Another cycle of privatization

Mr Dikki remarked that what he called the success stories of previous privatization exercises provided the impetus for the new wave of privatising additional government-owned enterprises, referring to sectors such as banking and telecommunications, with power being the latest which, he said, was showing encouraging results. Privatisation brings previously public-owned establishments the advantage of ownership […]

Mr Dikki remarked that what he called the success stories of previous privatization exercises provided the impetus for the new wave of privatising additional government-owned enterprises, referring to sectors such as banking and telecommunications, with power being the latest which, he said, was showing encouraging results. Privatisation brings previously public-owned establishments the advantage of ownership and management by profit-driven private investors that are sensitive to the inter-play of market forces, ensuring optimal deployment of productive resources. Through privatization, the affected sectors have enjoyed some measure of transformation with multi-fold dividends to the economy.
For instance, from 1999 when the telecommunications reforms were launched to date, the nation’s mobile phone subscriber base has increased from 450,000 lines to over 114 million lines. Between when the banking reforms were launched and the present the financial sector, which featured a few banks and financial institutions, has now expanded to its current trillion-naira status, and running on comparable basis with the leading financial hubs of the world. The newly privatized power sector, according to some analyses, has started justifying the initiative of privatization.
In the same vein, the sectors that have been earmarked for privatization, if properly managed, offer a promise of impacting positively on the economy in terms of expansion, increased in employment and enhanced income levels. When privatized, they would be in a better position to attract more investment opportunities with attendant advantages of fresh inflow of funding, competitive management, and improved service delivery.  
However as inspiring as the success stories Mr Dikki mentioned are, there is still room for improvement in the government’s handling of such exercises, in order for them to have the envisaged redounding effects on the economy. The primary expectation from privatization exercise should be the ownership and control of designated sectors, with emphasis on the promotion of local content in all aspects of the enterprise.
The scope of the implementation of the privatization programme so far in the country is bereft of the expected domestication of ownership and control of the privatized establishments. In the banking sector for instance, the level of foreign ownership is still significant enough to misdirect the deployment of investment portfolios in a manner that is non-supportive of the real sectors of the country. In the telecommunications sector, the situation is not different either. Beyond operations that are confined to the periphery, the sector is under the effective control of foreign interests. The newly privatized power sector is not faring better, too, in spite of the initial promise. Privatization without much higher local content than is the case presently weakens domestic control of the economy.
It is important that the government addresses this serious lapse in the privatization exercise with respect to both the earlier establishments and the fresh cases. Another disturbing aspect is the lack of transparency in the privatization transactions by the BPE. In referring to some of the new owners of hitherto public owned enterprises, the BPE routinely calls them ‘various individuals and organisations’ – a phrase that masks the identity of the foreign investors in the establishments. This apparent attempt at concealment should be discontinued. The BPE needs to establish a robust nexus between it and the Nigerian Stock Exchange (NSE) towards listing of privatized establishments in order to ensure the deepening of their impact on the economy and improving transparency.