i

ORLU, DAGOGO CORNELIUS REG. NO: PG/MBA/08/47300

PG/M. Sc/09/51723

THE PROBLEM ON PRIVATIZATION OF FEDERAL PARASTATALS

IN NIGERIA, A STUDY OF NIGERIAN TELECOMMUNICATIONS LIMITED (NITEL) AND ITS SUBSIDIARY, NIGERIA MOBILE

TELECOMMUNICATIONS LIMITED (M-TEL)

MANAGMENT

A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGEMENT, FACULTY OF

BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS

Webmaster

Digitally Signed by Webmaster’s Name

DN : CN = Webmaster’s name O= University of Nigeria, Nsukka

OU = Innovation Centre

APRIL, 2010

ii

THE PROBLEM ON PRIVATIZATION OF FEDERAL PARASTATALS IN NIGERIA, A STUDY

OF NIGERIAN TELECOMMUNICATIONS LIMITED (NITEL) AND ITS SUBSIDIARY,

NIGERIA MOBILE TELECOMMUNICATIONS LIMITED (M-TEL)

BY ORLU, DAGOGO CORNELIUS

REG. NO: PG/MBA/08/47300

BEING A DISSERTATION PRESENTED TO THE FACULTY OF BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA, IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS

ADMINISTRATION (MBA) IN MANAGEMENT

APRIL, 2010.

iii

CERTIFICATION

This is to certify this study: PROBLEMS ON PRIVATIZATION OF

FEDERAL PARASTATALS IN NIGERIA; a study of NITEL AND ITS

SUBSIDIARY M-TEL, carried out by Orlu Dagogo Cornelius

PG/MBA/08/473000 under supervision, has satisfied the necessary

requirements for the award of Master of Business Administration

(MBA) degree in Management, University of Nigeria.

By

ORLU DAGOGO CORNELIUS

Chief J.A. Ezeh Date Project Supervisor C.O. Chukwu Date Head, Department of Management

iv

v

ACKNOWLEDGEMENTS

The process of preparing this work was not an easy task.

Nonetheless, some people contributed both financially, morally and

socially towards its executions.

First, I thank the Almighty God for His grace, mercy, love and

kindness and more importantly for protecting me from all kinds of

problems during the strenuous period of the study.

My supervisor, Chief J.A. Eze who read the work and made inputs

of immeasurable value, whose advise, patience and understanding

obviously made for assiduous exploration. To him, I owe a lot of

gratitude.

My gratitude also goes to my Head of Department, C.O. Chukwu

and to all lecturers in Management Department in particular and

Business Administration in general.

The financial burden of this work as well as my education have

been fully borne by me through dedication, determination and above

all, the grace of God.

Also, my profound gratitude goes to Mr. Dakoru Wenika, Miss

Okoli Nwakego and my entire family who aided me socially and morally

for the completion of this programme.

And finally to my colleagues in the graduate school; Okoli Charity

N., Johnson Omi, Emmanuel Obijuru. Thank you for your supports at

various times.

vi

ABSTRACT

The research work is aimed at studying the problems of privatization of

Federal Parastatals with particular reference to NITEL and its subsidiary M-

Tel. Many African countries including Nigeria embarked upon the

establishment of Public Enterprises, managed and controlled by the

government of each country. However, the problems of insufficient

enterprise autonomy, defective capital structures resulting in heavy

dependence on the national treasury for operational purposes, and

economic depression of the nation, called for privatization of these public

enterprises as a measure of reform to avoid total collapse of the system

and grounding of the economy. Hence Privatization is a tool or reform for

economic management of modern industrial economy.The objective of the

study is to examine the reasons and basis for privatization, the effects, the

types and problems of privatization of federal parastatals in Nigeria. The

population of the study was made up of disengaged and retained staff of

both NITEL and M-Tel in Rivers and Enugu States respectively. The sample

size was determined using Yamani’s formular and Chi-square for testing of

hypotheses. The survey research method was adopted in eliciting data

from respondents for this study. The major findings are that, privatization

exercises in Nigeria are prone to self inflicted complications, lack of

transparency due to corruption that has remained the omnipresent

obstacle that erodes every exercise in Nigeria. In meeting the above

findings, the recommendations proposed for privatization exercise in

Nigeria are; The privatization exercise should ensure the evolution and

development of a near perfect policy, economic reformation and

restructuring of Nigeria’s political economy. Finally, the federal government

should have a proper labour policy to resolve terminal benefits matters in

collective bargaining.

vii

THE PROBLEM ON PRIVATIZATION OF FEDERAL

PARASTATALS IN NIGERIA, A STUDY OF NIGERIAN

TELECOMMUNICATIONS LIMITED (NITEL) AND ITS

SUBSIDIARY, NIGERIA MOBILE TELECOMMUNICATIONS

LIMITED (M-TEL)

BY ORLU, DAGOGO CORNELIUS REG. NO: PG/MBA/08/47300

DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA ENUGU CAMPUS

APRIL, 2010.

viii

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The federal government of Nigeria embarked on political,

constitutional, banking, pension and economic reforms having sensed

the economic depression of the nation. Privatization is one of the

pivots of the economic reforms which the former (President Olusegun

Obasanjo) was committed to during his tenure of democratic

governance in Nigeria.

The economic depression with its deep and severe

consequences coupled with the revolution in the union of soviet

socialist Republic (USSR) in the late 1930 led to a situation where

government dabbled into running enterprises it had no business in.

This became possible because private sector enterprises especially in

Western Europe collapsed due to recession.

Upon the attainment of independence, many African countries

embarked on the establishment of public enterprises. At

independence in 1960, Nigeria’s economy had a week industrial

sector with near absence of basic infrastructure, inadequate capital

and weak technological base. The public enterprises were established

because the then economy was that of an agricultural sector

producing largely primary products for exports.

The oil boom of the 1970s helped the government to enter into

ownership and control of economic activities. In view of this, the

ix

provisions of Telecommunications facilities in the country which was

restricted mainly to government business, enforcement of law and

order and administration of the country prior to independence,

became no longer restricted after independence because of

development of trade, commerce, industries and private enterprises

which commenced at a fast rate and required such services.

However since independence, there has been a number of

development plans for the expansion and modernization of

Telecommunications Network Services.

Under the first development plan, a total of 100,000 telephone

services were installed besides other improvements like provision of

large capacity cross-bar exchanges at Ikeja and Lagos Main land

respectively. Constructions of radio routes to link 23 urban cities in

the country including Ibaban, Kaduna, Sokoto, Kano, Jos, Maiduguri,

Warri, Calabar among others and trunk dialing at urban centers were

in progress. The implementation of this programme was dis-rupted

by the civil war (1966 – 1969). At the end of civil war, the status of

the first P & T (Post and Telecommunication) plan (1963 – 1968) was

reviewed and the second national plant was launched in 1970. This

enabled the government to improve on the existing

telecommunications facilities by marginal investment in major and

industrial areas and gradually extended to some rural and war

affected areas.

However, in order to correct some problems in the system,

government under the contingency plan in 1977 increased telephone

x

lines to 167,000 representing telephone density in the country to

approximately 3 per 1000 population. In addition, the communication

Ministry had a long-term plan for improvement of telecommunication

facilities within the context of the 3rd development plan (1975 –

1980) under which the new modern telephone exchanges with

additional 84,000 lines were provided. At the end of this development

plan in 1985, the year that marked the birth of NITEL Ltd, only

207,276 telephone lines and 500 Telex lines were introduced into the

network, thus bringing a total telephone lines in the system to

220,000.

But with the quest for effective and efficient communications

services, Global System for Mobile Telecommunication was introduce

to alleviate the problems being encountered under NITEL. Hence

prior to the emergence of this Global System for Mobile

Telecommunications (GSM) in the year 2001, the Analogue system

(090) was the only mobile cellular telephone in Nigeria which was

introduced in 1992 and its operation was under the supervision of

NITEL, the then leading and dominant operator.

Hence with the creation of M-tel in 1996, the responsibility of

providing (090) services was shifted to M-tel which was basically a

subsidiary to NITEL but operates independently of NITEL.

Ironically, inspite of the huge investments in public enterprises

in Nigeria, their services could not meet the demand of the populace.

During the oil boom of the 1970s, nobody complained but with the

dwindling of government revenue and global crisis, it became

xi

imperative to remove those policies that fostered and encouraged the

dominance of the public sector in the Nations economic life.

The establishment of parastatals is a popular strategy used in

developing Nations for notable reasons which includes; economic

leadership, national security, social welfare, profit motives, effective

control of resources, De-bureacratic efficiency etc.

There are pertinent factors that account for the poor

performance of these parastatals despite huge investment. According

to Okeke (1985), such factors are lack of accountability, lack of profit

motives, monopoly, over staffing, indiscipline, lack of coordination of

staff level and partly politics.

