CHAPTER ONE
1.0 INTRODUCTION
The idea of
privatization dates back to the position articulated by the classical economic
who assumed that, here exists an unerring pendulum that always tends towards
equilibrium, as the interaction of the market forces; demand and supply are
believed to be capable of regulating the economy.
The more towards economic development
has been the key aim of the
government since independent. However, the methodology of attaining this rapid
structural growth and development has been a problem. To this extent, since
independence has been adopting different tactics towards development but, the
implementation has been a problem. Besides, the use of state power, authority
and resorts as to promote the economic well being of individuals and groups in
society was introduced by the government.
All over the world, the public services
as a matter of fact has not been know for the capacity to create wealth.
Meanwhile public enterprises have usually been perceived as drain pipes for
government budgets, this creating budgeting constraints and avoidable burden on
the economy.
Attention which has been focus on the
poor service delivery and inefficiency,
financial waste and poor management and other sundry problems have cause
irreparable damage to workes and organizational goal of efficiency and
effectiveness. It become a national policy sector from the areas where the
private sector has the comparable advantage to perform, while letting the date
concern itself with the provision of infrastructure, security and the ending
environment for business to thrive through enhanced wealth creation.
In the case of ,
the issue of mismanagement and under utilization which led to huge wastage of
resources and manpower potentials pave the government of the day no other
option but, to pursue quickly the privatization programme. Privatization is an
economic policy, which entails the transfer of ownership or control of public
enterprises into private hand via government divestment and sales of shares.
However, this involves the private
participation in the , management and operation of public enterprises.
Privatization is the vehicle for
restructuring public enterprises, deregulation and major economic reforms. It
attracts foreign capital through core foreign investors, foreign equity
participation and injection of new technology.
Privitization aims to achieved
efficiently, increase productivity and economic growth, which will enhance for
capital income and standard of living. The private sector in has
developed sufficient known;
–
How to be able to take
care of investment. Financial and capital market are also sufficiently
developed to be able to play the role of expected of them.
The predominant argument about privatization is on
efficiency and that, government should concentrate on doing things which
private operators should concentrate on doing things which and monetary
policies. Another side of the argument is the need to inject additional funds
into the economy from non government source. There is need for government to
face the problem of dwindling foreing exchange reserves and heavy external
debt. The fea should be erased from their mind because, pribatization has the
effect ochanging the mix of employment opportunities and also can bridge the
gaps between the rich and poor. One of the public enterprises with government
100% equity holding stated fro full privatization is the
telecommunication limited (Nitel).
1.1
BACKGROUND
OF THE STUDY
Nigeria
telecommunications sector has gone through metamorphosis since the colonial
era. Telecommunication facilities in were first established in
1880 by the colonial administration and these were geared towards discharging
their administration function rather than provision of socio-economic
development of the country.
As at
independent in 1920, the total number of telephone line was only 18,724. for a
population estimated at about 40 million people.
This
translated to a teledensity of about 0.5 telephone lines per 100 people. The
telephone network consisted of 121 exchanges of which 116 were of the manual
(magneto) type and only 5were automated between 1960 and 1985. the
telecommunication section consisted of the department of posts and
telecommunications (P&T), where as, P&T provided internal network
services, the National External Telecommunication (NET) provided the external
services. The installed switching capacity at the end of 1985 was about 260,000
lives as against the planned target of about 460,000 lines, and all the
exchanges were analogue.
Telephone
penetration remained poor at one telephone line to 440 inhabitant against the
target of 1 to 100 inhabitants recommended by the internal and telephone Union
(ITU), for developing countries, congested and customer unfriendly, as a result
of these, in January 1985, the east while P&T and Net were merged to form
Nigeria telecommunications limited (NITEL), wile a postal division was carried
out and reconstituted into the Nigeria Postal services (NIPOST). There has been
a modest development in the telecommunication industry since the inception of
NITEL in 1985 with a public network of about 800,000 lines capacity as at date.
In 1992, the telecommunications industry was deregulated, thereby breaking the
monopoly in NITEL. This scenario created new entrants into the market as
private telecommunication operators (PTO), there companies such as Multi-Links,
inter cellular celtel e.t.c began to provide service within interconnectivity
agreement with NITEL. A new down has just set in with licensing of MTN, ECONET,
GLOBACOM and NITEL as providers of Global system of mobile (GSM) communications
in January 2001. MTN and ECONET launched their services in August 2001, while
the GLOBACOM launched their own service in April 2003.
With the
deregulation of telecommunications sector in , the country has therefore
with nassed increased activity in the sector. The sector has proven to be a
catalyst for the growth and development of other sector of the economy.
However, the deregulation is only a prelude eventual privatization of the state
owned NITEL.
