IT is the height of insanity to do the same thing over and over and expect a different result; right? That’s true only if you’re not in Nigeria. VANGUARD newspaper of Friday, May 27th, 2011, carried a report that the FGN through, the Attorney General, has asked the IG Police, to arrest the Anosike brothers, Fidelis and Noel, “over their alleged roles in the illegal purchase of The Daily Times of Nigeria assets, estimated at N3billion”.

Furthermore, the brothers, according to the charge against them in the Lagos High Court, made “false representation to the Bureau of Public Enterprises, BPE, that they had means to acquire majority shares of Daily Times of Nigeria, but instead of raising the said money, they were said to have mortgaged the assets of the newspaper conglomerate and also sold some of the property to realise the acquisition of the said shares”.

So devoid of legalese, the assets of the company were stripped and in the madness of the “religion” of privatising the public space in Nigeria, a national institution like Daily Times was destroyed and lost forever.

The privatisation delusion
It is very interesting that the story of the Anosikes and their mal-treatment of Daily Times broke almost at the same time as the confession by Vice President, Namadi Sambo that 80 percent of government companies privatised have failed. I have never supported the privatisation of national assets, because the delusion that the private sector works better than the public space is just that, a delusion; at least in Nigeria.

Privatisation has fostered the worst manifestation of crony capitalism, when choice national assets were sold to cronies of the ruling elite, as we have seen from the mid-1980s, but most especially under the regime of the old despot, Olusegun Obasanjo. Privatisation has been a ‘religion’ of sorts, here since the mid-1980s and its failure ought to have given the Nigerian state the pause. But adherence to the diktats of the Washington Consensus became the ruling orthodoxy in Nigerian bourgeois circles, since Babangida introduced SAP in the mid-80s; followed by the deepened adherence to the policies under Obasanjo.

Between 2002 and 2005, I worked as Editor of DAILY TRUST newspaper. We followed with interest two of the programmes of privatisation of the Obasanjo regime: those of the Ajaokuta Steel Company and NITEL. Ajaokuta, as planned, was to be bedrock of Nigeria’s industrial take off. Billions of dollars went into its construction, including a programme of training of Nigerian engineers and technicians around the world, but especially in the former Soviet Union and India.

The imperialist institutions of the IMF and World Bank were opposed to a Nigerian steel industry, arguing that it would not be economical. But the underlining effort was to defend the steel exports of Western countries. While Nigeria did not run the complex as best as it should and one should criticise that; it was nevertheless a gigantic undertaking that we were beginning to master. The steel complex was envisaged to become the largest employer of labour in Nigeria; while its location in Northern Nigeria made it particularly dear to our people.

Well, Obasanjo was determined to sell off Nigeria, no matter what! He chose to sell Ajaokuta using a certain SOLGAS company, headed by a 36 year old Seun Oyefeso. They did not possess the requisite expertise and were locked in perpetual battles with the iron and steel workers union. Not surprisingly, the group began to strip assets of Ajaokuta steel company. It became such a scandal that then SGF, Ekaette issued a query to the group.

I[b]t became clear that Nigeria’s industrial vision was deliberately being blinded forever. An unrepentant Obasanjo sacked the SOLGAS guys and then moved to an Indian group. The nut and bolt of our story is that Ajaokuta’s original patriotic effort as a state-led project for national industrialisation was aborted, while adherence to Washington Consensus-inspired privatisation has stripped assets; led to de-industrialisation and has not given Nigeria the capitalist development they have always touted.[/b]

The NITEL scam
The second is the painful scamming of NITEL! Just before Obasanjo’s assumption of power in 1999, a ‘terribly corrupt’ NITEL at least, paid dividend in billions of naira to the Nigerian government. But Obasanjo was beholden to the ‘demons’ of Washington and the simplistic mantra that everything must be privatised. The first group that came calling was IIL (London) Ltd.; they could not purchase the company. Then Nasir El-Rufai brought in PENTASCOPE from the Netherlands.

The controversial body was said to have its HQ in an abandoned church. Amazingly, PENTASCOPE was given a carte blanche to spend the monies of NITEL, and they cleared its offshore foreign currency savings. A company that was actually a national strategic institution has not recovered from PENTASCOPE; or from TRANSCORP and other efforts to sell BY FORCE! In the meantime, Nigeria became a country where telephone landlines disappeared from homes and offices, just as the assets of NITEL that have not been stolen, have continued to rot, as our empty-headed ruling elite cling to the litanies of the church of privatisation, as their route to the heaven of capitalist development!