Other factors recorded by Mbanefo (1985) were failure to

conflict objective, not flexible decision making, excessive wastage of

resources, underutilization of assets, low activity, motivation, poor

attitude to work and company affairs.

Hayafu Deen (1985) also believes that over extended and

cumbersome organizational structure, recruitments based on

extraneous consideration instead of merits, no concrete performance

target, parastatals used as vehicle for political patronages etc are

some militating problems.

1.2 STATEMENT OF THE PROBLEM

We recognized that parastatals like Nigerian

Telecommunications Limited (NITEL) and its subsidiary Nigerian

Mobile Telecommunications Limited (M-TEL), Power Holding

xii

Company of Nigeria (PHCN), Nigerian Ports Authority (NPA), etc,

occupied a pivotal position in the search for the Nation’s speedy

economic development and self sufficiency. The Nation’s inability to

achieve its development goals was partly as a result of the problems

of these parastatals.

Some of these problems are thus:

- Mismanagement of funds

- Heavy dependence on the national treasury for operational

purposes as a result of defective capital

- Mis use of power resulting in corruption and bureaucratic

bottleneck

The non-prevention of these long-lasting problems had indicated

negatively on the nation’s economic performance.

Since the first privatization of NITEL and M-Tel to Transnational

Corporation of Nigeria Plc (Transcorp) had failed, the second phase

of the privatization exercise already on ground should address the

problems of effective privatization. In addition, the possible

privatization malpractices of the first indigenization exercise should

serve as safety belt for the implementation of privatization policy.

Some of these malpractices include;

- Few privileged people buying up most of the shares.

- Partial privatization and not full (total) privatization thereby

creating rooms for government and political intervention.

xiii

- The Chief Executive Officers and Managing Directors were

not appointed on merit but on political benefits.

The research work attempts to examine the problem of the

institutional framework for the guided privatization in terms of

government transparency. It will attempt to restate the importance of

the valuation of assets and investment in NITEL and M-TEL through

the Bureau for public Enterprises (BPE).

Since the Nigeria factor has been a major set back in the

implementation of many laudable economic and political policies

geared towards national development, this research would attempt to

examine the success story of NITEL and M-TEL privatization in

Nigeria. It will also examine the responses from people on the

problem of economic activities of the nation.

1.3 OBJECTIVE OF THE STUDY

The objective of the study are as follows:

i. To examine the problems of privatizing federal parastatals in

the country.

ii. To examine the institution frame work guiding effective

privatization in terms of government transparency

iii. To examine the effect of privatization on the labour market

and employees of such parastatals.

xiv

iv. To examine the type of privatization adopted by the

government and her agencies that will suit the aspiration of

the citizenry.

v. To ascertain the faith of the retained staff of the parastatals

after privatization.

1.4 RESEARCH QUESTIONS

The research questions for this study are as follows:

i. What are the problems on privatizing federal parastatals in

the country?

ii. What are the institutional frame work guiding privatizations

in terns of government transparency?

iii. What are the effects of privatization on the labour market

and employees of the affected parastatals before and after

the privatization?

iv. What type of privatization exercise was adopted by the

federal government and her agencies and how was it

accepted by the citizenry?

v. To what extent does the faith of the retained staff of the

privatized parastatals be guaranteed in terms prompt

payment of salary/allowance and out right dismissed for

flimsy reason?

HYPOTHESES

xv

For the purpose of this study, the following assumptions will be

subjected to critical text.

Hypothesis 1

Ho: There is positive correlation between privatization of federal

parastatals and associated problems

Hi: There is no positive correlation between privatization of federal

parastatals and associated problems.

Hypotheses 2

Ho: The privatization exercise is not directly related to the due

process as such lacks transparency.

Hi: The privatization exercise is directly related to the due process

as such does not lack transparency.

Hypotheses 3

Ho: The privatization has negative effect on the labor market as

well as the employees.

Hi: The privatization has positive effect on the labour market as

well as the employees.

Hypotheses 4

H0: Ownership of the company partly by the federal government

and partly by the private sector (partial privatization) is not the

aspiration of the citizenry.

xvi

Hi: Ownership of the company partly by the federal government

and partly by the private sector (partial privatization) is the

wish of the people.

Hypotheses 5

H0: The retained staff of the company are not well taken care of

after privatization

Hi: The retained staff of the company are well taken care of after

privatization.

1.5 SIGNIFICANCE OF THE STUDY

The significance of the study can be viewed from the major

standpoints: Practical and academic

(a) Practical Significance

This kind of study will assist in broadening understanding of the

followings:

- To employees of paratatals in general, it will expose the

relationship existing between them and their employers,

which will be of interest to them in their respective

paratatals.

- Specifically to retained staff of NITEL and M-TEL understudy;

it will expose to a large extent the going-on in this

xvii

organizations with regards to the relevant variables and

comparative analysis of government actions over some

relevant years.

- To policy makers and regulators like BPE; it will present

through its analysis that could assist them in enunciating

polices that will not only have positive impact but also to

remain relevant in the policy by performing such functions

as proper guide lines for privatization and employees safety

and protection in such manifestation.

(b) Academic Significance

(i) It will contribute to the enrichment of the literature on

privatization and its associated problems.

(ii) It will support ways (of interest to academics) based on the

empirical evidence of enhancing the employment situation

rather than out rightly lay off staff on the pretence of

privatization which affects the economy.

(iii) The study will serve as a body of reserved knowledge to be

preferred to by researchers.

1.6 SCOPE AND LIMITATION OF THE STUDY

In researching the topic “Problem on Privatization of federal

parastatals in Nigeria”, the researcher focused on strategies and due

process used by the federal government and Bureau for public

xviii

enterprises in privatizing NITEL and M-TEL. However, the

privatization exercise is still in its infancy in Nigeria as such, detailed

information on this study is lacking which makes the study difficult to

adequately access the outcome of the exercise.

In addition, the researcher does not claim to have identified all

parameters used in the privatization exercise. This is as a result of

some limitations which includes; time constraints, financial

constraints and data constraints.

1.7 DEFINITION OF TERMS

NITEL: Nigerian Telecommunication Limited

M-TEL: Nigerian Mobile Telecommunication Limited

GSM: Global System for Mobile Communication

BPE: Bureau for Public Enterprises

Transcop: Transitional Corporation of Nigeria Plc.

Privatization: Removing the government ownership of an

organization to the private sector. (Comas C.D

2005;20): The Pain and Gain of privatization.

xix

REFERENCES

Abdulkadun B. I.(1992) The multifunction telephone system. NITEL

Journal Vol. 8 January/February 19

Okeke, C. O. (1983:2-3) Restructuring the Nigerian Economy; “The

place of privatization”, paper presented at the National Seminar

on Privatization organized by the securities and exchange

commission, Kanno.

xx

M-Tel Journal July (2003), M-Tel news Vol.1, No. 2 .

Mbanefor, A.C.I (1985:1-4) capital restructuring for successful

privatization organized by the securities and exchange

commission, Kano.

Schellerberger, R. E.(1969:55-111) “Management Managerial Analysis

(Homewood Illinois), Richard D-Irwin.

Hayatu Deen (1985:1-3); “Performance Contract tools for public

enterprises reform and restructuring” Paper presented at the

National Workshop on the commercialization programme

organized by TCP on April, 1985.

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 INTRODUCTION

xxi

This chapter will essentially deal on various types of opinion

expressed by different authors and researchers on federal

government privatization exercises, achievements, problems and

plans for future improvement. However, the chapter will in a proper

perspective examine the view of authors on problems of privatization

as it affects federal parastatals

2.2 THEORETICAL REVIEW OF THE STUDY

Privatization has been an important instrument of economic

development since 1970s and has been at the forefront of economic

policy of many countries, both developed and developing countries.

Cook and Kirkpatric, 1988; “The policy objectives and motives

for privatization varied between countries and have altered with

times. In the case of the industrialized countries, in the early 1980s it

could be argued that the dominant motive was an ideological one,

with issues of economic efficiency assuming a significantly less

important role.

For developing countries, the public enterprises were looked

upon for provision of utilities such as electricity, water, transportation

etc. The public enterprises were seen as an important contributory

factor of economic development as such, government financial

support for the enterprises increased for social services are relegated

to the background the development of the private sector. In late

1970s, Public Enterprises accounted for one third of all international

borrowing by developing countries and it was a source of concern

(World Bank 1980).

xxii

In the ex- socialist countries, privatization had been seen as an

important factor in the process of transition from a centrally planned

to market oriented economy. While in the highly, centralized state in

Eastern Europe and former Soviet Union, where the states sector has

accounted for Gross Domestic Product (GDP), privatization has been

seen as a means of creating a private sector economy. (Schwartz,

1993)

2.3 PROBLEMS OF THE PARASTATALS

Inspite of huge investments in government parastatals, their

services could not meet the demand of the people. The reason for

the establishment of these parastatals were not adequately achieved

due to lack of accountability, lack of profit motives, over staffing,

indiscipline, lack of co-ordination of staff level and partly politics

(Okeke, 1983).

