Ok I'll draw the theory aspect and focus on the Nigerian situation. As for integrated steel, they are producing steel materials from billets imported from the Ukraine simply because Ajaokuta is not producing. Nigeria currently imports about 60 billion naira worth of steel billets per annum, a gap that Ajaokuta's installed capacity has more than capacity to fill (if run by a capable steelmaker). Companies like Strabag, Julius Berger, PAN kaduna et al are sourcing from integrated steel (run by Dangote industries). Sell it off for a nominal fee to a capable steelmaker like ArcelorMittal and they would turn it around.


As it is now, most government enterprises in Nigeria are white elephants because there is no private sector utility on them. When ownership changes hands, they would become real companies filling a gap in the marketplace

kalokalo:


Ok I'll draw the theory aspect and focus on the Nigerian situation. As for integrated steel, they are producing steel materials from billets imported from the Ukraine simply because Ajaokuta is not producing. Nigeria currently imports about 60 billion naira worth of steel billets per annum, a gap that Ajaokuta's installed capacity has more than capacity to fill (if run by a capable steelmaker). Companies like Strabag, Julius Berger, PAN kaduna et al are sourcing from integrated steel (run by Dangote industries). Sell it off for a nominal fee to a capable steelmaker like ArcelorMittal and they would turn it around.


As it is now, most government enterprises in Nigeria are white elephants because there is no private sector utility on them. When ownership changes hands, they would become real companies filling a gap in the marketplace

Interesting but does anyone know whether the steel mill is capable of producing modern steel billets since the plant was designed ages ago for a very different market.
Maybe, just maybe, the plant itself is obsolete.

tensor777:

You have a point. But again I would caution you to be pragmatic and not just think text book theories would work in a real economy. For example integrated steel company should have been closed down and dismantled not privatised.
Not every privatised company can be successful as you should know. All in all don't kid yourself that there remains any profitable company still to be privatised.
Trust me that a rational business man would lobby like anything  to be able to bid for any remaining supposedly fat government cash cows.

While not all privatised businesses can be profitable, the success of many business enterprises is dependent to a large part to the regulatory framework/policies in place. Case in point electricity - without an ability to charge what it costs to produce power, the much awaited private investment will not come, no matter how high the demand.

Dangote and co were bidding for refineries because there remains a heck of a lot of money to be made from supplying petroleum products produced domestically. The issue there is that current government policy makes those refineries non-viable.

There are definitely profitable companies that have not been privatised, political interference has prevented that from happening in many cases.

tensor777:

Interesting but does anyone know whether the steel mill is capable of producing modern steel billets since the plant was designed ages ago for a very different market.
Maybe, just maybe, the plant itself is obsolete.

Most of the worlds steel mills were built by the Soviets with the exception of mills in North America. Some of these mills are 50 to more than 100 years old. China and India are two of the worlds largest steelmakers (built by the Russians) consumed internally and their mills are still in operation. Other steel mills in Eastern Europe and Africa are still working as they were made from simple soviet era technology.


A steel mill cannot be obsolete. At best, the steel making technology can be replaced with more modern advanced technology that cost billions. How can the steel made in such a plant be competitive to Chinese made steel without huge tariffs like the US currently does.

Ajaokuta was built in 1979 and it can produce billets. It can be rehabilitated or at best its technology replaced. It is inept government management that cripples it.

kalokalo:

Privatization has worked in Nigeria when the right folks (people with technical + financial capacity) buys the previously state run companies
what about the following companies that were were formally loss-making  moribund government owned like Conoil, NAHCO Aviance, AP, Nicon, NASCON, integrated steel, Notore, Benue cement Savannah sugar? the new owners have turned them after most of the old workers were flushed out and the companies restructured.

Let us put things in context, what percentage do the above named represent of former state owned companies?

kalokalo:

Don't you know that the reason labor unions in Naija fight privatization with their blood is that there would be no more room for their mediocrity, corruption, bloated workforce, nepotism, inefficiency?

Labour unions the world over have reacted in exactly the same way, uncertainty and fear of the unknown breed resentment. What I am talking about is the commercialisation of these institutions. Ineffective management is the problem, the workforce will respond to good corporate governance and leadership.

kalokalo:

The private sector has a powerful interest in making things work is that it makes them profit, a motivation the state lacks. As long as Nigerian state runs the show, their failures of the last 50 years would repeat itself.

