An Evaluation of the Current Privatisation Exercise in Nigeria
O A Odiase-Alegimenlen
Senior Lecturer and Head,
Department of Jurisprudence and International Law,
University of Benin
This is a commentary published on 25 January 2004.
Citation: Alegimenlen, O A An Evaluation of the Current Privatisation Exercise in Nigeria', Law, Social Justice & Global Development Journal (LGD) 2003 (2), <http://elj.warwick.ac.uk/global/2003-2/alegimenlen.html>. New citation as at 1/1/04: <http://www2.warwick.ac.uk/fac/soc/law/elj/lgd/2003_2/odiase/>
Privatisation  is the means whereby State owned property is transferred into private hands. This could be either a total or partial transfer of either or both ownership or management/control. It could be done through the sale or other transfer of shares to a foreign or local investor.  It could be full privatisation or a partial privatisation. There is also the issue of commercialisation of some of these enterprises. Commercialisation in this case is when the government still wishes to retain ownership of the business but withdraws from the daily activities and allows the enterprise managers collect funds and spend without reference to the government agencies. The government agency in this case remains strictly in a regulatory capacity.  The primary focus of privatisation is profitable operation of the enterprise. It is the case that privatisation of public enterprises is a means by which the government seeks to allow the businesses it owns to be properly run by private sector concerns and at the same time recoup its expenses in establishing the business.  In addition, as Nasir Ahmad el-Rufai, has noted,” The current move towards economic liberalization, competition and privatisation is partly informed by the gross failure of PE’s  to live up to expectations of meeting the social responsibilities of the State  in general.”  Thus privatisation could meet the need of the nation in many ways, but most especially it should be able to usher in efficient services especially in the area of erstwhile public utilities such as NEPA,  NITEL  etc. Laws pertaining to privatisation in Nigeria have invariably included commercialisation. The focus however, of this papers discuss is privatisation. Privatisation is also part of the liberalization of the economy, and thus will be addressed within this context.
In Nigeria, privatisation had arisen as a result of the inability of the State to manage its very extensive involvement in public enterprises. The poor capital profile of the private sector of the State at independence had made it imperative that at the initial stage of development, the government of the State should invest directly in the establishment of the industrial sector,  as well as embark on development of infrastructure. In fact the governments foray into nationalisation  in the seventies expanded its holding in the productive sector of the economy.  This was a reflection of its principle of controlling the commanding heights of the economy.  An assessment of government success or otherwise in business enterprises in Nigeria especially, makes it very apparent that the business of governance should not be mixed with the running of purely business enterprises. The combination is both diversionary from governance and in addition a disaster for the business. It is therefore quite obvious that the government has not been able to run its enterprises successfully and should leave this to the private sector, while it concentrates on the policy and regulatory aspects. 
The nations operative policy of development was the mixed mode, which allowed both capitalist and socialist tendencies. The financing of this policy was undertaken via the copious resources from oil sales. However, the collapse of the world oil economy resulted in a downturn in the national economy and in the disintegration of virtually all public utilities and government funded enterprises. This was connected with the inability of the government to adequately fund their daily needs and provide proper maintenance. The nations recourse to the Bretton Woods International Financial Institutions (IFIs), for help with its balance of payment problems resulted in the State being advised to privatise government owned companies and generally introduce capitalist oriented policies in the economy in the form of a liberalised economy. Privatisation/ Commercialisation was to free finance to both; offset the nations massive debt overhang, as well as address development of new infrastructure, and the maintenance of the existing infrastructure.  The movement from public to private ownership was from a pro-socialist government driven economic policy to a private sector based economy. A planned consequence was the freeing of government from business activity to enable it concentrate on governance.
There have been various  attempts to privatise state-owned enterprises (SOEs) / public enterprises (Pes)  in Nigeria.  The earlier, Privatisation and Commercialisation Act of 1988, had established a Technical Committee on Privatisation and Commercialisaton (TCPC). This body handled the early privatisation process initiated during the regime of military President Ibrahim Babangida. A new legal instrument, which governs the ongoing process of privatisation of government owned enterprises in Nigeria, is the Public Enterprises (Privatisation and Commercialisation) Law of 1998.  This law will form the major part of the discussion of this paper.
The operations of the Public Enterprises (Privatisation and Commercialisation) Law of 1998 have been adjusted twice with the advent of the democratic government. An initial shift to adequately reflect the governments resolve to privatise SOEs, saw the placement of the process via the National Council on Privatisation (NCP) directly under the office of the vice-president.  It has subsequently been moved to the office of the President in 2003, after the inauguration of President Obasanjo for a second term (2003-2007) in office.  The law signifies the intention of the Federal government to conduct an effective privatisation of SOEs by divesting from the ownership of these enterprises.
