Adagboyi Damian: Privatization Or Cronyism? The Case Of Benue State

The relevance of public infrastructure has been a debatable issue in Nigeria since independence, owing to the growing demand on governments to provide rapid social development and economic growth. As a result, both past and present governments have expended huge financial resources on these infrastructures through annual subventions to the public enterprise sector. Nevertheless, a worrisome trend has drawn more concern; they continue to witness huge losses due to presence of gross inefficiency, massive looting and unprofitability. All these have made most of the infrastructures a revolving-debt-asset.

Orokpo, & Ejeh (2014), noted that while the boom in the world market for oil and petroleum products lasted, no one complained about the wastes and inefficiencies of the public enterprise sector in Nigeria.

This same boom era recorded the highest number of public enterprises establishment in the country even when their commercial financial viability was questionable. However, the fall in the world market for oil, the early 1980s economic recessions and the quest for most developing countries to align themselves with the global trend has exposed the ailing condition of public enterprises in Nigeria.

It is against this backdrop that most economists argued that one prominent rationale for privatising public infrastructure is to make money available to governments. In order words, cash trapped in such infrastructure can be used to fix ailing infrastructure and perhaps build the much needed new infrastructure by creating an enabling environment, therefore shifting future financial risk from the public to a private sector.

A visit to Makurdi, the Benue State Capital of Nigeria would reveal how well the state has fared since it was created on 3rd February 1976. The Capital does not stand out among its equals in terms of infrastructural development. It prides itself as the food basket of the nation. Yet you will agree that a good deposit of resources must allow participation from the community through employment and thereby improving the economy of that community. This is what is assumed as development and growth.

The good deposit of resources in the state prompted the establishment of infrastructures like Taraku Mills, Otukpo Burnt Bricks, Benue Breweries, Kastina Ala Fruit Juice Company, Makurdi Sheraton Hotel, and the “privatised” Benue Cement Company (Now Dangote Cement Company) among other establishments.

Most of these establishments in the State were affected in the second round of privatization scheduled to commerce in 1999. Some of the establishments that were privatised are today, in various stages of liquidation, abandoned or shut down since they have failed to meet their economic and social objectives. As a result, the people are yet to feel the impact despite their eventual privatization. And cash recovered has not been used to build new infrastructures.

However, various excuses have been given for these shortcomings. First, the age of the plant and equipment, perhaps that was not properly assessed to enable preparation for turnaround maintenance. Second, harsh macro-economic environment and rough economic terrain characterized by erratic electricity power supply. Third, there exist an intermittent or acute shortage and high price of petroleum products. Fourth, there is also a low purchasing power due to infrequent payment of salaries, and by extension very weak economic activity.

However, as outlined by Orokpo & Ejeh (2014), most core investors declared as winners of the bids generated sporadic response by the people of Benue State accusing investors’ company of lack of managerial skills and technical capacity to handle the company. Legal proceedings were even instituted against the National Council on Privatization seeking to restrain it from selling the shares to most companies. Moreover, there were complaints of lack of transparency in the entire transactions which were shrouded in secrecy and that the majority of the investing public were ignorant of the sale of the shares.

Therefore, one can conclude that although privatisation is good having acknowledged that government business is not business. However, the process of privatisation must be properly followed in order to curb the perceived culture of cronyism that exists in the process.

Orokpo F.E & Ejeh A. W. (2014), An Assessment of the Privatization of Benue Cement Company Plc, Gboko, Benue State Nigeria: 1986- 2011 International Journal of Public Administration and Management Research (IJPAMR) 2(2):88-97