Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM

Monumental Failure of Privatisation in Nigeria:

Monumental Failure of Privatisation in Nigeria:

Labour should stop its support for privatization and lead the process for formation of a working people political alternative

By Peluola Adewale

Just as obtained in the power probe by House of Representatives in 2008, Nigerians have been treated to a reality show of monumental frauds and daylight robbery perpetrated in the name of privatization exercise. Prompted by the lamentation of the Nigerian Vice-President, Nemadi Sambo, that more than 80 percent of public enterprises that have been privatized now do not function or have been grounded, the Senate set up a panel to investigate the privatization exercise since 1999. Though the revelations have been sickening, the Senate probe has only provided Nigerians the platform to hear from the horse’s mouths what has already been an open secret – privatization is not only a brazen pillage of the country’s patrimony but also an unmitigated fiasco.

While moving the motion for the probe into the privatization Senator Ahmad Ibrahim Lawan, who would later head the probe panel, lamented that, “due to the collapse of the privatized companies, there are massive loss of jobs and colossal loss of economic returns to the Nigerian economy. For example, the privatized companies in the steel sector that used to employ up to 20,000 workers, now have less than 4,000 after the exercise. The Electricity Meter Company of Nigeria, Zaria that was privatized in December 2002 recently fired about 90 percent of its workforce.”

The revelations at the sitting of the panel are more frightening. Nigeria spent between 1973 and 1995 about $100bn to establish public enterprises but so far after more than a decade of privatization just meager $1.6bn has been realized as gross earnings from the exercise. Besides, most of the companies have been sold at give away prices. The $3.2 billion Aluminium Smelter Company of Nigeria (ALSCON) located in Akwa Ibom State was sold to a Russian firm, Russel for the sum of $130 million! Global Infrastructure, an Indian company, which did not participate in the bidding process, was sold 80 percent of the shares of $1.5 billion Delta Steel Company at the sum of $30million. The Nigerian Re-Insurance Corporation that was worth N50bn was sold to Global Fleet which is owned by Jimoh Ibrahim, a major financier of the PDP, for N1.5bn. The incontrovertible evidence that the Re-Insurance was sold cheaply, is that Jimoh Ibrahim, shortly after taking over the ownership, reportedly used only two of the company’s assets to secure a N41 billion loan from Union Bank Plc. For companies like Ajaokuta Steel and Daily Times, the only activities that have been taking place since their sale are the stripping of their assets by the new owners. Besides, a common factor with all the privatized companies is the huge loss of jobs.

Privatization is presented by the capitalist ideologists as the only solution to the monumental socio-economic crises confronting Nigeria, nay all third world countries. The usual refrain is that the government does not have business with business. For over two decades the unwholesome fleece of the public properties has been the main policy-thrust of the respective governments from the military dictatorship of Ibrahim Babangida to the current civilian administration of Goodluck Jonathan. The public hatred for military dictatorship and everything it represented meant that the structural adjustment program (SAP), which had privatization among its central plank, was not only unpopular among the people but also attracted a mass resistance – the anti-SAP protests after 1986.

But with the advent of the civil rule the hated SAP was repackaged as neo-liberal economic agenda just like replacing a half-empty bucket with a half-full bucket. The bitter adversaries of SAP of yore have become the unrepentant advocates of privatization today. It is unfortunate for the poor working people that standing out among the turn coats are the vast majority of the labour leadership. Labour, who rallied workers and youths with the slogan, “Nigeria not for Sale” in the struggle against SAP, now has leaders who have been relishing their seats on the National Council on Privatisation since 1999. Today’s labour leaders are not even apologetic for this apostasy. This explains why the NLC is not ashamed to gleefully declare itself “a stakeholder in the privatization of public enterprises” in an August 12, 2011, press statement issued and signed by NLC President in the wake of Senate committee probe. But this attitude is not just out of the blue; it has been characteristic of the current labour leadership who have apparently lost the will and conviction to fulfill the historic roles of Labour in the struggle of working people for a better society.

