Monday, February 20, 2017

Why Privatization is not the answer in the Nigerian's Government (Hospitals should not be privatized in Nigeria)

 Why privatization is not the answer in the Nigerian’s Government

Privatization is the transfer of ownership, property or business from the government to the private sector. It is regarded to bring more efficiency and objectivity to the organizations that government companies have no concern with (The Economic times , 2016). That is to say that it gives the private sectors an opportunity to make decisions about what, where and how to produce goods and services (Andrew Berg; and Elliot Berg, 1997). Privatization aims at:

Fiscal relief by cutting government subsidies to money-losing State-owned Enterprises (SOEs) and/or by establishing new revenues from their sale

 Increase the efficiency of the enterprise

 Increase the efficiency of the entire economy through more competitive markets and better allocation of revenues/resources across firms and sectors

 Increase the political support and broadened institutional underpinnings for market-based economy or further liberalization

 Establish stronger financial markets
 Investment and stimulate entrepreneurship (Andrew Berg; and Elliot Berg, 1997).

Privatization in Nigeria:
In Nigeria, in the unitary system of government such as indstries or assets owned by lower levels of government example: municipalities, being transferred to the central government to be operaed and owned at the national level (Prof. Taiwo Asaolu, 2015). Industries that are usually operated by nationalization include transportation, communication, energy, bank and natural resources and they become state owned enterprises; they aim to achieve social, political and economic objectives ( Ademola Ariyo and Afeikhena Jerome, 2004).
In the 1960s and 70s, many of the nationalized corporations went through a process of denationalization in other words privatization. The reason is because some state owned enterprises ran out at a loss by the government. They are characterized by low productivity, inefficiency, corruption and nepotism. Therefore, privatization is a strategy adopted by the government to improve the delivery of services by state owned enterprises as a means of economic re-engineering embarked upon to solve the problems related with state owned enterprises by the government (Ladipo Adamolekun , 2005).
1   
     No! National corporations should not be privatized.

    Why?
     In Nigeria, privatization over some time has not been a popular reform. It has received so much
     criticism from labor, academia and individuals. As it is seen as a means of instrument for an efficient
      resource management for rapid economic development and poverty reduction, privatization inflicts damage on the poor through loss of employment, reduction in income and reduced access to basic social services or leads an increase in prices (Chudi-Oji Chukwuk, 2013). That is to say that it abuses the public interest”. For example; if the National Emergency Management Agency whose aim is to manage natural disasters in Nigeria is being privatized, then the public will have to pay their services (Nigerian Association, n.d.).

      Government loses out on potential dividends: A lot of issues arise from ownership, management and control of public enterprises operated in the public interest. These includes the political interference, miss-allocation of resources, loss of revenue, corporation, lack of management autonomy; scarcity of foreign exchange leading to rampant in both private and public sectors due to economic deterioration (The impact of Privatization in Nigeria, 2015).

The problem of externalities: The utilities create negative externalities (i.e. pollution, damaging the environment). The public sector companies, the government can regulate the output and make sure that it is at the socially optimal level. In the private sector, the maximization of profit is the only concern, therefore leading to the occurrence of socially damaging externalities.

Job losses:Privatization increases enforcement among private companies to be efficient or at least find some way of reducing their costs in order to make a profit given by the regulators (Economics on Privatization , 2013).


Conclusion:              
Intergovernmental relations are to play a “bridge building” role to establish a degree of coordination and cooperation to divided powers (Okafor, J,C, 2007). In developing countries, such as Nigeria, it is necessary for the state to take active roles in matters associating with the economic development considering the absence of strong private sector. The available resources to the private sector are inadequate to provide certain goods and services. For instance, the investment in establishing a hydroelectricity-generating plan or water scheme for a large urban center is huge for a private sector to handle. Since the development is related to social services, post-independent African governments need to acknowledge the need to be involved in providing certain social and economic services (Prof. Taiwo Asaolu, 2015).
Ngadiuba Alina
Cluj School of Public Health
2nd Year student
(The Economic times , 2016)


REFERENCES:

1.       Ademola Ariyo and Afeikhena Jerome. (2004, July 04). Utility privatization and the poor: in Nigeria. Global Issues Paper. Retrieved from https://www.boell.de/sites/default/files/assets/boell.de/images/download_de/internationalepolitik/GIP12.pdf
2.       Andrew Berg; and Elliot Berg. (1997). Methods of privatization. Journal of International Affair. Retrieved from http://fspac.ubbcluj.ro/moodle/pluginfile.php/20769/mod_resource/content/0/Berg1-Methods%20of%20Privatization.pdf
3.       Chudi-Oji Chukwuk. (2013). Nigerian Economy – Effects Of Privatization And Commercialization Policies. Nigeria. Retrieved from http://www.doublegist.com/nigerian-economy-effects-privatization-commercialization-policies/
4.       Economics on Privatization . (2013). S-cool. Retrieved from Disadvantages of Privatization : http://www.s-cool.co.uk/a-level/economics/privatisation/revise-it/the-disadvantages-of-privatisation
5.       Ladipo Adamolekun . (2005, November). Re-Orienting Public Management in Africa: Selected Issues and Some Country Experiences. Economic Research Working Paper. Retrieved from http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/00457497-FR-ERWP-81.PDF
6.       Nigerian Association. (n.d.). Dept for Nigerian Related Website . Retrieved from Nigeria Info net: http://www.nigeriainfonet.com/Directory/associations__organizations5.htm
7.       Okafor, J,C. (2007). Comparative Models and Patterns of Intergovernmental Relations. In J. a. Onuoha, Theory and Practice of Intergovernmental Relations. Enugu, Enugu state , Nigeria : Quintagon Publishers. .
8.       Prof. Taiwo Asaolu. (2015, November 08). The Nation. Privatization in Nigeria: Regulation, deregulation, corruption and the way forward. Retrieved from http://thenationonlineng.net/privatization-in-nigeria-regulation-deregulation-corruption-and-the-way-forward/
9.       The Economic times . (2016, November 18). Retrieved from Privatization : http://economictimes.indiatimes.com/definition/privatization?from=mdr
10.    The impact of Privatization in Nigeria. (2015, March 23). UK essays. Retrieved from https://www.ukessays.com/essays/economics/the-impact-of-privatization-in-nigeria-economics-essay.php


0 Comments:

Post a Comment

Thank you for your comments

Subscribe to Post Comments [Atom]

<< Home