welfare.
The railways were likely the first significant public sector industry in Nigeria. Initially planned primarily in terms of colonial strategic and administrative requirements, they swiftly acquired a welcome economic utility for transporting items for deliberate commerce, such as cocoa, groundnuts, and palm kernels. Given the structure of railways in urban countries, it is unlikely that the Nigeria Railway Corporation could have been established as anything other than a public sector business for mass transit.
The colonial administration was the source of essential economic and social infrastructural amenities that private sector could not offer, such as trains, roads, bridges, electricity, ports and harbors, waterworks, and communications. Social services like as education and healthcare remained largely in the hands of the Christian mission. However, even at this early stage, the government pushed into the direct production sector of the economy. The earliest stages included the stone quarry in Aro, the coal mine in Udi, and the sawmill and furniture industry in Ijora.
After the civil war in the 1970s, the rise of the crude oil industry in the Nigerian economy, along with the concomitant boom, increased government participation in production and management of the Nigerian economy. The Nigeria enterprises promotion Decree of 1972, which went into force on 1 April 1974 and was amended in 1976, established a corporate foundation for government of enterprises. As a result of these advances, the number of federal public businesses had surpassed 100 by 1985, and their scope had expanded to include agriculture, energy, mining, banking, insurance, manufacturing, transportation, commerce, etc. It was projected that between 1975 and 1995, the federal government of Nigeria created more than 100 billion in public enterprises.
A 1991 survey by the now-defunct technical committee on privatization and commercialization (TCPC), the forerunner of the 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 rest by state and local governments.
In conclusion, the purpose of this project is to investigate the effect of the commercialization policy, which is to evaluate the performance of the power holding company of Nigeria (PHCN) as commercialized enterprises and determine whether or not the policy has actually increased corporate efficiency.
1.2 Statement of the Issue
The purpose of this study, titled “Commercialization and the Efficiency of Public Companies,” is to determine whether commercialization can influence the efficiency of public enterprises. Since the 1980s, Nigeria’s state enterprises have been plagued by a persistent economic decline and obviously flawed economic strategies. Beginning in the 1980s, the nation faced a period of difficulty. By the mid-1980s, the nation’s economy had been brought down to earth by a foreign exchange shortage. In both the corporate and state sectors, worker layoffs were widespread. There was inflation, a very high unemployment rate affecting both skilled and unskilled workers, and a low utilization rate of industrial capacity. This was attributed to the global economic recession that began in the 1980s. This compelled the federal government, under the leadership of President Shehu Shagari, to launch an economic stabilization program (Aboyade, 1974).
Thus, Nigeria’s vulnerable fiscal and monetary position could no longer support the requirements of its public sector firms, especially given that their return on investment and quality of service fell short of expectations. Began to suffer from fundamental problems of defective capital structure, excessive bureaucratic control and interve4nce, in appropriate technologies, gross incompetence and blatant corruption, external debt obligations and foreign exchange misalignment; Nigeria and many other African countries were strongly advised by the international lending agencies, especially the International Monetary Fund (IMF) and the World Bank, to divest their public enterprises as one of the conditions for receiving loans.
1.3 Objectives of the study
This study is intended to fulfill the following public enterprise goals:
I To get an understanding of the true causes of inefficiency in government agencies.
(ii) To improve the production efficiency of government agencies
(iii) Examine commercialization policy as an instrument for rejuvenating state companies.
(iv) To strengthen the private sector’s involvement in the economy, thereby guaranteeing employment and improved capacity utilization.
(v) To make recommendations in light of the findings
1.4 Research Hypothesis
In accordance with the aforementioned objective, the following hypotheses are developed:
First Hypothesis:
Commercialization is not correlated with the inefficiency of public organizations.
Hi: Commercialization is correlated with the inefficiency of public organizations.
The second hypothesis
Commercialization has no bearing on the quality and quantity of services provided by state organizations.
