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PROBLEM OF MANAGEMENT OF PUBLIC ENTERPRISES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND TO THE STUDY

In most Countries of the world, particularly the developing ones, the decades following World War II (particularly, the 1960s and early 1970s) witnessed a massive intervention of the government in national economics. One of the ways through which the government intervened in the economies of these countries was by establishing public enterprise state-owned companies. According to Ezeani (2006:211) stated “that public enterprise was seen as veritable tools for achieving national socio-economic development”. Thus, since the 1950s, successive governments have used public intervention in the development process. This was eloquently stated in the Nigeria Second National Development plan (1970-74) thus: 

their primary purpose is to stimulate and accelerate National economic development under conditions of capital scarcity and structural defects in private business organizations. There are also basic considerations arising from the dangers of leaving vital sector of the national economy to the whims of the private sector often under the direct and remote controls of foreign large scale industrial combines

Also according to Nwoye (2001:1) opined “that there are many reasons for establishment of public enterprises, which one of them is development emphasis, he further stated that in many developing countries, the resources available to the private sector are not adequate for the provision of certain goods and services for example, the investment required in the construction of a hydroelectricity-generating plant or a water scheme for large urban center are quite enormous and the returns on such investment will take a very long time to realize. Ozor (2004:10) stated that “like many other British-ex-colonial territories, Nigeria realized soon after political independence that she still had to battle for her economic independence. Her weak economic base limited infrastructural facilities, paucity of social service-providing inadequate local financial entrepreneurship etc.

 Furthermore, Adeyemo (2005:224) stated that “other factors that accelerated the growth of Nigeria’s public sector was the indigenization policy of 1972 as enacted by the economy, the policy further provided much needed legal basis for extensive government participation in the ownership and control of significant sectors of the economy”. Ugorji (1995:541) also observed that “public enterprises have also been established for political reasons; many government undertakings are used to provide jobs for constituents, political allies, and friends, Public Enterprises and the distribution of government employment were further been defended in the need to maintain “federal character” and promote national integration. 

 Consequently, the Public Enterprises especially in developing countries became active in likely sectors such as manufacturing, construction, finance, services, utilities, transportation, agriculture, natural resources, etc. 

 According to Ezeani (2006:21) stated  that “the colonial government established some public enterprises to provide essential services like electricity, railway, telecommunication and pipe borne water to mention but a few.” 

 Also according to Obadan and Ayodele (1998:1) they opined that “it is in order to put socio-economic development underway and also guard government finances under conditions of capital scarcity and structural detects in private business organizations, Nigeria and most other African countries, regardless of Ideological dispositions, unavoidably made fairly extensive use of public enterprises for resource mobilization and allocation, particularly within the utilities and social services sectors as (NTA, Awka) in the 1950s through the 1960s. In both technical and economic perspectives Public Enterprises are seen as:

 Organizations whose primary function is the production and sale of goods and/or services and in which government on other government controlled agencies have an ownership stake that is sufficient to ensure their control over the enterprises regardless of how active that control is exercised. 

The Public Enterprises approach to resource mobilization and allocation for national socio-economic development is in consonance with the Keynesian approach to economic approach reflected the problem of market failures and the growing demand for citizenship rights such as a decent living standard, adequate education and health care, and minimal social equality, he further stated that whereas in developing countries, this approach became the pivotal policy option to ensure national development, wealth redistribution, employment generation, and economic self-reliance.   In most developing countries like Nigeria, where ideology has not played any significant role in the shaping of their economic activities, the reason for the spread of public enterprises can be found mainly in the realm of political, social and economic considerations, but not ideological.

Thinking in the direction, S.A. Sosna in Ozor (2004:110) asserted that: 

The emergence of a fairly extensive public sector is a major regularity in the development of the young states. Although, the scope and pace of the change differ form country to country, the public sector and related problems are central to their economic polices. To a certain extent this is independent of what social forces that hold the reins of government; the reason being objective factors, which are not rooted in political and ideological motive alone but are associated with the processes occurring in the multi-structural economic patterns of these countries and with their economic and social situations.

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