CONFRONTING THE CHALLENGES OF ECONOMIC DEVELOPMENT, PEACE AND VULNERABILITY OF MULTI – NATIONAL CORPORATIONS IN NIGERIA

Posted November 19, 2007 by advocacygrp
Categories: Economic Development, Peace

By Paul Adepelumi, Executive Director, African Centre for Advocacy and Human Development (ACAHD).

An examination of Nigerian statutes would reveal that the major constituents of the laws which touch upon the exploration and production of petroleum date back to the Mineral Oil Act of 1914 which was promulgated to regulate the right to search for win and work mineral oils.

Similarly, under the Income Tax Act of 1959 which has been revised to date as Companies and Allied Matters Act (CAMA) of 1990, regulates the income of the companies that engage in “Petroleum Operation” in Nigeria.
A critical examination of Nigerian Petroleum Law since 1914 to date reveals that apart from the law that guides licenses, leases, contractual arrangements for the exploration and production of petroleum and payment of royalties, there are no real policies under the petroleum law of how oil companies should develop the communities from which they exploited the oil. Over the years this lacuna has caused gigantic problems ranging from the agitation for Independent Biafran State that led to civil war in 1964, the Ogoni crisis that led to the killings of the Ogoni’s including the environmentalist, Ken Saro Wiwa, the regional and states agitation for revenue sharing formula, The Odi Massacre and other abuses of fundamental human rights , violence between neighbouring ethnic groups and communities, which often triggered by disputes over the sitting of oil facilities and distribution of benefits and compensations from oil companies, the on-going violence and kidnapping in the Niger-Delta areas. In a nutshell, this gap in our petroleum law created the economic and security problem we are facing in the Niger-Delta today.

Apart from the gap created by the petroleum law, the Nigerian oil industry provides the most graphic illustration of the role played by the political elites under civil and military administration in the under development of the communities where oil are being explored. In Nigeria it is a common saying that “seek ye the political office, everything shall be added unto you.” Despite its shortcomings, the Petroleum Tax Law provides for the payment of licences and royalties to government, the money accrued under this oil revenue paid by oil companies has not been put into good use. The human cost of corruption has been enormous. A recent a report of the World Bank listed Nigeria as a fragile state. The report also quoted the Executive Director of the United Nations Office on Drugs and Crime, Mr. Antonio Maria Costa as saying that Nigeria lost $400bn to graft between 1960 and 1999, similar report by Nigeria’s Economic and Financial Crimes Commission (EFCC), more than $380 billion in public funds was stolen by those in government between 1960 to date.
Despite earning more than $400 billion in oil and gas revenue since the early 1970s, the majority of Nigeria’s 140 million citizens mostly in the Delta areas live without access to basic services such as clean water, electricity and health care, leading Nigeria to place 159th out of 177 of the most poorest countries on the United Nations Development Programme 2006 Human Development Index.

One reason for corruption in the oil revenue is the poor management of oil revenue. Facts show that government has in the past locked out other bodies in the monitoring of money accrued from oil revenue, whereas public revenue are ending in private accounts, human and community development continue to suffer leaving oil companies prone to series of attack for lack of development in the communities where they explore oil and flare gas.
The Obasanjo led administration reforms which included the implementation of the Extractive Industries Transparency Initiative (NEITI) taken after Norway and publication on government websites and local newspapers of the amount of revenue transferred each month from the federal government to state and local government is a good development.

The initiative has helped in increasing the transparency of oil and gas revenue in Nigeria. The idea has served public interest and allows civil society, like African Centre for Advocacy and Human Development to strategically using this information to promote peace, good governance and accountability in Nigeria.
In fairness to oil companies, their attitude has always been that no laws obliged them to rehabilitate these areas. When they are pressed to enhance the development of the communities where they explore oil, they are masters at public relation rhetoric. They often claim that no law obliges them to do so; rather it is the responsibility of government to develop the communities based upon oil and gas revenue that accrue to them.