Why can't government make a profit / surplus for the benefit of the nation? The concept has been used previously (excess crude account)
We have to ask ourselves why countries like South Korea are able to perform so well with state owned companies and we can't.
Yes, lest we forget Enron, AIG, RBS, the banking sector in general where all motivated by profit and still went belly up

debosky:


While not all privatised businesses can be profitable, the success of many business enterprises is dependent to a large part to the regulatory framework/policies in place. Case in point electricity - without an ability to charge what it costs to produce power, the much awaited private investment will not come, no matter how high the demand.

Dangote and co were bidding for refineries because there remains a heck of a lot of money to be made from supplying petroleum products produced domestically. The issue there is that current government policy makes those refineries non-viable.

There are definitely profitable companies that have not been privatised, political interference has prevented that from happening in many cases.

TRUE and there are a lot of inbuilt costs in imported refined petroleum products that a local refinery would not have. All the government has to do is leave the prices for the refinery owners to set (to reflect their costs) and laws of demand and supply and they would build refineries. Its not rocket science.


The issue is NO COST RECOVERY, NO INVESTMENT

tensor777:

You are still missing the point. You guys are the one bringing up this corruption is the number 1 problem in Nigeria not me.
Anyway it is thus of no surprise that you  would even attribute corruption as the reason the free market would not work in Nigeria even without giving a single cogent reason.
If you were totally honest with yourself you would admit that you are for mainly ideological reasons commited to state control and ownership of utilities and heavy industry.

If you were to follow my posts you would realise I am just being pragmatic. Would privatisation of NEPA provide 24/7 electricity in Nigeria ? No
Not because of corruption but because the per capita income and the level of industrialization is too low for such an industry to be run profitably whilst providing comprehensive service. This means that the rural and urban poor who contribute the majority would be denied these services.

As for funding again I am being pragmatic not ideological. Where would the FGN get the required $50 billion to build capacity.? World Bank , Banks ? Think again.
Certainly not budgeted funds as the entire capital budget is less than 10% of the required amount. You can hide your head in the sands or even in the national flag and pretend that such funds can somehow be raised but I would like to hear something more intelligible than just a crackdown on corruption.

The truth is  you should be humble enough that no government has any kind of magic wand to wave that would give Nigeria 24/7 electricity Western style.
Any President that does manage to pull off such a feat does however deserve the title as one of the greatest statesmen of the century. Take it or leave it.

There is nothing in my argument that suggests what my preference is. I am merely stating that corruption is responsible for there being little to show for vast amounts of funds being expended on the power sector. If all funds have been spent judiciously over the years and Nigeria still cannot generate enough power to meet its needs, then the leadership can look at ways to make up the difference such as privatisation, alternative energy, PPIs, etc. But it is futile to look for solutions when the leadership is extremely corrupt. You have to fix the foundational problems before you start any new initiatives.

Please address the issue of misappropriated funds first.

kalokalo:

Most of the worlds steel mills were built by the Soviets with the exception of mills in North America. Some of these mills are 50 to more than 100 years old. China and India are two of the worlds largest steelmakers (built by the Russians) consumed internally and their mills are still in operation. Other steel mills in Eastern Europe and Africa are still working as they were made from simple soviet era technology.
A steel mill cannot be obsolete. At best, the steel making technology can be replaced with more modern advanced technology that cost billions. How can the steel made in such a plant be competitive to Chinese made steel without huge tariffs like the US currently does.
Ajaokuta was built in 1979 and it can produce billets. It can be rehabilitated or at best its technology replaced.

You get my point? No. Well I was referring to the PLANT and EQUIPMENT used to produce the steel billets not the MILL itself. And yes plant and machinery do get obsolete with the passage of time due to changing market conditions. So there must ALWAYS be provision for upgrading and revamping the technology used to design the plant and equipment which are in turn used to produce the billets.
I don't know what your point is . Any industry whatsoever can be obsolete if market conditions change or the reqiuired investment in Research and Design is not made.
Anyway their is no big deal about where the steel is made in a free global market and there is no law anywhere that says Nigeria must have a steel mill.

