PUBLIC ENTERPRISES

Public Enterprises:  Apart from the civil service generally referred to as the public service, there are other corporations for which government has interest directly or indirectly. in this article we shall discuss in details what Public Enterprise is all about.

DEFINITION
The public corporations are those enterprises in which the government has an interest or has a major shareholding influence. They are referred to as Public Corporations because the Government runs them with taxpayers money.

TYPES OF PUBLIC ENTERPRISES
There are three forms of public enterprises. These are :
a. Statutory corporation
b. Non Statutory corporation and
c. Those run as government departments

a. Statutory corporations: These are the creation of Acts of Parliament. In a Military government, statutory corporations can be created by decrees. Examples of statutory corporations in Nigeria are Nigerian Ports Authority
(NPA), the National Electricity Power Authority (NEPA), the Nigerian Airways Authority (NAA), the National Television Authority (NTA).

Non-statutory corporations: These are creations of statutes or Acts of Parliament. They are basically limited liability companies in which the government has come to acquire part, or whole shares. The Nigerian National Supply Company Ltd. is a non-statutory government limited liability company set up purposely for purchasing and distributing good items to the public. The Nigerian National Petroleum Corporation is another non-statutory corporation set up for the exploitation and sale of mineral oil products. The Nigeria National Shipping line is another good example of a non-statutory corporation.

Public corporation runs as government department: These are public enterprises established by government, financed and controlled by the same government. A very good examples are the Nigeria Railways Corporation,
Nigerian Telecommunication Limited, Nigeria Postal Services, etc.

FEATURES OF GOVERNMENT CORPORATIONS:
The following features are associated with government corporations:
I.  Finance: The bulk of their finance capital is from the government votes
II. Ownership: long to the general public on whose behalf the government
III. Control since funds are provided by government, it is natural that the control will be vested in the government. This is done the government appointment  of a Board of Directors with a Chairman all of whom are answerable to the government though a minister or Commissioner whose departmental duties are relevant to the corporation,
a typical is the minister of information for NTA.
V. Policy Matters: the board policies are basically those of the government.
This often leads to opposition parties accusing the enterprises to promote political interest.
VI. Administration: The day-to-day administration is left in the hands of a General Manager or a Managing Director appointed by the Board of Directors or even by the government itself.
VII. Accountability: In financial operation, it is now the vogue that public corporations would not be self-financed but be profit making and revenue generating for the government. This is particularly so for “trading” Corporations such as the Nigerian National Supply Company (NNSC). Public companies render accounts to the Parliaments. State or National Assemblies as the case may be usually the appropriate commissioners or Ministers (Asaolu, 1985)

THE STANDING COMMITTEE ON PUBLIC CORPORATION
This is a committee of the Assembly (State or National) that has powers to take any information about the activities of any of the public corporations. It is another way of effecting the national control of public interest in the management of the corporations.

REASONS FOR GOVERNMENT CORPORATIONS:
Readers must take note that in most cases it is possible to adduce or adopt the same points that stand as reasons why we have government corporations as the very advantages of the corporations. Therefore, to separate the reasons from the advantages here may result to splitting a stand of hair, hence we shall say here that these are the reasons and therefore the advantages of Public enterprises.

Provision of essential services at reasonable cost such as water gas, electricity good roads and ample supplies of food items are some of the essential needs of man.
Provision of infrastructure
Prevention of possible private monopolies.
Provision of capital for key industries.
Prevention of foreign domination

THE DISADVANTAGES OF PUBLIC ENTERPRISES
Public enterprises have a number of disadvantages which include
A. Pricing problem
B. Conflicts of control and efficient management
C. Effects of poor stall remuneration
D. Vulnerability of industrial actions, and
E. Civil servants unsuitability to business enterprises

PRIVATIZATION AND COMMERCIALIZATION OF GOVERNMENT ENTERPRISES IN NIGERIA
The federal government administration of General Babangida (1985-1993) under the Structural Adjustment Programme (SAP) decides and by Decree No. 25 of July 1986, revised in 1988 privatized and commercialized some federal government corporations in order to make them more functional, profit oriented and eliminate waste and some of the problems mentioned above.

Privatization, according to the Decree means the relinquishment of part
of, all of the equity and other interest held by the Federal or state government or their agencies in enterprises privatized whether wholly or partly owned by the federal/state governments. All share of enterprises privatized were
offered for sale in Nigeria capital market. Between 10-20% of the total share were allotted to associations, interest groups, trade union, workers etc. while the remainder were sold to the public. Priority in the allotment of shares were given to workers and management of that particular enterprises to ensure commitment of workers in the functioning of the enterprise. The control and management of such privatized enterprises were to reflect the ownership structure of the organization. About Sixty-seven (67) Federal enterprises were listed in the decree for full privatization while another forty-three (43) were listed for partial privatization  Another 35 enterprises were listed for full or partial
commercialization. According Nasir El-Rufai, a member of the programme monitoring committee, there are 588 parastatals under various federal ministries and the presidency (Guardian 6/5/99) partial privatization means that the federal government would retain its original number of shareholding or reduce them.