Apart from borrowing a leaf from Norway and other similar countries where they explore oil that have comprehensive legislation on petroleum exploration on how to develop the communities where they work and the meaningful impacts they make in those communities (such as provision of employment , electrification, health assistance) and good oil field practices etc. “It is also reasonable that under the concept of corporate and social responsibility , oil industries have an obligation to avoid creating negative social impacts while contributing positively to the communities and societies where they work. This involves doing impact assessments of new projects, consulting with neighbouring communities and non governmental organizations in order to understand what the impact of investment might be and how these can be avoided.” The concept (CSR) also requires financing community projects that reflect community needs and priorities. These assessments can involve good oilfield practices , making sure that people from oil field areas benefit from employment and business opportunities, often through elaborate training, hiring and business development programs.

They should also work the path of peace by building human capacity in conflict resolution through collaborative efforts with NGOs and community leaders. Finding from all community consultations is that people want jobs, community development as compensations for the changes introduced by oil companies to their socio-economic lifestyles.

Note of mention is that, agitation through violence and request for oil companies exist from communities where they operate will not bring lasting solution neither revocation of licenses. The truth of the matter is that with the emergence of new “world economic order”, the revolution witnessed in the twenty first century in technology and globalization; no country can live independent of others.

If men are to live together in a peaceful, productive rational society and deal with one another to mutual benefit, they must accept the basic social principle without which no moral or civilized society is possible.

Man’s rights can be vacated only by the use of physical force. It is only by use of physical force that one man can deprive another of his life, enslave him from social relationships – thus establishing the principle that if men wish to deal with one another, they may do so only by reason, by discussion, persuasion and voluntary uncoerced agreement.

The use of physical force – even its retaliating use, cannot be left at the discretion of individual citizens. The incessant violence; kidnapping and demanding for ransom are not the solution to problems in the Delta areas.
The heart of the economy of Nigeria springs from the oil, and unless these problems are solved diplomatically, the heart of the economy cannot breed.

To achieve a meaningful solution to these problems created over the years in the distribution of oil revenues, the government must fill the lacuna created in our petroleum tax law and create for the development of communities in mineral exploration agreements. Also, oil companies must incorporate the concept of corporate and social responsibility instead of human relations rhetoric; the agitation for community development must be through dialogue, persuasion and acceptance.
It behooves therefore on the government to begin to heed to comments and opinions of erudite legal luminaries who lent a voice to the need to embark on wholesome reform of the Nigerian Petroleum Law and borrow a leaf from Norwegian Petroleum law.

The intractable upheavals in the Niger-Delta region have continued to defy efforts at quelling them. The diversity, complexity and intractability of these conflicts have posed some of the greatest challenges to government and whether Nigeria will survive as a state today. In past, due to a desire of the people of the region to assert their group, environmental and economic rights. It is specifically noted that the incidence of kidnappings and demanding for ransom and extra judicial killings continued within the region. The activities of the task force and security organizations set up by government and the oil companies respectively continued to run against the groan of acceptable human rights.

Therefore, a process or forum where government representatives and those of the various factions and oil companies in the Niger Delta region can dialogue and work out modalities for stemming the violence in the region before an implosion occurs. Government must search for more creative strategies in such previously neglected areas as indigenous or traditional forms of conflict resolution. Such ideas should include building capacity of traditional rulers, youth and women leaders in conflict resolution. Government needs to realize that repression and force will not pave the way for peace in the involved communities. The oil companies need to admit the facts that in term of environmental and community impact, they have taken so much and given little. The various youth and political blocks in the region should understand that they have the right to assert their group and environmental rights, but in a non violence.

The government must institutionalize the Economic and Financial Crime Commission (EFCC), taking a queue from Federal Bureau Investigation (FBI) in United States so that they can perform creditably without any political interference.
The Obasanjo’s Nigerian Extractive Industries Transparency Initiative (NEITI) should be allowed to continue. Membership to NEITI must be rational, oil companies should be allowed to be represented along with those that constitutes the body so that they can have input in the management of oil revenue. The proposed Information Bill Act must be passed to allow public unlimited access to government records.