Other problems include; failure to conflict objectives, not

flexible in decision making, excessive wastage of resources, under-

utilization of assets, no appropriate capital structure, purposeless

attitude to work and to company affairs (Mbanefo, 1985).

Further problems include; over extended and cumbersome

organizational structure, recruitments based on extraneous

consideration instead of merit, no concrete performance target,

parastatals used as vehicles for political patronage etc (Hayatu Deen,

1985)

xxiii

2.4 COMPETITION (MONOPOLY BROKEN): A properly

implemented programme has the potential to promote productivity

and profitability through the exposure of the parastatals to

commercial discipline of the market.

Competition is already hutting up with NITEL and its subsidiary

MTEL with other telecommunication providers such as Reltel, MTN,

GLO, ZAIN, STARCOM etc. Diversified range of products now dots the

lines in paid adverts by these new entrants. It is expected that very

soon service provision and delivery will be at door posts of customers

and purchase of line and Sim cards will soon be over.

Chisnall Peter M. (1989) stated that nearly every market can be

divided into several sub-markets which have significant

characteristics affecting demand sand supply. Instead of treating all

customers the same way by offering identical range of products and

levels of services, objective market research enables groups or

clusters of customers or high net worth customers to be identified

whose needs can be more adequately met through specific marketing

attention. Telecommunication services have wide variety of products.

There is the need to identified corporate customers, high net worth

customers, rural customers and specialized agencies in order to meet

their specific needs adequately.

The customers of telecommunication services were in great

expectation for the privatization of NITEL and its subsidiary M-Tel

despite the competitive nature of the market in order to benefit from

the followings:

xxiv

Injection of efficiency in the telecommunication services

provision.

Deregulation and healthy competition

Removal of monopoly

Attraction of private and foreign capital

Reduction in the need of government subvention and control

Growth and development in the economy

Availability of services for potential subscribers.

New technology and equipment.

2.5 POLITICAL DEFINITION OF PRIVATIZATION

The term privatization did not gain wide circulation in politics

until the late 1770s and early 1980s. With the rise of conservative

government in Great Britain, United States and France, privatization

has come primarily to mean two things.

Any shift of activities or functions from the state to the

private sector and more especially;

Any shift of the production of good and services from the

public to private.

Besides directly producing services, government establish the

legal frame work of societies and regulate social and economic life,

and finance services that are privately produced and consumed.

Shift from publicly to produced services may result not only

from a deliberate government action, such as sale of assets, but also

from the choices of individuals or firms that a government is un-

xxv

willing or un-able to satisfy or control. In Nigeria and most other

countries, private demand for education, health care, retirement

income has out stripped public provision. As a result, private

schooling, medical care and pensions have grown to relatively larger

proportions.

If one shifts attention from the sphere of production to the

sphere of consumption, one may alternatively define privatization as

the substitution of private goods for public goods. A public good in

the economics sense, has two distinguished properties.

One person’s consumption does not preclude another’s, and

excluding any one from consumption is costly if not impossible.

A prototype example is fresh air. A public good need not be produced

by government.

These forms of privatization vary in the extent to which they

move ownership, finance and accountability out of the public sector.

The spectrum of alternatives runs from total privatization (as in

government disengagement from some policy domain) to partial

privatization (Contracting out or vouchers). This is typical of Nigeria

Telecommunications Limited (NITEL) and its subsidiary Nigeria Mobile

Limited (M-TEL), where the government partially privatized these

paratatals to the Transnational Corporation of Nigeria PLC

(Transcorp) in 2006 with the share percentage of 51% to Transcorp

and 49% to the government.

The implication of partial privatization vary with its degree as it

affects NITEL and M-Tel. In this case, the government may continue

xxvi

to own but not to manage assets. It is easy to treat privatization

purely as a question of domestic policy. But where the likely buyers

are foreigners, privatization of state-owned enterprises often means

denationalization, a transfer of control to foreign investors or

managers. Since state ownership often originally came about in an

act of national self assertion, privatization appears to be a retreat in

the face of international presence. This was the obvious reason why

NITEL and M-TEL were partially privatized to an indigenous company

called Transcorp under the leadership of present Olusegun Obasanjo.

2.6 FORMS (TYPES) OF PRIVATIZATION

Though, privatization is an arrangement which brings about

change in the ownership structure from the public to private hands.

It involves the private participation in the management and operation

of public enterprises. It is the vehicle for restructuring public

enterprises, de-regulation and major economics reforms. If attracts

foreign capital investment through core foreign investors, foreign

equity participation and injection of new technology.

There are two basic types or forms of privatization;

Full privatization

Partial privatization.

2.6.1 FULL PRIVATIZATION:

This is a privatization aims at achieving efficiency, increase

productivity, economic growth, enhances per capital income and

standard of living. Full privatization entails a carefully planned and

systemically implemented programmes of government by way of with

xxvii

drawal of full control of business enterprises in order to be effectively

and efficiently ran by the private operator it has fully handed over

ownership to.

Professionals, policy makers and economic planners alike, tend

to hold the view that the full privatization policy, guided or unguided

can yield substantial benefits, in terms of greater efficiency, renewed

investment, budgeting savings and the preservation of public finance

(Obadan and Ayodele, 1998).

2.6.2 PARTIAL PRIVATIZATION:

Partial privatization in the context of guided privatization is

explained as government carefully planned and systemically

implemented programme of government partial with-drawal from the

control of business enterprises which can be more effectively and

efficiently run by the private operators.

It was evidenced from the research conducted that NITEL and

its subsidiary M-TEL were partially privatized. This shows that the

federal government has 49% shares while Transcorp has 51%

shares. This affected the operation of the company as such not fully

autonomous. The structure and the objective of the company are not

fully adhered and the objective of the company are not fully adhered

to due to government influence. This resulted into un-precedented

restructuring of the organization with better unachieved theoretical

promises to move the company forward.

Therefore, it is proper at this point to say that the management

of NITEL and its subsidiary M-TEL were confused on whom to serve

xxviii

(either Transcorp or Federal government). Partial privatization does

not conform with the principles of “Unity of Command” where the

subordinate must receive instructions from one boss only. As the

saying goes, “You cannot serve two masters at the same time”.

Once these parastatals are fully privatized in this third phase of

the ongoing privatization exercise to be concluded within the first

quarter of 2010, the new company will have a sense of direction. The

organization structure, the vision and mission of the company will be

consistently adhered to in all levels of the management of the

organization in order to work towards achieving the desire objectives

of the company.

2.7 GOVERNMENT APPROACH TO PRIVATIZATION IN

NIGERIA

The first attempt to move forward a competitive market system

was in 1986 with the introduction of the structural Adjustment

Programme and the promulgation of the privatization and

communication decree No. 25 of 1988. The Federal Government

outlined the objectives to include improvement of the efficiency and

reliability of the operations of the companies, reduction of their

dependency on the national treasury for operation, promotion of

share ownership by Nigerian in productive investment which were

owned wholly or partially by the federal government. At the end of

the process in 1992, a total of 89 companies were privatized. These

include SEA TRAVEL, MOTOR ASSEMBLY, HOTELS and TOURISM,

xxix

TEXTILE, TRANSPORTATION and a lot of others. The proceeds from

the exercise amounted to N4.66 billion.

The second phase of the privatization promises to be the

biggest in Africa as it concerns major state owned National

Corporation. In October 2006, the Bureau for public enterprises

invited local and international investors to express interest in about

37 state owned companies slated for privatization. These include;

Daily Times of Nigeria, New Nigerian Newspaper, Nigerian

Telecommunications Limited and its subsidiary Nigerian Mobile

Telecommunications Limited, National Electric Power Authority,

Rolling Mills, Nigeria Newsprint manufacturing company, Petroleum

Refineries among others. Under the new programme, the

government planned to sell 40% of its equity in the enterprises to

strategic foreign investors through international open tenders. 20%

will be sold to Nigerian investors through public share offers leaving

the government with 40% shares. This pattern of share holding

indicates colonization of the economy as such should be looked into.

LEGAL FRAMEWORK: The Bureau of Public Enterprises (BPE)

Decree No 78 of 1993 which supercede the technical committee of

privatization and commercialization (TCPC) Decree No 25 of 1988

which formed the legal framework for the privatization. However,

amendment is expected to be made to reflect the expected

privatization exercise slated in the first quarter of 2010.

