ABSTRACT
The topic for this project is A financial Appraisal of
the operational performance of privatized Nigeria company. The research study
is done in order to get possible solution or recommendation to the problem of
the company and to make the staff to be efficient and effective.
Privatization
can be defined basically as the process of transferring the ownership of a
public enterprise to the private sector. The method adopted in this paper work
was purely primary sources i.e from the field an secondary sources i.e
magazine, journal e.t.c. The ratio shall be used as a benchmark for evaluating
the performance of the company while the data can be analyzed into two and
these are pre-privatization and post privatization.
In
this respect, my aspiration to go into this research work is the modern
techniques of finance mobilization, privatization has grown to attain much popularly as it is how being
embraced by many developed countries and developing countries.
TABLE OF CONTENT
TITLE PAGE PAGES
CERTIFICATION I
DEDICATION II
ACKNOWLEDGEMENT III
ABSTRACT V
TABLE OF CONTENT VI
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF THE PROBLEM 4
1.3 SIGNIFICANCE OF THE STUDY 7
1.4 AIMS AND OBJECTIVES OF THE STUDY 7
1.5 SCOPE AND LIMITATION OF THE STUDY 8
1.6 RESEARCH METHODOLOGY 9
1.7 ORGANIZATION OF THE STUDY 10
CHAPTER
TWO
LITERATURE
REVIEW AND THEORETICAL FRAMEWORK
2.1 LITERATURE REVIEW 12
2.1.1 MEANING OF PRIVATIZATION 13
2.2 PRIVATIZATION IN NIGERIA 16
2.3 THE PRIVATIZATION PROGRAMME 18
2.4 PRIVATIZATION AND LIBERALIZATION 20
2.5 HISTORICAL BACKGROUND AND REGULATORY FRAMEWORK OF PRIVATIZATION IN NIGERIA 24
2.6 THE PRIVATIZATION PROCESS 25
2.7 ESTABLISHMENT OF AN APPROPRIATE LEGAL AND REGULATORY FRAMEWORK 31
2.7.1 INSTITUTIONAL ARRANGEMENT 31
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 INTRODUCTION 45
3.2 DATA COLLECTION METHOD 45
CHAPTER
FOUR
4.0 PRESENTATION ANALYSIS AND INTERPRETATION
VIA STATISTICAL AND ALLIED TECHNIQUES 49
4.1 ANALYSIS OF PRE-PRIVATIZATION AND POST PRIVATIZATION OPERATIONAL PERFORMANCE OF SELECTED COMPANIES 50
4.2 ANALYSIS OF RATIO MEAN VALUE 51
4.3.1 TAX FOR THREE COMPANIES 53
4.3.2 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN DIVIDED 54
4.3.3 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN RETURN ON CAPITAL EMPLOYED 55
4.3.4 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN SHAREHOLDER’S FUND GROWTH 56
4.3.5 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN EARNINGS PER SHARE 57
4.3.6 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN DIVIDEND FOR SHARE AFTER TAX 58
CHAPTER
FIVE
SUMMARY
CONCLUSION AND RECOMMENDATION
5.1 SUMMARY 59
5.2 CONCLUSION 60
5.3 RECOMMENDATION 62
BIBLIOGRAPHY
CHAPTER ONE
1.1
BACKGROUND OF THE STUDY
Privation
is basically the process of transferring the ownership of a public enterprise
to the private sector. This can be said to be injection of private resources in
order words, capital and man power (in the aspect of more qualitative
management ) into public sector activities. In Nigeria, privation has led to
the transfer of ownership of government establishment to the private sector
With
the advent of the modern techniques of finance mobilization, privation has
grown to attain much popularity as it is now being embraced by many countries
both developed and developing countries which Nigeria happen to be part of
them.
The
need for an efficient mechanism finds mobilization need to deregulate the
economy and a quest for the elimination of include political interference in
the economy amongst other reason have led to recent international appeal for
privation by many government.
This
wide spread acceptance of privation could be accounted for by various factors
these includes:
1.
The failure of
government to run their parastals efficiently and effectively due to prevalent
factor like bureaucracy. These have hundred their responsiveness to government
public policy: hence they have constituted a drain on the nation economics
2.
The minimization
of excesses of political interference and non-market oriented decision making
3.
The need to
restructure internal policy due to an international economic demand for
deregulation, instance of this is the international monetary funds (IMF) demand
for deregulation of some third world economic s as a condition for granting
loan facilities to them
Privatization
has proven to be a channel through which domestic and international investment
get into and perhaps stay with in the country’s
economy. Also fund tied down in state owned establishment. Also fund
tied down in state owned establishment can be released and redirected towards
more welfare oriented program like heath are delivery, funding of education
national security e.t.c.
However,
in the case of Nigeria and some developing countries privatization is taking a
slow pace and this can be blamed on previous bad government greed on the part
of policy makers, minimal awareness of the gains of privation on the part of
the majority of the populace amongst other reasons.
Privatization
has been adopted as a key mechanism for deregulation policy in developing
counties like Nigeria is that of accelerated domestic participation in economic
activities that will enhance economic independence.
The
history of privation in Nigeria and it’s implication for economic independence
of the private sector owned no part of establishment, but the government and
foreigners own them.
