Impact of Privatisation and Commercialisation (Phase I) On Nigerian Economy
From 1989 to 1991 Usman served as the pioneer Director General of The Technical Committee of Privatisation and Commercialisation, now the Bureau of Public Enterprises and was responsible for the Phase I programme with the task to reform public enterprises, as an integral and critical component of the International Monetary Fund-led Structural Adjustment Programme (SAP), which was started in 1986.
Under his supervision, about 88 public enterprises were either fully or partially privatised without any foreign technical assistance. The programme succeeded in relieving the government of the huge and growing burden of financing public enterprises, minimised the overstretching of government’s managerial capacity through a redefinition of the role of the supervising ministries, created a large body of shareholders and deepened and broadened the Nigerian Capital Market to the position of being the most developed in black Africa. The market capitalisation of the Nigerian Stock Exchange (NSE) through which the shares were sold has grown from N8.9 billion in 1987 (before privatisation) to N65.5 billion in 1994 (after the Phase-I). The catalytic effect of the volume of shares released into the market via the privatisation exercise cannot be over emphasised.
The TCPC became the current Bureau of Public Enterprises (BPE) in 1993.
In summary, the Phase-I of the privatisation has given the Nigerian economy some benefits, like:
- Performance of the privatised enterprises so far has led to a considerable increase in the volume of corporate taxes accruing to the national treasury.
- The sale of shares and assets realised over N3.7 billion as gross privatisation proceeds from the privatisation of 55 enterprises whose total original investment according to the records of the Ministry of Financed Incorporated (MOFI) was N652 million. This represents less than 2% of the total value of the Federal Government’s investments as at 30th November 1990 which stood at N36 billion.
- Privatisation has massively expanded personal share ownership in Nigeria.
- By reducing the reliance of public enterprises on the government for finance, the programme of privatisation has encouraged new investments in the enterprises concerned.
- The new operational autonomy of these enterprises and their liberation from political interference in day to day management has improved the internal efficiency of these enterprises allowing them to liberalise their purchasing as well as rationalise labour practices.
- Flotation of shares of privatised enterprises have greatly stimulated the rapid growth of the Nigerian Capital Market and helped to deepen and broaden it.
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