Nigerians are alarmed that majority of the government-owned companies that were privatised have not been functioning well. Many of them have ceased to exist while many are tottering, trying to stay alive. How did the privatised companies suddenly become white elephant enterprises that could not be operated or made to work? Why could the companies not function in spite of claims by the buyers that they had the funds, ability and the expertise to make them function and prosper?
Majority of the selected core investors who bought the government companies were incapable of paying for the firms after being certified as technically and financially sound. In other words, they did not have the money required to turn around the companies they bought. In some cases, companies with small asset turnover were ultimately licensed to handle larger public agencies, bigger than their capacities. It is like the case of a tot asked to carry a bag of cement.
Also, it was discovered in many cases that the financial records of the privatised firms were often not audited or at best incoherent. ‘Due diligence’ was conducted at the data room of the Bureau of Public Enterprises instead of a full, physical and financial audit of the government-owned firm being privatised, thus creating room for manipulations and distortions. In some cases, the landed assets of substantive or principal government corporations were manipulated and converted as those of subsidiaries being privatised.
The Osogbo, Jos and Katsina steel rolling mills are not functional today after they had been sold at scrap prices to some private firms that had money but lacked technical expertise and the capacity to manage and turn them around Consequently, there was massive asset stripping in these steel rolling mills reportedly by the expatriate owners
Take the case of the Ajaokuta Steel Rolling Mill as an example. Newspaper reports said the complex was built by the Federal Government for over $1.5 billion. But it was sold to an Indian company for $30 million. Delta Steel Company, Aladja, was also sold for less than 20 per cent of its actual market value. The Osogbo, Jos and Katsina steel rolling mills are not functional today after they had been sold at scrap prices to some private firms that had money but lacked technical expertise and the capacity to manage and turn them around.
Consequently, there was massive asset stripping in these steel rolling mills reportedly by the expatriate owners. After the disposal of the stripped assets, these companies repatriated their “profits” back to, say, India and the concerned companies became not more than empty shells.
The classic case of Daily Times of Nigeria is very pathetic and terrible. Those with good sense of history would remember that Daily Times was the largest newspaper group in Nigeria in the 1970s and the early 1980s. The newspaper group was forcibly taken over by the Federal Government in 1976 from its private owners without any compensation to the owners. As at the time it was forcibly acquired, the Daily Times group had landed properties worth many billions of naira all over Nigeria and in the choicest areas of Lagos. So also were the New Nigerian newspapers group taken over from the Northern states’ governments without compensation to the owners. Also, Western Nigeria Broadcasting Service and Western Nigeria Television were forcibly taken over without any compensation to the owners.
One fallout of the sale of the government-owned companies to the private sector companies is the pain inflicted on the economy by the frequent industrial squabbles in some of the privatised public enterprises. The crux of retrenchment of employees of public firms undermines decades of manpower experience and amounts to a waste of funds used to train the staff of the privatised firms. The result is the saturation of the employment market and wanton waste of valuable experience and technical knowhow.
For the retrenched staff, both the non-payment and late payment of retrenchment benefits have continued to generate frequent industrial squabbles as seen in the cases of Daily Times, NAFCON, NITEL and Nigerian Airways, among others.
When a government-owned company is to be sold, collective bargaining is the proper labour policy required, to resolve dispute over terminal benefits due to workers to be retrenched. The collective bargaining should involve the BPE, the management of the government owned-enterprise, the management of the private firm, the employees’ union and other professional consultants.
At this juncture too, one cannot but frown at government’s rabid quest to sell its enterprises to new private owners, especially the Chinese and Indian companies. This is coming at a time when forward-looking countries of the global community are in favour of nationalism and protectionism of national assets. For Nigeria, the situation is bizarre, to say
the least.
As things are, Nigeria needs laws that will protect national investments for security reasons. Many countries have such laws. For example, China recently passed the National Economic Security Act. The United States recently passed Foreign Investments and National Security Act. Thailand also recently passed the Foreign Business Act, restricting foreign equity to a maximum of 50 per cent. What this means is that, every country must create a balance between foreign investments and protection of local companies from unfair international control and competition. Nigeria must also play by the rules.