SapeleGuy:

Let us put things in context, what percentage do the above named represent of former state owned companies?

Labour unions the world over have reacted in exactly the same way, uncertainty and fear of the unknown breed resentment. What I am talking about is the commercialisation of these institutions. Ineffective management is the problem, the workforce will respond to good corporate governance and leadership.


Why can't government make a profit / surplus for the benefit of the nation? The concept has been used previously (excess crude account)
We have to ask ourselves why countries like South Korea are able to perform so well with state owned companies and we can't.
Yes, lest we forget Enron, AIG, RBS, the banking sector in general where all motivated by profit and still went belly up

Like Debosky said, the success of business is to a major extent predicated on favorable government policy. That is why businessmen all over the world are friendly to governments so as to obtain enabling policies or at least maintain policy stability and Nigeria is not different.


Commercialization has been tried in Nigeria and failed because the government still maintained ownership and so the enterprises did not have a market orientation. Only a change of ownership would prevent things like political interference, nepotism, corruption and other things that are collectively known as the Nigerian factor.  


I agree that state run companies work elsewhere and are profitable but will never work in Naija for several reasons:
1) Nigerians expect and demand services rendered by state companies to be free or uneconomically priced  like electricity (PHCN), petroleum products (NNPC refineries), education (universities) etc

2) Appointments into state institutions are compelled to be made on the constitutional basis of federal character, quota and so incompetent management and staff man critical institutions when they have no business being there.

3) Management and staff of state run companies see them as cash cows to be looted for their illicit gains and so the companies run at a loss

4) Over bloated workforce hired for political expediency and not for rational economics

These are just a few and we know them colloquially a the Nigerian factor

2

debosky:

While not all privatised businesses can be profitable, the success of many business enterprises is dependent to a large part to the regulatory framework/policies in place. Case in point electricity - without an ability to charge what it costs to produce power, the much awaited private investment will not come, no matter how high the demand.
Dangote and co were bidding for refineries because there remains a heck of a lot of money to be made from supplying petroleum products produced domestically. The issue there is that current government policy makes those refineries non-viable.
There are definitely profitable companies that have not been privatised, political interference has prevented that from happening in many cases.

Presumably ,you know what the bolded means of course?
We are talking about total deregulation of the downstream sector. That involves dismantling the NNPC behemoth and selling off the refineries and pipelines to the highest bidders. It also involves complete removal of any remaning subsidy on petroleum products.
Because make no mistake until all this is done there will be no new private investment in the downstream sector.

Katsumoto:

There is nothing in my argument that suggests what my preference is. I am merely stating that corruption is responsible for there being little to show for vast amounts of funds being expended on the power sector. If all funds have been spent judiciously over the years and Nigeria still cannot generate enough power to meet its needs, then the leadership can look at ways to make up the difference such as privatisation, alternative energy, PPIs, etc. But it is futile to look for solutions when the leadership is extremely corrupt. You have to fix the foundational problems before you start any new initiatives.[/b]Please address the issue of misappropriated funds first.

Indeed . The NIPP (national integrated power project) scheme under OBJ is a classic example. I took time to read the findings and recommendations of the panel convened by Yar Adua to look at how billions of dollars was expended while Nigeria did not gain one single Megawatt of electricity. Cut a long story short, OBJ, Agagu , Imoke and other and others conspired to make this project their own cash cow and personal aggrandizement scheme. It was a very depressing read and a revelation as to the callousness of Nigerian leaders. Power contracts were awarded to start up companies , with [b]no experience of power generation, that were later revealed to be , more or less , money conduits for the likes of stella Obasanjo-Bello and other 'associates' of OBJ, Imoke , Agagu et al. Any 'private' sector initiative , under a corrupt Government, will be the same because there will be no transparency and there will certainly be cronyism , deliberate and deleterious over-inflation of contracts, inefficiency and incompetence caused by corrupt concessioning of technical contracts to laundering pals , who often do not have the requisite skills, of the Government of the day  , etc , etc . OBJ, Agagu, Imoke and others essentially 419ed Nigeria .