2.8 IMPACT OF PRIVATIZATION ON THE MASSES

The theory justifying privatization holds that it is desirable for

xxx

its likely political effect in deflecting and reducing demand on the

sates. In the 1970s, some critics suggested that the Western

democracies were suffering from an overload of pressure responsible

for excessive spending and poor economic performance. Within this

frame work, privatization represents one of several policies

encouraging a counter – revolution declining expectations. Privatizing

government enterprises and public services in this view will re-direct

aspirations into the market and encourage a more entrepreneurial

consciousness.

The political theory of privatization has several different over

lapping elements.

First, the partial privatization of government parastatals (NITEL

and M-TEL) should have an employment relation. The advocates of

privatization hope to divert employees’ wages and claims from the

public treasury, with its vast capacity for taxing and borrowing, to

private employees, who presumably will have more spines in resisting

wage demand.

Secondly, the advocates of privatization hope also for a

privatization of beneficiary claims. Instead of matching out-side of

government offices when things go wrong, the privatizers want them

to direct their ire to private service providers. The analogies were

mere theoretical following the ethics of privatization in Nigeria,

especially as it affects the telecommunication industry where NITEL

and its subsidiary M-TEL belong. The partial privatization of these

parastatals (NITEL and M-TEL), were purely for personal and political

xxxi

reason as such, the practical connotations for such privatization were

not put into consideration.

The global trends in this information age favours privatization,

not partial privatization, but there has been eries of the partial

privatization of NITEL and M-TEL. Some of the reasons asked for the

clarion call for the privatization and NITEL and M-TEL include;

Inefficiency of the organization

Extensive spending and rip-offs

Corruption, tribalism, favouritism, fraud and indiscipline.

Over size labour

Low returns on investment

Political consideration of sitting of Base

Transmission stations (BTS).

Much as the advantages on privatization seem to hold, the social

impact on the populace should not be under-estimated. Privatization

will bring hike in price of services, tariff or product prices as the

investors would want to recoup their cost of investment on record

time.

There was the possibility of under valuation of the assets of

both NITEL and M-TEL which have been hard earned by tax-payers in

a bid to gain undue advantage by the fraudulent minority company of

Transcorp or rich few who hijacked the whole exercise to themselves

knowing the numerous assets owned by these paratatals over the 36

states and Abuja.

xxxii

Privatization has definitely triggered a massive layout of

workers which has constituted serious problems and un-employment.

Out of the total staff strength of about 13,000 for both NITEL and M-

TEL, about 10,000 staff were retrenched representing 77% keeping

about 3,000 representing 23%. There is no pension scheme. Many

people engaged in public service because of pension scheme dangled

by the government.

2.9 PROBLEMS OF PRIVATIZATION

There were jubilations in almost every quarter when the news

of privatization and acquisition of NITEL and its subsidiary M-TEL by

Transcorp-broke out in 2006. People thought it was a wise decision

taken by the Obasanjo’s administration and a step in the right

direction. The share price of Transcorp immediately appreciated and

people felt it was a good market for investment. Little did they know

that Transcorp was wearing a good company’s mask on disguise

under the shadow of President Olusegun Obasanjo.

In late 2006 when NITEL and M-TEL were partially privatized,

there were sweet testimonies and promises given by the Transcorp

on the acquisition of the government parastatals. These testimonies

later held on substance and faded like a block of ice dropped in a cup

of worm water. Transcorp, rather than keeping to its promises,

engaged in selling some of the assets of the acquired companies and

also brought pains and agonies to the dis-engaged and re-engaged

staff. Salaries and allowances have not been paid to the re-engaged

staff for almost one and half years (1½ years) now. Payment of

xxxiii

pensionable staff was forcefully tagged at five (5) years which was

even paid with difficulties, tears and under strenuous exercise. This

has brought NITEL and its subsidiary M-TEL to partial closure as non-

functional organizations.

The problems of privatization cannot be over-emphasized.

Comrade Nwagbara C. O, the then secretary general of the senior

staff Association of Utilities, Statutory Corporations and government

companies in the Guardian of August 4, 2005, raised an alarm over

the strenuous effects of the national council of privatization to

embark on due diligence with the prospective investors in the

privatization exercise of NITEL and M-TEL, NICON and other

parastatals.

The association lamented that it is not in the public and

national interest for the government to allow its citizens to suffer

humiliation and deprivation as is now the fate of citizens of Nigerian

working in the privatized Niger Dock Ltd, NITEL and M-TEL.

According to him, “No true government of the people can sit around

and oversee the destruction of its citizens. He expressed fear of

dehumanizing labour relations, deprivations and humiliation awaiting

Nigerians citizens as obtained now in privatized parastatals as the

government rushes on the privatization”.

There is no doubt that privatization will have impact on the

employment mix through deliberate policies of downsizing,

restructuring and retrenchments. Consequently more labour will be

xxxiv

thrown into the un-employment market. Regrettably, no social

benefits are attached to the un-employment in Nigeria.

Some sectors of the Nigerian however, have expressed concern

over privatization generally, considering the issues whether the

process places the assets in the hands of those who can deliver the

desired quality service without exploiting the poor, whether the

exercise would not lead to loss of jobs which has already happened.

Oddy E, President of the Senor Staff associations of Nigeria

(NPA), has stated that, given the role of ports as the nations

economic life wire, privatization will mean selling the gateway of

Nigeria economy to foreigners. He emphasized that under a

privatized port, the nation will be exposed to security risks since all

sorts of good will be imported into the country.

“Will, unbundling before its privatization make the difference?

“A pertinent question asked on page 17 of the Nation Newspaper of

February 1, 2010. It reads in parts: … “In line with the advice of the

Nigerian Communication Commission (NCC), the Bureau of Public

Enterprises (BPE) is adopting the un-bundling strategy to deal with

the privatization challenges of NITEL and its subsidiary M-TEL. What

this entails is the breaking down of NITEL into several units, with the

aim of selling them as entities, as opposed to the usual wholesale

strategy that had failed severally in the past.

For the reasons that are peculiarly Nigerians, NITEL’s

privatization has remained problematic, and with the controversy

xxxv

trailing the latest over to unbundle the hitherto functional national

carrier, no one is assured of a fruitful conclusion, the paper stressed.

It is said in the last eight years or thereabout, and at every turn

of events, the federal government has continued to commit very

huge resources to the process designed to fail. For instance, when

Orascom’s bid was rejected, Nigeria paid $800,000 to KPMG (a

consulting firm) through the BPE (Bureau for public enterprises) for a

due diligence examination and other handling charges. The point is,

corruption is the only thing standing in the way of the privatization of

NITEL and its subsidiary M-TEL.

As things stand, we support the “Unbundling Strategy” if it will

not go the way of the Power Holding Company of Nigeria (PHCN). It

appears a reasonable option for obvious reasons. First, the core

investors in communication may no longer find NITEL as attractive as

it was eight years ago. Most of its equipment have become obsolete.”

2.10 SELF INFLICTED COMPLICATION

Strict compliance of both regulators and participants to the

rules and time frames of 1999 privatization and commercialization Act

and customary international privatization practices would had

ensured the evolution and development of a near project policy and

the economic reformation and restructuring of Nigeria’s economy.

The expected trajectory of the entire privatization exercise

immediately took a dangerous derailment after the first five years of

implementation.

xxxvi

By the twilight of the past administration in Nigeria, a plethora

of discontentment on the exercise had reached fever pitches. A

panoply of privatization controversies in Nigeria includes the

entangled privatization exercise of NITEL and its subsidiary M-Tel,

NEPA (PHCN), Power Sector Reforms, the Oil sector reforms

particularly NNPC, the Ports reforms, the inability of 18 successor

companies to Power Holding Company of Nigeria (PHEN) to function,

the sales of National Steel Companies (Ajaokuta Steel and Delta

Steel) to Global Infrastructure, NAFCON, Eleme Petro-Chemicals, the

draconian sale of Federal Government Properties in Lagos and Abuja

considered by Patriotic Civil Servants to be the greatest economics

heist of the 21st Century in Africa.

The technical complications are direct consequences of several

structural defects in the legal, policy and implementation frame works

of the exercise. These defects are better understood by applying

performance bench marks for the exercise. As accumulation of these

complications continues to scupper the lofty objectives of the

exercise, the axiomatic solution is for regulator to re-evaluate, re-

engineer and enforce improved policies and implementation models,

enhance legislative advocacy, regulation and compliance etc. The

consensus among several stakeholders is that Nigerian privatization

program requires several fundamental restructuring and

improvement to argument and maximizes its impact on Nigeria

2.11 REQUIRED REFORMS ON PRIVATIZATION.

xxxvii

2.11.1 WORKABLE PRIVATIZATION MODEL: There are

several models for privatization of public enterprises. However, the

core investor (auction) model is synonymous with transition from

state to market economy and not developing economics hence, it is

the most susceptible to abuses. This model also involves the inclusion

of other institutional supervision agencies such as the Securities and

Exchange Commission and stock exchange.