Writing about the near-religious fervor for neoliberal capitalism, Tariq Ali, the Pakistani/British writer, said in the book Pirates of the Carribean:Axis of Hope (2008), “The new faith is, as we know, an old one. Capitalism has existed for five hundred years….WC (Washington Consensus) supporters became semi-religious in their devotions. What they supported became immutable and infallible; all problems would cease once the entire world had been properly converted. All heresies needed to be expelled from it so that it became self-consistent.

Any challenge to this view was to be ruled out of court. And yet if one looks deeply into the minds of the new converts all that can be seen is an empty space with borrowed furniture”. This is an apt description of the Nigerian variety of this near-religious madness. During Obasanjo’s years, reactionary elements running the nation’s economic life, from Charles Soludo, Oby Ezekwesili through to Nasir El-Rufai huffed and puffed as disciples of the Washington orthodoxy; but Nigeria has been the worst for it.

More of the same
The crisis of the past few years exploded the myth of Francis Fukuyama’s “End of History”. Neoliberal capitalism was exposed as a monumental fraud, especially in Latin America. But in a classical neo-colony like Nigeria, run by the worst specimens of unthinking political elite, they regularly promise us MORE OF THE SAME, even when it does not work.

Official statistics speak of 44million unemployed young people and these are under the age of 30. The state will not create jobs hoping the parasitic bourgeoisie will; this survives on an economics of import waivers and buccaneering. It is delusion sans frontieres! The Nigerian privatisation process is the worst form of pseudo-religious delusion afflicting the elite. The much-touted economic turnaround has not worked and is not likely to. Does anyone recognise insanity when he/she sees it?

http://www.vanguardngr.com/2011/06/nigerias-privatisation-delusion/

I am guess it is a know fact - No matter how they try - The Nigerian government cannot run business.

Interesting read.

It occured to me that the only two successful privatisation projects I can think of are NAFCON and the mobile telecoms industry.

Anyone know of any others?

Ibime:

Interesting read.

It occured to me that the only two successful privatisation projects I can think of are NAFCON and the mobile telecoms industry.

Anyone know of any others?

The only PRIVATIZATION we had in the telecoms industry were those of NITEL and Mtel and they both were monumental failures. What worked in the industry was LIBERALIZATION and I've always been amazed at how these two completely different economic terms have been lumped together and shoved down the throats of ignorant Nigerians with the success of liberalization ascribed to the glaring failures of privatization in order to justify the foolishness of our decision makers.

There are many formerly government run companies in Nigeria that were privatized and are now performing excellently. Examples include:

Conoil Plc (formerly NOLCHEM),
Oando Plc (formerly Unipetrol),
Dangote Cement Plc (acquired Benue Cement),
Notore Industries(formerly NAFCON),
African Petroleum Plc
Nicon Insurance Plc
Niger Insurance Plc
Indorama Corporation (Formerly Eleme Petrochemicals)
Cement Company of Northern Nigeria Plc
Unity Bank Plc (formerly Federal Savings Bank)
Dangote Sugar Refinery Plc (acquired Savannah Sugar)


There are many others including Transcorp Hilton, Festac 77 hotels that are working just fine after they were privatized. Government is not a businessman and they should stay away from running companies.

^^ You really should be ashamed of such a list as the evidence of success of governments privatization programme. Most of those companies were sold at a fraction of their true value to individuals and are yet to realize their true potentials. Take AP for example currently embroilled in deep mess no thanks to trying to obey Otedola's every whim it used to be BP (yeah, thats British Petroleum) before it was nationalized by Obj and subsequently privatized, now can you compare our AP with its foreign counterpart? Or perhaps its NICON that has almost been run aground by Jimoh Ibrahim. Believe me the successful companies on that list are successful cos they've got some sort of peculiar advantage not cos of the brilliance of their owners.
And yes govt has got every business in business esp in a country like ours with an increasingly Shylock private sector with no thought in the world for the common man. Yes we've had a number of failures and huge losses but gone are the days of brazen ineptitude and this generation is one that is willing to hold its leaders and officials responsible unlike the generation of our fathers, unfortunately, there might be nothing left for us to call our own by the time these men are through with our national assets no thanks to folks like you that have been brainwashed into believing there's a curse on anything being managed by the govt.