 

Women Entrepreneurship as a tool for Economic Development in Nigeria

Posted July 13, 2007 by advocacygrp
Categories: Economic Development

By Paul A. Adepelumi, Esq., Executive Director, African Centre for Advocacy and Human Development (ACAHD)

Nigeria holds the unenviable record of having her 85 million people of her 120 million people living in abject poverty. To control the this scourge, several Nigerian government have adopted and implemented various poverty alleviation programs dating back to oil boom era of the 1970’s and spanning to the current administration.  Past attempts to alleviate poverty in Nigeria can be grouped into two distinct time frames: Pre/SAP, and Post/SAP. Such programs include; Operation feed the Nation(OFN), Free and Compulsory Primary Education(FCPE), Green Revolution, Low Cost Housing, River Basin Development Authorities(RBDA), National Agricultural Guarantee Scheme(NALDA), Agricultural Credit Guarantee Scheme(ACGS), Strategic Grains Reserves Program(SGRP), Rural Electrification Scheme(RES), and Rural Banking Programme(RPB) were all Pre-SAP programmes mostly designed to take care of objectives such as employment generation, enhancing agricultural output and income, and stemming the rural-urban migration tide, which generally contributed to rising poverty levels. SAP/Post-SAP programmes include: Directorate for Food, Roads and Rural Infrastructure (DFRRI), National Directorate of Employment (NDE), Better Life Program (BLP), People’s Bank of Nigeria (PBN), Community Banks Program, Family Support Programme (FSP), Family Economic Advancement Programme (FEAP) and Obasanjo’s programme on National Poverty Eradication Programme (NAPEP) in 2001 with a start –up grant of six billion naira. Somewhat paradoxically, however despite large financial and material resources invested the number of poor in both the rural and urban has continued to increase. The strategies and methods for tackling poverty have a universal application as can be found in the UN’s Millennium Development Goals (MDGs) agenda. According to Ilungole (2006), MDGs range from having extreme povetry to halting the spread of HIV/AIDS, and to providing universal primary education, all by 2015. As discussed above all these programmes are not new in Nigeria. These programmes had failed either because; they were mostly not designed to alleviate poverty but a sharp measure to secure loan from International Monetary Fund(IMF) or to secure foreign aids for selfish gain, they lacked clearly defined policy frameworks with proper plans for poverty alleviation, and they were riddled with corruption, political deception, outright kleptomania and distasteful looting.

In Nigeria the keys to poverty alleviation are; Sponsorship of micro credit programs, which would aid and improve women entrepreneurship and the general public, production and improvement in agricultural seeds development which will invariably enhance overall level of agricultural output for consumption and foreign trade, moderate government as against large government, tax reduction that would attract foreign investments ,accountability, democracy and good governance, stable and steady provision of power , pursuit of foreign trade as against foreign aids. Leadership is another monumental requirement to help alleviate poverty in Nigeria. Entrepreneurship and good leadership has to work together to alleviate among the  Nigerian poor. Our leaders  have frequently come to their position with limited experience battled on, confronting their awesome problems of development and nation building, essentially unprepared and unaided, their efforts have been at best, only a qualified success. Foreign aids have helped impoverished Nigeria, breeding corruption at governmental level and encouraging large government and non accountability. In Nigeria, the impact of foreign aids has done more harm than cure. The lives of middle class Nigerian women differ greatly from those of most western women. Since colonial days women retained certain economic opportunities within the social system. In fact, before the middle of the twentieth century, Nigerian women traditionally played a more significant role in society than did western women. Traditional or tribal society in Nigeria expected women to be significant wage earners in the family. They laboured in farming, fishing, herding, and commerce alongside Nigerian men. In fact, women traditionally have the right to profit from their work, although the money usually served as a contribution to the family income. This economic freedom was much different from many western societies, where women have to fight for the right to work. These traditions still survives in modern Nigeria. Today, Nigeria women are generally considered to be at the lowest rung of poverty ladder the reason why is women’s access to credit is blocked usually through practices that are justified  as ‘cultural Discriminatory customary laws concerning women’s right that impedes their rights to own property. Male supremacist structures of authority, whether in kinship structures or traditional’ rulers, often act to marginalize women systematically from access and control over land and economic enterprise”. The significance of such access and control is located in the relationship between land rights, property rights and the sustainability of livelihood.

