CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Privatization refers to the reduction or total withdrawal of public sector intervention in economic activities. It involves the relinquishment of part or all of the equity and other interest held by the government or its agency in enterprises whether wholly or partly owned by the government, the reduction in state provisions, reduction in state subsidies and reduction in state regulation of industries (enterprise). Privatization may therefore be full (total or partial) for reasons of transparency and credibility, as well as widespread share ownership, the popular trend has been of divest through the stock market and as such, the Act gave preference to the capital market as a divestment vehicle, with government divesting its holding through the privatization programmes of the government has provided new opportunities (which never existed before for individuals, organization and government in and outside Nigeria to buy and sell securities.
However, with this chosen channel of divestment, experience has also shown in Nigeria that privatization has increased the activities of the Nigerian stock market as well as broadened and deepened the stock market in a number of ways. This research is aimed at examining the privatization on economic development of Nigeria with a view of focusing on the degree of awareness and innovation engendered into the capital market, in relation to the economic development of Nigeria.
The thesis is equally aimed at discussing such topic like privatization, the Nigerian stock exchange, impact of the exchange in privatization programme, the capital market. Special attention will be paid to such question as to, how the programme has further enlarged both the outstanding shares, shareholders and widened the type and quantity of shareholders in the stock market, what extend the policy has increased awareness in the capital market on the part of the shareholders, general public and the principal operators and if privatizing through the market has made the market better appreciated by policy makers which may consequently less to the ignition of policies conducive to its growth.
1.2 STATEMENT OF PROBLEMS
Privatization of public enterprises is a vital tool for the upliftment of a country’s economy, more especially the developing countries like Nigeria. Regrettably, the problems facing this privatization program is numerous to include:
- Corruption
- Lack of transparency
- Lack of accountability
- Inconsistency and
- Incredibility.
However, it is based on these problems that the basic propositions of this privatization program are being hindered. In trying to look into these discrepancies and proffer a way forward towards a positive state of privatization of public enterprises in Nigeria, this research work emanated.
1.3 RESEARCH QUESTION
- To what extent has market failures enhance job creation capacities towards economic development in Nigeria?
- What are the problems associated with privatization of public enterprises (PHCN)? 3. What are the implications of the above policy towards their organizational goals attainment?
- The implications of the above policy is the massive unemployment and high rate of crime and criminality among the youths.
1.4 PURPOSE OF THE STUDY
In view of the issue raised in the research problem, this study has a number of objective all of which are directed towards appraising privatization policy as a development strategy for the economy.
These Objectives Include:
- To determine the impacts of privatization towards economic development of Nigeria. The impacts of privatization towards economic development of Nigeria is the engender regional development and job enhancement capacities.
- To make a comparative analysis of the problem associated with privatization of public enterprise (PHCN). The problem associated with privatization of public enterprise is industrial unrest due to high handedness of private owners of firms.
- To point the implication of the policy on economic development of Nigeria. The implication of the policy on economic development of Nigeria is massive unemployment and youths restiveness in public enterprise.
1.5 SIGNIFICANCE OF THE STUDY
The study is on privatization and economic development in Nigeria using PHCN, development programmes is sociologically important because private investors are geared towards development, either socially, economically, publically or technologically. The study is also significant because it will help to find solution to the problems hindering PHCN from carrying out commonly development programmes not only in their organization but also beyond. More so, it will help the government to assist and encourage privatization as a means of development programmes.
Theatrically, this research work may help members of the public to have vast knowledge about the role of privatization in embarking on economic development porogrammes, as well as, the problems they encounter in PHCN. This may help them to be constructive in their criticism, and may also help subsequent researcher’s top build on it and improve on their work.
1.6 SCOPE OF THE STUDY
The essence of this research work is to study the privatization and economic development of Nigeria. The research intends to focus on the PHCN Enterprise.
1.7 LIMITATIONS O F THE STUDY
During the conduct of this research work, some factors posed constraints to the determined efforts of the research to carryout the research study to such a depth and in such a manner that it ought to have been carried out. Some of these factors are:
Time Constraint: Time is also another factor that acts as hindrances in carrying out this research study. This is as a result of the fact that other things were still being attended to in the course of carrying out this research work.
Financial Constraint: Money also acts as a problem in the conduct of the research work. Traveling expenses were incurred in getting the materials for the research work. Also incurred, were expenses for the typing and distribution, building and a lot of other expenses.
The researcher was able to overcome all these constraints through prayers, guidance and support from both my supervisor and my mother
1.8 DEFINITION OF TERMS
PUBLIC CORPORATIONS: Public corporation or enterprise as defined by Adamolekun (1983), are organizations that emerged as a result of government acting in the capacity of an entrepreneur. They can be seen as those corporations or enterprise built, owned and managed by the government. They are being financed with public fund, especially through taxation and also operate on monopoly.
PRIVATIZATION: Privatization can be defined as the transfer of ownership and control of enterprises from the state to the private sector. Iheme, (1997) defines privatization as any of a variety of measurers adopted by government to expose a public enterprise to competition or to bring in private ownership or control or management into a public enterprises and accordingly to reduce the usual weight of public ownership or control or management.
CAPITALISM: Capitalism means the economic system in which property is privately owned and goods are privately produced. It is some times referred to as the private enterprise system. It is the private ownership of the business of a society with the freedom of private owners to use, buy and sell their property or services on the market at voluntarily agreed prices and terns, with only minimal interference with such transactions by the state or other authoritative third parties.
FULL PRIVATIZATION: sales of entire government shareholding or stake in the company. This also means divestment by the federal government.
PARTIAL PRIVATIZATION: this means divestment by the federal government of part of its ordinary shareholding in the designated enterprise.
LISTING REQUIREMENTS: these are condition which every application (companies seeking to be listed in the stock exchange must satisfy.
DAILY OFFICIAL: it is an authoritative document showing useful cooperate data on daily business rating for all quoted securities to aid investors in appraising or monitoring their portfolio performance for best result. This document also reflects changes in the prices and earnings of the listed securities.
Economic development: generally refers to the sustained, concerned actions of policy makers and communities that promote the standard of living and economic health of a specific area. Economic development can also be referred to as the quantitative and qualitative changes in the economy.
QUOTED COMPANIES: these are companies whose shares have been admitted in every way with listing requirement of the exchange.
1.9 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows. Chapter one is concern with the introduction, which consist of the (background of the study), statement of the problem, purpose of the study, research questions, significance of the study, scope of the study etc. Chapter two being the review of the related literature presents the theoretical framework, conceptual framework and other areas concerning the subject matter. Chapter three is a research methodology covers deals on the research design and methods adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
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