In summary, privatization may be described as the process of transferring ownership from the government sector (public sector) to the private sector or simply put, the sale of the government of its interest in a public-owned enterprises to the private sector. Essential services are basically services that are of great importance
to the people because to a large extent, they contribute to the well being of the people. These essential services are mostly provided by government owned parastatals to the people so as to ensure its equal distribution among
the populace and to avoid any form of exploitation on the people generally. Examples of such essential services include :Electricity, water, telecommunication, and transport services, to mention but a few.

Commercialization on the other hand, means reorganization of enterprises wholly or partly owned by the federal government so that such commercialized enterprises would operate as profit-making commercial ventures and without subvention from the federal government, like privatization, some enterprises such as N.N.P.C. NITEL, NICON, etc. were to go on full commercialization while other such as Nigerian Airport Authority, Nigerian Railways Corporation, N.E.P.A, etc were to undergo partial commercialization.

For the purpose of implementation, the federal government established a Technical Committee on Privatization and Commercialization (TCPC) now called Bureau for Public Enterprises (BPE) with the overall objectives of
ensuring thorough implementation of government policies in this regard.

In essence, commercialized enterprises, though still under government ambit, would have to seek innovative ways of doing its business as well as competitive to survive. For privatized enterprises, it is obvious that with change of ownership, they would have to be profit-oriented and conduct their affairs with private sector goals rather than waiting for government subvention. It is envisaged that funds realized from divestiture would be used to pursue some other profitable projects to the benefit of the people. In summary, Commercialization is the re-organization of enterprises wholly or partially owned by Government to ensure that such enterprises operate as profit-making commercial ventures without subvention from government.

ARGUMENTS FOR PRIVATIZATION
Public enterprises in Nigeria have been unable to sustain themselves in their operations in spite of the huge and colossal sum of money being sunk into their operations. It has been argued by the apologists of privatization policy and government agents alike that between 1980-1985 about N23 billion was released to public enterprises and only a paltry sum of N933,701,132 (Newswatch 13/8/88) was realized from them. Notwithstanding this amount of money, they are heavily subsidized yearly by government. This problems have generated questions on the credibility of these public enterprises, knowing full well that other developmental projects compete for allocation from government revenue which is said to be loan. Because of government’s lean resources, it could no longer discharge
the key projects on which the Nigerian economy depends. It therefore had to re-order its capital- spending programme and also reduce or stop sub ventures to parastatals. Government has echoed and presented statistical data to support their claims. The objectives of privatization programme is anchored on the following principles:
1. To re-orientate the enterprises towards a new horizon of performance, improvement, viability and overall efficiency.
2 To develop the Nigerian capital market.
3. To restructure the capital of relevant enterprises in order to facilitate good management and independent access to the capital market.
4. To restructure and rationalize the public sector in order to lesson the dominance of unproductive investment in that sector.
5. To ensure positive returns or public sector investments in privatized and commercialized enterprises.
6. To check the present absolute dependence on the treasury for funding by otherwise commercially oriented parastatals and to encourage their approach to the capital market.
7. To inject dynamic and versatile management and operational efficiency and effectiveness into these parastatals.
8. To de-regulate the economy and thereby stimulate the expansion of the production frontier
9. To reduce public sector borrowing requirements.
10. Government role in most enterprises were considered appropriate when the private sector was not well organized and had no financial capability to shoulder most of these enterprises. Now that they have come of age, it is only wise to concede to them the financing and management of certain enterprises.

Generally, the intention of the policy is to rapidly reduce the degree of government participation in national economic matter, especially in the area of structure, pattern and direction of investment and growth, as a part of the overall strategy of shrinking the public sector and strengthening the influence of market forces in coordinating virtually all aspects of the national economic activities. The observation that the public sectors is quite large comprising of over 100 enterprises at the Federal level alone, spreading over agriculture, mining, manufacturing, transport, commercial and other activities clearly demonstrates that the government has spread its resources beyond control.

ARGUMENTS AGAINST PRIVATIZATION
Some apologists of the status quo’ argue for the retention of public enterprises and advanced the following points. Amongst other functions and responsibilities, public enterprises help in rendering the following services:
1. The provision of social services at prices lower than market rates e.g water, information, electricity.
2. They help reduce regional inequality or structural imbalance in national development
3. They help promote national pride and feeling of economic independence.
4. They are major employers of labor.
5. Their lower prices charged for their services does help in enhancing the profitability of private enterprises, i.e electricity.
6. Requirement to satisfy economic, political and social goals simultaneously.

There are many activities that are strategic to a nation and the private sector in the immensely to the increase in the GDP of most less developing countries i.e Nigeria, less developed countries (ie Nigeria) are not capable of undertaking them. To prevent the multi-national corporations from monopolizing such activities and hold the country to ransom; such as the refineries, some public enterprises have to be established. This guarantees not only economic independence, but also political freedom in policy choices.

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