Recent developments and studies conducted by ACAHD in Okitipupa local government of Nigeria reinforce the contention that microfinance or micro credit structures are essential for development of rural areas in Nigeria. As has been argued by the United Nations Capital Development Fund(UNCDF), “the development of microfinance institutions over the last two decades and a number of success stories have lent credence to the idea that microfinance is a major stimulus for development in the countries of the south, and is power instrument for combating corruption and promotes economic development”. Microfinance institutions have rapidly evolved in the last decade and have been able to create significant income and employment opportunities for the poor in developing countries.  Nigeria government had in the past established some financial institutions it includes: Commercial Banks, Development Banks, Community Banks and Micro-credit Finance Banks. Most of these development programmes were faced with some obstacles and had failed according to research conducted by ACAHD  because : the Banks are too elitist in nature, the poor have no channel to approach banks for credit; Lending is structured for short term lending operation with strict collateral conditions , which the poor cannot afford; The banks are only interested only in short-term LPO financing with high interest and administrative charges; Social-cultural impediments which prevent the poor from approaching the banks for loans; Most of the major chunks went to the rich farmers. According to Nigeria National Strategy Team, most of the development banks failed because: They were not tailored to meet the needs of the poor as profitable enterprises; The Banks prefer to provide large loans as result of the high cost of administration involved in a large number of customers. Perhaps as a natural response to a common threat, Nigeria’s poor community have designed their own type of primitive financing structures. A lot of these have manifested in form of Cooperatives and informal trade associations. The strategy here is to develop a loan able capital base from contributions by members. Most of these cooperatives have recorded a huge success in poverty alleviation and economic development. For instance Country Women Association of Nigeria (COWAN) had 178,000 members belonging to some 35,000 working cooperative societies. Their objectives which includes promote the well – being of women in agricultural, economic decision making and for the total development of the capacities of women to contribute to self-reliance and sustainable development; empower rural women economically, socially, politically and thereby promote sustainable economic development; develop skills, improve knowledge, promote culture consultation in decisional process; give the youth a sound knowledge of the local technology, tradition and culture that are sustainable for economic development. While most of this organization has succeeded over the years with little resources, it is shameful that Nigerian government with access to foreign aids and proceeds from oil and internal generated revenue has failed woefully in alleviating poverty in Nigeria.

In Nigeria, women lacked access to resources including credit and technology because of the deterioration of the economic situation in the 1980’s, till today .The condition of women has been affected adversely. The Abuja Declaration on Participatory Development: The Role of Women in the 1990s noted that sustainable development only can be achieved with the full participation of women who constitute approximately 50 per cent of the population. And yet their role in development has only gained serious attention only in the last few years…” The declaration noted that: “Women lacked access to resources including credit and technology: Because of the deterioration of the economic situation in the 1980s, the economic situation of women has been affected adversely … It has constrained governments from allocating the necessary resources to the multiple roles of women and their access to development.”  For Nigeria to sustain her development banks they have to borrow leaf from model countries like Indonesia, China and Bangladesh. The Grameen Bank in Bangladesh recommends itself for study. The bank is one of the most successful micro-credit finance in the world and it is reputed with pioneering the micro-credit movement all over the world. The Bank brought credit to the poor, illiterate and women with a methodology and institution around the financial needs of the poor. The characteristics of the bank includes: Borrower fall below certain income group; Collateral are not required; Clients must join cooperative or belong to five member groups to guarantee one anther’s credit; Group initially evaluates the credit request of others before banks consideration. Nigeria community and Micro-Finance banks can be patterned after the structure of Grameen Bank for maximum results. The micro support under UNDP is also worthy of note. It is anchored on six guiding principles, strategies and approaches that could be adopted to strengthen the community and micro finance banks. The principle are: Adoption of people and community-centered participatory development approach; Marching the objectives of the scheme with needs, culture values and aspirations of the groups and community members; Building real partnership among relevant agencies, NGOs, Banks and the beneficiaries; Recognition of Government/donor collaboration with banks as well as capacity building; Accessibility of the financial services; and Financial and operating self-sufficiency. 

One of the promising solutions to Nigeria economic development and women empowerment today is granting credit facilities and training to rural women who involved in agricultural activities to enable them to procure simple agricultural implements like hoes, knives, hiring of tractors and purchase of fertilizers. Credit facilities should also be extended to people involved in cottage industries, such as oil-palm extraction and palm kernel cracking and oil presses. Okitipupa local government area of Ondo state is one of the largest producers of palm oil and palm kernel in the world yet no credible impact of the government has been felt in this area to improve agricultural seeds and women enterprise. Yet Okitipupa land mass with her fertility and people is enough to feed Nigeria if government has placed her attention in this area for poverty alleviation.

