This study sets out to appraise the financial and operating performance of some privatized enterprises in Nigeria.The matched pair results though mixed, do provide empirical support that privatization is associated with improved financial and operating performance of firms. It thus validates the theoretical preposition that privatization might improve efficiency, as is suggested both by the property rights and public choice literature. The results show significant improvement in profitability after divestiture in some of the selected firms.For instance, the mean return on sales goes from 3.50 percent before privatization to 9.80 percent at Afribank. The same significant improvement was recorded in Ashaka cement, Allco insurance, Benue cement, Flour mills and Okomu palm in the agro-allied sub sector.On operating efficiency, all the sampled firms witnessed an increase at 5 percent level except for Flour Mills and Allied Bank plc.The results from the analysis for other performance indicators were also mixed
Nigeria's political economy has straddled the ideological divide between socialism and capitalism. The country produces oil, and at some point in its existence, it embarked on robust state involvement in the economy. This was marked by the acquisition, or establishment, of numerous state enterprises. Over the years, the performance of these enterprises was found to be dismal, and as part of the overall reform of the economy, Nigeria has joined the global trend toward reduction in direct state ownership of enterprises. Indeed, it has embarked on massive divestment of state interests in once publicly owned firms. Besides the universal rationale of efficiency, one of the objectives of the privatization exercise in Nigeria is the attraction and retention of foreign investments. This work examines the direct and indirect linkage between the government's divestiture of its interests in firms, on the one hand, and foreign investments in the country, on the other hand. The book is divided into seven chapters. Chapter 1 reviews the political and economic history of Nigeria, to set the background and context that necessitated the introduction of the reform package of which privatization is just an aspect. Chapter 2 is a discussion of various natures of state involvement in an economy. This ranges from mere regulation to active participation. The chapter discusses the competing conceptual and ideological theories and tries to situate the Nigerian experience within the broader conceptual dichotomies of capitalism, socialism and the via media of mixed economy. Chapter 3 is an examination of the meaning and rationales for privatization of state owned enterprises generally and the Nigerian attempts in particular. Nigeria's privatization program is an ongoing exercise. Yet two distinct attempts are identifiable: one which started in 1988 and the reinvigoration of the exercise, albeit with new constitutive frameworks, in 1999. Thus, Chapters 4 and 5 review the legal and institutional frameworks for these two exercises. Chapter 6 deals with foreign investments in Nigeria. The discussion encapsulates the pros and cons of foreign investments, especially in Nigeria. Chapter 7 explores the direct and indirect linkages between the privatization program in Nigeria and foreign investments in the country. This is particularly apposite because one of the touted objectives of the privatization exercise is the attraction of foreign investments. A conclusion follows. The work finds that although foreign investments appear to have been indirectly boosted by the privatization exercise, foreign investors initially did not show interest in direct acquisition of the shares and other interests being relinquished by the government, but that that attitude has been changing gradually.
This study examines the performance of privatized firms in Nigeria, with the insurance sector as the case study. We computed pre- and post-privatization means for, profitability, growth, employment, dividend, leverage, and operating efficiency, for a period of 10 years and use the Wilcoxon signed-rank test to check for significant changes in each of the variables. We then draw conclusions based on the standardized test statistic Z. In addition to the Wilcoxon test, the kruscal-Wallis test was used to trace the differences in performance changes for the various groups of the sub sample. The results from test of predictions for the full sample of the privatized insurance companies lend support to the proposition that privatization improves the operating efficiency/performance of the privatized insurance companies. Except for changes in employment, which shows a negative results, we document significant increase in profitability, efficiency, dividend payments and capitalization for all the privatized insurance companies. The kruskal-wallis test shows that, return on assets increases significantly better for insurance companies that had less than 50 percent change in their board of directors. Return on assets, return on turnover and debt equity ratio increases significantly better for those insurance companies that had no change in their chief executives. While other variables, return on net worth, return on investment, capital employed, and dividend payout, increases significantly better for those insurance companies that had change in their chief executives. Our results also indicate significant differences in employment for the insurance companies that restructure versus insurance companies that did not restructure. Insurance companies that restructure maintain significantly higher levels of employment following privatization. Generally, the results from other variables imply that although restructuring generally leads to greater post-privatization performance improvement, the Nigerian privatized insurance companies experienced a negative performance improvement. Finally, the results from the regression analysis shows that except for the restructuring that has lower correlation with the variables used for measuring the performance, all other factors such as changes in the composition of board of directors, chief executive and the nature of business carried out by the insurer shows higher correlation with the performance variables.
Master's Thesis from the year 2015 in the subject Economics - Case Scenarios, grade: 65, Aston University, language: English, abstract: The slow and deteriorating performance of the electricity power sector over the last few decades triggered the Federal Government of Nigeria to embark on a power sector reform program. This study examines the impact of the power sector reform (restructuring and privatization) on the performance of the electricity sector in Nigeria over the past twenty-five (25) years. Relevant electricity indicators are used to access the performance changes in three significant period; pure state-ownership, transition (restructuring and unbundling) and full privatization of the sector. The study also assesses how the effect of the economic environment, regulatory governance and political climate/effectiveness within the period contributes to the improvements in the electricity sector. The results shows that privatization is associated with improvement in the technical efficiency, access to electricity, electricity consumption per capita and an increase in electricity tariff in the sector. Furthermore, the results highlight the significant relationship between regulatory governance and a robust economy on the performance changes observed in the power industry.
The authors assess the effect of privatization on performance in a panel of Nigerian banks for the period 1990-2001. They find evidence of performance improvement in nine banks that were privatized, which is remarkable given the inhospitable environment for true financial intermediation. Their results also suggest negative effects of the continuing minority government ownership on the performance of many Nigerian banks. The authors' results complement aggregate indications of decreasing financial intermediation over the 1990s. Banks that focused on investment in government bonds and non-lending activities enjoyed a relatively higher performance.
Privatization and After discusses the need to monitor privatization. The authors argue that monitoring will show whether or not the process is fulfilling its objectives and contributing to improved economic performance. The book also assesses the need for, and techniques of, regulating privatized enterprises in situations of continuing monopoly or significant market control. This is supported by an in-depth analysis of regulation in the UK and its implications for developing countries. Further illustrative material is drawn from a range of developed, developing and former socialist countries.
