Giving Privatisation a Bad Name!!! (2)

For over fifty years, Nigeria had a telecommunications monopoly, most-recently called Nigerian Telecommunications Ltd (NITEL) by the time of the Digital Mobile License auctions in 2001. In spite of a large underserved market and extremely high prices, NITEL refused or was unable to exploit the market opportunity providing only about 470,000 lines across the whole country! It cost over N200,000 to obtain a telephone line and a Nigerian Minister for Communications was reported to have proclaimed that telephones are not for the poor! As an upwardly mobile manager in a leading bank, I recall having to go through a friend, whose uncle was federal permanent secretary simply because I wanted an analogue mobile phone!!!

According to Nigerian Communications Commission (NCC) data, there were 117 million connected lines, 90.5 million active lines and installed capacity of 160.9 million lines with tele-density of 64.7% as at April 2011. Given current installed capacity, the industry now has capacity to provide a telephone line for every Nigerian, rich or poor! Beyond sector transformation, the impact on government revenue (corporate and employee taxes), import duties, employment and GDP growth has been phenomenal. The telecommunications sector has grown to just under 5 percent of GDP in just 10 years-higher than manufacturing!!! Meanwhile the state-owned NITEL has virtually disappeared from the industry radar due to a combination of corruption, incompetence, bureaucracy and sabotage.

The domestic airline industry has also been transformed due to sector liberalisation leveraging private capital and management. I recall the bad old days of Nigerian Airways when you could not get around Nigeria in less than one week! The airline frequently oversold tickets and prospective passengers risked getting on the plane to find all seats taken, except of course you had a powerful government official or Airways official to secure your seat. Ex-president Obasanjo has frequently lamented how Nigerian Airways fleet of over thirty airplanes was depleted to just one in a space of twenty years due to corruption, mismanagement and greed. While there are still problems with private airlines, air travellers can get to and from Abuja, Port-Harcourt, Enugu or Lagos in one single day! The difference is that you have a choice between Air Nigeria, Arik, Aero Contractors, DANA, IRS and whoever else is able to muster capital and requisite regulatory approvals to set up an airline.

Government ownership was also disastrous for the financial services industry in the 1980s and 1990s. No one who has read the case study of the old International Merchant Bank (IMB) as contrasted with the Guaranty Trust Bank case both written at the Lagos Business School will countenance the return of government ownership of banks in Nigeria (unfortunately as the CBN has just executed!) Hopefully that will be a short-term intervention. Government ownership meant that promotions, employment, lending and credit decisions and board and management composition in banks were subject to political interference and abuse. Most federal and state government-owned banks did not survive that era-Continental Merchant Bank, Allied Bank, Nigerian Merchant Bank, Nigerian Arab Bank, National Bank, Progress Bank, Lobi Bank etc. Private banks are not free of mismanagement (as we have recently being reminded), but the difference is that owners of private banks are more likely to be allowed to suffer the consequences of mismanagement than government!!! Had government control of our leading banks-First Bank, UBA, Union, Afribank, Federal Savings Bank etc continued for just a few more years, it was virtually inevitable that those banks would also have gone the way of the others.

I find it curious that journalists and activists are often opposed to privatisation, not recognising that they are important beneficiaries of private sector investment. When government controlled the “commanding heights” of the Nigerian economy, most newspapers, radio and television stations were owned by federal and state governments-Daily Times, New Nigerian, Radio Nigeria, Lagos Television, OGBC, Radio Lagos, Sketch, Observer, Nigerian Tide, Herald, Triumph etc. Government media ownership was a major constraint on civil liberties, especially freedom of expression and the press, and only very few media organisations such as Chief Awolowo’s Tribune offered an alternative to official propaganda. Journalism and civil society flourished with media entrepreneurship making it impossible for schemes such as “third-term” or “self-succession” to succeed in Nigeria.

Activists and commentators freely offer alternative, often anti-government views on various privately-owned media platforms-STV, Channels, THISDAY, Guardian, Trust, Businessday etc. It was their self-employment in private professional practices that enabled activists like late Kanmi Ishola-Osobu, Tunji Braithwaithe, Alao Aka-Bashorun, Beko Ransome-Kuti, Gani Fawehinmi, Bamidele Aturu and Femi Falana to survive the intimidatory powers of the Nigerian state! Associated with growth in private media is the marketing communications industry (advertising, public relations, branding, outdoor marketing etc) which have blossomed as private media expanded.

The transformative impact of private capital and management has been felt in other sectors-hotels and hospitality, information technology, cement, oil marketing, professional services, food logistics etc. Is it a coincidence that the areas in which our people suffer-electricity, refineries, water and public utilities, transportation, public health and education-are state-owned? I don’t think so!!! The Nigerian public sector has more than enough to do in maintaining security and public order, building regulatory institutions, investing in education, health and social services, providing roads and public infrastructure, administration of justice and stamping out corruption.