2.11.2 ESTABLISHMENT OF ADDITIONAL SECTOR

REGULATORY COMMISSION:

The ultimate target of privatization, is to create and expand private

markets. Sector regulation is one of the fulcrums of privatization

considering the manpower handicap of the Bureau for public

enterprises, the solution lies in establishing more sector regulators.

This will enforce price control, free competition, service control,

quantity and quality as in the case of the Nigeria communication

commission for effective sector regulatory commission.

2.11.3 IMPROVED POST PRIVATIZATION REGULATORY

FRAMEWORK:

With the absence of sector regulators and anti competition laws or

commission, an effective post privatization regulatory and compliance

framework should be put in place. In other jurisdiction, privatized

firms are deprivatized and ownership and control reverted to the

regulator once they failed to meet agreed bench mark with in specific

xxxviii

time limits as in the case of NITEL and its subsidiary M-TEL Since the

BPE is overwhelmed by several regulatory responsibilities, another

sub commission must be established for this purposes. The senate

and House committee on privatization can also be of immense value

in compliance and regulation matters. Unfortunately, the senate

committee and House of Representatives committees were severely

compromised doing nothing proactive on privatization for four years.

However, the federal Government of Nigeria must be hailed for

the recent revocation of the sales of NITEL and its subsidiary M-TEL

to Transcorp.

2.11.4 ENACTING NIGERIA’S COMPETITION LAW: The full

concept of privatization involves deregulation of public sector

monopolies, involving of private enterprises, encouraging free

competition with in a regulated framework to improve quality,

quantity of services at reduced prices. Once companies are

deregulated, there is a high tendency for it to operate as a private

monopoly except it is controlled by specific competition or anti-trust

laws. The lack of competition laws remains one of the major bones of

privatization in Nigeria

2.11.5 PUBLIC ACCOUNTABILITY: Since all the faulty or

controversial decisions are made by Government Official in the

exercise, the question arise as to who owes the responsibility and

accountability to whom in the privatization scandals that have

unfolded in recent yours. Can a regulator regulates itself or can one

xxxix

be a judge in your own court? The national assembly that ought to

check the excesses of our privatization seem to compromise in their

functions or do not have enough information. Government can

ensure public accountability of the entire exercise by passing a

freedom of information bill and allowing the national assembly more

supervisory roles. This will bring checks and balances in the functions

and responsibilities of Government Official, stakeholder and affected

enterprises.

2.11.6 NON-AUDIT OR EVALUATION OF THE EXERCISE:

Since 1999 when the privatization Act become law and with the BPE

having privatized over 400 public enterprises. Nigerians have never

been privileged to determine who sold what public enterprises; to

whom was it sold, at what price and what is the performance record

of the privatized firm. We have had snippets of congressional hearing

of designated public enterprises as we saw of NITEL and M-Tel in

2005. This none audit or evaluation of the exercise has only

encouraged certain Government officials sabotaging the exercise to

grow in confidence and statue while majority of the privatized public

enterprise remain prostrate in un-necessary crises, NITEL/MTEL a

practical example.

2.11.7 LOSS OF EXPERIENCED MANPOWER: We have

continued to witness frequent industrial squabbles in privatized public

enterprises. The crux of retrenchment of employees of public Firms

under-mines decades of man-power experience and waste of training

xl

funds used to train staff of privatized firms. The result is the

saturation of unemployment market and wanton waste of valuable

experience and technical know how. None or late payment of

retrenchment benefits has continued to generate frequent industrial

squabbles as seen in NITEL, NAFCON etc. The proper labour policy to

resolve terminal benefit matters is collective bargaining involving the

BPE, the management of the public enterprises, the management of

private firm, the employees union of the public enterprises, other

professional consultant etc.

2.12 SUMMARY OF REVIEW OF RELATED LITERATURE:

The wind of privatization blew across our country (Nigeria) for

some time as occasioned by the reforms being in place by the past

and present administrations. While the reforms was however painful

to others especially the employees of the affected state parastatals

as in the case of NITEL and its subsidiary M-TEL. In changing the

public-private mix in any type of economy, partial privatization will

sometimes be less important than the emergence of new private

business especially in Nigeria.

xli

REFERENCE:

A paper (2006) titled “Transcorp Acquires NITEL/M-TEL”

July, 4.

Comrade Nwagbara C.O (2005), The Guardian Newspaper,

August 4

Dike C. (2005). The wind of privatization

Cook .P. and Kirkpatrick, C. (1988) Privatization in less

Developed Countries, New York, Harvesters and

wheat sheat

M-TEL Journal February/March (2004) M-Tel New

Vol2. No2.

Obadan M and Ayodele A (1988), Improving Public Finance

through reforms of states owned enterprises: A case

of commercialization and privatization; Paper

presented for NCEMA, as a training material on

fiscal policy planning and Management, Ibadan,

Nigeria, May, 2000

Ralp D.S (1996) Strategic Management and Organizational

Dynamics 2nd Ed. Pitman Publishing.

Schwartz S. N. (1993:52) Finance Theory and Corporate

Policy, London, Wesley Publishing Co.

World Bank (1980:1-2) Bureaucrats in Business. The Economics

and Politics of Government Ownership-Pamphlet

xlii

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION:

Every researcher must as a matter of necessity, adopt a

method that will help elicit the idea of the study under consideration.

This chapter, therefore aims at assessing and picking the most

appropriate research method that best suited for the purpose of the

study.

3.2 RESEARCH DESIGN

A research design is the programme that guides the

investigator in the process of collecting, analyzing and interpreting

observation. It serves as a road map or plan of action showing what

and how the researcher will carryout step-by-step procedure of

accomplishing the research endeavour.

The research will employ both the survey and description

research designs. These suit our purpose and are appropriate for this

study. They nonetheless, are advantageous for assessing large and

small populations especially when a small population is to be derived

from a large one.

3.3 POPULATION/SAMPLE SIZE

xliii

Population is the identifiable total set of elements of interest

being investigated by the researcher.

The researcher will administer questionnaires and oral

interviews on a population of about 600 comprising disengaged and

re-engaged staff of NITEL and M-TEL draw from Rivers and Enugu

States. For obvious constraints, not every member of the population

could be reached. In view of this, these groups of staff from the two

parastatals from two states were randomly chosen.

3.4 SOURCE OF DATA

The data for this study were collected from both primary and

secondary sources.

Primary data

In collecting primary data, a questionnaire as a research instrument

was draw up and randomly distributed with in the indicated areas of

study. The questionnaire was designed in format that will give the

best possible information required by the researcher from the

respondents (NITEL/M-TEL staff of retained and disengaged). The

data obtained from these questionnaire were basically relied upon

and used in both the test and the analysis of the hypotheses.

Secondary data

Secondary data were collected by the researcher from textbooks,

magazines, journals and newspaper where relevant for the study.

3.5 SAMPLING TECHNIQUE:

xliv

As can be inferred from above, the technique for gathering

primary data is the simple probability sampling technique. The

relevant respondents from each groups of the sample size are to be

got using the stratified random method.

SAMPLE METHOD

The Yamani’s formular is used to determine the sample size

since the population is known

The formular is;

n = __ N __

1+Ne2

Where n = Desired sample size

N = Population of the study (estimated 600)

e = limit of tolerable error square (using 10%)

I = Theoretically constant.

Assigning values to the formular;

The sample size would be calculated thus;

n = ____600_____ 1+600 x (1.0)2 n = 600 1+6 = 600 7 n = 85.714 n = 86

3.6 PROCEDURE FOR DATA ANALYSIS

The data would be analyzed with the aid of simple percentages

and chi-square (x2)

xlv

The percentage (%) would be used for this research because of

its ability to transform questionnaire into values and attributes which

were quantitative in nature. It would enable the researcher analyze

the variables independently.

The formulated Hypothesis would be tested using a non-

parametric statistic called chi-square (X2) which would be used to

calculate the expected frequency and the formular thus;

Expected frequency = Row total-Column Total

Grand Total

The formular for calculating the chi-square (X2)

X2 = (O-E)2

Where O = Observed frequency

E = Expected frequency

O-E = Deviation

(O-E)2 = Deviation square

In addition, there is another consideration in the use of chi-square

(X2) which is important. It is the assumption of a certain level of

confidence or error margin. The degree of freedom which is its

characteristic is calculated thus;

df = (R-1) (C-1)

Where

df = Degree of freedom

R = Number of rows

C = Number of columns

Rule guiding the use of chi-square.

xlvi

There are two sets of figures that are relevant to the decision guiding

the rule in the use of chi-square (X2). These two variables are the

chi-square calculated value (X2) and the chi-square critical value

(X2o). The rule in calculating the chi-square value (X2) and the chi-

square critical value (X2o) are shown below;

Reject Ho, if X2 > X2o

Accept Hi, if X2 < X2o

Where

Ho = Null Hypothesis

Hi = Alternative Hypothesis

X2 = Calculated value of chi-square

X20 = Critical value of chi-square

> = Greater than

< = Less than

< = less than or equal to

REFERENCES.