It is therefore submitted that instead of African leadership and particularly Nigeria government running, soliciting for foreign aids they should promote women entrepreneurship and foreign trade for poverty alleviation. They should embark on developmental projects such as granting micro-credit finance to women borrowing leaf form Gramen bank standards. On the other hand, genuine and committed effort must be made forthwith in establishing a direct linkage between all existing Government initiatives and institutions, desirably with export market access as common goal. Perhaps one of the highest advantages in Nigeria today is the availability in abundance of cheap but skilled and talented labour. A creative approach to harnessing these latent talents for exports will, no doubt prove a strong and innovative strategy to create new wealth.  Nigeria cannot afford to continue with ill-prepared and unassisted leaders. Those whom the burden of selection process and those whom the burden of leadership will fall in future must fully comprehend their responsibilities, duties and obligations. They must, that is, have exposure to democratic norms and values , free enterprise,  knowledge of globalization ,and carefully planned preparation if they are to meet the challenges that will face them. Broadly- implemented adaptive leadership skills program such as Democratic Leadership training for Traditional rulers, Rural and Urban Youths, holding periodically have the potential to transform the struggling democracy in Nigeria. The purpose is to enhance the knowledge and awareness of young, potential Nigerian leaders and traditional rulers, placing special emphasis on diagnosing apparent interrelations of local, national, regional and global problems, and on seeking possible approaches to solutions.       For Further Reading1         Ali Garba “Alleviating Poverty in Northern Nigeria”. Paper presented at the Annual Convention of: Zumunta Association US, Minneapolis, MN, July28-29, 2006.2         Ngozi G. Iheduru “Women Entrepreneurship and Development: The Gendering of Microfinance in Nigeria”. Presented at the 8th  International Interdisciplinary Congress on Women 21-26 July, 2002, Makerere University, Kampala –Uganda 3         Report on Research conducted by ACAHD in Okitipupa, Ondo State, Nigeria on Entrepreneurship Development, March 2005 – July 2006.4         “Africa and Successor Generation”- Summary Report and Papers presented at the 10th Anniversary Meeting of the African Leadership Forum.  

Worsening spate of ritual killings

Posted July 10, 2007 by advocacygrp
Categories: Human Rights

The chilling story of a four-year old girl. Timileyin Abiona, who was gruesomely murdered by ritualists in Ayetoro, Ogun State, is a reflection of a society that is fast becoming bestial. It also shows that despite the splashy press coverage and occasional police arrest and investigations of suspected murderers in the past, the obnoxious is still prevalent in the country. 

The poor girl was playing with her peers when the suspected murderers lured her to their room. As the Ogun State Police Command revealed, the girl’s captors strangulated and beheaded her and later dumped her torso in the bush. The police apprehended two of the three suspects.

Since 2002 when seven people were sentenced to death by hanging for the 1996 ritual killing of an 11-year old boy and for masterminding clandestine killing of many others in the infamous “Otokoto” saga, the police and the courts have only recorded a few other breakthroughs in the investigations and convictions of ritual murderers. In February 2005, an Ogwashi Uku High Court in Delta State convicted three people killing an albino infant boy for ritual purposes. But other highly publicized cases, including the Okija Shrines horror, where 50 mutilated bodies and 20 skulls were found in 2004, the Clifford Orji case in Lagos and the case of a popular soap manufacturer accused of using human parts for rituals in Ogun State, still remain in limbo.

But the story was not the same in the British Police handling of the killing of a boy found in the Thames River in July 2004. Named Boy Adam, the metropolitan Police painstakingly investigated the boy’s murder with the equipment that modern science could offer. 

The saddest part of the mindless business is that hundred of victims of ritual murder and human sacrifice only get mentioned as missing persons in the media. As some victims who managed to escape revealed, bus loads of innocent people are discharged on a daily basis to these vampires who hide in evil forests across the country, with the possible connivance of some law enforcement agents. This explains why most of the reported cases are not diligently investigated and the culprits brought to justice. Indeed, there is much speculation that both the wealthy elite and the poor ignorant peasants profit from the bloody trade. Mostly, victims are innocent school children, poor street hawkers and unsuspecting commuters. 

