The Effect of Privatization and Commercialization of Government Owned Industries

The Effect of Privatization and Commercialization of Government Owned Industries

The period of between 1972 to 1990 was a period described in the history of Nigeria economy as the period of oil boom within which time incoherent application of generated revenue from sale of crude oil was made. The various government many medium scale industries in various parts of the country same of these industries so established import as much as 90% of its raw material imputer from overseas countries.

The down turn of the Nigeria economic fortunes which resulted from global oil gut has a negative impact on the economy and which depended on the revenue from the crude oil finance her their input oriented economy to as much as 85% could not be unaffected in 1986, the Nigeria Government applied for a loan of $2.3 billion from the international monetary funds of finance her acting economy. The international monetary fund hence presented as set conditional  ties which will equal Nigeria for  the loan. One of these conditional ties was reduction of government expenses on public parasitical.


          According to Wmer Sombert, capitalism has its own spirit which is profit seeking spirit the motives to make profit from investment is considered a moving force which derives investors.

When ever the expected returns from investment is not fourth coming such investment may be considered as avenue of financial loose, such as the economic situation which contributed the Nigerian society when act of total of eleven billion #11 billion investment on parastatal and government owned industries realized a divided of 93.1 million i.e 39% return.

This poor return portrays the fear that such investment is a waste of public following a global recessive in the oil revenue.

Also Read: Privatization in the Nigerian Economy

The first official public statement on privatization was in the 1986 Budget special by the Head of State. President Ibrahim Banangida, when he said “Government parastatal have for long been subject of the study and policy, review. They too have generally come to constitute an unnecessary high Burden on government resources.

They have been variously classified for purpose of reform government has now decided that as from 1986 the value of non statutory transfer to all economic and quest economic parastalals would constitute not more than 50% of their level. They are to find the balance from increase in the price of their services and products charges, tariffs and rate.

According to Another C.I. Mbarieto in his paper “Capital restricting for successful privatization. There is no doubt that excessive participation by the government of developing in their economic it is obvious that the under lying cause of privatization efficiency by making profit into such enterprises more productive well and to competitive pressures privatization and commercialization of public owned enterprises in expert to block the drain of government revenue by bringing spirit of profit into such enterprises as well as provided the much sought  revenue for the art in public program.


          The objectives or nationals build privatization of an industries listed below.

  1. To improve the management of government owned establishment.
  2. To encourage private individuals to invest in the industry
  3. To encourage foreigners to invest in the economy
  4. To encourage the development of local skill and technology
  5. To encourage development of private sectors
  6. To encourage healthy competition on the economy etc.


This study is essential in the fact that privatization and commercialization of public enterprises is being restored to as a solution for public enterprises, importability, inefficiency and unproductively.

Public enterprises in some western countries were privatized for maximum efficiency and profitability, such enterprises include the British Telephone company. The U.S. poital agency etc.

This study is very timely especially since privatization and commercialization of public owned enterprises is currently pursued in Nigeria with many potential investors still ignorant of the benefit derivable from such investment.

Considering the fact that there are limited literature on effect of the activities, this research therefore seek to enlighten the general public about the effects of privatization and commercialization as a policy option for the revitalization of our inefficient public enterprises. It is also hoped that research work will definitely create or stand as detain reference for further research work of the issue.


There is no doubt that the privatization and commercialization of the government owned industries have many effects on the economy of the nation on infrastructure development of the nation, on the standard of living of the nation in the development of manpower of the nation but this study is only concern

On the effect of this privatization and commercialization government owned industries. That is to say that this study is limited to the effect of privatization and commercialization of government owned industries which were privatized, example of government owned establishment which we are talking about are NEPA, NITEL, NIPOST, Nigeria cement company, etc.

Therefore this research represents an attempt to search for the effects which the privatization and commercialization of government owned enterprises had on the life of these enterprises. That is on the management of these enterprises, on the effectiveness of these enterprises on the productivity of these enterprises etc.


  1. Privatization – Transfer from state to private ownership
  2. Commercialization – To make money out of some thing
  3. Government – Method on system of governing or body of persons governing a state that is Nigeria government.
  4. Establishment – To set up or establishing or being established. That is government owned companies.
  5. policy – Plan of action, statement of aims and ides e.g one made by a government, political party, business company etc.

Although a Glory of literature existed on the use of public enterprises inefficiency and the relevance of privatization and commercially their for profit motive not much literature exist on the effect this activities have had on the economy so to privatize or/and commercialize public enterprise.

Mbanefo C.I. Author for A (1986) in his publication in the Bullion a publication of the central bank of Nigeria states “Privatization and commercialization is expected to yield some for the government in the merit revenues from operating the enterprises inefficiently.

Therefore, Mbanefo agree with inefficiency of public enterprises due to mainly to improper allocation or resources and ineffective financial management and hence hold the view that privatization is the only viable option left for the government.

Imperatively in conducting this research perfect continuous effects were intensified to reach previous research studies carried out on defined problem areas, but as a matter of fact, I could not have access to any work on the defined problems area.

However, this does not absolutely mean that there has never been any research work on the problem area but the research instead to the express all desperate efforts to lay hands on any was to avail. Consequently the basis of this literature review is conceptions literature


—This article is not complete———–This article is not complete————
This article was extracted from a Project Research Work/Material Topic



Click Here To get the full Project Research Work/Material

To Get Banking and Finance Project Materials, Click Here!

[simple-links category=”3211″]

One Comment on “The Effect of Privatization and Commercialization of Government Owned Industries”

Leave a Reply

Your email address will not be published. Required fields are marked *