PRIVATIZATION /COMMERCIALIZATION

PRIVATIZATION

Privatization is the process whereby ownership and control of the businesses, companies, industries or co-operation are transferred from the Government (public sector) to private individual (private sector)

 

ADVANTAGES OF PRIVATIZATION

1. It promotes efficiency in the business that are commercialized or privatized.
2. Government generates more revenue during the implementation of policies.
3. It leads to competition and innovation as well as improvements in the quality of goods and services.
4. There is great reduction in the level of public expenditure on enterprises that are not viable.
5. It deepens or widens the capital market.
6. It gives the consumers an increases range of choice.

 

DISADVANTAGES OF PRIVATIZATION

1. It leads to uneven distribution of income.
2. It leads to inflation i.e. increase in prices.
3. It leads to mass retrenchment of workers.
4. It leads to the reduction (lowering) of the standard of living of the citizens.
5. Privatization process may not be transparent thereby allowing a few rich people to take over choice government business.

 

EVALUATION

1. What is privatization?
2. State five advantages of privatization.

 

COMMERCIALIZATION

Commercialization is the running of government enterprises with profit motives.  It means changing from service orientation to profit orientation of government owned enterprises.  The ownership and control of such enterprises will still be under the government.  The provision of subvention, grants and subsides to such enterprises are either partially or totally removed.

 

ADVANTAGES OF COMMERCIALIZATION

1. It promotes efficiency.
2. It generates funds for government.
3. Reduction of government’s expenditure.
4. It promotes the principle of accountability.
5. It makes the enterprises to be self-sufficient.
6. It enhances the competitiveness of such commercialized enterprises.

 

DISADVANTAGES OF COMMERCIALIZATION

1. It may lead to reduction of work force.
2. It may lead to increases in price of goods and services.
3. It may lead to exploitation of the consumer.
4. It may lead to uneven distribution of wealth.

 

EVALUATION

1. What is Commercialization?
2. Differentiate between Commercialization and Privatization.

 

WEEKEND ASSIGNMENT

1. The federal government made effort at rendering public enterprises more efficient and profit-oriented through the process of ___
2. The commercialization of public enterprises is aimed at ___ (a) increasing efficiency and self-sufficiency of the enterprises (b) advertising and promoting the goods and services of the enterprises (c) selling the goods and services of the enterprises(d) changing the management of the enterprises.
3. The agency that currently oversees the privatization and commercialization processes in Nigeria is the ___(a) Securities and Exchange Commission (b) Technical Committee on Privatization (c) Nigerian Stock Exchange (d) Bureau of Public Enterprises
4. A core investor in the current phase of privatization in Nigeria is one who ___(a) can mobilize foreign currency equivalent to the value of the enterprises (b) can afford to buy most of the shares of the enterprises (c) will be at the core of the enterprises (d) has the technical know-how of the enterprises.
5. A major benefit derivable from the privatization and commercialization of public enterprises in Nigeria is ___ (a) revenue generation (b) information technology (c) employment generation(d) increase in wages

 

THEORY

1. Differentiate between Privatization and Indigenization.
2. List five disadvantages of Commercialization.

See also

INDIGENIZATION

NATIONALIZATION

AUTHORITY: SPAN OF CONTROL

STRUCTURE OF A BUSINESS

DEPARTMENTS IN A BUSINESS ORGANISATION