^^^^^
You sound like a communist who prefer top down state control of economic assets. Nigeria is a free country. I would rather live in freedom away from the oppression of the state a la failed enterprises like PHCN, Nitel, Nigeria Airways, Ajaokuta steel. What happened to those "national assets" after they have been paid for is not your business!! If the new owners run it aground, they lose their investment and money.

Isn't it ironic that anything referred to as "our" in Nigeria is a failure; "our" refineries, "our" universities, "our" PHCN, "our" anything. The things that work and work well in Nigeria is privately owned and run.

The common man is better off under private sector led economy than under a grossly mismanage state run companies.

wesley80:

^^ You really should be ashamed of such a list as the evidence of success of governments privatization programme. Most of those companies were sold at a fraction of their true value to individuals and are yet to realize their true potentials. Take AP for example currently embroilled in deep mess no thanks to trying to obey Otedola's every whim it used to be BP (yeah, thats British Petroleum) before it was nationalized by Obj and subsequently privatized, now can you compare our AP with its foreign counterpart? Or perhaps its NICON that has almost been run aground by Jimoh Ibrahim. Believe me the successful companies on that list are successful cos they've got some sort of peculiar advantage not cos of the brilliance of their owners.
And yes govt has got every business in business esp in a country like ours with an increasingly Shylock private sector with no thought in the world for the common man. Yes we've had a number of failures and huge losses but gone are the days of brazen ineptitude and this generation is one that is willing to hold its leaders and officials responsible unlike the generation of our fathers, unfortunately, there might be nothing left for us to call our own by the time these men are through with our national assets no thanks to folks like you that have been brainwashed into believing there's a curse on anything being managed by the govt.

Very disgustingly dishonest write up
Who is the common man in Nigeria? The citizen whose government dips its fingers into every form of social and commercial life?
From rice distribution to cement marketing, to retail banking, to airport concessioning, to retail farming, to-----just about every aspect of life.
This socialist governmental tendencies no doubt gives the president or whoever controls the center a lot of power, but guess what, it has never proved to work in just about every society that has tried it. I mean from Russia, to China, to Cuba, to Italy, to North Korea, etc.

It has never worked for the same reason that all humans are not equal. While some people are able to work 8-hr jobs, some could hardly make it through a 6-hr day at the work place, and yet some push themselves to work for 12-hrs/day.
There's no where in the World, basic corporations run by goverments are as efficient as private companies, and yes these private companies have profit motives, but they have been shown to be most efficient from Japan, Germany, to USA, so why not let Nigerians run their basic companies on purely private for profit basis.
Is the word profit a dirty word to you? I know some people think it's a sin to make profit when view from a religious lens, but it's not in real life.

Nigerians certainly don't want a company to call their own if that company meant to provide electricity pertually keeps customers in darkness, or an airline company that can hardly take off, because of commercial mismanagement. We don't need big for nothing companies to call our own when these companies are not doing well at all.

Funny that my views are being interpreted to be communist. But let me point this out, I'm not in support of tight govt controls or restrictions but of liberalization and govt's active participation alongside the private sector. Those corporations are failures today not cos they were destined to be so, but cos NOTHING escaped the rot in the entity called Nigeria.

kalokalo:

What happened to those "national assets" after they have been paid for is not your business!! If the new owners run it aground, they lose their investment and money.

Sorry but you've got it completely wrong. Maybe u need to do a check on why govt's get involved in businesses in the first place. The govt initiates corporations because the existence of such corporations are imperative to national development. Each single failure (regardless of whose hands its in) represents a setback to national development not just a mere loss of investments. Any serious govt has got to be an active participator in its own economy not just as a regulator but as a participant in order to 'sway events' and cut the excesses of the private sector and more so in a developing economy as ours. The telecom sector readily comes to mind cos here we are all complaining about high prices but what if we still had govt's Mtel in existence? Couldnt it have been a vehicle for determining realistic prices and therefore saved us from the shylock excessess of the likes of MTN?
Today its Mtel, tomorrow it could be PHCN or NNPC.
The failures of the past should be no excuse to abandon the future. Govt corporations can operate efficiently, we've got the likes of EDF and Petrorbras to look up to and i'm optimistic we can replicate same in Nigeria. The private sector handling sensitive sectors in a country with lax regulation as ours, is the worse that can happen to the common man.

wesley80:


The only PRIVATIZATION we had in the telecoms industry were those of NITEL and Mtel and they both were monumental failures. What worked in the industry was LIBERALIZATION and I've always been amazed at how these two completely different economic terms have been lumped together and shoved down the throats of ignorant Nigerians with the success of liberalization ascribed to the glaring failures of privatization in order to justify the foolishness of our decision makers.