Eboh E.C (1998) Social and Economic Research

(Principles and methods) published by

Academic publications and development

Resources Ltd, Lagos.

Eze, A.N. (1999); Practical approach to research

Methods and statistics in Education,

Management and Social Sciences. 1st Ed.

xlvii

Onitsha, Onwubiko printing and packaging.

Emmanuel Dibua etal (2003) Elements of business

Statistics, Vol 1. Success publisher onitsha.

Onwumere J.U (2009) Business and Economic; Research

Methods, 2nd Ed.

CHAPTER FOUR

4.0 DATA PRESENTATION, ANALYSIS AND

INTERPRETATION.

4.1 INTRODUCTION

xlviii

In this chapter, all the data collected are analyzed and interpreted.

The data were presented in tables, the researcher treated statements

in the questionnaire separately and the responses worked out in

percentages. From the analyses, it is hoped that it would be able to

make some deductions which would either result in accepting or

rejecting the hypotheses formulated in chapter one of the study.

Chi-Square (X2) was used in testing of the hypotheses. This provides

a means of comparing set of observed frequency (0) with the set of

expected frequency (E).

4.2 DATA PRESENTATION AND ANALYSIS

In this chapter, the researcher analyses the various data

collected from the respondents. A total of 86 questionnaire were

distributed to both retained and disengaged staff of NITEL and MTEL

in Enugu and River States. Out of these, 80 copies were properly

answered and returned, three (3) copies were considered unsuitable

for analytical purposes while three (3) copies were not returned.

Table 4.1 below shows the population areas under study,

proportion to the population in each area, number of questionnaire

administered, numbers returned, numbers not returned, numbers

considered unsuitable for analytical purposes and percentage

represented.

xlix

TABLE 4.1 DISTRIBUTION OF QUESTIONNAIRE

Source: From NITEL/MT-TEL Zonal Personnel Offices, Enugu.

TABLE 4.2 DISTRIBUTION AND RETURN RATE OF

QUESIONNAIRE.

S/NO Questionnaire No of respondents Percentage

1 Returned 83 96.5

2 Not Returned 3 3.5

3 Not used 3 3.5

4 Used 80 93.0

Total distribution 86 100

Source: From Field Investigation

S/N Population Groups Estimated Population

Number of Questionnaire

Nos Returned

Numbers Unreturned

Nos Not Used

Nos Used

%

01 Nitel Staff Retained, Enugu

67 22 22 - 1 21 26.2

02 Nitel Staff disengaged , Enugu

202 17 16 1 1 15 18.8

03 Nitel Staff Retained, Rivers

87 16 15 1 - 15 18.8

04 NitelStaff disengaged, Rivers

191 13 12 1 - 12 15.0

05 M-Tel Staff Retained, Enugu

26 8 8 - - 8 10.0

06 M-Tel Staff disengaged, Enugu

11 4 4 - 1 3 5.0

07 M-Tel Staff Retained, Rivers

10 4 4 - - 4 3.7

08 M-Tel Staff Disengaged, Rivers

6 2 2 - - 2 2.5

600 86 83 3 3 80 100

l

Table 4.2 Illustrates that out of the total of 86 questionnaire

distributed, 83 representing 96.5% were returned, 3 representing

3.5% were not returned, 3 representing 3.5% were not suitable for

used while 80 representing 93% were used in the analyses.

TABLE 4.3 DISTRIBUTION OF RESPONDENTS ACCORDING TO SEX

S/NO Sex No of respondents Percentage

1 Male 62 77.5

2 Female 18 22.5

Total 86 100

Source: From Field Investigation

Table 4.3, shows that 62 respondents (77.5%) were males while 18

respondents were (22.5%) were female.

Table 4.4 AGE CLASSIFICATION OF RESPONDENTS

S/NO Age No of respondents Percentage

1 20-25yrs 5 6.3

2 26-35yrs 24 30.0

3 36-45yrs 32 40.0

4 46 years and

above

19 23.7

Total 80 100

Source: From Field Investigation

Table 4.4 shows that 5 respondents (6.3%) were between 20-25yrs,

24 respondents (30%) were between the age of 26-35yrs; 32

li

respondents (40%) were between the age of 36-45years and 19

respondents (23.7) were 46 years and above.

TABLE 4.5 DISTRIBUTION OF RESPONDENTS WORKING EXPERIENCE IN NITEL/MTEL

S/N Years of work Experience

No of respondents Percentage

1 Less that 5 years 7 8.7

2 Between 5 and 10years 13 16.3

3 Between 10 and 20 years

18 22.5

4 Over 20 years 42 52.5

Total 80 100

Source: From Field Investigation

Table 4.5 illustrate that 7 respondents(8.7%) have worked for

between 1-5years in the parastatals, 13 respondents (16.3%) have

worked for between 5-10years; 18 respondents (22.5%) have

worked for between 10-20years in the parastatals and 42

respondents (52.5%) have put in for more than 20years of service.

Table 4.6 EDCUATIONAL QUALIFCATIONS OF RESPONDENTS

S/NO Educational

Qualification

No of respondents Percentage

1 WASC/GCE O/L 8 10.0

2 OND/NCE/HSA 18 22.5

3 HND/BSC/BA 34 42.5

4 MBA/MSC/M.A 16 20.0

Total 80 100

Source: From Field Investigation

lii

In table 4.6, it is shown that 8 respondents (10%) possessed

WASC/GCE ’O’ Level; 18 respondent (22.5%) possessed

OND/NCE/HSC; 34 respondents (42.5%) possessed HND/BSC/B.A; 16

respondents (20%) possessed MBA/M.SC/M.A while 4 respondents

(5%) possessed professional and other qualifications.

Table 4.7 DISTRIBUTION OF RESPONDENTS RETAINED AND DISENGAGED

STAFF.

S/NO Parastatals No of respondents Percentage

1 NITEL Retained 36 45

2 NITEL Disengaged

27 33.75

3 M-tel Retained 12 15

4 M-tel Disengaged 5 6.25

Total 80 100 Source: from Field Investigation.

Table 4.7 shows that a total of 36 respondents (45%) were from

retained NITEL staff; 27 respondents (33.75%) were from dis-

engaged NITEL staff; 12 respondents (15%) were from retained M-

tel staff while 5 respondents (6.25%) were from dis-engaged M-tel

staff.

TABLE 4.8: RESPONDENT IN TO TWO GROUPS (RETAINED AND DIS-

ENGAGED)

Table for easy analyses s/n Group No of

Respondent

%

1 Retained 48 60

2 Disengaged 32 40

liii

Total 80 100

TABLE 4.8 RESPONDENTS IN TO TWO GROUP (RETAINED

AND DISENGAGED) FOR EASY ANALYSES.

S/NO Groups No of respondents Percentage

1 Retained 48 60

2 Disengaged 32 40

Total 80 100

Source: Field investigation

Table 4.8, illustrate that 48 respondents (60%) were retained staff of

both parastatals while 32 respondents (40%) came from the

disengaged staff of both NITEL and M-tel.

TABLE 4.9 RESPONDENTS REACTION ON WEATHER PROBLEMS

ARE ASSOCIATED WITH THE PRIVATIZATION OF NITEL AND M-

TEL.

S/NO Responses No of respondents Total Percentage

Retained Disengaged

1 Strongly 25 15 40 50

liv

Agree

2 Agree 15 12 27 38.75

3 Undecided 4 3 7 8.75

4 Disagree 2 1 3 3.75

5 Strongly

Disagree

2 1 3 3.75

Total 48 32 80 100

Source: Field investigation.

Table 4.9 shows that a total of 40 respondents (50%) strongly agree

that there are problems associated with NITEL and M-Tel

privatization; 27 respondent (33.75%) agree; 7 respondents (8.75%)

were undecided; 3 respondents (3.75%) disagree while 3

respondents (3.75%) strongly disagree.

TABLE 4.10 RESPONSES FROM PRIVATIZATION OF NITEL AND M-

TEL NOT FOLLOWED DUE PROCESS AS SUCH LACKS

TRANSPARENCY.

