THE ROLE OF CAPITAL MARKET ON PRIVATIZATION PROCESS IN NIGERIA
The study examines the roles
of capital market in Privatization process on Nigeria. The research
instrument used included questionnaire, participant observation and
interview. In view of this, some research hypothesis were postulated for
the collation of the data obtained. The study centers on the role of
privatization process using the Nigeria experience. The study concludes
with some basic recommendation to enhance the capital market and basic
concepts were given to effect the human capital development.
TABLE OF CONTENT
1.1 Background of the Study
1.2 Statement of the problem
1.3 Objective of the study
1.5 Scope of the study
1.6 Definition of terms.
THEORETICAL FRAME WORK LITERATURE REVIEW
2.2 The Nigerian Capital Market
2.3 Privatization and Capital market
2.4 The Nigerian stock exchange and privatization process
2.5 The role of the exchange in the current privatization
2.6 A critical evaluation of the role of capital market in the privatization process in Nigeria.
3.1 The Research design
3.2 Types and sources of data
3.3 Analysis of questionnaire
3.4 Actual Fields work
3.5 Method of data analysis
Data Presentation and analysis
4.1 Presentation of Data
SUMMARY, CONCLUSION, RECOMMENDATIONS
1.1 BACKGROUND OF THE BODY
Privatization Appeared on standard
dictionaries only in the early 1980s [it appeared in Webster new
collegiate Dictionary is one of the radical methods through for thinning
the government owned enterprises [which failed to maximize greater
goods, he did so at high cost and ran government into severe fiscal
problems in the 1980s making loans difficult to raise both home and
Around the other method was to strengthen the methods by which government controlled their enterprises.
To achieve these goals, a viable capital market must be put in place.
In Nigeria context, the
privatization process has been greatly criticized by the media and even
by the civil society, it is the focus of this paper to enlighten the
masses on how the current privatization process will help to
redistribute income, create more employment for the people, channel
funds from the surplus to the deposit group and increase the revenue of
the government in the country.
The privatization process is
one of the recommendation of the structural adjustment [SAP] for many
years up to 1980, the Nigerian government made fairly extensive use of
the public enterprise [PES] for resource mobilization and allocation,
particularly within the social service and utilities sector with the
windfall from the crude oil sales during the boom of the 1970s, the
economic activities of PES in Nigeria expended significantly beyond the
authoday domain of social services and utilities into agriculture,
banking and finance, manufacturing, mining, commerce etc.
With this expansion by the
1980s, and increasingly dominant PES sector, accounting for about 50% of
the Gross Domestic Product [GDP] and 60% of the modern sector
employment had emerged in Nigeria [FRN 1986] by this time also, the
number of PES at the federal level alone had reached about 600
enterprises and some 900 smaller one at the state and local government
level, [Technical committee of privatization and commercialization
Also by the 1985 estimate,
total investment in these PES at the federal level is about N36,756.00
billion which TCPC now Bureau for public enterprises [BPE] revaluated
using the 1993 estimates being about N5000.00 billion of the investment
estimates public utilities [PUS] public enterprises producing hard core
infrastructure such as electricity, water telecommunications and
transport, accounted for about 37.4% [TCPC, 1993] for the maintenance
and sustenance of the economic activities sof this PES, the Nigeria
government had usually expanded about 40& and 30% of its forced
capital and recurrent expenditures respectively on them annually at the
pre-structural adjustment programme [SAP] period [FRN 1986] from the
foregoing, it has been ascertained that the oil boom of the 1970s made
it possible for the government to dabble into starting from the doctrine
that government should control the commanding height of the economy,
the public sector went ahead to set up many manufacturing trading
activities in direct competition with well established private
enterprises. They also required majority shares in the oil companies.
Commercial bank, insurance
companies and newspaper, some state government even went to the extent
of investing in laundry and dry cleaning services yet, it must be
stressed that even the most of the industries that have deliberately
been chosen to reserve for government in Nigeria re either wholly or
partly run by the private sector elsewhere e.g power generation and
distribution [USA and UK] to mention but a few. These sectors have been
found out to be performing in Nigeria.
This is why privatization is
indispensable of the moment of the ailing nations economy. The achieve
greater efficiency, the capital market has to be fully alive, one of the
objectives of the privatization process is to ensure a more viable
capital market within an economy and also the privatization process
cannot be carried out successfully without the capital market.
The capital market, through
the Nigerian stock exchange is saddled with the responsibility of
ensuring a successful privatization.
STATEMENT OF PROBLEM
All over the
world the public services as a matter of experience has not been meant
in their capacity to create wealth consequently public enterprises have
usually been perceived as drain pipes for government budget this
creating budgeting strains and avoidable burden on the economy it become
imperative therefore to disengage the public sectors from those areas
where the private sectors has the comparative advantages to perform
while letting the state concern itself with the provision of
infrastructure security and enabling environment for business to thrive
through enhanced wealth creation this led the researcher to carry out
this research on the role of capital market in the privatization process
the Nigerian experience.
OBJECTIVE OF STUDY
The objective of this research
is to harmonize the different beliefs by people of the privatization
process evaluate the social and economic benefits of privatization and
the evaluation of the role played by the Nigerian stock exchange [NSE]
towards the development of the nation especially the privatization
programme the success or failure of the first phase of the privatization
process will be critically examined to be able to connect the mistakes
made in the past if the programme is proved successful then the paper
will be aimed at gearing people up in active participation in the
current privatization process which is the second phase of privatization
of the Nigerian government.
It is also the objective of
this paper to suggest techniques to government on how best to supplement
her privatization policy. This paper will also focus on ways of further
developing the capital market through the privatization process.
Furthermore, how income will be redistributed, cost, minimized and
efficiency in production will be substantiated with more facts.
hypothesis shall direct the thrust of this study by looking at the NUI
and alternative hypothesis HD, the capital market has not played any
role in the privatization HI – the capital marked has played a role on
SIGNIFICANCE OF STUDY
The study is
important because it will help correct erroneous belief by some people
that the privatization process will make life extremely difficult for
Nigerians. Though privatization is not the almighty solver of all
economic problems but if it is well implemented not in writing above but
in policies. The advantages will be seen in the nations economy, it
will inform and educate the readers on investment decisions give a man
fish and he will live forever. If the investment decisions are
cautiously taken many Nigerians will see themselves living forever,
furthermore the paper will correct the belief that the sales of these
enterprises shares is for a particular set of people and encourage all
to invest in the sector.
SCOPE OF THE STUDY
This study will be mainly
concerned with various factors that affect privatization especially the
capital market and Nigeria stock exchange [NSE] this study will focus on
privatization and the role of the capital market in actualizing the
privatization process by using the Nigeria situation.
This study will also focus on the function of the capital market as it affects the privatization process in Nigeria.