So basically, market liberalization absolutely works, but monopoly privatization does not.
But how do you rally people around 'liberalization'? People don't know what that word means.

Liberalization is the way forward in the case of the power sector, we need to ask ourselves why the investors are not ready to set up their own infrastructure just like was done in the telecoms sector, the noise about increasing the cost of power to the users is not necessary if the sector is fully deregulated, the "MTN" of the power sector can come in, set up shop in say Lagos and charge a price that they feel makes them profitable within reasons, competition can now bring the rates down, why is our government so much in a hurry to sell PHCN, are they selling it to themselves?
A lot of our problems in Nigeria require simple common sense, we do not need to throw too much money at this power issue, run PHCN as efficiently as you can (I have always clamored for a more efficient government) but allow others to compete in the same space, PHCN can lease transmission facilities to the new companies while they are building their own, just privatising PHCN will lead to a monopoly which in turn will lead to further hardships for the people. The government can sell this idea the same way it sold the GSM one, infact, it can use GSM as an example to foreign investors or local investors.

Nta wasnt sold to pave way for Ait&over 20 other private tv stations to operate. Frcn wasnt sold to pave way for over 50 radio statns. Glo,mtn,airtel didnt buy Nitel. Genera hospitals still exist wt private hospitals

Fashola just built a power statn of 10MGW. Did he sell PHCN to achieve it? Fashola is trying to revitalise railway. Does he have to sell NRC?

wesley80:

Any serious govt has got to be an active participator in its own economy not just as a regulator but as a participant in order to 'sway events' and cut the excesses of the private sector and more so in a developing economy as ours. The telecom sector readily comes to mind cos here we are all complaining about high prices but what if we still had govt's Mtel in existence? Couldnt it have been a vehicle for determining realistic prices and therefore saved us from the shylock excessess of the likes of MTN?
Today its Mtel, tomorrow it could be PHCN or NNPC.
The failures of the past should be no excuse to abandon the future. Govt corporations can operate efficiently, we've got the likes of EDF and Petrorbras to look up to and i'm optimistic we can replicate same in Nigeria. The private sector handling sensitive sectors in a country with lax regulation as ours, is the worse that can happen to the common man.

Monopoly kills every economy, agreed?
When the fedegral goverment becomes a participant in say the marketing of garri in Nigeria, it's regulatory role suffers. The same goverment that sells bad garri through one of its parastatals cannot turn around to effectively regulate garri quality through out the country. Governments should simply regulate basic trade and not particiate therein.

Yes, privitisation does have problems and setbacks, but these are nothing compared to continued direct govermental management.
"Shylock" excesses of MTN? Am I the only one who detect a religious tone to this condemnation of business enterprises? These people have borrowed, starved, and invested to build MTN and other companies, and a few years later, you've turned around to call them Shylocks? That's a typical cock-eyed Nigerian view of business, and successful businessmen. Maybe if he had ran away from our shores to invest that money in Ghana, you'll shout 'ranka dede" anytime he visits home?

Speaking about MTN, does anybody remember when you've to spend all day at NITEL, bribe 3-4 people, before making a 5-minute phone call from NITEL offices? If goverment is not confused like you're they will simply focus on regulating telecom companies and not trying to establish one themselves.

