CHAPTER ONE

1.0      GENERAL INTRODUCTION

All over the world, the public service as a matter of experience has not been known for their capacity to create wealth. Consequently, public enterprises have usually been perceived as drain pipes, thus creating budgetary strains and avoidable burden on the economy. It became a national policy imperative therefore to disengage the public sector from those areas where the private sector has the comparable advantage to perform, while letting the State concern itself with the provision of infrastructure, security and the enabling environment for business to thrive through enhanced wealth creation.

It is important to observe that for many developing countries like Nigeria, it was perhaps unavoidable for the government, in an earlier epoch, to promote the initial investments in the early phase of national development when the private sector was almost non-existent. Unfortunately, the government got herself so involved in business that could best be tackled by the private sector, that government could no longer perform her traditional functions: the provision of infrastructure and security through the maintenance of law and order as well as the promotion of an enabling and conducive environment for investments and wealth creation. (Any a, O. A., 2000 p4)

1).        The import of this economic step is anchored on "the belief that entrepreneurs can manage the industries and can operate services more efficiently and at a lower cost than the public enterprise. (Onodugo,V.A. 1995 P3).

The introduction of privatization fourteen (14) years ago has provoked a lot of public attention and discussion. However, it is clear that as opposed to the 1980s when there were two strong schools of thought on privatization - one for and another against, dissenting voices are much fewer these days. This perhaps, may be an indication of the widespread acknowledgement and

acceptance that the merits of privatization far outweigh its demerits.

It is therefore the purpose of this study to critically analyze this government policy of privatization and commercialization, with a view to finding out whether it has the economic remedy, for which it is meant. In doing this, the researcher will carry out investigation using two government parastatals namely - The Nigerian Telecommunication Limited (NITEL)

      STATEMENT OF THE PROBLEM

The economic depression of the late 1930's with it's deep and severe consequences coupled with the revolution in the Union of Soviet Socialist Republic (USSR) led to a situation where governments, that hitherto had no business in running enterprises, dabbled into business. This became possible when private sector enterprise, especially in Western Europe collapsed due to the recession.

Nigeria, like many African countries on attaining independence, embarked on establishment of public enterprises. The oil boom of the 70's further accelerated the growth of the public enterprises. Government presence was felt in virtually every aspect of our economy such that "it became the largest producer, the largest consumer, the biggest employer, the biggest owner of property, the biggest investor, the biggest insurer and the biggest debtor' (Ubaigboma 1995 P. 8).

However, by the 1980s, it was clear that a nightmarish mistake has been done indicated by the common features of the public enterprises, which are huge annual losses, gross inefficiencies, low returns, mismanagement etc. All these necessitated a move towards competitive market system by the use of economic tools of domestic Deregulation, Privatization (Iromantu,