The restructuring of wilting privatised enterprises and services is in order
Perhaps because the overall success of many of the privatised public firms remains in doubt, the Bureau of Public Enterprises (BPE) has embarked on a review of those that have failed public expectations. Mr. Alex Okoh, Director-General of the BPE, told visiting members of the Senate Committee on Privatisation and Commercialisation recently that the bureau had started a thorough examination of the non-performing enterprises in order to ascertain the issues affecting their performances.
Cutting across communication, transport, banking, insurance, manufacturing, publishing and power and others, many of the erstwhile state-run firms, privatised at huge costs to the tax payers, have performed woefully. Since 1993, when some 86 firms were privatised in the first phase of the exercise till now, there have hardly been any major positive impacts on the economy as many firms are either wilting or failing badly. Besides, there are little or no corresponding returns on investments. Many of the new investors behind the purchase are only interested in the assets of the firms, and not on adding value, leading to economic losses for the country. Reports suggest a significant drop in job creations across the firms though it must also be said that the prevailing harsh economic environment is also unhelpful.
Mr. Benjamin Dikki, Okoh’s predecessor at BPE, once expressed outright disappointment with the outcome of the exercise when he spoke on the theme, “The Nigerian Reforms and Privatisation Policy, Processes, Gains, Challenges and Prospects.” The Nigerian economy, according to Dikki, “has continued to experience declining growth, increasing unemployment, galloping inflation, high incidence of poverty, worsening balance of payments, debilitating debt burden and increasing unsustainable fiscal deficits”.
Nothing significantly has changed. Majority of the establishments sold to public concerns by the BPE are either ran aground or are finding it difficult to stay afloat. Perhaps nowhere are the worries of privatisation more apparent or consequential than in the power sector. It is the prime example of the dilemma of privatisation. The hope that the unbundling of the ailing power sector into six generating companies, 11 distributing companies and a transmission company would bring about efficiency in service delivery while kicking off industrialisation and the economic development of the country has turned out to be grossly misplaced.
After more than two years, the deficiencies seemed more than doubled – in form of prolonged power outages, unreliable services and poor management. Indeed, Senator Ben Murray-Bruce, Chairman of the Senate Committee on Privatisation and Commercialisation, said that the committee had been mandated by the Senate to institute an inquiry into the power sector. “We have been mandated to hold a public hearing on the power sector,” said Murray-Bruce. “We are mindful of foreign investors and we are wary of scaring away foreign investors. However, we need to fix it.”
Several reasons have been played up for the inefficiencies of these enterprises. Among them was the hasty manner in which such assets were disposed of by government. Indeed, Dr. Christopher Anyanwu, erstwhile Director- General of BPE, said due diligence was downplayed. Some of the new investors, like those in the power sector, had little or no knowledge of how the unbundled power firms operate, coupled with their inability to build up capacity because of paucity of funds. Yet such measures do nothing but help to raise credibility questions about the readiness of the investors to up the public good.
For now, there is no painless way out. But the PBE has assured of buoying public confidence by restructuring the public sector enterprises and services in a manner that would create a new synergy between the government and a revitalised, efficient and service-oriented private sector. It is a big expectation. In doing this, it will help by abiding with the enabling laws. Besides, we should not do anything that will scare away foreign investors from our shores.