Without a drastic reduction in corruption even the best laid out and most brilliantly concieved plans will always be derailed to the detriment of Nigeria's progress. In a corrupt system , where there is no fear of punishment, everyone will be encouraged to think as opportunistic saboteurs for the sake of self enrichment . This type of mindset will defeat every measure aimed at nation building .

Kalokalo, we are in agreement that the regulatory and legislative framework are missing.

Having said that, If you look at the Transcorp, Nitel & Ajaokuta Steel deals to name a few, the private buyers were heavily incentivised to buy these companies, some of them paid nothing. These became case studies in Asset Stripping.

@kalokalo you are making good points. let me just butt in one more time and make a point about the statement in quote

kalokalo:

I agree that state run companies work elsewhere and are profitable but will never work in Naija for several reasons:
1) Nigerians expect and demand services rendered by state companies to be free or uneconomically priced  like electricity (PHCN), petroleum products (NNPC refineries).

Let's not cut our face to spite it, Nigerians are in no position to demand anything. Nigerians make no demands, they are at the mercy of NEPA services and whatever the lords in power do, they expect nothing.

Hapless Nigerian masses are not like some liberated voters or consumers in serious societies, my grandma in the village and grandaunties at Omu-Aran have no say in what the Nigerian govt does, if Obj had privatized PHCN and NNPC he would still have won a contested third term bid if his looter friends wanted it. Nigerians have no influence over these policies, free, subsidized, commercial or private monopoly.

You are giving my people too much credit. The corrupt elites and owners of Nigeria can decide on any policy they like. Nigerians do not have a say in this matter.

Heavens will not fall if they privatize everything in Nigeria. It takes dedicated leadership to do these things and they've not done it either because it's not in their interests or in the interest of their sponsors and patners-in-looting. Nigerians decide nada!

For those who want to cite the Lekki toll road case, it's an exception and we know why, Lekki has a high population of rich and educated Nigerians and Lagos state is a very cosmopolitan very urban area, can't even compare.

Let's cut my grandma some slack.

Gbawe:


Indeed . The NIPP (national integrated power project) scheme under OBJ is a classic example. I took time to read the findings and recommendations of the panel convened by Yar Adua to look at how billions of dollars was expended while Nigeria did not gain one single Megawatt of electricity. Cut a long story short, OBJ, Agagu , Imoke and other and others conspired to make this project their own cash cow and personal aggrandizement scheme. It was a very depressing read and a revelation as to the callousness of Nigerian leaders. Power contracts were awarded to start up companies , with no experience of power generation, that were later revealed to be , more or less , money conduits for the likes of stella Obasanjo-Bello and other 'associates' of OBJ, Imoke , Agagu et al. Any 'private' sector initiative , under a corrupt Government, will be the same because there will be no transparency and there will certainly be cronyism , deliberate and deleterious over-inflation of contracts, inefficiency and incompetence caused by corrupt concessioning of technical contracts to laundering pals , who often do not have the requisite skills, of the Government of the day  , etc , etc . OBJ, Agagu, Imoke and others essentially 419ed Nigeria .

Without a drastic reduction in corruption even the best laid out and most brilliantly concieved plans will always be derailed to the detriment of Nigeria's progress. In a corrupt system , where there is no fear of punishment, everyone will be encouraged to think as opportunistic saboteurs for the sake of self enrichment . This type of mindset will defeat every measure aimed at nation building .

This is what some don't understand; good vision and strategy with bad implementation will yield little to no result.

'A good idea is about ten percent and implementation and hard work, and luck is 90 percent.' - Guy Kawasaki

Gbawe:

Without a drastic reduction in corruption even the best laid out and most brilliantly concieved plans will always be derailed to the detriment of Nigeria's progress. In a corrupt system , where there is no fear of punishment, everyone will be encouraged to think as opportunistic saboteurs for the sake of self enrichment . This type of mindset will defeat every measure aimed at nation building .

Absolute hogwash, and a load of nonsense! First of all privatise all the corrupt bloated behemoths and then you will see a drastic reduction in fraud, waste and mismanagent.
No buyers for the white elephant companies??. Okay just dismantle them and send the staff home.
Implying that we should all wait until the Nigerian government becomes as efficient as that of a Western country is just self indulgent complacency!

