The scramble for Nigeria
July 24, 2012
The disastrous privatisation programme in Nigeria is the epitome of greed, avarice and corruption, benefitting a tiny elite at the expense of everyone else.
A mad scramble for Nigeria has been underway since 1999. The name of the game is called privatisation. It was a programme put in place to dispose of some 1,000 state-owned enterprises and institutional buildings to a few highly placed Nigerians and their foreign collaborators. The exercise has never been transparent; it was not intended to be anyway. So far, it has been characterised, in typical Nigerian fashion, by greed and avarice. While privatisation may not be entirely dismissed, the manner in which it has so far been implemented in Nigeria leaves a sour taste in the mouth.
For decades, Nigerians have been contending with many non-performing state run enterprises and past efforts to stem the tide failed to turn things around. But while Nigerians knew this and more, and welcomed any moves at repositioning these money guzzlers, they hardly knew former president, Olusegun Obasanjo, had unpatriotic plans when he labelled all state run enterprises as corrupt and promised to breathe fresh life into them. Thereafter, the government proceeded on a frenzied and incoherent privatisation exercise that has continued to be the source of embarrassment and shame to Nigerians. Rather than handing over the enterprises to efficient private investors with the requisite technical knowhow and experience, the government proceeded on an exercise that was largely shrouded in secrecy and bereft of even the semblance of transparency. Most of the enterprises, including institutional buildings, were cornered by shady investors and their collaborators in high places in government. Even some of its most vociferous proponents believe so many things have gone wrong with the privatisation exercise. In an unusual admission of failure, the Bureau of Public Enterprise (BPE) the body charged with overseeing the privatisation exercise, recently revealed that a miserly 10 percent of the 400 hundred privatised firms in Nigeria are properly functioning. Even at that, many sneering Nigerians and experts hotly dispute this figure.
One of the early signs that Obasanjo presided over a monumental fraud in the name of privatisation broke two months after he eased himself out of office following a failed bid to elongate his tenure. While on hand to receive a delegation from the United States Department of Energy on 17 July 2007, then director-general of the BPE, Irene Chigbue, was still maintaining that the handing over of Port Harcourt Refinery Company and Kaduna Refining and Petrochemical Company to Blue Star Oil Services Limited was a transparent exercise which, in her words, resulted from ‘a complex five-year transaction process conducted subject to international best practice and following the adoption of a multiple-bidder competitive tender process’. Nigerians knew Mrs. Chigbue was being economical with the truth as the privatisation of the refineries, like other hastily conducted ones in the twilight of the Obasanjo administration, was not transparent and apparently carried out to reward friends and loyalists of then outgoing President Obasanjo.
The flawed transaction surrounding the refineries is just one of many examples of the haphazard implementation of the privatisation policy. As if to confirm the fear of Nigerians, the privatisation exercise, right from the beginning, has been bogged down by greed, avarice and absence of transparency. These are evident in the sale of institutional buildings such as the Apo Legislative Quarters under the guise of the monetisation programme, the ‘concessioning’ of the National Theatre, Tafawa Balewa Square, Lagos International Trade Fair Complex and the stalled sale of Nigerian Telecommunications Limited (NITEL), National Electric Power Authority (NEPA), as well as reforms in the ports, and power and oil sectors. For similar reasons, the sale of national steel companies located at Ajaokuta and Aladja, Daily Times of Nigeria, African Petroleum, ALSCON, NAFCON, Eleme Petrochemicals and their attendant labour disputes, the controversial auction sale of African Petroleum and Stallion House, the sale of Federal Government properties in Lagos and Abuja, among others, have stalled with millions going down the drain.
Taken on its own, the sloppy handling of the sale of Ajaokuta Steel Company, built at a cost of $1.5 billion, is a classic example of how fraud was perpetrated in the name of privatisation. SOLGAS, the company Ajaokuta Steel Company was handed to, clearly lacked the managerial skills and technical knowhow for the big job it was saddled with. After months of squabbles with the local branch of the iron and steel workers union, Nigerians woke up one day to discover that vital components of the company had been dismantled and shipped out of the country. All an embarrassed federal government did was to query SOLGAS. The outcome of the inquiry was a termination of the agreement by the federal government after which an Indian conglomerate was drafted in by the Obasanjo administration after the Indians paid $30 million. Today, the original dream of Ajaokuta to power the nation’s industrial take-off remains a dream.
NITEL might not have been a shining example of state run enterprise but the organisation, despite its structural weakness, was paying dividends in billions of naira to the Nigerian government. Rather than reposition this goose that laid the golden eggs, Obasanjo, upon assuming office in 1999, dubbed NITEL as a corrupt organisation that needed to be privatised. NITEL was handed over to IILL Limited, a company that did not have the technical knowhow to handle the project. Worse still, IILL Limited lacked the financial muscle to finance the purchase. Eventually IILL Limited could not pay, a situation that paved the way for Pentascope, a backwater Dutch company brought in by Mallam Nasir El-Rufai. It did not take much effort to discover Pentascope was a mere front. NITEL reportedly suffered a N100 billion deficit after the Pentascope debacle. After stumbling from one crisis to the other, the company was forced off the stage but not before it turned NITEL’s account into red and cleared what was left of the company’s offshore foreign currency savings. Any dream of NITEL escaping insolvency perished when TRANSCORP, a so called home grown company, was brought in as NITEL’s undertaker. 13 years on, the mad scramble for NITEL’s jugular is still ongoing, as her assets, spread across the country, have been shared and cornered by a privileged few.