Despite the mushrooming of religious groups, it is tragic that a large number of Nigerians still believe in gaining power and making money through the murderous practice. Though ritual murder occurs elsewhere in the world, its prevalence in Nigeria is traceable in the nation’s fetish culture and shrinking economic opportunities to earn legitimate income. But while such heinous crimes provoke severe punishment in other societies, the nation’s criminal justice system is still lax, making it possible for ritualists and cultists to escape justice.After several feeble attempts to stamp out cultism in higher institutions, the inability to apply the full weight of the law on the suspects explains why murderous gangs still kill and maim on many campuses in the country. 

The primitive practice of ritual killing must be discouraged by firmly applying the relevant laws, while parents must be more security conscious, especially in monitoring their children and wards. Both the media and the civil society group need to step up their campaigns against ritual killings. The police and the judiciary should hold these criminals at bay. The Ogun State Police Command should not just stop at parading the suspected killers of Timileyin; it must ensure that the murderers are brought to justice in order to deter others. 

Challenges Of Privatisation In Nigeria

Posted June 13, 2007 by advocacygrp
Categories: Privatisation

Since the beginning of the outgoing administration in May 1999, the Bureau of Public Enterprises has been dynamic with the sale of public firms to local and foreign private interests.

The policy of the government is to make Nigeria a private sector-driven economy where the government will regulate but leave business to those who can run it.  But privatization, which transfers ownership of production and control of enterprises from the public to the private sector, has been very controversial. It has generated strong debates, everywhere especially in developing countries, where it is perceived to have more negative impact.  

While proponents of privatization see it as an efficient way of promoting competition and enhancing growth, critics argue that it makes the poor poorer by increasing unemployment and reducing access of the poor to basic goods and services through increase in prices. In Nigeria, there have been several protests by unions that are opposed to the proposed sell-off because of the fear of losing their jobs.

The most recent were the auctions of the Egbin Power Plant to KEPCO, a Korean firm, Kaduna refinery to China National Petroleum Company and Port Harcourt refinery to a local consortium. Apart from the fear of job losses, many workers argue that the sale of public enterprises to either foreign owners or domestic investors is an infringement on their rights as Nigerians.  The privatization journey in Nigeria may be said to have really started in the 1980s when the country witnessed economic deterioration. 

The Technical Committee on Privatization and Commercialization was established in 1988 under the chairmanship of late Dr. Hamza Zayyad. Dr. Ifeoma Nwoye of the Nigerian Institute of Management, in her study on the privatization of public enterprises in Nigeria, said the socio-economic difficulties of Nigeria were traceable to the global economic recession, which opened with the decade of the 1980s. She said, “The problems of performance of the public sector enterprises in Nigeria were complicated by the downturn in socio-economic development in the country due to the global economic recession and the collapse of the oil market.

Thus, Nigeria’s precarious fiscal and monetary posture could no longer sustain the requirements of its public sector enterprises, particularly since they perform below expectations in terms of their returns on investments and quality of services.  “Towards the end of 1980s, the public enterprises, which had grown too large, began to suffer from fundamental problems of defective capital structures, excessive bureaucratic control and intervention, inappropriate technologies, gross incompetence and blatant corruption. “With the deep internal crises that included high rates of inflation and unemployment, external debt obligations and foreign exchange misalignment, Nigeria and many other African countries were strongly advised by the worldwide lending agencies, particularly the International Monetary Fund and the World Bank, to divest their public enterprises as one of the conditions for economic assistance. “With the intensified push for economic liberalization, Nigeria and other African leaders were told that privatization as an economic reform would help cut public sector inefficiency and waste, attract more investments, bring in new technologies, and hence revive economic growth.