@naijaking

Let the private companies come in first with their resources and infrastructure, let them compete with PHCN, when the competition is keen, we can then sell off PHCN, for now, selling PHCN is asking for monopoly, as Satani said, Nitel was not sold, FRCN was not and NTA was not sold for other people to participate, why are they so keen on selling PHCN?

hercules07:

Liberalization is the way forward in the case of the power sector, we need to ask ourselves why the investors are not ready to set up their own infrastructure just like was done in the telecoms sector, the noise about increasing the cost of power to the users is not necessary if the sector is fully deregulated, the "MTN" of the power sector can come in, set up shop in say Lagos and charge a price that they feel makes them profitable within reasons, competition can now bring the rates down, why is our government so much in a hurry to sell PHCN, are they selling it to themselves?
A lot of our problems in Nigeria require simple common sense, we do not need to throw too much money at this power issue, run PHCN as efficiently as you can (I have always clamored for a more efficient government) but allow others to compete in the same space, PHCN can lease transmission facilities to the new companies while they are building their own, just privatising PHCN will lead to a monopoly which in turn will lead to further hardships for the people. The government can sell this idea the same way it sold the GSM one, infact, it can use GSM as an example to foreign investors or local investors.

OBJ didn't have to spend any money to liberilize cell phone usage in Nigeria today, that's real open market competition.
The law establishing PHCN or whatever the power company is called should be abolished, and using presently available infrasturcture allow localities, states, cities to provide themselves with power under federal regulation. If this happens, there will be 2-3 weeks of chaos, then followed by permanent and sustainable power infrastructure that will respond to market forces.
The process will not be perfect, there maybe problems, but no problem will be worse than what currently obtains----darkness

hercules07:

@naijaking

Let the private companies come in first with their resources and infrastructure, let them compete with PHCN, when the competition is keen, we can then sell off PHCN, for now, selling PHCN is asking for monopoly, as Satani said, Nitel was not sold, FRCN was not and NTA was not sold for other people to participate, why are they so keen on selling PHCN?

That's where power generation differs from other business. I have a house in Atlanta for example, and while GA power is the dominant power company in the area, smaller companies like Greystone energy and Oglethorpe power do supply power to some customers using some of the infrastructures built by Souther company, GA powers' parent company. If am not happy as customer I can even switch to another company of my choice. It's not going to be exactly like the US overnight, but we can learn from their pattern.
Unless, we change the law establishing PHCN, it may be outrightly illegal to try supplying power to even Lagos from a private and state sources

@Naijaking,
I'm really hoping we can get somewhere considering the stance u've taken, I just hope I'm not trying to get a fixated individual to see some sense when he's chosen not to.
Monopoly does not kill EVERY economy, yes it may stifle the private sector and limit growth but it has its use. The whole essence of the economy is to serve the needs of the people not just to be engaged in some madd race of impressive economic aggregates. An efficient and well managed Monopoly has got its use, I can point a number of areas we wld be better served by a well run monopoly .
Govts regulatory role does not have to suffer if it is a participant in such biz, instances abound of succesful govt endeavours. All it has to do is to provide a framework for operations and get competent individuals to run these orgs, its not as if there's to be a Ministry of PHCN with a cabinet minister at its helm.
I do not know what religious undertone u've sniffed out of my posts but I can assure u I had none. There's a reason MTN seems to personify the greed in the telecoms sector more than any other company in the sector and I can assure u it has nothing to do with the volume of their profit, so my refering to their "Shylock excesses" definitely isnt out of place.
We can either look back to the bad old days of NITEL's monopoly and learn from it or leave in perpetual fear of making the same mistakes and choose to sell off all that we own because of the lack of vision of a bunch of men in uniforms. When do we choose to snap out of the mental bondage of self disbelief inherited from our fathers? I say NOW but all I seem to be hearing from u is ITS NOT POSSIBLE.

wesley80:

@Naijaking,
I'm really hoping we can get somewhere considering the stance u've taken, I just hope I'm not trying to get a fixated individual to see some sense when he's chosen not to.
Monopoly does not kill EVERY economy, yes it may stifle the private sector and limit growth but it has its use. The whole essence of the economy is to serve the needs of the people not just to be engaged in some madd race of impressive economic aggregates. An efficient and well managed Monopoly has got its use, I can point a number of areas we wld be better served by a well run monopoly .
Govts regulatory role does not have to suffer if it is a participant in such biz, instances abound of succesful govt endeavours. All it has to do is to provide a framework for operations and get competent individuals to run these orgs, its not as if there's to be a Ministry of PHCN with a cabinet minister at its helm.
I do not know what religious undertone u've sniffed out of my posts but I can assure u I had none. There's a reason MTN seems to personify the greed in the telecoms sector more than any other company in the sector and I can assure u it has nothing to do with the volume of their profit, so my refering to their "Shylock excesses" definitely isnt out of place.
We can either look back to the bad old days of NITEL's monopoly and learn from it or leave in perpetual fear of making the same mistakes and choose to sell off all that we own because of the lack of vision of a bunch of men in uniforms. When do we choose to snap out of the mental bondage of self disbelief inherited from our fathers? I say NOW but all I seem to be hearing from u is ITS NOT POSSIBLE.