1.2 STATEMENT OF PROBLEM
This
research findings is aimed at diagnosing the probleminhered in the public
enterprises. Which precipitated privatization. There is also the need to evaluate
the current privatization exercise of telecommunication limited
(NITEL) as a result of the ineffectiveness of the sector to provide a better
and satisfactory services for the subscribers. This will be done with the view
of determine how effective the exercise is in the telecoomunictions industry in
terms of being the catalyst of industrial and economic development of any
nation.
1.3
Objectives
OF STUDY
The main objectives of study includes the following:
i.
To strategically
examine the effectiveness and efficiency of the telecommunications limited
(NITEL) in the face of privatization exercise in
ii.
To see how policies put
in place by the government would enhance effectiveness of the privatization
exercise
iii.
To examine how
efficient and effective the telecommunication industry (NITEL) is after the
privatization exercise.
1.4
SIGNIFICANCE
OF STUDY
Privatization has assumed a global trandard it is
necessary to be abreast with the current economic development across the world
and in particular within the
economic.
As earlier
mentioned, telecommunication is a catalyst of industrial and economic
development of any nation. The sector has witnessed tremendous changes and
competition in recent times. Therefore, there is need, the explore the potentials
as well as us undertake a sheep look into how efficient and effective the
privatization exercise in the Nigeria telecommunication section is in order to
make meaningful contribution, suggestions and recommendations for the
improvement and successful fully privatization policy in Nigeria and in the
telecommunications industry in particular.
1.5
SCOPE
OF STUDY
This research work will be exhaustive, fact finding
entails objective analysis of the public enterprises performance with
particular reference to telecommunication section (NITEL). The research will
cover wider aspect in decision making relating to.
i.
The strategies being
adopted by the privatization policy of NITEL Plc in their bid for greater
development effective services delivery.
ii.
The object of privatization
policy as well as the development process.
1.6 LIMITATIONS OF STUDY
The problem which will
hinder the smooth process of this write-up may include the following:
i.
timely retires of
questionnaire by the respondent
ii.
the higher cost that
will be involved in craying out the project
iii.
the sensitive nature of
the topic may make the respondent unwilling to provide the required data
iv.
The interview problem,
some those whom the researcher may not able to interview due to the fact that
they were so busy or clearly avoiding the interview to feat of feat of possible
reappraised from management.
1.7 RESEARCH PLAN OF STUDY
This research work
amongst other things aimed at studying and evaluating privatization, as a
viable tool for development of the economy with particular
reference to NITEL.
This study will spring up five chapters:
Chapter one will comprise the general
description of the study; introduction of the topic; background of the study,
statement of problem, purpose of study, significance of the research, scope,
limitation of the research, plan of study and definitions of the terms used.
Chapter two will be based on the
literature review under the write up of various scholars and writers on
privatization with the experience of telecommunication (NITEL).
And the benefits and problems of privatization.
Chapter three will take a look at the
research method, historical background of the case study, statement of
hypothesis population and sample size of study, method of data collection,
analysis and testing hypothesis.
Chapter four, the research instrument od
data analysis will be defined and the testing of hypothesis takes place with
research findings chapter five will be the summary of the entire project work,
conclusions and recommendations.
1.8 DEFINITIONS OF THE TERMS USED
i. Privatization:
means any corporation board company or parastatals established by or under any
enactment in which the federal government or it agency in enterprises whether
wholly or permanently owned by the private hand to manage.
ii. Enterprises: means
any of its departmental ministry or agencies has ownership or equity interest
and shall include a partnership. Joint venture or any other form of business
arrangement.
iii.
Commercialization:
Means the re-organization of enterprises
wholly or partly owned by the federal government in which such commercialized
enterprises shall operate as profit-making commercial venture and without
subventions from the federal government
iv.
Full
privatization: Means the disinvestments by the
federal government of all its ordinary shareholding in the designated
enterprises
v.
Partial
privatization: Means the disinvestments by federal
government of its ordinary shareholder in the designated enterprises.
vi.
Subvention:
subsidy given to certain services oriented
parastatals from government.
vii.
Infrastructure:
Amenities available for public and institutional for technical committee on
privatization and commercialization
viii.
TCPC:
Is the acronym for technical committee
on privatization and commercialization
ix.
Installation:The provision of service to the user’s end
x.
Subscribers:
telephone users
xi.
Teledensity:
telephone penetration rate
xii.
Analogue:
telephone system electro-magnetic based
xiii.
Digital: telephone
system computer based
xiv.
Interconnectivity:
system of linking one exchange to another to facilitate connecting of
subscribers
xv.
Deregulation: removal
of restrictions or regulations on business entry
xvi.
Competition: enabling
environment for interplay of market forces of demand and supply.
xvii.
Innovation:
diversification and improvement of varieties
xviii.
Exchange: the whole
equipment which enables switching operations
xix.
Switching: Linkage the
originating calls to the desired destinations.