Thus, many countries, including Nigeria, embarked on privatization and other market oriented reforms to pull them out of the structural imbalances.” Since the drive for privatization in developing countries emanated largely from international creditors, many experts believed it could be a form of economic exploitation. The views of critics may not be discarded as majority of the companies being privatized are purchased by foreign companies. Economic like Prof. Sam Aluko, have faulted the outgoing regime’s privatization programme, saying that the accompanying mass retrenchment has shown that it is not human development-oriented. Aluko said the sale of public enterprises to a few privileged Nigerians had only succeeded in making a few people rich at the expense of the vast majority. This, in addition to other anti-poor policies, Prof. Ade Adejugbe said, had made unemployment higher and poverty deeper despite the recorded improvement in growth indicators.  Other economists have also said that in developing countries, privatization must be pursued with utmost caution. Paul cook and Yuichiro Uchida, of the University of Manchester, United Kingdom, in a study on privatization and economic growth in developing countries, found that the effects of privatization on these countries might be negative. They claimed that since theoretical literature argued that change in ownership alone at the microeconomic level was not sufficient to guarantee greater enterprise efficiency, then other reforms more directly related to enterprise development, might play a crucial role. The World Bank, which could be described as the originator of privatization, also has its reservations, particularly in the poor developing countries. Otive Igbuzor of the Centre for Democracy and Development, in his paper on privatization in Nigeria, quoting the World Bank, said, “Most privatization success stories come from high income and middle-income countries. Privatization is easier to launch and more likely to produce positive results when the company operates in a competitive market-friendly policy environment and a good capacity to regulate. “The poorer the country, the longer the odds against privatization producing its anticipated benefits, and the more difficult the process of preparing the terrain for sale.” If this assertion is a pointer, then privatization in Nigeria is bound to be controversial. Nigeria, by international and domestic standards is a poor country. The World Bank’s annual Human Development index is a comparative measure of life expectancy, education, and standards of living for countries worldwide. It could also be a measure of the impact of economic polices on quality of life. The 2006 HDI for Nigeria-based on 2004 figures was 0.448. The country ranked 159th out of 177 countries and 76th out 102 developing countries for which the index was calculated. 

The Central Bank of Nigeria still quotes the 2004 poverty rate of 54.4 per cent while the World Bank states that about 70 per cent of Nigerians live below poverty level. Experts have, therefore, said that for Nigeria to reap the benefits of privatization poverty must be tackled and employment generated. If the private sector must be made the engine of growth for the economy, an enabling of operating environment must be provided. “If basic infrastructure that aid production are still in the poor state that they are, the private sector can do no magic to turn the economy around because there is a limit to the facilities that they can provide for themselves,” Adejugbe said. In the same vein, the Chief Executive Officer of Economic Associates, Lagos, Dr. Ayo Teriba, said there was no need talking about the continuation of policies or the privatization programme when the county had so much money saved abroad while her citizens were still wallowing in poverty. He said, “The new government should focus on ways of using Nigeria’s wealth to solve Nigeria’s problems.” The 2006 IMF country report on Nigeria lent credence to Teriba’s stance. The report, which stated that Nigeria still lagged behind in infrastructure, said growth had been weaker in the country than in other less-developed countries. The report stated, “Growth, which has been weaker than in other less-developed countries, would benefit from significant infrastructure spending.

The authorities could finance this by drawing on the country’s higher oil wealth, which increased by 91 per cent of non-oil gross Domestic Product in net present value terms over the past year. “Although large overall fiscal surpluses and low public debt should protect fiscal sustainability, greater spending must have a sufficiently high import content to safeguard the single-digit inflation objective and to avoid crowding out of non-oil private sector activity. In the light of the high levels of capital spending, strengthening of the initially weak public financial management practices is imperative to avoid the wasteful spending associated with past oil booms.” Economists say there are certain reasons why some major enterprises must be publicly controlled. These include the inadequacy of the private sector to provide certain goods and services that require enormous investments, the fact that the financially incapable in the society must not be totally deprived of access to basic goods and services and national security. The indivisibility clause also requires that facilities such as roads, railways and streetlights be provided by government and financed through taxation. However, experts have said that privatization may not be inherently good or bad. It is the mode of implementation that determines its effectiveness. “But the greed that had been displayed by past Nigerian leaders in their quest to amass ridiculous wealth has made the genuiness and ultimate efficiency of the ongoing privatization programme questionable,” an expert said. In this regard, Nwoye said, “One of the most important issues in privatization is the concern for transparency and accountability. Nigeria is characterized by distrust and suspicion. Suspicions of corruption that follow privatization deals require that separate auditing and legislature’s oversight committees be established to help in the monitoring process.” If there is transparency, citizens may not be too suspicious of privatization moves because it creates a perception of honesty and accountability. “If privatization is carried out with sincerity of purpose, almost every group will come out ahead as a result of divestment. Workers will be shareholders. Consumers will be better off because of better service. New graduates and the unemployed will get jobs because of expansion and government will be relieved of the burden of subsidies among others,” Nwoye said.               

Culled from The Punch Newspaper.               


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