There have also been recent amendments to the law by the National Assembly based on the Assembly’s disenchantment with the manner the NCP under the office of the vice-president was implementing the process.  At the time of writing this paper, it was however not clear if this had been duly passed into law and what scope would be covered by such an amendment. Comments shall therefore be limited to the above-mentioned laws, which shall be appraised in the light of the expectations for the privatisation process and the success or otherwise of the process.
2.1 The Privatisation and Commercialisation Law (1988)
This is the initial law, which was to regulate privatisation under the structural adjustment programme (SAP) adopted by the Nigeria government in 1986. The law established the Technical Committee on Privatisation and Commercialisation (TCPC), which was to manage the process of privatisation. The law was therefore to operate in tandem with the overall objectives of the nations economic liberalisation and was intended to free government’s finances to offset debt obligations of the nation.  The functions of the TCPC among other things were to do all possible for the successful privatisation of those enterprises slated for privatisation. It was also to advise the Federal Government on the privatisation process from time to time. It was in addition to ensure that the exercise was balanced and in accordance with the laws of the country. The law also contained a schedule of the enterprises to be privatised. Other laws on privatisation have largely followed this pattern.
The law was intended to rectify inherent defects in the previous law. It operated via the Bureau of Public enterprises. It also contained an updated schedule for privatisation.
This law originated as a decree promulgated by the erstwhile Military government on the 31 December 1998.  It replaced the old Law, which had established the previous Bureau of Public Enterprises. Under this law, a new restructured Bureau of Public Enterprises was established to cope with the challenge of the reinvigorated privatisation process. The law was predicated on the recognition that previous attempts to privatise public companies in Nigeria had been fraught with problems.  The new law was intended to address the shortcomings of the process to facilitate the effective privatisation of state-owned enterprises (SOEs), within the parameters of the general development objectives of the nation.
The general features of the legal framework of the law on privatisation (in no particular order) include;
1. Carrying out all activities for the successful privatisation of slated enterprises;
2. A schedule of enterprises to be privatised/ commercialised
3. Appointment of advisers /consultants for the process of privatisation
4. Restructuring of the enterprise preparatory to privatisation
5. Reviewing the process of privatisation to make it more effective
6. Overseeing the sale/divestment process at all stages
7. Ensuring a wide spread of the shares and a balanced divestment to all Nigerians at a fair price
8. Making recommendations on to the government on how the enhance the process
9. Keeping a proper financial and other record of the privatisation process
Each of these will now be examined, in some detail:
1) Carrying out all activities for the successful privatisation of slated enterprises
This has always involved the setting up of a body to over the administration of the process of privatisation. The Technical Committee on Privatisation (TCPC) was the administrative body under the The Privatisation and Commercialisation Law (1988) The Bureau of Public Enterprises Law had an administrative organ with the same nomenclature. At present, the Bureau of Public Enterprises (BPE) is the administrative body entrusted with the process in the extant law. This is expressed in section 12-22 of the Law. The National Council on Privatisation (section 9-11) is however the overseeing body, which takes policy decisions on the process. Although these bodies are supposed to be impartial and transparent this has not always been the case, as allegations are always rife about the corrupt tendencies of the parties involved. 
2) A schedule of enterprises to be privatised/ commercialised
The schedule of enterprises to be privatised is included in the law  to ensure some orderliness and transparency of the process. However, it has been the case that this schedule is not always adhered to.  In addition, the schedule lists specifies those enterprise for full or partial privatisation or commercialisation. This classification is also not followed. The law in the schedules also refers to strategic core investors  The quick pace of liberalization of the economy since the inception of the democratic government is reflected in the expansion of the scope of the privatisation process to include the full liberalization of the nations SOEs. 
3) Appointment of advisers /consultants for the process of privatisation
Section 11(j) of the law gives the NCP the power to appoint consultants and advisers. This function is however on the recommendation of the BPE under section 13(f) of the extant law. The NCP is also given the power to appoint technical committees on privatisation of specific enterprises under section 11(k). The inclusion of this requirement in the law is in consonant with the advise of the IFIs.  It is intended to enhance the professional conduct of the exercise in accordance with international standards for privatisation. Without the inclusion of these experts, it is doubtful if the process will attract the caliber of investors that the nation requires. 