[table]All in all, they are all not bad candidates. The only negatives I have are:

Buhari - I can never trust or approve of a man that blatantly told Northerners not to vote for a XtiaN
Jonathan - Dull and uninspiring in every situation I have seen him. Does not come across as sharp or strong minded.

Ribadu - I have no negative against him. He is a smart, inspiring, dedicated, passionate, uncompromising and progressive perseverer.[/table]
i guess ppl should also know that action springs not from thought only but from a readiness for responsibility, which is the case of GEJ or Oga Ribadu, sorry for atiku, he was just in full pursuit of the unbeatable, SOUTH SUDAN NOW  BIAFRA NEXT

Nigeria is one of d few countries in d world where d electorate knowingly vote for a corrupt party and candidate,ie,Gej/PDP

Trying to undermine d apocalyptic effects of corruption is like a habitual gambler who wonders why heis always broke/stagnant

Corruption simply the first of all challenges we need to solve.

About voting,
Do we vote in GEJ whose corrupt party is our nightmare

Or do we vote Ribadu, who has an attractive CV for reducing corruption.

Or Buhari, who is disciplined and trust worthy.

The decision is ours.

If i walk with thieves then i'm a thief too.
"Iron sharpens iron"
GEJ is from the most corrupt party in this country and i'm sure he as corrupt as all other party members.

h

Politics i love

Lets see what is gonna happen at the end of the day.

ribadu is nothing but obj's plan B. as long as this 2011 is concerned, obj is not putting all his eggs in one basket hence two candidates.
in a normal world (outside nigeria), pdp has been arround since 1999 with nothing to show for it so deserves no place in 2011 but what do we have in an abnormal country like ours.
it is a shame that folks here celebrate failures because most of us do not know the real meaning and implications of success.

So, let me get this straight, the parties have chosen their presidential candidates.

Why are people saying "Ribadu can not defeat GEJ" etc? Dont you know that it is NOW over to YOU the VOTERS to deliver the president? Are you STILL not up to the challenge at this late hour?


What must take place before you Nigerians take on YOUR RESPONSIBILTY to vote in your president? I am shocked to talk about an election as if it the complete domain of the three or so candidates. Then you will complain that people are being imposed on you, why wont they when you dont even see yourself as part of the process?

Some of you talk as spectators watching a boxing match.

Nigerians dont seem up to the challenge of making their votes count, therefore they wont. It is clear to me now that you have had the kind of leaders you deserve.


I would be happy for Ribadu to win, Nigeria needs to rid itself of PDP once and for all, this is an opportunity to do that, but unfortunately Nigerians seem to blind to see it, so they will likely remain complaining slaves. If you miss this opportunity then as far as I'm concerned you deserve all you get and nobody should give you any sympathy, because you have refused to remove the snare from your own leg and that of your children to come.

Ribadu 2011, it is possible,keep saying it

Boyan:

Ribadu 2011, it is possible,keep saying it

It is impossible unless Nigerians go beyond merely "saying it" and actually vote (and defend that vote) it into being.

There are no two ways about it.

This is a very interesting possibility to ponder
>>>>>

1025:

ribadu is nothing but obj's plan B. as long as this 2011 is concerned, obj is not putting all his eggs in one basket hence two candidates.
in a normal world (outside nigeria), pdp has been arround since 1999 with nothing to show for it  so deserves no place in 2011 but what do we have in an abnormal country like ours.
it is a shame that folks here celebrate failures because most of us do not know the real meaning and implications of success.

Ribadu has an undisputedly better track record in public service than Jonathan.

He (and ACN) will need to work more than extra hard to beat a structure like PDP's.

But if elections are free and fair, and ACN do their homework, who says it isn't possible?

By the way I'm flabbergasted that people can actually argue that corruption is not the backbone of Nigeria's quagmire today.

Please forget educated studies that do not reflect reality on ground. Those IMF (etc) studies are not carried out for the benefit of the citizenry but for foreign investors.
Of couse their findings will be unrealistic for Nigeria because our corruption is largely in gov't not business. Why? OIL is the major revenue hence there is no neeed to milk businesses dry.
Implication is that public projects are mismanaged and not implemented. Institutional government corruption is our major problem.