At the outset of the privatization spree, the call by the organizations like DSM on Labour not to join, or to resign from the NCP, but rather lead a struggle for a working peoples’ economic alternative was apparently dismissed as rant of starry-eyed idealists who are blind to the reality of the failure of public enterprises. We have consistently argued that the problem is not the public ownership of the enterprises but the character of their management and their added burden of operating within an economy dominated by capitalism and imperialism. The companies are public in names but are run with private interests with characteristic self-serving agenda. The companies are usually carved out for those appointed to run them as their own share of the spoils of public office. It is in order to ensure that the public companies truly serve the interest of the people and economy that we have argued that it is not enough to have public ownership it must exist side by side with open democratic management and control of those companies with the elected representatives of workers, consumers and communities.

Unfortunately, the stark reality of the failure of privatization is not even compelling enough to make Labour to review its stands. This should be much more disturbing to the working people than the frightening revelations from the probe. It is unfortunate that the Labour leaders share similar simplistic argument that it is lapses in the privatization process that accounted for its failure.

The labour leadership has refused to appreciate the incontrovertible fact that the primary drive for the so-called private sector is quick and super profits they could appropriate by cheaply seizing hold of formerly public enterprises. In reality it was another looting exercise, not a desire to contribute to economic development and job creation. This explains why in the most cases while the privatized enterprises have failed or grounded the buyers have made huge profits their investment either through asset stripping or using the assets as collateral for bank loans. Besides, because of the way in which governments had run down public services, a good number of the companies require huge and long-term investment which the parasitic fortunes hunters are not capable of.

The Nigerian ruling elite are primitive and parasitic. This explains why they can hardly invest in industry. They rather position themselves to buy cheaply the public enterprises or cream off public resources by holding political office or by awarding themselves inflated government contracts. For instance, since 2002 about 17 companies have been issued license to build private refineries but until none of them has laid even the foundation let alone commence operation. Yet, they would be ready to buy off the public refineries once they are placed on the counter. It is the same scenario that obtains in the power sector where the so-called investors who could not generate on their own a single megawatt of electricity are waiting in the wing to buy the companies that have been cannibalized out of the PHCN.

It is unfortunate Labour has been confronting the privatization fraud and failure with a half-measure approach. According to the communiqué of the NEC meeting of NLC held on August 18, 2011 which reads in part, “the NEC-in-Session resolved that Congress should not only make a strong presentation to the Senate Sub-committee, but carry out whatever action it deems fit, including rallies to demonstrate the feelings of workers with a view to ensuring that the outcome of the probe is not jettisoned and all those found culpable are brought to book.”

We welcome actions that would see those who have plundered the public assets behind bars and call on Labour to include in its demands a call for the confiscation of looted assets from corrupt individuals and companies. We however hold that this approach does fundamentally address main issue which is that privatization itself is a daylight robbery of public properties. This is a case where it is correct and desirable to throw the baby away with birth water. But the way and manner the NLC is addressing the issue is tantamount to raising illusion among workers and the public that once report of the probe is implemented and the culprits of privatization frauds are brought to book the privatization agenda would help turnaround the economy. Labour should appreciate that the failure of privatization exercise is not an accident but fundamentally inherent in the profit-first driven process. The eighty percent failure so far recorded by the privatization, as revealed by the Vice President Nemadi Sambo, is too phenomenal to be a mere slip or human error.

Besides, the recent pumping of public funds to bail out the failing private banks has further shown that fabled private sector managers do not own any magic wand to run companies efficiently. Moreover, capitalism has proved globally to be an intrinsically corrupt system. It is the failure of private banks and institutions triggered by monumental frauds that brought the world to the deepest and worst economic crisis since World War Two. The struggle should therefore be primarily aimed at the privatization agenda, anti-poor neo-liberal policies and capitalism as a whole.

The NLC should withdraw its membership of the National Council on Privatisation and invest its energy and resources towards a campaign against privatization of the public companies. The privatized companies should be returned to the public ownership but under management which is subject to open democratic control of workers, consumers, communities and relevant professionals. However, implementing this measure is a threat to the greed of the parasitic, pro-capitalist elements in the political offices, hence the question of political power by the working people in order to use the public resources to serve the need and interest of the vast majority. Besides, all the major political parties hold privatization as the linchpin of the economic agenda. Therefore, the need for the working people political alternative armed with a socialist program as the platform to struggle for a political power is imperative. We call on workers and Labour activists to consistently agitate at the various organs of trade unions from the workplaces right to the apex level for Labour to play its historic role to the working people by initiating the process for the formation of a mass working peoples’ political party that will fight this rotten system with a socialist programme.