As a Senate committee report on the subject demonstrates, Nigeria’s privatisation programme since 1999 was more or less a total mess brought about by corruption-inspired undervaluation of enterprises, assets stripping and sales of undervalued enterprises to cronies and political associates.
—Taiwo Asaolu, October 27, 2015.
The opening quote is taken from the inaugural lecture delivered on Tuesday by Taiwo Asaolu, Professor of Management and Accounting and Dean of the Faculty of Administration at the Obafemi Awolowo University. Inaugural lectures, as known, are formal platforms which enable university professors to inform their colleagues and the wider academic community about their researches, past and current, as well as sketch out future plans for developing their specialisations. Rarely does the world outside the ivory tower take interest in what is viewed largely as an intramural affair among academics, many of who speak and write, in difficult to access language.
It is a different matter however, when the lecture is situated at the crossroads of scholarly work and national conversation on a topical public policy. Asaolu’s lecture, entitled, “Privatisation in Nigeria: Regulation, Deregulation, Corruption and the Way Forward,” by virtue of its focus on important public policy issues attracted a huge audience cutting across town and gown. The academic rigorously examined Nigeria’s privatisation programme, and as quoted above, delivered a verdict of failure for the implementation of the programme, especially in the period between 1999 and now.
Interestingly, as the author demonstrates, the limited successes recorded by the scheme occurred in the twilight of military rule and concerned mainly small enterprises such as United Bank for Africa, Unipetrol and Ashaka cement. In the period of the current civilian regime however, when succeeding governments, beginning with Chief Olusegun Obasanjo, committed themselves to privatisation as part of a “market-oriented and private sector-driven” economy. The result has been a catastrophic failure. The lecture conducted an autopsy on the failed programme and went on to suggest remedies and alternative pathways for achieving results.
The issue is not whether one accepts privatisation and market-driven policies, as the only ways to allocate resources, and grow productive forces. It is rather to investigate how a corrupt and predatory political elite tragically mismanaged the national patrimony in the name of privatisation. By an interesting coincidence, a few days before the lecture, this writer stumbled on an article in a British newspaper analysing former British Prime Minister Margaret Thatcher’s privatisation programme by tracing the current fortunes of British companies privatised in the 1980s. The article drew the conclusion, after systematic analysis that close to 70 per cent of the privatised companies, including those that have acquired new identities are doing pretty well, generating good cash flows and paying reliable dividends. The remaining 30 per cent of those privatised by Thatcher are classified by the writer as underperforming. This analysis perhaps explains why Thatcher, although a controversial figure in life and in death, is credited with having rejuvenated the British state, and indeed holds a secure place in the pantheon of great British and world leaders.
Returning to Nigeria however, Asaolu amasses a wealth of data in order to lay bare the magnificent rip-offs, insider abuse, and thieving conspiracies that attended the privatisation of important state enterprises. A few examples will illuminate the point. The Ajaokuta Steel Company was sold to an Indian consortium under the inspiration of some highly placed Nigerians. Asaolu reports that, instead of reengineering the distressed company as projected, the Indians embarked on “frenzied assets stripping of valuables to India”. The result of this humungous racket is that in a pathetic irony, Nigeria now imports steel products from India, while Ajaokuta had been laid waste by colluding fraudsters. Another loss connected with the stranding of the steel complex is the disuse of the thermal power plant of the company, which in its heyday generated enough electricity to service three contiguous states in the country.
That is not all. The DailyTimes, which was once a password for newspapers in Nigeria, was sold off to a group of so-called investors who were more interested in battering away the company’s property for immediate cash. As someone, who served as a senior member of that company’s editorial board, this writer recalls the anguish of the late Babatunde Jose, former Chairman of The Daily Times, when he visited the Agidingbi office of the paper. At that point, Nigeria’s privatisation, so-called, was in full swing. The printing press at the Daily Times was being dismantled by its new owners and sold piecemeal to metal workers. Jose, who spent his lifetime to build the media empire, came close to tears. Subsequently, a Senate resolution to reverse the tragedy was ignored by the executive and the company went into protracted limbo. It may interest the reader to note that The Times of Ghana and The Daily Graphic, which have the same colonial antecedents as The Daily Times, are still doing well even today and sell far more copies than most newspapers in Ghana.
In the case of the Delta Steel Company, the ethical chaos that pervaded the entire programme assumed a different, amazing dimension. As Asaolu told it, a company called, Global Steel Infrastructure, which did not participate in the bidding process was suddenly declared the winner. To be sure, Global Steel had put forward an expression of interest, but did not follow up with a technical bid. Yet, it was announced as having won the bid. Given this abracadabra and fly by night methods, it was hardly surprising that, even though Delta Steel was valued at N22.5bn, it was sold for a mere N4.5bn. The same story, with slightly different variations obtains for the sale of Volkswagen, Nicon Insurance, and some of our refineries.
Ironically, these insensitive transactions, most of them at any rate, took place under an Obasanjo government that committed itself to an anti-corruption programme, but according to Asaolu, no one was brought to book for bleeding the nation so severely. What went wrong? The lecturer attributed the failure of the programme to, among others, insincere and unrealistic targets, corruption and lack of accountability of the Bureau of Public Enterprises, policy inconsistency and reversals, as well as undervaluation and lack of due process.
To amplify one of the issues, it was designed that there should be only one account, where the proceeds of privatisation would be lodged. In flagrant violation of this requirement, eight different accounts were found to which the proceeds were paid. More disturbing still, out of the N301bn realised from the sales of national enterprises, less than 50 per cent of that amount actually reached the accounts. Asaolu did not only analyse the problem, he went on to provide a road map. His panaceas include the amendment of the privatisation law, in order to give the National Assembly better oversight functions, the implementation of the Senate recommendations on our botched privatisation programme, as well as intensive prosecution of corruption cases. Others include, appropriate valuation methodologies, promotion of competition as well as the partial privatisation of sensitive public enterprises.
All told, it was a most rewarding evening for those who attended the lecture. Hopefully, some of his policy suggestions will find their way into the policy arena.
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