Your 'well run' qualifier makes all the difference when speaking about monopoly. Only God can run a monopoly well, and since God is not going to come down to run companies here on earth, forget about well run monopolies, that's never going to happen. Try Animal Farm, try USSR, and try China, it never works on the long run. So, no monopoloy is a good monopoly, not matter how 'well run'.
The only concern of our developing goverment should be security, customs, and a few othe regulatory agencies. Our government should not be in the business of runing all sorts of corporations.

naijaking1:

Your 'well run' qualifier makes all the difference when speaking about monopoly. Only God can run a monopoly well, and since God is not going to come down to run companies here on earth, forget about well run monopolies, that's never going to happen. Try Animal Farm, try USSR, and try China, it never works on the long run. So, no monopoloy is a good monopoly, not matter how 'well run'.
The only concern of our developing goverment should be security, customs, and a few othe regulatory agencies. Our government should not be in the business of runing all sorts of corporations.

Well, we can leave the issue of the practicality or desirability of running a monopoly for another day, meanwhile the question remains why are we selling off our national assets when we can have them operate alongside private enterprises? Who's afraid of competition?

wesley80:

Well, we can leave the issue of the practicality or desirability of running a monopoly for another day, meanwhile the question remains why are we selling off our national assets when we can have them operate alongside private enterprises? Who's afraid of competition?

You can't talk about goverment running companies without bringing up the issue of monopoloy, because that's one big reason goverments shouldn't be running companies. You've really got to understand what's involved here.

You call these companies national assests, I call them national liabilities. Did you know what a national bagage NITEL was until it influence was cut? Same with PHCN for today.
Want to know who is afraid of a small competition? I would say people with half baked understanding of market economy who are hesitant to let Nigerians run the conomy from a private and commercial perspective, these people want to use the advantage of the goverment to play the role of a regulator and participant at the same time.

IT is the height of insanity to do the same thing over and over and expect a different result; right? That’s true only if you’re not in Nigeria.

The irony is staggering. The author suggests that it is insane to do the same thing repeatedly and expect a different result but what is the main argument that he is putting forward? That we go back to government run corporations!

It is as if the past 5 decades of economic experience taught him nothing. Is it our NNPC run refineries, NEPA, Nigerian Airways, NITEL, Ajaokuta Steel,e.t.c Amazingly, he references some of these institutions in his article but seems to suggest that retaining the status quo would yield different results. See here

The nut and bolt of our story is that Ajaokuta’s original patriotic effort as a state-led project for national industrialisation was aborted,

So what does he suggest? That the Govt should continue running Ajaokuta Steel and pouring money into it?

His article is not just ignorant of the Nigerian experience but also of the universal experience of state run corporations versus private run corporations. In Nigeria in particular, the former has been for many decades a conduit for siphoning Govt money into private pockets and proven a monumental failure.

There is no doubt that the Nigerian privatisation process has seen the worst form of crony capitalism but that is a problem with the method of privatisation rather than the idea of privatisation. Considering the worst of possible worlds, I would rather have crony capitalism where the asset destruction occurs without tapping the national purse than Govt run corporations which are a byword for incompetence and the brazen theft of Govt money.

@4Play

I believe the author is saying deregulate totally instead of trying to sell off the PHCN, use the same method as that of the telecoms sector, it was the total deregulation of the sector that brought about the GSM companies, the downside for having a failed Nitel has been the cost of making calls, lack of landlines and slow penetration of broadband access. A lot of companies that were privatised have failed, the people who bought them were more interested in taking money out of the companies than revitalising them, imagine what happened to Nicon, Nitel and other companies happening to PHCN without options, we will be up the creek without a paddle.

There are several ways to protect the interest of Nigerian consumers and also ensure that private companies make profit and deliver tax revenue to government.