Although,
the whole process was not know as privatization then it was all the same as an
attempt to transfer ownership of enterprise in Nigeria to the private sector.
It was further modified in 1977.
Under
the indigenization exercise, the government still retained its hold on many
enterprise from the global perspective,
the growth in the popularity of privatization then, especially in industrial
nations like Britain etc. can partly be traced to the economic development of
the mid 70’s because it was used as a very vibrant tool to salvage the economy
from the repercussion of the failure of the widely expanded public sector
activities (Ekpentony 1992 ). then, privatization brought a kind of relief by providing market
system, which is being required to achieve some necessary macro economics adjustments.
Countries that found themselves in this situation include Pakistan and Brazil.
1.2
STATEMENT OF THE PROBLEM
In
privatized companies, it is strongly believed that with very sound policies,
their implementation and monitoring will bring about a lot of gains both
structural and financial, and the economy of large especially in the area of
deregulation that will be enhanced by qualitative backward and forward
linkages.
There
is no organization without it’s own share of problem. The success of any
organization depends on it’s ability to make a good programme and excite it.
For example of privatized companies have good plans and could not execute
Them for the following reasons
(i)
Ability to finance
:- some privatized companies find it difficult to fiancé programme that will
bring success to their bring success to their out put either caused by the
ignorance by the decision makers.
(ii)
Practice
competence :- some may be ready to finance, but the technical hands, they have
on the floor of the organization may able to meet the requirement
(iii)
Management
consistency:- this also may pull back the hand of the organization clock as in
accounting data on the determination of business efficiency
(iv)
Excessive urge for
profit:- this means the organization interest in making more of profit them
it’s reasonable, there by having an adverse effect on the quality of it’s form
the global perspective, the growth in the popularity of privatization them,
especially in industrial nations like Britain e.t.c can partly be traced to the
economic development of the mid 70’s because it was used as a very vibrant tool
to salvage the economy from the repercussion of the failure of the widely
expanded public sector activities (Ekpentony 1992) then, privatization brought
a kind of relief by providing to achieve some necessary macro economic
adjustments. Counties that fund them selves in this situation include Pakistan and brazil.
1.3
SIGNIFICANCE OF THE STUDY
The
essence of this study is to reveal the Nigeria program of privatization on
which was thus developed
(a)
Improve the
efficiency of public enterprises
(b)
To minimize their
dependence on the nation
(c)
To encourage share
–ownership by Nigeria capital market
(d)
Also, it will
limit the scope of political interference in decision making in order to
increase managerial incentive by making mangers responsible to shareholders who
monitor their performance letter than government and to impose the financial
discipline into private capital market (including the market for corporate
control)
1.4
AIMS AND OBJECTIVE OF THE STUDY
The
main objective of the study is to investigate whether privatization has
affected the financial performance of the privatized company. It is also to
establish the degree of relationship between privatization of Nigeria companies
and their positive post privatization performance.
The specific objective are to:
(a)
Examine the
performance of privatized companies financially before and after privatization
(b)
Assess the cost
and benefit of privatization to these companies and the nation at large
(c)
Determine the
major constraint (5) to privatization
1.5
SCOPE AND LIMITATION OF THE STUDY
The
study is strictly focused of the effects of privatization on the performance of
privatized companies in Nigeria. The selected companies which is divided into a
5 year post privatization and 5 year. This study is prone to certain constraint
which includes:
(a)
Inaccessibility to
first hand primary data which would have reflected a precise state of the
affairs of the selected companies
(b)
Also that of data
accuracy because the main source of data is the financial statement of these
companies over the years haven been subjected to various adjustment and fine
turning for corporate interest e.g taxation
The
most suitable type of data for this type of study is that which reflects
specific market values of the performance of the company in question. This is
very expedient for an economic based study of this nature. Other limitation are
the presence of qualitative factors, management composition and other
externalities data whereas some of these qualitative aspect have serious
impacts on performance e.g Trade dispute in the organization.
1.6
RESEARCH METHODOLOGY
In designing
a reliable and ideal methodological work, it is of all things necessary to
discuss on the statistical terms used in the making of this research work. The
study examine the economic financial performance of 2 selected privatized
companies in analyzing its operational performance before and after
privatization.
I shall
be making use of frequency table and graphs in describing the operational. The
major source of this information for this study are through journals,
textbooks, research work etc.
1.7
ORGANIZATION OF THE STUDY
The study is divided into six chapters.
Chapter one: It is the introductory chapter which
provide an insight and over review as to what the study is all about and how
the study was conducted.
Chapter two: It deals with the literature review and
the theoretical framework which covers the views and opinions of experts in the
field of privatization on issues such as: economic theory. Legal (provision
guidelines constraints and environment) it focuses on the historical background
and the regulatory framework which briefly but adequately touches on the past
history of privatization in Nigeria this far and also the regulatory bodies
that have been in-charge of the process up to data and also existing relevant
information pertaining to the study.
Chapter three: deal with research methodology i.e the
data presentation of the study. The sources through which data is being
collected.
Chapter four: Deals with the actual empirical analyses
of the study, where the generated data in intricately manipulated via
statistical and allied techniques to arrive at the result of the whole study.
Chapter five: Round up of the whole essay with the
summary conclusion and recommendation.
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