Should the National Electricity Power Authority be privatized?
'Liberalisation Required for Effective Economy'
By Ndubuisi Ugah and Linda Elueme, 12.05.2004
Chairman, Technical Committeee, National Council on Privatisation, Akin Kekere-Ekun yesterday, said for Nigeria to benefit from the gains accruable from the privatisation and liberasation policy of the Federal Government, there is need for an effective regulation, competition, tranparency and accountability backed by government's commitment in order to achieve the set objectives. Kekere-Ekun, said at the University of Lagos Muslim Alumni (UMA) Reunion Luncheon in Lagos, that "the last 40 years have conclusively proved that the hitherto existing paradigm of government ownership and intervention in business has failed, and failed woefully too". He noted that the primary goal of privatisation and liberalization is to make the private sector the leading engine of growth for the Nigerian economy, adding that over the time, Nigeria has developed a large public enterprise sector by investing huge sums of money in the sector. The public enterprise, according to him, have consumed nearly half of all the earnings made from the sale of oil since 1973 and has not accounted for any significant returns on investment. "Estimates of the Vision 2010 Committee indicate that Federal Government investments in public enterprises stood at over US $ 100 billion in 1996. The return on these investments averaged less than 0.5 per cent annum", he said. Speaking on theme: "Privatisation and Liberalisation: Whose Benefits?", Kekere-Ekun noted that "a profound change in approach is therefore required, and privatisation and liberalisation represents that change". The Chairman noted that a survey carried out by the defunct Technical Committee on Privatisation and Commercia-lisation (TCPC) had noted that "public enterprises accounted for between 30 and 40 per cent of fixed capital investments and nearly 50 percent of formal sector employment". According to him, the gross failure of this enterprises to live up to expectations and of the Nigerian state to effectively manage them is primarily responsible for the current move towards economic liberalization, competition and privatisation. Kekere-Ekun emphasised that privatisation, liberalization itself does not always produce the desired results, stating that in most cases, privatisation has been immediately followed by deterioration in the level of service and the promotion of rent seeking behaviour by individuals that are well connected. Citing example from China, he said the Chinese government emphasied competition rather than privatisation and yet have achieved results that have commonly been thought to be associated with privatisation. "In the last 20 years, Chinese per capita income have quadrupled. Standard economic theory says that both compettion and privatisation are required for an effective market economy. A well designed privatisation process with a good regulatory system in place can however lead to good revenues for the government as well as better services and lower costs", Kekere-Ekun added. He said inspite of the growing concern expressed by Nigerians over the success or otherwise of the policy, the future of Nigeria lied squarely on the two policies as "the two interrelated processes are fundamental anchors for a prosperous Nigerian state". "Privatisation and liberalisation of themselves will, however, not necessarily ensure economic growth and development", noting that "if badly designed, it could have disastrous consequences on the economy". He said it was obvious that Nigeria was at the threshold of some fundamental changes in the shape of the Nigerian economy, which he said the privatisation and liberalisation policy was out to achieve since it was expected to enhance greater private sector participation in economic activity. The NCP chairman stated that "as we (Nigerians) proceed with the changes, there is also no doubt that there will be positive as well as adverse effects and consequences", adding that the choice of whether the impact will be positive or not lies with all Nigerians, that is, both government (policy makers, implementers) as well as civil society itself.
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