Privatisation in Nigeria is currently enmeshed in a plethora of discontentment which includes massive job losses. Many of the sold companies have collapsed, while others are dancing at the precipice. Privatised companies in the steel sector that used to employ up to 20,000 workers now have less than 4,000 after the exercise, Dr Sanusi Muhammad, Executive Secretary of the Africa Iron Ore and Steel Association told Daily Trust in a phone interview.
The Daily Times Plc which was acquired by the Folio Communication Ltd in July 2004 has since been out of circulation.
The Electricity Metre Company of Nigeria, Zaria that was sold to Dantata Investments Ltd in December 2002 is not performing. Daily Trust investigations revealed that only recently the company fired about 90 per cent of its work force while carrying out only a skeletal operations.
Last year, Peugeot Automobile of Nigeria (PAN) sacked 226 workers, as lack of patronage and unfavourable government policies stifle its operations.
The Federal Superphospate Fertilizer Company Limited in Kaduna has virtually closed shop. The fertilizer plant was acquired by Heiko Consortium in an open bid process in September 2005. The company has not been able to pay workers salaries in months.
The Nigeria Paper Mill, Jebba that was liquidated in June 2006 is not producing also, though it claimed it has resumed partial operation after a long recess. The mill was acquired by the IMNL Ltd.
In the same vein, the Ajaokuta Steel Complex which was sold (60 per cent Concession) to Indian Global Infrastructure Nigeria Ltd on May 17, 2007 has since been returned to the Federal Government while its labour force of 6,000 has been reduced to around 1,000.
The Nigerian Sugar Company, Bacita Kwara State, sold in 2005 to Joseph Dam & Son has stopped sugar production. But in contrast, the Savannah Sugar company in Adamawa State acquired by Dangote Industries Limited is producing.
BPE’s spokesman Chukwuma Nwakoh however said the privatised companies are functioning, “save for one or two.”
He also said all other public-owned companies that have not been privatised are “either due for commercialisation or privatisation.”
The Zuma Steel rolling mill in Jos and the Osogbo Steel rolling mill have been grounded, Daily Trust can report. Both of them were privatised in November 2005.
Dr. Mohammed told this paper that their continuing closure has cost the nation billions of naira.
Other steel companies sold under the Olusegun Obasanjo government include: the Ajaokuta Steel Company (concessioned), the Nigerian Iron Ore Mining Company, Itakpe in Kogi State; Delta Steel Company, Ovwian Aladja, and the Katsina Rolling Mill.
Of all these, it is only the Katsina Rolling Mill that is functioning, while the Delta Steel Company is operating at around 10 per cent capacity.
The programme, according to experts begun on a good note but went bad later.
In the financial sector, the policy saw many state institutions going into private hands, which include: NICON Insurance, Nigerian Reinsurance, Nigerian Bank for Commerce and Industry, Assurance Bank, FSB Bank and Afribank BIAO shares, among others.
In the manufacturing sector, some of the public firms that ended in the deep pocket of investors include: Savannah Sugar Company, National Fertilizer Company of Nigeria (NAFCON), Federal Super Phosphate Fertilizer Company, Nigerian Machine Tools, Nigerian Paper Manufacturing Company Limited, Nigerian Sugar Company Bachita, Ashaka Cement, Sunti Sugar Company, Benue Cement Company, Calaber Cement, Leyland, Peugeot Automobile Nigeria Limited, Volkswagen Nigeria Limited etc.
Electricity Metre Company of Nigeria, Zaria, Oshogbo Steel Rolling Mills, Jos Steel Rolling Mill, Delta Steel Rolling Mill, Ajaokuta Steel Rolling Mill, Aluminum Smelter Company Limited and National Iron Ire Mining Company Limited were also sold as part of effort to inject life into the steel and power sector. In the solid minerals sector, the sold companies includes: Nigerian Mining Corporation, Nigerian Coal Corporation and Nigeria Uranium Company Limited.
The information sector group comprises of Daily Times of Nigeria, Federal Radio Corporation of Nigeria, New Nigerian Newspapers, News Agency of Nigeria and Nigeria Television Authority.
In the transport sector, several state enterprises were slated for privatization. They includes Nigeria Ports Authority, Nigeria Railways, Nigerdock, NAHCO etc.
The petroleum sector group includes: Baker Nigeria Limited, Nigerian National Petroleum Corporation, Eleme Petrochemicals, Kaduna, Port Harcourt, Warri refineries, Nigerian Gas Company, Petroleum and Pipelines Marketing Company, African Petroleum, UniPetrol, National oil and Dresser Nigeria Limited.