Price control (price ceiling, price floor)

Sensible subsidies and Import controls especially for local exporters

Export focused foreign policies that will protect the Nigerian advantage

Regulations and enforcement of policies that will compel Nigerians to buy certain products or develop certain services e.g Insurance

One thing we have to move away from is the practice whereby Nationalized corporations double as regulators, e.g NNPC and PHCN

The key is sensible regulation, we need more of that and less of outright company ownership by the FG.

Any competition between private companies and state run companies is NOT fair competition. Why? Because private companies have to raise capital to do business at commercial interest rates while state owned companies are subsidized by taxpayer subventions. Private companies will pay myriads of taxes (VAT, Companies income Tax, Education Tax) while state companies do not. Why should MTN's taxes be used to prop up an inefficient Nitel? Is that fair?

Has anyone ever wondered why state run companies are usually protected from competition by the coercive force of law? Because the state knows know that private companies will drive them out of business. That is exactly what happened when the airline and telecoms industries was liberalized in Nigeria. The former state run monopolies were driven out of business. Why? because consumers will always patronize companies that offer the most value and efficiency. Nigeria Airways and Nitel could not compete despite decades of head-start. NTA and FRCN survive because they are propped up by taxpayer subventions. Remove that and they collapse!! Is that fair competition with AIT?

NNPC can mismanage its refineries because there are no private refineries. A private refinery in Nigeria today will seize the market share from NNPC because they would be better run and more efficient and therefore attract the money of consumers like you and me even if their products are at market prices. Its the same reason why even the common man will pay more to send his kids to private primary school than pay less to send them to poorly run public schools

Everywhere in the world,  state run companies are inefficient loss makers. That is why Amtrak is always posting losses. The US postal service is always losing money despite the fact that UPS, Fedex and DHL are barred by law from competing with the post office in first class mail. Remove that monopoly and see what happens to the post office.

People think Petrobras is efficient? Not when they are statutory corporation vested with all the Oil and gas resources of Brazil. Expose them to competition in Brazil from the IOCs like Shell, ExxonMobil and ChevronTexaco and we'll see if they are really efficient.

naijaking1:

You can't talk about goverment running companies without bringing up the issue of monopoloy, because that's one big reason goverments shouldn't be running companies. You've really got to understand what's involved here.

 The whole idea is to dismantle existing monopolies but leave the companies in the hand of the govt, maybe with a certain percentage given out to the public while the rest remains with the government. I'm not aware of a theory that says govt participation in biz is certain to end in disaster, If one exists then i think this is a great time to prove such a theory wrong. Why are we so afraid of turning a failure into a success? If these parastatals r privatized would they be manned by aliens? Are they not also going to be manned by humans just like the public owned enterprises? So i ask again, who is afraid of competition?

@kalokalo,
There's a whole load of sense in what u've said but more importantly, there are more distorted truths. Let me try n address some of them.

1) No government is going to hand out subventions to a corporation that is partly owned by the public ( in terms of issued out shares) the govt being the majority owner does not necessarily mean it is obliged to issue out subventions in whatever form to prop up its operations. All companies including the govt owned would operate under same framework without any form of tax exemptions or unique advantages else we might as well have stuck with our single monopoly. Therefore your assertion about subventions and tax exemptions are wrong and completely out of place.

2) You really want to know why public companies have not been able to compete with their private counterparts? Lets take the cases of Nigerian Airways and Mtel for instance. Of course incompetence of mgt is always a factor but beyond that have you noticed that the goal of our previously established corporations were beyond profit making? While it was uneconomical for private airlines to operate routes like Yola - Benin - Calabar, a public airline would be obliged to do so in the nations interest and the unavoidable result would be losses while a private airline would streamline its operations to its areas of strength - now who's not playing fair?
Part of the reason Mtel went under was that while the likes of Mtn were targeting high density areas to launch their networks( any surprise it took over a year for some states to get covered ), mtel was busy trying to meet the nations regional interest by having a presence in all regions of the country, tell me if losses wont be inevitable in such circumstances without monopolistic restrictions.
There's a reason state run corp's are loss makers and its definitely not cos anything touched by the state is destined to fail but because the motive is to serve the general populace not make profit. So i can understand if Shell should make more profit than Petrobras.
In our quest for economic development, it is imperative that we do not forget the whole essence of it; to serve theneeds of the people and who's best to do so in societies with poverty and illiteracy dominant as ours? The private sector? Yeah right!

naijaking1:

Your 'well run' qualifier makes all the difference when speaking about monopoly. Only God can run a monopoly well, and since God is not going to come down to run companies here on earth, forget about well run monopolies, that's never going to happen. Try Animal Farm, try USSR, and try China, it never works on the long run. So, no monopoloy is a good monopoly, not matter how 'well run'.
The only concern of our developing goverment should be security, customs, and a few othe regulatory agencies. Our government should not be in the business of runing all sorts of corporations.