4) Restructuring of the enterprise preparatory to privatisation
For the enterprise slated for privatisation to attract the attention of genuine and committed investors, it is necessary that it be properly packaged. This involves a record of it assets and liabilities, investment potential, access to markets and other such factors. This is to enable the investor make an informed opinion of the viability of the enterprise he seeks to buy. It is therefore important that credible and well-qualified persons are appointed to conduct the packaging process according to international standards. This is the duty of the consultants and advisers appointed under the above-mentioned sections of the law. This aspect is important, as the major reason for the privatisation is the inability of these SOEs to fulfill their major purpose of providing services they were established to provide. Any intending buyer must therefore ascertain that the enterprise it wishes to purchase can benefit from the inflow of capital and other investment. To this end, therefore it is incumbent on the BPE under section 13(1)(b) to ‘prepare public enterprises approved by the Council for privatisation’, and section 13(1)(d) to ‘advise the Council on the capital restructuring needs of the public enterprise to be privatised’.
5) Reviewing the process of privatisation to make it more effective
Due to the fact that the privatisation process is part of a greater goal concerning the progress of the nation, the process must reflect the objectives as intended. This is the area of policy implementation, where the overall spirit of the general deregulation of the economy must be the overriding factor. Without this, the exercise would be soulless and offend all sensibilities. Since the objective of the privatisation process and deregulation and liberalization of the economy is for the ultimate benefit of its citizenry via the economy, there must be a mechanism of reviewing the process from time to time to ensure that it is not automatic in nature and that it fulfils the objectives it is meant to serve. The NCP is the policy implementation arm of the process and in section 11(i) it is to ‘review, from time to time, the socio-economic effects of the programme of privatisation and commercialisation and decide on appropriate remedies’. This will ensure that the programme falls into the scope of the nations development policy and plans. This duty of the operators of the privatisation process is also connected to the next objective.
6) Overseeing the sale/divestment process at all stages
Just like midwives to the birth of a child, the NCP and BPE must be watchful over the process of each privatisation. This enables them know what challenges are involved at every stage. This enables them deal with these challenges in time, without compromising the whole process or calling its credibility into question. There are three main stages in the process, the preparatory stage, where the enterprise is packaged for sale; the next is the receipt of offers; finally comes the actual sale either through bidding or at the capital market or both as the case may be. Problems at the initial stage would involve the proper packaging of the Enterprise, it is the duty of the overseeing bodies to attend to this. It could also be that the credibility of the SOE/ PE, this is tied to its financial standing and viability. It may require a lot of preparation for it to attract buyers. It may also entail that some guarantees are necessary from the government for this reason. The NCP and BPE in their overseeing role are the liaison officers to ensure that the sale is not cancelled for this kind of reason. At the stage of receipt of offers, the overseeing bodies have to ensure that the bids are from responsible organizations, which are offering the requisite capital influx, technology and managerial expertise and in addition have the necessary outlook, vis a vis the nations development plans. It is here that the overseeing bodies must ensure that the bids are technically accurate and the companies bidding are real, sincere and genuine corporate entities. The final stage of bidding and/or capital market offer is also fraught with problems and so needs to be properly monitored. For the bidding aspect, the success of the process is evidenced by sale to a genuine and committed investor.  This is the objective that the law entails the NCP and BPE to ensure at all times.
In the case of the capital market offer, a lot of work is done even though professionals are in direct charge of the process. The law stipulates as will be seen in the next part of the paper that shares must be sold to all Nigerians from every part of the nation and every social strata. In addition one percent of the shares must be reserved for the workers of the SOE to be privatised. In addition in the case of over-subscription, the BPE is to ensure that no individual holds more than 0.1 percent of the shares. The accomplishment of these provisions is serious responsibilities that need to be observed by the BPE.
7) Ensuring a wide spread of the shares and a balanced divestment to all Nigerians at a fair price
This is discussed fully later on in the paper. Suffice it to say here that the wide diversity of the nation has ensured that there is never any consensus on the application of principles, which are intended to create some form of equality among the different segments of the society. This creates some difficulty for the BPE in their implementation of Section 5 (2) of the law, which states that, shares shall be sold on the basis of equality of states of the federation and the federal capital. The second aspect i.e. that the shares are sold at a fair price is rather speculative. What is a fair price? Is this connected to the original price of the enterprise, or is it to be based on the ability of the people to pay? In any case who will the price be fair to? The truth is that the price cannot be fair either to the seller or buyer. These enterprises were established at very exorbitant prices and have been run largely at a loss. They have therefore cost the Nigerian citizens and government much more than they were worth. In addition, what ever their sale value, they will never bring in enough money to cover what was spent on them.  Finally, to assist the ordinary Nigerian to buy shares, the government has instituted a fund known as, the ‘Privatisation Share Purchase Loan Scheme’. It is to give out loans to underprivileged Nigerians so that they may acquire shares in SOEs, which are being privatised. 