In the housing sector, there were, Federal Housing Authority, the Federal Mortgage Bank and Federal Mortgage Finance Limited, while in the natural resources, all 12 Water River Basin Development Authorities were slated for sale. In the agricultural sector, National Park Board, Ore Oil Palm, and Ihechiowa Oil Palm were slated for sale, while hotels were not left behind. They include: Nigeria Hotels Limited (audit section) and Festac 77 Hotels, among others. In the telecoms sector it include NITEL, MTEL and NIPOST.
The country’s premier telecommunication company-NITEL and MTEL- has become a classical case in the study of the failure of privatisation in Nigeria, experts say.
Efforts to privatise them have failed after IIL of London, Pentascope of Netherlands, Orascom of Egypt and Transcorp of Nigeria bided, won and failed at different points in time. Currently, the New Generation Consortium of Dubai, which emerged preferred bidder, is yet to pay a 30 per cent advance fee amounting to $750million of the $2.5billion bid price.
In the same vein, effort to sell 18 successor companies for the Power Holding Company of Nigeria (PHCN) to function have yet to succeed.
The government agency charged with the responsibility of selling off these public companies-Bureau of Public Enterprises (BPE)-has so far raked in N510billion after selling some 145 public owned firms, Daily Trust reports.
But the BPE has yet to make public the report of the post privatisation evaluation exercise it conducted last year.
A source in BPE told this paper that the report is not for “public consumption.”
Daily Trust also leant that the subsidiaries of the Nigerian National Petroleum Corporation (NNPC) have been slated for sale.
The units are: The upstream exploration and production subsidiary, the National Petroleum Development Company (NPDC); the gas marketing and distribution arm, Nigerian Gas Company (NGC); the petroleum products marketing and distribution arm, the Pipelines and Products Marketing Company (PPMC), and the four refineries in Port Harcourt, Kaduna and Warri.
Reacting, President Senior Staff Association of Communications, Transport and Corporation (SSACTAC) NITEL branch, Comrade E.Y. Kazzah described the entire privatisation exercise as a failure. He said it has not translated in the creation of more jobs and that most of the companies privatised are not functioning.
“The privatisation policy has failed. Government needs to revise it. There are better options than privatisation. The policy is not in favour of workers,” he said.
President of the Manufacturers Association of Nigeria (MAN) Kola Jamodu however said experience has shown that public owned companies performed better when they are privatised, “that is why they are doing it and that is why they are not looking back.”
Managing Director/Chief Executive Officer of NITEL Hajiya Zainab Sa’ab said in an exclusive interview that privatisation can succeed with the right managers.
She also said there was the need for government or private investors to inject money into NITEL if it must be revived.
The Ibrahim Babangida government (1985-1993) was the first to seriously adopt a privatisation programme. The policy was one of the prescriptions usually imposed by the IMF and World Bank, and Nigeria was desirous of working with the two institutions. The primary concern then was the notion of efficiency and performance of the public companies.
It was also believed that privatisation would create more wealth through tax and jobs for Nigerians, and as well eliminate corruption in public enterprises. Contrary to expectation, the private sector is also enmeshed in corruption, inefficiency and the country has suffered massive job losses over the years.
Contrary to expectation, economists say the private sector has also been trapped in high profile corrupt practices, as the sold companies are not performing.
Unlike government management, the privatised firms also failed to invest in infrastructure, and lacked public accountability, in the face of a widening social and economic gap.
In his appraisal of the exercise, an expert, Barrister Onjefu Adoga says the woes include: “The sale of national steel companies namely Ajaokuta Steel and Delta Steel to Global Infrastructure, Daily Times, African Petroleum, ALSCON, NAFCON, Eleme Petrochemicals, the constant labour disputes, the draconian sale of Federal Government properties in Lagos and Abuja considered by patriotic civil servants to be the greatest economic heist of the 21st century in Africa, the revocation of 18 private refineries licences, the proposed and ill advised privatization of Unity Schools, the sale of the Trade Fair Complex, the controversial auction sale of African Petroleum, the sale of Stallion House, the hastened and obscurantic sale of national refineries at the twilight of the last administration.”
According to experts, the solution to the privatisation challenges in Nigeria include: A workable privatization model, improving its framework, enhancement of Nigeria’s competition law through anti-trust law, fighting corruption, transparency of the bidding process by the BPE, public accountability, enhancement of corporate governance among investors and most importantly, making public the report of BPE’s post privatisation monitoring and evaluation exerciseof the privatised companies.