ABSTRACT
The researcher looked into the impact of privatization on Nigeria
money market with the Central Bank of Nigeria as the case study. For
the purpose of clarity, this project has been divided into five
chapters.Chapter one deals with the introductory part of the project,
statement of problems, objective of the problems of the research.Chapter
two discussed the literature review. It went into analysis of the
relevant materials, which are directly related to the project and
equally those that are not directly related to it.Chapter three went
into the research design and methodology, source of data and the
instruments in data collection.Chapter four, emphasized on the analysis
and presentation of data based on the questionnaire.Chapter five which
is the last chapter, discussed the summary of the work, finding and
recommendation on the project work.
CHAPTER ONE
1.0 INTRODUCTION:
The topic of this research paper is the impact of privatization on
Nigeria money market. We will concentrate on the effect of the
privatization on Nigeria money market. Undoubtedly, there are many
organization ranging from government to the hand of individual. In this
report, the establishment of statutory corporations and state owned
companies are tools of public intervention.
There was also consideration arising from the dangers of leaving the
care sector of the economy in the hands of government and large –
foreign business organization considering these reasons and others,
public enterprises was seen as crucial in Nigeria guest for the true
national economic independence and reliance. The economic and financial
analysis has never relented in the reminding of the worthy of the need
to operate these government enterprises with reasonable efficiency. It
was recognized as far back as 1950 which led to a situation where many
of the public enterprises operated in some form of quasi commercial
organization. Some of the reasons for this development include:
1. Government system of accounts is designed to
facilitate close-expenditure control by the legislature and necessarily
to promote operational efficiency.
2. The necessity to minimize political pressure and
partisan influence in some sensitive social institutions in order to
sustain confidence in their policies and programmes.
3. commercial undertakings lead to generate an
atmosphere of initiative and release greater energy on the part of
operational personnel.
4. It is being doubtful whether the private
enterprises will sustain the magnitude of investment need in certain
vital areas of development.
5. The normal government machines do not tend it to the speedy decisions so needed for commercial operations.
However, the situation on ground was that the real performance of the
public enterprises in Nigeria have left much to be desired, many were
not responsive to the changing requirements of a growing and dynamic
economy and they did not possess the necessary tools for translating
into reality the hope of successful commercial operations in this
difficult condition faced by the public enterprises in Nigeria. The
Central Bank of Nigeria (CBN) and the Nigeria Stock Exchange has used
privatization and commercialization policy to encourage the growth of
our economy and create an avenue for individual investor. Privatization
has gained much more prominence than commercialization in Nigeria
recent time. Proprietor of privatization in Nigeria have argued against
the continued existence of government in the public enterprises because
of the economically inefficient and wasteful of resources as well as
domestic and foreign credit.
1.1 BACKGROUND OF THE STUDY:
Privatization has contributed greatly to the growth of Nigeria
economy by regulating inefficient and unaccountability in resources
distribution and control.
Furthermore, the criticism have being made against the background
that as of today, inspite of the heavy public sector interaction and
ownership of the enterprises, the vast majority of Nigerians are still
going without access to the most basic infrastructure such as water,
electricity, telephones etc. This has helped to bring the privatization
policy as a notable option. Privatization has circulated into so many
economic streamlets different degrees in different parts of the world,
particularly in developing economics. The activities relating to the
programme have been on the increase in recent times during early 1980’s
for instance Structural Adjustment Programme (SAP) which was promoted by
major international bilateral and multilateral agencies. During the
administration of Babangida, it was heralded in the price decree of 1988
which the Abacha administration propagated and pursued and was restated
to its commitment on October 1, 1998 by General Abubakar to the
programme and government intention towards privatization on investments
in telecommunication, electricity, petroleum refineries, petro-chemical
and tourism and bitumen production. This is the first round of
privatization during the past administration.
Secondly is the legal work of privatization which was put in place
with promulgation of public enterprises (privatization and
commercialization decree No. 28 of 1999 which provided for the full
privatization of 25 or more public enterprises involved in oil, cement,
banking, agro-allied, motor vehicles, assembly and hotel activities, and
it also provide partial privatization of 37 enterprises in sectors
ranging from telecommunication to sager manufacturing under full
privatization, the government share holding would become zero, while at
the partial privatization would be maximum of 35% to 40% in any case the
core investors are expected to hold the maximum of 40% while a minimum
of 20% would go to the Nigeria public allocated through the public
offer, another good development of the offer decree, is that it provides
full commercialization of nine enterprises and partial
commercialization of 24 others, these are about commercialization and it
was not disclosed in this work because our major concentration is on
privatization.
1.2 RESEARCH QUESTIONS:
This research is set out to carry out investigation on the effects
and impact of privatization on the Nigeria money market and the Nigerian
economy as a whole and may be summarized as follows:
1. To rationalize public enterprises in order to increase efficiency.
2. To deregulate the economic system by reducing unnecessary administrative controls of government.
3. To minimize the volume of unproductive instruments in the public sector.
1.3 STATEMENT OF THE PROBLEMS:
In the money market, there has been an import and fall out on
privatization programme due to the exercise in the money market. By
this statue the privatization companies are to be quoted on the Central
Bank right from 1988 when the exercise took effect and it expected that
the money market would be appreciably developed and boosted in its
operatives, the significant impact in such market devices as market
capitalization numbers of instruments, value of operations and it has
not being properly cleared whether or not these expectation are
realized.