8) Making recommendations on to the government on how to enhance the process
Apart from just privatising the PEs, the NCP and BPE are also to made suggestions on how to enhance the process. It is conceivable that their close involvement in the privatisation makes them privy to procedures that will assist the process to occur without hindrance and facilitate the objectives of the privatisation process. This implies that they are to serve as advisers to the government in respect of privatisation measures. It is the operation of these wide powers by these bodies that have brought them into conflict with interest group within the society, which have felt marginalized in the privatisation of the nations publicly owned organisations which are perceived as part of the national patrimony. The perception is that these bodies are not the only source of knowledge on all issues concerning the privatisation process. However, the Public Enterprises (Privatisation and Commercialisation) Act (1999) confers wide-ranging protection on the operators of the process. This is presumably to protect them form parties seeking to impugn the operation of the privatisation process.  The provisions of the law therefore seek to ensure that only credible issues are brought to the attention of the court in respect of privatisation and that vexatious and flippant matters do not hamper the duties of the privatization operators.
9) Keeping a proper financial and other record of the privatisation process
The privatisation process in Nigeria ensured due to the nations financial problems. This means that the proceeds of the privatization are an important source of funds. In addition, the enterprises were established with the nations revenue. Thus their sale should result in some revenue for the government. In addition, the parties entrusted with this important duty must render a proper account of their activities. To this end section 19 of the law establishes a Privatisation Proceeds Account at the nations Central bank into which all proceeds from the privatization is paid. This is to be paid to the federal govern which utilizes it for any stated purpose as under section 19 (2).  Apart from the financial aspect, there needs to be a proper record of the privatisation transactions for the future.
The collateral effect of the so-called economic liberalisation, which, is of capitalist orientation,  of the economy is an anticipated concurrent effect for the developed nations as it ensures that their economic supremacy is maintained.  This realisation has led some Third world social scientists to the conclusion that government divestment from business is illogical and anti development in the Third World. Their argument is based on the premise that since these SOEs provide employment and stand as a testimony of governments commitment to development, it is counter productive to privatize them especially since (at least in the case of Nigeria) the stated objectives of privatisation have seemed difficult to achieve.  In addition, the capitalist orientation versus socialist theories on the obligations of government are also involved in the discussion. While some argue that it is not government ownership that makes SOEs fail but other factors, which if tackled would make SOEs successful, others are of the view that governments business is governance and this is contrary to its ownership of business, which must be properly placed in the hands of the private sector. The IFIs argument is however also pertinent to note - that is, States can not use other States finances and capital to provide development for their people without planning to repay such debts. 
What are the known objectives of privatisation?  These are summarised below as:
1) Divestment of shares from public to private sector
2) Redistribution of Shares from one segment of society to the other
3) Raising of Capital
a) for development needs
b) for debt repayment
c) to recoup expenditure/loss on SOE
4) As a development policy objective
These objectives are to be found either in the Act itself, or in the ‘Guidelines for Privatisation’.  An example is Section 13 (i) of the extant privatization Act, which confers on the BPE the duty to ‘ensure the success of the privatisation exercise taking into account the need for balance and meaningful participation by Nigerians and foreigners in accordance with the relevant laws of Nigeria.’ (emphasis added).
Each of these objectives will now be examined.
1) Divestment of shares from public to private sector
The divestment of shares from the public to the private sector as noted previously is based on the need for efficient and profitable running of the enterprise. This incidentally is one of the objectives enumerated in the BPE ‘Guidelines for Privatisation.’ This is stated as the intention ‘to move substancial (sic) ownership, control and operation of certain key economic enterprises from the public to the private sector.’ Section 13(i) of the Act as noted in the previous paragraph makes it clear that a primary objective is divestment to the private sector. A criticism of this objective is that it fragments the ownership structure of the enterprise making it difficult for effective functioning; which is contrary to the object of privatization. This criticism is however, not valid due to the fact that the majority of successful companies have diverse ownership structure are this has not hindered their operative success.