Hi: Commercialization affects the quality and quantity of services delivered by public organizations.
The Third Hypothesis
Public enterprise has no effect on the commercialization of achieving goals.
Hi: That public enterprise influences the commercialization of goal attainment.
1.5 Importance of the Research
It is important to highlight that the results of this study will be of significant service to the under study Abuja Electricity Distribution Company (AEDC) Idah Branch, Kogi State, as well as other relevant companies, and will serve as a basis for future research. In this context, students have also assisted the government’s aim of policy review by allowing students of all levels of business administration and management to evaluate the effectiveness of the government’s commercialization policy and its impact on AEDC.
1.6 Range and Restrictions of the Study
This research focuses on Nigerian public enterprises. There will be a brief examination of public businesses, with the case study AEDC Plc serving as the focal point.
A comprehensive examination of the historical evolution and operations of public businesses in Nigeria will be conducted. Before and after the commercialization of AEDC, this study examines two distinct time periods.
1.7 Definition of Important Terms
The commercialization and privatization policies are instruments of economic reform; Olisambu (1993).
Commercialization
Is a situation in which the government grants full or partial commercial status to a public corporation, allowing it to operate strictly according to business principles and practices, without undue government intervention or control, and to exercise complete financial independence in the process of its operation. Commercialization entails public corporations and agencies operating in accordance with current economic and market conditions in order to provide profitable and efficient services to the public market. They are have the opportunity to compete with the organized private sector firms that are efficient and have profit maximization as their primary objective, hence fostering national progress and economic expansion.
Privatization
Privatization is the government policy of selling public enterprises to private individuals, groups, and organizations so that, as private organizations, they operate according to the principles of productivity, effectiveness, efficiency, and viability, as well as profit maximization, rather than the public interest. Privatization is defined by the Privatization and Commercialization Act of 1988 and the Bureau of Public Enterprises (BPE) Act of 1993 as the transfer of equity and other interests held by the federal government or any of its agencies in enterprises wholly or partially owned by the federal government.
Efficiency
The Oxford English Dictionary defines efficiency as the aptitude or capacity to accomplish or the achievement of the desired objective, adequate power effectiveness efficacy. The Encyclopedia of the social sciences defines efficiency as an input-output connection, or the highest amount of labor accomplished with the least amount of energy or resources input. Thus, “Optimization” refers to the process of maximizing satisfaction for a given expenditure of resources.
Public Enterprises (Corporation)
Are public or government institutions and agencies that are created, owned, and managed by the state to operate specialized public enterprises requiring business acumen and administration. According to Ogunna, a public corporation is “a semi-autonomous organisation established by legislation to deliver specialized social or economic services to the public.” They also have legal personality, allowing them to sue and be sued, negotiate, sign contracts, etc. In Nigeria national petroleum corporation NNPC etc.
The Nigerian power holding company (AEDC) is authorized to function as the country’s current electrical corporation (ECN).
1.8 Work Organization
This study consists of five chapters and focuses on the efficiency of public companies in respect to AEDC.
The first chapter is devoted to the introduction, which includes the study’s history, description of problem, aims, statement of hypothesis, significance, scope and limitations, definition of important words, work organization, and chapter references.
The second chapter is devoted to a literature review that examines the historical context of AEDC, the conceptual issue, the treason for government investment in public enterprises, the general assessment of the performance of public enterprises, the prospects and challenges of, and the relationship between and the effectiveness of public enterprises.
The third chapter addresses methodology, which addresses research design, field of study, data collection source, and certain relevant difficulties.
The fourth chapter then discusses data presentation, analysis, and interpretation, including an introduction, data presentation and analysis, and a hypothesis test.
Chapter five concludes with a summary, conclusion, and recommendation, addressing the findings summary, management implications, conclusion, recommendation, bibliography, and appendix.
Commercialization and the effectiveness of public enterprises: A case study of the Nigerian company ABUJA Electricity Distribution (AEDCN)
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