A scenario where oil dries up and the gov't needs to rely on taxes and duties etc from businesses in Nigeria is too grim to even imagine.
Right now, businesess are suffering from a lack of infrastructure (due to gov't corruption) not corrupt gov't officials asking for all sorts of bribes.

Nuff said.

LRNZH:

This is a very interesting possibility to po
By the way I'm flabbergasted that people can actually argue that corruption is not the backbone of Nigeria's quagmire today.
Please forget educated studies that do not reflect reality on ground. Those IMF (etc) studies are not carried out for the benefit of the citizenry but for foreign investors.
Of couse their findings will be unrealistic for Nigeria because our corruption is largely in gov't not business. Why? OIL is the major revenue hence there is no neeed to milk businesses dry.
Implication is that public projects are mismanaged and not implemented. Institutional government corruption is our major problem.

You just don't know what you are talking about and are bringing up entirely irrelevant issues. What has the IMF got to do with foreign direct investment and developmental issues?
For your information the IMF is an institution set up to render short term financial assistance to members who run into balance of payments and budgetary difficulties. They do not give develpoment loans which is mainly the prerogative of institutions like the world bank and the African Development Bank.
Every big developing country has corruption issues not just Nigeria  and the results of the studies do reflect that vital fact. The idea that you know more about the economy than the well trained experts that carried out this study is just laughably arrogant and ludicrous.  Who are you anyway and what are your credentials and international business experience for you to challenge such a detailed and referenced report??
You think they are myopic enough to focus on small private companies and not on the bloated government parastatals?

Hodaya:

Corruption simply the first of all challenges we need to solve.

Absolute rubbish. It may bother you and cause you discomfort but it is way way down the list of items to be tackled in Nigeria. What is the big deal about fighting corruption anyway? What are the police, the EFCC and the courts for? 
When these institutions are strengthened the battle against corruption is automatically stepped up.
There is no need for any leader or presidential candidate to keep going on about that other than to ensure that he leads by example,makes the right appointments, and periodically reviews the effectiveness of control systems in the government department for which he is responsible.

tensor777:

You just don't know what you are talking about and are bringing up entirely irrelevant issues. What has the IMF got to do with foreign direct investment and developmental issues?
For your information the IMF is an institution set up to render short term financial assistance to members who run into balance of payments and budgetary difficulties. They do not give develpoment loans which is mainly the prerogative of institutions like the world bank and the African Development Bank.
Every big developing country has corruption issues not just Nigeria  and the results of the studies do reflect that vital fact. The idea that you know more about the economy than the well trained experts that carry out this study is just laughably arrogant and ludicrous.  Who are you anyway and what are your credentials and international business experience for you to challenge such a detailed and referenced report??
You think they are myopic enough to focus on small private companies and not on the bloated government parastatals?

I know your type but I will overlook your idiosyncracies.

Let me give a you a little background.
If you have been following this thread from the beginning you would have seen where some folks claim that corruption as Nigeria's major problem is overstated.
They also quote some IMF study which compares the level of corruption in Nigeria to that in Kenya, Indonesia and Venezuela.
The study concludes that because the level of bribe requested from businesses in Nigeria is less than those in comparable countries, Nigeria is not as corrupt as perceived.

Moving to my comments.
I stated that the corruption archetype in Nigeria is not the type that focusses on businesses because there is enough gov't revenue (from oil) to perpetually steal from.
If you take out oil as a source of gov't revenue today their taste for stolen money will shift to demanding more kickbacks from the private sector.
I am in Nigeria and I can tell you that as long as a business is not dealing directly with gov't parastatals or agencies,its overhead is mostly from power generation, security and transportation. Ultimately, the amount of corrupt practices that go on in the gov'ts of Nigeria are grievously higher than any business in Nigeria.

So these studies are put together by foreigners and the indices they generate are more likely to the benefit their countries who are into foreign investment.
You think they care if you get bad governance as long as their businesses thrive in your country undisturbed?
They can use the amount of corruption in businesses in Nigeria to measure the level of corruption in Nigeria and it works for them.
But for us the masses, it is the level of corruption in the gov't that bothers us most. It is stopping us from access to quality food, education, security, employments etc etc.

Please wake up and stop suffering from the "expert syndrome". Think for yourself!
Put studies in context before you runaway with interpretations