2) Redistribution of shares from one segment of society to the other
This is based on the theory of a national patrimony, which all Nigerians are entitled to share from. Thus, as the argument goes, as the national resources were used to develop these SOEs, every Nigerian is therefore entitled to a potion via shareholding. This will ensure that there is an even ownership spread throughout the nation. Section 5(2) of the Act, in recognition of this, states; ‘the Shares on offer to Nigerians shall be sold on the basis of equality of States of the federation and the residents of Abuja’.  In addition, the situation whereby the elite have access to ownership of shares is to be discouraged as much as possible.  To this end several policies on how to enable all Nigerians from all segments of society benefit from the process have been instituted. Section 12 deals with the issue of share allotment and focuses on the wide geographical spread of the allotment.  Multiple applications are also not allowed. A share purchase revolving loan stock has also been instituted.  In addition the extant law, Section 5 (4), states that in case of over subscription, no individual subscriber may hold more than 0.1 percent equity shares.  Naturally enough, the applicants do not honour these provisions. Thus it is common to find multiple applications, to the end of one person having a large chunk of ownership. In addition, the elite as usual corner most of the shares without censure by the operators who turn a blind eye to this state of affairs.
3) Raising of Capital
It is the case that every entrepreneur involved in capital expenditure wishes to make a profit from his business. The same is through of the federal government divestment of shares. The capital accruing from this process can be utilised in various ways.
a) Development needs: The nation is still in the process of development. This is a very capital-intensive venture. Monies realised from the sale of government shares could be utilised to finance development.
b) Debt repayment: Nigeria is heavily in debt. This debt originated from the reckless expenditure which the nation involved itself in during the oil boom years. The debt overhang of the nation led the nation to the IFIs, which recommended privatisation as a means of freeing funds for debt repayment among other reasons.
c) Recoup expenditure/loss on SOE: The various governments of Nigeria expended much funds in the establishment of these SOEs. A major objective of the privatisation process is to recoup such expenditure.  In addition, divestment is an avenue for the government to cut its losses on the enterprises, which have proved to be a veritable drain on the resources that would otherwise have been utilised for other productive ventures.
4) As a development policy objective
Privatisation of government shares could be as a result of a reorientation of the development objectives of a State. In this case Nigeria is moving from the socialist orientation of development to the capitalist mode. As noted earlier on in the paper, the nation had implemented a policy whereby the government was in control of the commanding heights of the economy. This was predicated among other things on the issue of security considerations. The idea was that it was not wise to allow foreigner’s access to some strategic assets of the nation in case information pertaining to these was not secure. 
Apart from the objectives stated above there are other objectives as stated within the ‘Guidelines to Privatisation’ these are:
1) Move ownership and control as well as the operation of key economic enterprises from the public to the private sector. The movement from public to private sector is predicated on the change of economic orientation from the controlled to a liberal based one. The theoretical framework for this being that specialization of function leads to greater efficiency. The movement is also meant to increase the economic indices in terms of the nations GDP and GNP. Growth in this case is intended to jump-start the economy paving the way for greater rate of development and therefore progress and prosperity. This argument is unfortunately not tenable in Nigeria. Several reasons have being adduced for this, suffice it to say however that despite years of privatisation the nation is yet to get any benefit from the various privatized enterprises in terms of productivity, employment, contribution to the GNP/GDP, less expenditure of foreign exchange and so on. Why is this the case? Some may chose to blame the so called ‘Nigerian factor’ which can be described here as failing to plan and thereby planning to fail, so that one may reap some selfish benefit from the process. 
2) Attract private investment to act as a catalyst for economic growth to close the supply and efficiency gaps in the economy. This objective while admirable would be useless if the environment for operation of a viable business organisation is absent in the country. These factors include a good and consistent policy outlook and legal framework supported by stable implementation by the relevant officers and agencies. The fact that enterprises are moved to the private sector does automatically ensure their success. It has to be exposed to competition and access to cheap input for production of goods and services.  The absence of the forgoing implies that the goods and services available to the populace from the organisation will be substandard and expensive. Care must therefore be taken that the privatized enterprises do not just move from being public failures to private inefficient monopolies.
3) To check the present absolute dependence on the treasury for funding by other wise commercially oriented parastatals  and so encourage their approach to the Nigerian capital market to meet their funding needs.  This latter objective is synonymous with another general objective of privatisation frequently stated in Nigeria as the ‘deepening’ of the Capital market.  It is also intended to encourage less dependence on government funding. With respect to the issue of independence from government funding, this object has been discussed earlier in the paper as a primary consideration for privatising/ commercialisation of SOEs.  However there is also the intention that this approach to the capital market will encourage the share culture in Nigeria in two ways; first as a venture capital source for companies and as means whereby Nigerians learn to save their monies by investing in the capital market. It is perceived that this will gradually shift the emphasis of funding requirements from the government and encourage Nigerians to perceive erstwhile SOEs as their property by virtue of the fact that they own shares in them. Perhaps this thinking that participation in the business will encourage it to succeed is what has informed the preservation of shares for the workers of the SOEs to be privatised. 