There are at least few studies that have empirically demonstrated
this, using Nigeria as evidence, the need therefore, arise for a study
to menacingly determine the direction and magnitude of the effect of
privatization on development of the Nigeria money market.
1.4 RESEARCH QUESTIONS:
In this study paper, we will attempt to answer questions that are incidental to this research topic, they are as follows:
1. What are the major problems confronting the
privatization programme in its contribution to the Nigeria money market?
2. To what extent has privatization exercise which
the Nigeria government has been carrying out over the years affected the
money market?
3. In what ways has privatization significantly and
specifically affected the market indicators at the market capitalization
stock index, and volumes and value of transaction?
1.5 RESEARCH HYPOTHESIS:
The hypothesis follows guard the analysis of this study and is
directly related to the objective and problems of this research paper.
They have been selected to make findings and concentrate statements on
the effects of the on-going privatization progamme in the money market.
These hypothesis are stated in the null as follows:
Ho There is no significant difference in the stock.
Ho There is no significant difference in the market between the period prior to the privatization and period after.
Ho There is no significant difference in the value of
transaction in the Central Bank between the period before and after
privatization.
1.6 SIGNIFICANCE OF STUDY:
This research is significant in number of ways. This study would
serve to provide a spring board towards amendments where it is
necessary. Its finding and recommendation would be useful to a wide
range of persons or groups who are interested in the operations of the
money market among them are policy markets, money market operators,
practitioners, investors and other authorities.
Researcher and students would find the information contained therein
very valuable in providing a good foundation for further research and
relevant works.
1.7 SCOPE OF STUDY:
This researcher would have been involved in a more elaborate study of
all the department in the organizations, but the researchers in this
study are intended to study the impact of privatization on Nigeria money
market.
This research work examined the necessary market indices over a
period covering ten years after privatization had been introduced which
is
1.8 ORGANISATION OF STUDY:
This research report is classified into five chapters. The first
chapter is the introduction to the study and it contains the overview
and statement of the research problems, objectives and statement of the
research problems, objectives and hypothesis. The research questions
and the significance to the study are also part of this section, it is
oriented up terms.
The chapter two is about the literature and their review and
theoretical framework and issues to the topic. The third chapter covers
the research methodology of the works which contains the research
designs, sampling procedure, research questionnaire and data collection
and data analysis techniques.
The fourth chapter is the presentation and analysis of data collected
in the facts finding activity. The chapter five is the summary of the
major findings, recommendation and conclusion are being carried out in
this chapter.
1.9 DEFINITION OF TERMS:
The terms listed below are used in this and shall be defined below:
(a) PRIVATIZATION: This is a programme of divesting
government interest, ownership and control of certain public enterprise
and transferring same into the hands of private sector economic units
which can be done in full or in part.
(b) FULL PRIVATIZATION: This means divestment by the federal
government of all its ordinary shareholding in designated enterprise.
Particularly affected are enterprises which produce goods that are not
essential in nature.
(c) PARTIAL PRIVATIZATION: This means divestment by the
federal government of part of its ordinary shareholding in designated
enterprises.
(d) MONEY MARKET: This refer to an arrangement whereby short
term borrowers (deficit economic unit) short-term lenders (surplus
economic unit) are brought into contractual.
(e) COMMERCIALIZATION: This means the reorganization of
enterprises wholly partly owned by the federal government in which the
commercialization enterprise shall operate as profit making commercial
ventures and without subvention from the governments.
(f) AUTOMATIC TELLER MACHINE (ATM): They are electronic
devices employed to withdraw funds automatically without the need to
complete withdrawal documents.
ATM works through electronic systems share an account
holder is assigned that ensures access to the account for withdrawal by
the account holder. One of its advantage is that it can be installed at
any safety location outside the bank office ensuring withdrawal of
funds at any time for immediate use without recourse to the bank that
hold the account, it is not common in Nigeria banking system
relationship.
(g) SECURITIES: These are financial documents evidencing
claims which some economic units are obligated to perform according to
the state terms of the document and they are certificates of IOU which
an economic units issues to another. They are called financial assets
or instruments.
SUMMARY:
In this chapter, the research attempts to lay down the necessary
foundation and direction for the study, it is clear from the chapters
that the privatization policy was designed to promote major
international bilateral and multilateral agencies in Nigeria as an
integral part of the nations economic adjustment programme. The policy
of privatization was introduced in order to discontinue with public
enterprise as they were economically inefficient and wasteful of
resources on our economy.
Privatization polices are currently being pursed in different degrees
and in different parts of the world particularly in developing
countries like Nigeria.
The research in furtherance of the study have an overview of general
background for the study, the problem and purpose of the study, the
research question and hypothesis were also stated. The chapter is
comprised of the significant of the study and definition of terms.
REFERENCES
FGN (1988) Privatization and Commercialization Decree No. 25 Lagos
Government Press.
Financial Management Vol. II by Dr. John Orji.
FGN (1998) Privatization and Commercialization Decree 1988 FRN official
Gazette No. 42 Vol. 75 FG Press Lagos.
Ajakaiye, D. O. (1984) “Impact of Public Enterprise performance in Nigeria,
Nigeria Journal of Economic and Social Studies, Vol. 26 No. 3.