S/NO Responses No of respondents Total Percentage

Retained Disengaged

1 Strongly Agree

18 20 38 47.50

2 Agree 22 9 31 38.75

3 Undecided 1 - 1 1.25

4 Disagree 4 2 6 7.500

5 Strongly Disagree

3 1 4 5.00

Total 48 32 80 100

Source: field investigation

lv

Table 4.10 reveals that a total of 38 respondents (47.50%) strongly

agree that the privatization of NITEL and M-Tel did not follow due

process hence, lacks transparency; 31 respondents (38.75%) agree;

1 respondent (1.25%) was undecided; 6 respondents (7.50%)

disagree while 4 respondent (5%) strongly disagree.

TABLE 4.11: RESPONSES ON THE NEGATIVE IMPACTS OF

PRIVATIZATION ON THE LABOUR MARKET AND THE EMPLOYEES

S/N Responses No of respondents Total Percentage

Retained Disengaged

1 Greatly affected

20 13 33 41.25

2 Affected 20 15 35 43.75

3 Undecided 3 1 4 5

4 Not affected

5 2 7 8.75

5 Not greatly affected

- 1 1 1.25

Total 48 32 80 100

Source: from field investigation.

Table 4.11 reveals that a total of 33 respondents (41.25%) strongly

agree that privatization has negative impacts on the labour market

and on the employees of the privatized parastatals (NITEL and M-

Tel); 35 respondents (43.75%) agree; 4 respondents (5%) were

undecided; 7 respondents (8.75%) disagree while 1 respondent

(1.25%) strongly disagree.

lvi

TABLE 4.12: RESPONSES ON PARTIAL PRIVATIZATION THAT

DOES NOT OBEY THE RULE OF UNITY OF COMMAND IS NOT

THE ASPIRATION OF THE MASSES

S/N Responses No of respondents Total Percentage

Retained Disengaged

1 Strongly agree

17 10 27 33.75

2 Agree 20 18 38 47.50

3 Undecided 3 - 3 3.75

4 Disagree 5 2 7 8.75

5 Strongly disagree

3 2 5 6.75

Total 48 32 80 100

Source: from field investigation.

Table 4.12 shows that 27 respondents (33.75%) strongly agree that

the masses never aspired for partial privatization that does not obey

the rule of unity of command; 38 respondents (47.50%) agree; 3

respondents (3.75%) were undecided; 7 respondents (8.75%)

disagree while 5 respondents (6.25%) strongly disagree.

TABLE 4.13: RESPONSES ON THE RETAINED AND

DISENGAGED STAFF NOT WELL TAKEN CARE OF AFTER

PRIVATIZATION.

S/N Responses No of respondents Total Percentage

Retained Disengaged

1 Strongly agree 24 19 43 53.75

2 Agree 20 12 32 40

3 Undecided - 1 1 1.25

4 Disagree 2 - 2 2.50

lvii

5 Strongly disagree

2 - 2 2.50

Total 48 32 80 100

Source: from field investigation.

Table 4.13 show that 43 respondents (53.75%) strongly agree that

the retained and disengaged staff of NITEL and M-Tel were not

properly taken care of after the privatization; 32 respondent (40%)

agree; 1 respondent (1.250%) disagree while 2 while 2 respondents

(2.50%) strongly disagree.

4.3 TESTING OF HYPOTHESES

HYPOTHESES 1

Ho: There is positive correlation between privatization of federal

paratatals and its associated problems.

Hi: There is no positive correlation between privatization of federal

parastatals and associated problems.

To test this Hypotheses, table 4.9 will be used.

Chi-square contingency table. S/N Responses No of respondents Total

Retained Staff O E

Disengaged Staff O E

1 Strongly agree 25 (24) 15 (16) 40

2 Agree 15 (16.2) 12 (10.8) 27

3 Undecided 4 (4.2) 3 (2.8) 7

4 Disagree 2 (1.8) 1 (1.2) 3

5 Strongly disagree 2 (1.8) 1 (1.2) 3

Total 48 32 80

E=nr nc n where E= Expected frequency

nr = Row total

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nc= Column total

n = Grand total = 80

Using a 5% level of significance and degree of freedom given:

df = (Row-1) (column-1)

= (5-1) (2-1)

4x1 = 4

Then the critical value of (Xo2)__ 9.5.

To test the hypotheses, the decision rules are;

Reject the Null (Ho) hypotheses if the calculated value of the test

statistics is greater than the critical value of 9.5 but accept it (Ho) if

Xo2 > X2 cal.

Chi-square: X2 = ∑(O-E)2

E

Chi-square table

S/N O E O-E (O-E) (O-E)2 E

1 25 24 1 1 0.04

2 15 16.2 -1.2 1.44 0.09

3 4 4.2 -0.2 0.04 0.01

4 2 1.8 0.2 0.04 0.02

5 2 1.8 0.2 0.04 0.02

6 15 16 -1 1 0.06

7 12 10.8 1.2 1.44 0.13

8 3 2.8 0.2 0.04 0.01

9 1 1.2 -0.2 0.04 0.03

10 1 1.2 -0.2 0.04 0.03

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X2 0.44

Thus, since the critical value Xo2 (9.5) is greater than the calculated

value X2(0.44), we accept the Ho and accordingly reject Hi. We

conclude by accepting the Null hypotheses, therefore that there are

positive correlations between privatization and its associated

problems.

TEST OF HYPOTHESES 2

Ho: Privatization exercise does not follow due process as such lacks

transparency.

Hi: Privatization exercise on NITEl and M-Tel followed due process

as such does not lack transparency.

To test this hypotheses, table 4.10 will be used

Chi-square contingency table Responses No of respondents Total

Retained Staff O E

Disengaged Staff O E

Strongly agree 18 (22.8) 20 (15.2) 38

Agree 22 (18.6) 9 (12.4) 31

Undecided 1 (0.6) - (0.4) 1

Disagree 4 (3.6) 2 (2.4) 6

Strongly disagree 3 (2.4) 1 (1.6) 4

Total 48 32 80

E= nr nc n

Using a 5% level of significance and degree of freedom

Given; df = (Row-1) (column -1)

(5-1) 2-1)

4x1 = 4

lx

Thus, the critical value of (X2o) = 9.5

To test our hypotheses, the decision rules are;

Reject the Null (Ho) hypotheses if the calculated value of the test

statistics is greater than the critical value of 9.5, but accept it (Ho) if

X2o > X2 calculated.

Chi-square: X2 = ∑(O-E)2

E

Chi-square table S/N O E O-E (O-E) (O-E)2

E

1 18 22.8 -4.8 23.04 1.01

2 22 18.6 3.4 11.56 0.62

3 1 0.6 0.4 0.16 0.27

4 4 3.6 0.4 0.16 0.04

5 3 2.4 0.6 0.36 0.15

6 20 15.2 4.8 23.04 1.52

7 9 12.4 -3.4 11.56 0.93

8 - 0.4 -0.4 0.16 0.40

9 2 2.4 -0.4 0.16 0.07

10 1 1.6 -0.6 0.36 0.23

X2 5.24

Thus, since the X2o (9.5) is greater than the X2 (5.24) the calculated

value, we accept Ho and accordingly reject Hi. We conclude by

accepting the Null hypotheses, therefore, that the privatization

exercise does not follows due process as such, lacks transparency.

TEST HYPOTHESES 3

Ho: Privatization has negative effect on the labour market and the

employees of the privatized parastatals.

HI: Privatization has no negative effect on the labour market and the

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employees.

To test this hypotheses, table 4.11 will be used

Chi-Square contingency table

Responses Respondents Total

Retained Staff O E

Disengaged Staff O E

Strongly Agree 20

(19.8)

13 (13.2)

33

Agree 20 (21) 15 (14) 35

Undecided 3

(2.4)

1 1.6) 4

Disagree 5

(4.2)

2

(2.8)

7

Strongly Disagree -

(0.6)

1

(0.4)

1

48 32 80

E= ncnr

n

Using a 5% level of significance and degree of freedom given;

df (Row-1) (Column-1)

(5-1) (2-1)

4 X 1 = 4.

Critical value of (XO2 )= 9.5

To test our hypotheses, the decision rules are;

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Reject the Null (Ho) hypotheses if the calculated value of the test

statistics is greater than the critical value of 9.5, but accept it (H0) IF

X 02 > X2 calculated.

Chi-square; x2 = Σ (0-E)2 E

Chi- square table

S/N 0 E 0-E (0-E)2 (O-E)2 E

1 20 19.8 0.2 0.04 0.002

2 20 21 -1 1 0.048

3 3 2.4 0.6 0.36 0.15

4 5 4.2 08 0.64 0.152

5 0 0.6 -0.6 0.36 0.6

6 13 13.2 -0.2 0.04 0.003

7 15 14 1 1 0.071

8 1 1.6 -0.6 0.36 0.225

9 2 2.8 -0.8 0.64 0.229

10 1 04 0.6 0.36 0.9

Х2 2.38

Thus, since the x02 (9.5) is greater than the x2 (2.38) the calculated

value, we accept the Ho and accordingly reject Hi. We conclude by

accepting the Null hypotheses therefore, that privatization has

negative effects on the labour market and the employees.