4) To create jobs, acquire new knowledge and technology and expose the nation to international competition. The chronic problem of the nation is lack of technology and jobs. The privatisation process is intended to redress these issues. The emphasis is on development of the nation. However as noted earlier in the paper it is not likely that development will come the way of the nation without consistent intervention by the government. In fact in the case of jobs, the emphasis of private enterprise is on efficient production of goods and services, it likely that the focus will be on use of machines/technology and less emphasis on jobs per se. Perhaps if the privatized enterprises concentrate on technology at least one aspect of this objective this is realizable. However it is the case that the buyers or managers of these privatized SOEs will be agents of the Multinationals and it is the case that they are not likely to transfer any technology to the country via these subsidiaries. What is most likely to happen is that only obsolete technology will be available at exorbitant prices.
The major difference however between previous privatisation exercises and the present one is the determination of the present government to divest as much as possible from the SOEs. This is in contrast to the previous efforts where the process was perceived as, selective in the sense that not all the SOEs were slated for privatisation. The exercise was in addition, based on the whims and caprices of the incumbent authority without any objectivity. In addition, the process was exclusionary in the sense that it was programmed to benefit only a few persons. It was obvious that government was patently insincere in its intention to privatise the enterprises as scheduled under the law. This conclusion could only be drawn from the fact that the government wanted to and did keep the best of the SOEs under its control and even when it sought to privatize them, still maintained substantial interest in the prestigious ones, especially the Banks. Some sections of the nation also protested their marginalisation from the process, claiming that other sections of the nation were benefiting more from the exercise due to undue intervention by the authorities.
If the objectives of privatisation in Nigeria had been achieved then there would hardly be cause for appraising the privatization process today. The truth however is that Privatisation simplicita, without a productive base will not achieve any progress or development in any nation. What will and is happening, is a change of ownership base to exploiters both local and foreign who are set to exploit the nation and its people.  For this change of ownership to be successful, it must be complemented with the appropriate infrastructural and structural support of the economy. If efficiency of the SOEs is the hallmark of privatisation, then patently this cannot be achieved in an atmosphere of poor policy choice, implementation inconsistency and poor regulation by the government.  This fact is shown by the ineffectual nature of the various laws on privatization despite constant tinkering with the legal framework of the process.
The operative efficiency of the privatised enterprises would also be enhanced by innovative technology as well as productiveness and dedication to work by the management and employees. However the process although presenting laudable objectives is likely to fall short of expectations. This is exemplified by the fact that so many laws have been directed at the process. The truth is that the legal framework is just an aspect of the process and cannot of its own guarantee the objectives sought. The tinkering with the law is therefore unnecessary and diversionary.
The issues at stake are clearly connected with the nations inability to focus on it needs and the inability of those trusted with the privatisation process to carry out their brief faithfully and diligently on behalf of the nation. In addition Nigeria is constrained as a developing low industrialised nation to seek capital and technology else where, in fact from its competitors. How can it hope to succeed in this situation? Unfortunately the solution does not lie with you or I, but with the agents of ‘progress’ who continue as they have before, to lead us towards the path of progress that has brought us to today. The only solution to a successful privatisation exercise, or indeed for anything in Nigeria to be successful, is if all aspects of the economy; including the direct operative segments, represented by the business community, together with the government, as well as the people, work together to achieve a synergy that will benefit the nations and its development.
 See p 1 of an undated pamphlet issued by the BPE, titled ‘What you should know about Privatization.’
 It seems that due to the ability of the foreign investor to import both capital and technology, there seems to be a distinct preference for them. Investment could be in the form of investment capital directly or in kind. Additionally the foreign investor could invest capital or technology in an already established enterprise in the form of a management/technology contract. This method is especially useful where the nation in question lacks both investment capital to expand and modernize the business and lacks technology of its own, which is the situation in most developed nations.
 This is almost impossible in practice.
 In an article titled ‘Liberal Democracy, Corruption and the Privatisation Process’ by Nasir Ahmad el Rufai (erstwhile head, Bureau of Public Enterprises, the Nigerian privatisation administrative body) in Special Forum, Tell Magazine, No 10 March 10, 2003, p 68-70.
 Public Enterprises. The Public Enterprises (Privatization and Commercialisation) Law defines a PE as, any corporation, board, company or parastatal established by or under any enactment in which the Government of the Federation, a Ministry or Extra-Ministerial Department, or agency has ownership, or equity interest and includes a partnership, joint venture or any other form of business arrangement or organisation.
