There is need for intervention as the privatised firms are largely ineffectual
Apparently mindful of the growing number of privatised companies that are now moribund, the Bureau of Public Enterprises (BPE) recently inaugurated four committees to review and implement a strategic road map for the resuscitation of ailing enterprises in the country. Known as Technical Working Groups (TWGs), these committees were to examine the sectoral challenges and develop a comprehensive five-year turnaround programme for each of the non-performing enterprises. Under the searchlight are ailing enterprises in the automobile, housing (bricks and clay), mines and steel as well as oil palm sectors.
While inaugurating the committees, BPE Director General, Alex Okoh attributed the poor performance of the enterprises to the challenging operating environment in Nigeria, which he said had made it difficult for many businesses to survive. While many of these public enterprises have either closed or relocated to neighbouring countries, Okoh said the BPE had commenced a thorough review to ascertain the issues responsible for their problems. Commendable as the BPE move appears, it is regrettable that many of the erstwhile state-run firms, privatised at huge costs to the taxpayers, have performed woefully. They cut across communication, transport, banking, insurance, manufacturing, publishing, and power, among others.
However, the agency itself has questions to answer. In February 2018, BPE had disclosed that 37 per cent of the 152 privatised enterprises in the country were non-performing. But in September 2022, the privatisation agency put the number of non-performing enterprises at 16 per cent, signifying a decline of 11 per cent and a positive outlook. There are two possible deductions from the different figures dished out by the privatisation agency. The first presupposes that the BPE and relevant stakeholders may have done something to turnaround the organisations and lift some of them out of their non-performing status.The second points to a possibility that the BPE does not have a handle on what constitutes the figure of non-performance among the privatised entities.
Meanwhile, it is doubtful if the country has reasonably achieved certain broad objectives and benefits underpinning the privatisation and commercialisation of federal government enterprises which commenced about 34 years ago.Some of these objectives included the liberalisation of the economy to make the private sector “the engine of growth”, rehabilitate dead or moribund enterprises, promote efficiency, and better management, and create employment opportunities.The move towards privatisation was also targeted at reducing corruption and parasite mentality, strengthening capital markets, dismantling monopolies, and removing service arrogance, among others.
From 1993, when some 86 firms were privatised in the first phase of the exercise till now, there have hardly been any major positive impacts on the economy as many firms are either wilting or failing badly. Besides, there are little or no corresponding returns on investments. Many of the investors behind the purchase are interested in the assets of the firms, and not on adding value, leading to economic losses for the country. Reports suggest a significant drop in job creations across the firms though the prevailing harsh economic environment is also unhelpful.
Today, most of the establishments sold to public concerns by the BPE have either collapsed or are finding it difficult to stay afloat. Perhaps, nowhere are the worries of privatisation more apparent or consequential than in the power sector. It is the prime example of the dilemma of privatisation. The hope that the unbundling of the ailing power sector into six generating companies, 11 distributing companies and a transmission company would bring about efficiency in service delivery while kicking off industrialisation and the economic development of the country has turned out to be grossly misplaced. With soaring unemployment figures arising from poor macroeconomic fundamentals, breathing life into the non-performing enterprises has become more urgent.