Well said. Clap Clap.

^^^ Which part were you clapping for? The monopoly part or the Govt non intervention part or the entire falsity?

kalokalo:

Any competition between private companies and state run companies in NOT fair competition. Why? Because private companies have to raise capital to do business at commercial interest rates while state owned companies are subsidized by taxpayer subventions. Private companies will pay myriads of taxes (VAT, Companies income Tax, Education Tax) while state companies do not. Why should MTN's taxes be used to prop up an inefficient Nitel? Is that fair?

Has anyone ever wondered why state run companies are usually protected from competition by the coercive force of law? because the state knows know that private companies will drive them out of business. That is exactly what happened when the airline and telecoms industries was liberalized in Nigeria. The former state run monopolies were driven out of business. Why? because consumers will always patronize companies that offer the most value, efficiency etc. Nigeria Airways and Nitel could not compete despite decades of head-start. NTA and FRCN survive because they are propped up by taxpayer subventions. Remove that and they collapse!! Is that fair competition with AIT?

NNPC can mismanage its refineries because there are no private refineries. A private refinery in Nigeria today will seize the market share from NNPC because they would be better run and more efficient and therefore attract the money of consumers like you and me even if their products are at market prices. Its the same reason why even the common man will pay more to send his kids to private primary school than pay less to send them to poorly run public schools

Everywhere in the world, state run companies are inefficient loss makers. That is why Amtrak is always posting losses. The US postal service is always losing money despite the fact that UPS, Fedex and DHL are barred by law from competing with the post office in first class mail. Remove that monopoly and see what happens to the post office.

People think Petrobras is efficient? Not when they are statutory corporation vested with all the Oil and gas resources of Brazil. Expose them to competition in Brazil from the IOCs like Shell, ExxonMobil and ChevronTexaco and we'll see if they are really efficient.

Thank you, well said.
Your first sentence is a good reason why goverment run companies are usually monopolies, something for people here to understand

Seun:

Well said. Clap Clap.

Thank you.
You would think many of these facts are self-evident

wesley80:

The whole idea is to dismantle existing monopolies[b] but leave the companies in the hand of the govt, maybe with a certain percentage given out to the public while the rest remains with the government[/b]. I'm not aware of a theory that says govt participation in biz is certain to end in disaster, If one exists then i think this is a great time to prove such a theory wrong. Why are we so afraid of turning a failure into a success? If these parastatals r privatized would they be manned by aliens? Are they not also going to be manned by humans just like the public owned enterprises? So i ask again, who is afraid of competition?

What you fail to understand is that government companies are always run on political premises/grounds instead of sound rational economics. That is why they are inefficient. Things like federal character/quota are always used to hire people that have no business being there. The management and staff see the companies as cash cows to be looted and therefore they are mismanaged. The workforce is always bloated and corrupt! The lethargic bureaucracy used to run the place makes it unable to perform well. These are things that is inherent in the civil service but can't thrive in a private company.

Finally in response to the bolded, would you invest your hard earned resources in a company majority owned by the Nigerian government? I want an answer!

^^^ Lets not loose sight of the argument which still is that govt parastatals should not be SOLD but should rather be allowed to exist alongside privately owned businesses.
The problem here seems to be a lack of self belief more than anything else and seems to be a direct reflection of what most feel about our nation as a whole and our leaders. The lack of faith in our institutions is glaring in your arguments - of course there's every reason not to - but what if we've actually turned a corner? Would it still be right to judge our every leader and institution by the Failures and rot instituted by our past leaders? If it is possible for a govt OWNED (not necessarily run) parastatal to run efficiently, then i think it is worth a try in an age of civilian rule with more openness and increasing govt accountability.
Why the rush to sell? For every single corporation that u can point to that has been a failure, i can point two that have been sold to private owners and have failed woefully. So if your argument is that this time the govt wld get the sales right then mine is that this time the govt would pick better managers.