 Developing States
 National Electric Power Authority
 Nigerian Telecommunications Limited
 Bolaji Owasanoye (ed): Privatisation of Government Owned Banks and the Issue of Ownership and Control (Legal and Economic Perspectives). Proceedings of a one-day roundtable, NIALS (1996) p 19.
 That is through the medium of the indigenisation decrees of 1972 and 1977.
 This action also damaged investor confidence in the nation. Thus the nation has had to overcome investor shyness arising from this as well as policy inconsistency and the deleterious effects of military rule.
 2nd National Development Plan of Nigeria.
 The only way privatisation can be effective is if the government, apart from creating a right business environment also ensures that it objectives for the process are implemented.
 The history of privatisation in Nigeria is closely connected to the institution of the structural adjustment programme in Nigeria in 1986 under military President Ibrahim Babangida
 This is not to say that the present process is totally transparent. Only that relatively if compared with the previous ones can it be said to have some merit.
 Due to the fact that the State is involved all categories of business in Nigeria, SOE seems more appropriate to describe these enterprises than just public enterprises (PE), which implies public utility.
 Immediately after the nations civil war in 1969, there had been sales of shares in selected enterprises. This was however not on the same scale as that done under the Privatisation programme of the World Bank from 1986.
 The erstwhile Federal House of Assembly had indicated the desire to overhaul the law. However this new legislation is not available at present, hence the focus on the 1999 version in this paper.
 Since the original law was passed under military administration, the provision in section 9(1) was for the Chief of Staff, a military position to be the chairman of the council.
 This may seem to indicate a lack of confidence in the ability of the NCP previously under the office of the Vice President, to effectively handle the privatization process.
 The law invested the operators of the process with wide-ranging powers, which have been frowned at by the nations legislative body. Areas of conflict have included the privatisation of Nigeria Airways, Nitel and the National Insurance Corporation of Nigeria (Nicon) among others.
 The PEs were a veritable drainpipe of the nations financial resources as they were many, and had allocated to them a large share of the nations revenue for their operations. In addition, they were inefficient and corrupt, serving as a conduit to siphon finances away from development of infrastructure.
 It is sometimes quoted as 1999.
 The previous attempts at privatisation essentially benefited only a few persons. A situation was created in which some parts of the nation felt marginalized from sharing from the collective patrimony, as the government’s divestment was perceived.
 The last head of the National Council on Privatization, in his testimony to the nations Senate on his claim that he was approached to give gratification to some members of Senate to expedite his present appointment as Minister for the Federal Capital Territory, claimed that the parties involved based their request on the conviction that his position as head of BPE, had enabled him to corruptly enrich himself.
 The extant privatisation law contains three schedules, with the first two dedicated to setting out the schedule of enterprises for privatization and commercialization. The first schedule, which is in two parts, contains in part one of the first schedule, enterprises for partial privatisation, in which the government is to have 40 percent, a strategic investor 40 percent and the Nigerian public 20 percent. In part two of the first schedule are the enterprises for full privatisation. In the second schedule also in two parts, the first contains enterprises for partial commercialisation, and in part two those for full commercialisation.
 It should be noted however, that the extant law in section 1(3), amend, alter, delete, add to the provisions of the first schedule.
 This is defined as a reputable core investor or group of investors with the technical expertise managerial experience and financial capacity for effective management of the privatised enterprise. At a recent wok shop on the privatisation process, which was organised by an NGO, Nigerians were urged to refer the privatisation process to court as government was selling off their collective resource to foreigners thereby ignoring Nigerians collective right to ownership of these privatised PEs.
 The extant law was made under the military, and the policy outlook then was ‘guided deregulation.’ This meant that the government was desirous of maintaining control over the economy. The present government however, is intent on full deregulation/liberalisation of the economy. The discrepancies in the law and the implementation of the process have led to attempts to amend the law by the legislators at the federal level. This is especially due to the reluctance of the legislators to see full scale privatisation as the panacea to the nations economic problems.
 The IFIs provide technical support to the government on the privatisation process. Any consultants appointed by the NCP or BPE are required to meet world-class standards even if they are Nigerians, to this end there are a set of standards that must be adhered to. However, both indigenous and non-indigenous experts are qualified to make bids for the positions of experts and advisers.
 That is investors with sufficient capital and technology, to provide the much-needed boost to the local economy.
 At the initial attempt to sell Nitel, it was discovered at an advanced stage that the strategic or core investor did not likely have the expertise to manage the investment to the satisfaction of the government. The sale did not go on.
