BUREAU OF PUBLIC ENTERPRISES
The Bureau of Public Enterprises (BPE) is the Secretariat of the National Council
on Privatisation (NCP) and is charged with the overall responsibility of
implementing the policies and decisions of the Council. The functions of the
Bureau as provided for in the Act include:
(a) Implementing the Council’s policy on privatisation and
commercialisation;
(b) Preparing public enterprises approved by the Council for privatisation
and commercialisation;
(c) Advising Council on further public enterprises that may be privatised or
commercialised;
(d) Advising Council on capital restructuring needs of the public enterprises
to be privatised;
(e) Ensuring the update of accounts of all commercialised enterprises for
financial discipline;
(f) Making recommendations to the Council on the appointment of
Consultants, advisers, investment bankers, issuing houses stockbrokers,
solicitors, trustees, accountants and other professionals required for the
purpose of either privatisation or commercialisation;
(g) Ensuring the success of the privatisation and commercialisation exercise
through effective post transactional performance monitoring and
evaluation; and
(h) Providing secretarial support to the Council and carrying out such other
duties and responsibilities as may be assigned to it from time to time
by the Council and its committees.
The Rationale
Experience worldwide has shown that Public Enterprises have failed to live upto expectations. They tend to consume a large proportion of national resources
without discharging the responsibilities thrust upon them. More importantly,
they fail to allocate these resources efficiently. Public enterprises consume
about N200 billion of national resources annually, by way of grants, subsidies,
import duty waivers, tax exemptions, and the like.
The current move towards economic liberalisation, competition and privatisation
is partly informed by the gross failure of public enterprises to live up to
expectation. In the case of Nigeria, it is clear that Nigeria cannot afford to
spend or subsidise a few public enterprises with resources equal to more than
twice the nation’s capital expenditure budget.
Furthermore, donors and creditors expect Nigeria to direct her scarce resources
to alleviate poverty through investment in health, education and rural
development - social programmes that will benefit millions of Nigerians. There
is virtually no public enterprise in Nigeria today that functions well.
While they were created to alleviate the shortcomings of the private sector and
spearhead the development of Nigeria, many of them have stifled
entrepreneurial development and fostered economic stagnation. NITEL, NEPA
and the Nigerian National Petroleum Corporation (NNPC) are the best examples
of these. Public enterprises have served as platforms for patronage and the
promotion of political objectives, and consequently suffer from operational
interference by civil servants and political appointees.
Public Commissions and Study Groups have undertaken various studies on the
performance of public enterprises in Nigeria. Adebo (1969), Udoji (1973),
Onosode (1981) and Al-Hakim (1984) chaired these commissions.
The findings of the studies were consistent in establishing that public enterprises
were infested with problems such as:
(a) Abuse of monopoly powers;
(b) Defective capital structures resulting in heavy dependence on the
treasury for funding;
(c) Bureaucratic bottlenecks;
(d) Mismanagement;
(e) Corruption; and
(f) Nepotism.
The scope of the Privatisation Programme, which commenced in 1999, includes
the partial or total divestment of the shares owned by the Federal Government,
its parastatals and other agencies in public enterprises active or dominant in
at least thirteen key sectors. The cummulative value of investment to be
transferred from the public sector is in excess of $100 billion.
Clearly then, there is abundant evidence that public enterprises have not served
their customers, their employees, or the taxpayers well. The simple fact is that
when the government owns, nobody owns; and when nobody owns, nobody
cares. The experience in the last thirty years has been one in which the public
enterprises have:
(a) Created economic inefficiency;
(b) Incurred huge financial losses;
(c) Absorbed disproportionate share of credit especially in the form of Paris
and London club loans, as well as domestic loans and advances; and
(d) Contributed to consistent fiscal deficits.
Over time, political and personal considerations have proved to be significant
influences on numerous public enterprises policy matters (including investment,
tendering, pricing, choice of machinery, employment levels, and management
appointments). All have been unsustainable, and achieved at significant cost
to the Treasury.
The benefits of privatisation are immense, and the sooner these are realised,
the better. Privatisation, in whatever forms chosen, will:
(a) Reduce corruption;
(b) Modernise technology;
(c) Strengthen domestic capital markets;
(d) Dismantle monopolies and open markets;
(e) Promote efficiency and better management;
(f) Reduce debt burden and fiscal deficits;
(g) Resolve massive pension funding problems;
(h) Broaden base of ownership;
(i) Generate funds for the Treasury;
(j) Promote corporate governance;
(k) Attract foreign investment; and
(l) Reverse capital flight.
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