A similar fate befell Daily Times of Nigeria (DTN). Until the early 1980’s, DTN was the largest Nigerian newspaper corporation with landed properties worth billions of naira. It was sold to Folio Communications as scrap. The matter was finally resolved by a Federal High Court of Nigeria ruling in January 2010 voiding the sale of 140 million shares of DTN to Folio Communications by the BPE. According to the court, Folio Communications acquired the Daily Times without paying a dime but curiously used the company’s shares and assets network to secure a bank loan to the tune of N750 million from Afribank. Folio Communications did not even bother to repay the loan before it stripped and sold off several DTN properties and assets. Another major scam concerns the fate of Apo Legislative Quarters, Abuja. In the frenzy to sell off the buildings, lawmakers who arrived in Abuja believing they would be allocated the flats were momentarily stranded because the housing units originally built for the MPs had been sold to their predecessors. Though more than N25 billion was realised from the sale of the Legislative Quarters, the nation has been groaning under the burden of an annual budget of N3 billion for accommodation allowances, thereby placing a big question mark on the long term benefit of disposing of the Legislative Quarters.
The sale of institutional buildings, including eye-popping presidential guest houses, which ended up in the hands of serving public officials heightened fears among Nigerians that there was more to the privatisation process than they were made to understand. It further confirmed the fear of Nigerians that the exercise was taken advantage of primarily by residents within the corridors of power and their loyalists. Some instances will suffice: Mallam Nasir el-Rufai, former Minister of the Federal Capital Territory, bought the presidential guest house at No. 16 (now No. 12) Mambilla Street, off Aso Drive, Maitama, Abuja; Dr. Andy Uba, former Special Assistant to the President on Domestic Matters, dethroned as governor of Anambra state by a Supreme Court judgement which reinstated Peter Obi, bought the property at No. 19 Ibrahim Taiwo Street, Aso Rock, Abuja; Mrs. Remi Oyo, Senior Special Assistant to the former President on Media bought the property on Yakubu Gowon Crescent, inside the Presidential Villa; while Dr. Mohammed Hassan Lawal, former Minister of Labour and Productivity bought the property on Suleiman Barau Street, Asokoro, Abuja. Mr. Akin Osuntokun, former Managing Director of the News Agency of Nigeria (NAN) and, later Honorary Political Adviser to the former president, bought the presidential guest house at No. 2 Mousa Traore Crescent, Abuja; while the official residence of the Inspector General of Police (IGP) was cornered by then IGP, Mr. Sunday Ehindero.
The criminal desperation to sell off Nigeria soon became a source of embarrassment to some of the main beneficiaries of the exercise. For instance, in March, 2007, Obasanjo’s deputy, Alhaji Atiku Abubakar said:
The well-conceived and well-intentioned privatization programme, which was designed to transparently transfer state-owned assets to private hands to ensure better service delivery, has gradually been personalized and our prized economic assets and choice enterprises have been cornered and auctioned off to a tiny cabal of private sector interests closely associated, or in full partnership with those in the corridors of power, with little or no pretence at due process or transparency… (They) used the privatization programme to auction our crowned jewels to themselves at rock-bottom prices.
He should know because as vice president, Alhaji Atiku Abubakar chaired the National Council on Privatisation between 1999 till he fell out with Obasanjo in 2005. Four months later, specifically in July 2007, Senator Ahmadu Ali, former chairman of the ruling People’s Democratic Party added his voice to what had become a national uproar: ‘This is an age when they sell off everything including the family silver. I don’t encourage all these things. I don’t see why Federal Government Colleges should be sold. I don’t see why certain things that are of national security should be sold’.
The private sector was at its infancy when Nigeria inherited its colonial capitalist economy at independence. With the first coming of the military in 1966, Nigeria, in line with the policy of non-alignment, adopted a hybrid of state capitalism and socialism with significant private participation. In 1973, the military government introduced and rolled out an Indigenization Decree which nationalised operations run by multinational corporations and brought them under state control. The result was the proliferation of more 1,000 state run enterprises funded by Nigeria’s new found oil wealth. However, the crash of international oil prices in the early 1980’s, dwindling annual profits of state run enterprises and operational problems of nepotism, excessive bureaucracy, gross incompetence in management, lack of effective control and supervision by the Government among others made increased private participation in the national economy imperative. The response of the military administration of President Ibrahim Babangida to these challenges was the establishment of the Technical Committee on Privatization and Commercialization (TCPC) headed by the late Hamza Rafindadi Zayyad.
Under Rafindadi, the TCPC was widely hailed for laying down enduring structures to ensure effective privatisation of state run enterprises. Its assignments and targets were the disposal of Government equities in the Nigerian capital market, the privatisation of commercial and merchant banks, cement companies etc. To build on these economic landmarks, the Bureau for Public Enterprises (BPE) was established in 1999 as a successor to the TCPC. The National Council on Privatisation (NCP) was also established as the supervising body to BPE. These two regulatory agencies on Nigeria’s privatisation were established through the promulgation of the Public Enterprises Privatisation and Commercialisation Act 1999. But as Nigerians have come to realise, the Obasanjo idea, typical of Nigerian standard practice, altered the original programme of privatisation.
As usual, nobody will be sanctioned for the fraud and, in typical Nigerian style, buck-passing and shadow-chasing have been the game. Do Nigerians have to wait for a ‘corrective regime’ to clear the mess? Should there be a problem in dealing with whoever derailed a programme that was widely hailed at inception? Our fingers are crossed!
* Source: PAMBAZUKA NEWS. Abdulrazaq Magaji is a writer, journalist and former history lecturer, living in Abuja, Nigeria. He can be reached at email@example.com
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