 The sale of these SOEs is at a big loss to the government. This has engendered sentiments from some Nigerians who are questioning the rationale for selling them off at a big loss.
 The fund is an attempt by government to balance the various interests of sectors of the Nigerian populace.
 Section 23 of the law, in subsection one imports the Public Officers Protection Act applies to suits brought against members of the Bureau. Sub-section 2, in addition, ousts the courts jurisdiction by excluding court action for actions taken in the course of his duties, except if such a suit is brought within three months of the act complained of, in the case of acts of neglect or default, or in the case of damage, within six months of such an act. One month’s notice of such intention to sue must also be given. In addition, any member of Council or employee of the BPE so sued shall have the judgment paid out of the general reserve fund of the Bureau and be indemnified out of the assets of the Bureau for costs incurred if judgment is in his favour.
 The Bureau also operates its own fund, into which is paid its entitlements and other financial receipts, different from the above fund. See also section 22 which requires that the BPE keep an account of all its financial dealings to present to the NCP.
 An interesting consequence of the privatisation process is the fact that it will amount to nationalisation of some joint venture enterprises where the government has shares in association with foreigners. If the government is to sell its own shares within the framework of the law, how does it ensure that the shares of the foreign partner are not devalued in the valuation process. In any case, it was not the intention of the foreign partner to be in association with any party other than government, probably for a strategic objective. This objective becomes redundant with the exit of the government from the partnership. What kind of compensation is payable for this loss?
 The developing States as a result of the structure of unequal world economics, continue to trail behind the developed industrialised nations.
 It probably due to the need to adjust the objectives from time to time that the NCP was conferred with the duty to under Section 11 (a) ‘determine the political, economic and social objectives of privatization and commercialisation of public enterprises.’ See also Section 11(i) on review of the process from time to time.
 This is phased in colloquial English as ‘there is no free lunch’.
 A pamphlet titled ‘Guidelines on Privatisation’ issued by the BPE states about four objectives of the privatisation programme. They will be discussed along with the other ascertained objectives.
 Although politically Nigeria is organised as into a 36 state structure, it still has ethnic segmentation, which reflects in all aspects of the nations political, economic and social life.
 Section 9(1)b of the‘Guidelines’ states that the minimum application is just 100 shares of 50 kobo.
 Section12(1) of the ‘Guidelines’.
 See Section 9(4) Of the ‘Guidelines’.
 This is supposed to limit the holding of any one individual or applicant.
 See section 19 of the law on the establishment of the Privatisation Proceeds Account.
 Unfortunately, the nation had already built its major infrastructural installations before taking this useful decision. In addition many more have since been built after the decision was taken. In any case, the nation has after all this years remained unable to either build or maintain any sophisticated installation on its own.  In fact the nation does not produce even secondary technical materials such as finely blown glass, extended copper wire, refined iron, industrial plastics and so on which are utilised in the production of goods. These secondary goods the know-how for utilisation and the manpower to produce goods and infrastructure continue to be imported at great cost to the nations balance of payment.
 Perhaps this is better illustrated by the situation evident in the petroleum products sector and the large ‘windfall’ going into private pockets from the combination of gross inefficiency, greed and subversion operating in the sector. The situation can only worsen when the refineries are privatised, if it continues to be more lucrative to import fuel for sale in the country. Policies that make subsidized importation possible but retard domestic production unknowingly can only lead to closed enterprises loss of jobs and reversal of government motive for privatisation.
 In this wise, the recent government ban on the importation of various items in the country does not augur well for the nation.
 These are extra-ministerial government funded bodies, set up for some specific objective.
 See section 2(2), of the Public Enterprises Act, which says that an offer for public placement of shares may be made at the Capital market.
 Section 8(c) of the Act declares that ‘Public offer of shares will be the dominant method of privatization to be used in the sale of the 20 percent equity reserved for Nigerian investors in the programme.’
 See p 6 infra.
 By section 12(2) of the extant Act, one percent of the shares of the SOE being privatised is to be reserved for its workers.
 The recent deportation of some Indian born businessmen for perpetuation of sharp practices in their business operations illustrates this point aptly.
 The government handling of the communications sector privatisation/liberalisation and the introduction of the Global Satellite Mobile Systems of Communications (GSM) is a case in point. The high cost of the license has led the operators seeking to recoup their investment in a short time; the outcome of this is high tariffs for the users, to which the regulators have no answers. This is worsened by the fact that the liberalisation of the sector has created a monopoly for GSM operators. In addition, the bundle sale of Nitel is set to create a private behemoth thus setting the stage for power tussles in the sector in future.