TEST OF HYPOTHESES 4

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H0: Partial privatization that does not obey the law of unity of

command is not the aspiration of the masses.

Hi: Partial privatization is the aspiration of the masses.

To test this hypotheses, table 4.12 will be used.

Chi-square contingency table.

Responses Respondents Total

Retained staff O E Disengaged Staff

O E

Strongly Agree 17

(16.2)

10 (10.8) 27

Agree 20

(22.8)

18 (15.2) 38

Undecided 3 (1.8) 0 (1.2) 3

Disagree 5 (4.2) 2 (2.8) 7

Strongly

Disagree

3 (3) 2 (2) 5

48 32 80

E = nc nr n.

Using a 5% level of significance and degree of freedom given;

df = (Row – 1) (column – 1)

= (5 – 1) (2 – 1)

= 4 x 1 = 4

lxiv

Critical value of ( xo2) = 9.5

To test our hypotheses, the decision rules are; reject the Null (Ho)

hypotheses if the calculated value of the test statistics is greater than

the critical value of 9.5, but accept it (Ho) if xo2 > x2 calculated

Chi-square, X2 = Σ (O-E)2 E

S/N 0 E 0-E (0-E)2 (0-E)2 E

1 17 16.2 0.8 0.64 0.04

2 20 22.8 -2.8 7.84 0.34

3 3 1.8 1.2 1.44 0.8

4 5 4.2 0.8 0.64 0.15

5 3 3 0 0 0

6 10 10.8 -0.8 0.64 0.06

7 18 15.2 2.8 7.84 0.52

8 0 1.2 -1.2 1.44 1.2

9 2 2.8 -0.8 0.64 0.23

10 2 2 0 0 0

Х2 3.34

Thus, since the xo2 (9.5) is greater than the x2 (3.34) the calculated

value, we accept the Ho and accordingly reject Hi. We conclude by

lxv

accepting the Null hypotheses, therefore, that the partial privatization

is the aspiration of the masses.

TEST OF HYPOTHESES 5.

Ho: Both retained and disengaged staff of the company were not

Well taken care of after the privatization

Hi: Both retained and disengaged staff of the parastatals were well

taken care of after the privatization to test this hypotheses,

table 4.13 will be used.

Chi-square contingency table.

Responses Respondents Total

Retained staff O E Disengaged Staff

O E

Strongly Agree 24

(25.8)

19 (17.2) 43

Agree 20

(19.2)

12 (12.8) 32

Undecided - (0.6) 1 (0.4) 1

Disagree 2 (1.2) - (0.8) 2

Strongly

Disagree

2 (1.2) - (0.8) 2

48 32 80

E = nc nr

lxvi

n.

Using the 5% level of significance and degree of freedom given;

df = (Row – 1) (column-1)

= (5-1) (2-1) = 4x1 = 4.

The critical value of (x02) = 9.5

To test our hypotheses, the decision rules are; reject the Null (H0)

hypotheses if the calculated value of the test statistics is greater than

the critical value of 9.5 but accept it (H0) if x02 > x2 calculated

Chi-square: x2 = Σ (10-E)2 E

Chi-square table.

S/N 0 E 0-E (0-E)2 (0-E)2 E

1 24 25-8 -1.8 3.24 0.13

2 20 19.2 0.8 0.64 0.03

3 0 0.6 -0.6 0.36 0.6

4 2 1.2 0.8 0.64 0.53

5 2 1.2 0.8 0.64 0.53

lxvii

6 19 17.2 1.8 3.24 0.19

7 12 12.8 -0.8 0.64 0.05

8 1 0.4 0.6 0.36 0.9

9 0 0.8 -0.8 0.64 0.8

10 0 0.8 -0.8 0.64 0.8

Х2 4.56

Thus, since the xo2 (9.5) which is the critical value is greater than the

calculated value x2 (4.56), we accept the Null (H0) hypotheses and

accordingly reject the alternate (Hi) hypotheses. We conclude by

accepting the Null hypotheses, therefore, that the retained and the

disengaged staff of the parastatals were not well taken care of after

the privatization.

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, RECOMMENDATION AND

CONCLUSION

5.1 SUMMARY OF FINDINGS:

lxviii

It has been analytically proved that privatization remains one of

the major reforms Mechanism in every ailing economy of a country or

Parastatal. This reform is associated with problems which help in

making the exercise ineffective if not properly checked.

In this research work, attempt was made to seriously examine

the problems on privatization of federal parastatals with particular

reference to NITEL and its subsidiary M-Tel, with chosen population

figures in River and Enugu States respectively.

In order to achieve the objective of this study, some research

questions were formulated. Consequently, the questions in the

questionnaire were based on these research questions which were

eventually distributed. Having known the population of the study

through the two chosen states, the sample size was determined

using a sample method of “Yamani’s formular” which also determined

the number of questionnaire to be distributed.

A total of eighty six (86) questionnaire were distributed to both

disengaged and re-engaged staff of NITEL and M-TEL in both Rivers

and Enugu States. Out of which, eighty three (83) respondents were

returned. In Enugu State with 50 respondents and Rivers State with

lxix

33 respondents returned respectively. It might also interest us to

know that the respondents study included sexes, ages and

educational qualifications.

Various sample techniques were contributively used in this

study. Among them are the “Yamani’s formular”, simple percentage

and the non-parametric statistics called chi-square.

The data used in this study were collected through primary and

secondary sources. The questionnaire were analyzed using simple

percentages while the hypotheses were tested using non- parametric

statistic called chi-square at 5% (0.05) level of significance.

At the end the exercise of this study, the following findings

were made:

1. The respondents agreed that the privatization exercise

embarked upon by the federal government on NITEL and M-

TEL was a reform in a right direction.

2. The respondents also strongly agreed that though, like a toad

that likes water but not water, they like the privatization reform

but not partial privatization.

lxx

3. The respondents are aware of the militating problems

associated with the privatization of NITEL and M-TEL but

argued that some of these problems are self inflicted

complications which ought to be addressed properly.

4. Obviously, the respondents agreed that the privatization

exercise does not follow-due process as such, lacked

transparency. This argument was based on corruption that has

remained the omnipresent obstacle that erodes every exercise

in the country

5. The respondents argued that the privatization has resulted in

the saturation of the un-employment market and wanton waste

of valuable experience and technical know how.

6. The retrained and disengaged staff of there parastatals are not

well taken care of after privatization. This is because, there is

no proper labour policy to resolve terminal benefits matters in

collective bargaining.

7. Another finding of the study indicates that government

parastatals like NITEL and M-TEL are of more economic burden

to the government, hence privatization.

lxxi

8. Though, the respondents strongly agreed that privatization of

NITEL and M-TEL will enhance greater accountability and

development of better management practice. It raise apartment

question, who privatizes the public sector? Can a regulator

regulates itself or can one be a judge in your court?

9. Another finding also indicates that privatization will raise

financial resources that will be channeled to development of

infrastructure. Considering $750m sales of NITEL and M-TEL to

Transcorp, how much was paid if actually money was paid and

to whom? This tells us the level of corruption in the country

and under development.

10. The respondents strongly agreed that the privatization motive

in Nigeria’ is to enable the money barons to buy the public

enterprises and not for economic restructuring

5.2 RECOMMENDATION

Based on the findings of this study, the following recommendations

are therefore made to improve the problems on privatization of

federal parastatals.

lxxii

1. There should be strict compliance of both regulators and

participants to the rules and time frames of the 1999

privatization and commercialization act and customary

international privatization practices that will ensure the

evolution and development of a near perfect policy and the

economic reformation and restructuring of Nigeria’s political

economy.

2. Since corruption has made privatization not to follow due

process or being transparent, the EFCC and ICPC should audit,

investigate and prosecute from 1999 to date any public officer

of government official for economic sabotage or crime arising

out of privatization.

3. The federal Government or the labour Ministry should have a

proper labour policy to resolve terminal benefit matters in

collective bargaining involving the BPE, the management of the

public enterprises, the management of the private firm, the

employees union of the public enterprises, other professional

consultants etc.

lxxiii

4. It is pertinent to know that no manager likes serving two

masters at a time. Serving two masters at a time does not obey

the rule of unity of command stated by Henri Fayol in his

fourteen principles of administration. Therefore, partial

privatization should be ruled out but policies and rules be made

to check the privatized firm.

5. Since the crux of retrenchment of employees of parastatals

undermines decades of manpower experience and waste of

training funds, the privatization agencies should pre-condition

the minds of staff for viable entrepreneurship with possible

orientation before retrenchment as to make retrenched staff

self employed.

5.3 CONCLUSION

With ca