Privatization in Nigeria represents a watershed in the country’s economic history. From the late 1980s onward, state-owned enterprises (SOEs) gradually shifted from government control to private ownership or commercialization under successive military and civilian regimes. Designed to enhance efficiency, reduce government expenditure, and stimulate private sector growth, the policy achieved mixed results. While some sectors recorded progress, others became symbols of controversy and elite capture.
Background: State Control and the Economic Crisis
Following independence in 1960, Nigeria adopted a state-led model of economic development. The government dominated major sectors, oil, steel, telecommunications, transport, and power, guided by the belief that the state was best positioned to drive industrialisation and protect national resources.
By the late 1970s, however, inefficiency, corruption, and political interference had crippled most SOEs. The global oil price collapse of the early 1980s exposed the fragility of Nigeria’s oil-dependent economy. Many state firms became financial burdens rather than engines of growth, paving the way for economic liberalisation.
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The Turn to Privatization Under Military Rule
The decisive shift occurred during the regime of General Ibrahim Babangida (1985–1993). In 1986, his government introduced the Structural Adjustment Programme (SAP), supported by the International Monetary Fund (IMF) and the World Bank. Its objectives included reducing public spending, diversifying the economy, and encouraging private enterprise.
In 1988, the government enacted the Privatization and Commercialization Decree, establishing the Technical Committee on Privatization and Commercialization (TCPC), led by Dr Hamza Zayyad. The committee identified unprofitable SOEs and classified them for either privatization or commercialization.
Between 1988 and 1993, about 88 public enterprises were privatized or commercialized, covering manufacturing, banking, insurance, and hospitality. The initiative marked Nigeria’s first formal step toward economic liberalisation, though it drew criticism for lack of transparency and favouritism toward politically connected elites.
Privatization Slowdown Under Abacha and Abubakar
After Babangida’s resignation in 1993, the process slowed under General Sani Abacha (1993–1998). His regime prioritised political control and consolidated state authority over key economic sectors. Although he maintained rhetoric supporting privatization, little practical progress was achieved.
Following Abacha’s death in 1998, General Abdulsalami Abubakar’s transitional government revived the privatization agenda as part of preparations for democratic governance. He established the Bureau of Public Enterprises (BPE) in 1999 to institutionalise and coordinate the programme under clearer legal and policy frameworks.
The Democratic Era and Renewed Reforms
President Olusegun Obasanjo (1999–2007) inherited an economy burdened by debt, inefficiency, and corruption. Determined to revitalise Nigeria’s industries, his administration accelerated privatization under the guidance of the BPE, led by Nasir El-Rufai (1999–2003).
Major enterprises such as the National Electric Power Authority (NEPA), Nigerian Telecommunications Limited (NITEL), Nigerian Airways, and various port and steel facilities were sold, concessioned, or restructured. The government argued that privatization would attract investment, enhance productivity, and reduce public sector costs.
Between 1999 and 2003, over 100 enterprises underwent some form of privatization or commercialisation. However, many sales were marred by allegations of undervaluation, corruption, and political patronage. For example, NITEL’s privatization failed multiple times, leading to its eventual collapse.
Sectoral Outcomes
Telecommunications
The telecommunications sector remains the most successful example of privatization in Nigeria. The liberalisation that began in 2001 opened the market to private operators such as MTN, Glo, and Airtel. This expansion revolutionised communication, created millions of jobs, and boosted economic productivity.
Power
The privatization of the power sector produced mixed results. The unbundling of NEPA into the Power Holding Company of Nigeria (PHCN) and the subsequent sale of generation and distribution companies in 2013 attracted investors but failed to guarantee stable electricity. Poor regulation, infrastructure decay, and inconsistent policies hindered long-term improvement.
Transport and Steel
Privatization efforts in the transport and steel industries largely failed. The Nigerian Railways, Ajaokuta Steel Company, and Nigerian Airways struggled with corruption, inconsistent policy direction, and lack of investment. These failures exposed deep governance and institutional weaknesses that persist in Nigeria’s public sector.
Public Reaction and Criticisms
Public opinion on privatization has remained divided. Supporters argue that it curbed wasteful state spending, promoted efficiency, and fostered innovation. They cite the telecom revolution as proof that private enterprise can succeed where government bureaucracy fails.
Critics, however, view privatization as a vehicle for transferring national assets to a wealthy elite. Labour unions, especially the Nigeria Labour Congress (NLC), opposed the policy, citing mass job losses, rising inequality, and lack of public consultation. The opaque nature of transactions eroded public trust and reinforced perceptions of corruption.
Challenges and Governance Issues
The major challenges of privatization in Nigeria include weak institutional frameworks, lack of transparency, inconsistent policies, and political interference. Many privatised enterprises continued to underperform due to inadequate oversight and absence of strong regulatory structures. The government’s failure to reinvest proceeds from sales into productive sectors also weakened public support.
Furthermore, the social consequences, particularly unemployment and inequality, were rarely addressed. Without social safety nets, thousands of displaced workers were left without compensation or retraining opportunities.
Legacy and Continuing Relevance
Privatization has left a complex legacy in Nigeria’s economic and political development. It remains a central issue in debates over state intervention versus market freedom. While it has spurred progress in certain sectors, particularly telecommunications, it also revealed systemic flaws in governance, accountability, and equity.
Today, Nigeria’s challenges in power generation, manufacturing, and public infrastructure stem partly from incomplete or poorly executed privatization policies. The lesson is clear: reform requires more than policy, it demands transparency, integrity, and long-term commitment to the public good.
The privatization of Nigerian state-owned enterprises was one of the most transformative yet controversial economic policies in the nation’s post-independence history. It promised efficiency and growth but often delivered uneven results due to corruption, policy inconsistency, and inadequate regulation.
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Privatization reshaped Nigeria’s economic landscape, laying the foundation for market-oriented reforms. Yet, its mixed legacy continues to influence contemporary discourse on development, governance, and national equity. For future reforms to succeed, Nigeria must balance efficiency with fairness and economic growth with social responsibility.
Author’s Note
Nigeria’s privatization journey began under the Babangida administration through the Structural Adjustment Programme and evolved under Obasanjo’s democratic reforms. It brought successes in telecommunications but fell short in sectors like power and steel.
Privatization can drive growth only when implemented transparently, equitably, and with strong institutions. Nigeria’s experience underscores the need for reforms that serve both efficiency and public interest.
References
- Preliminary Reflections on the Privatization Policy in Nigeria, Emerald Insight, 2013.
- Does Privatization Serve Public Interests?, TheCable Nigeria, 2022.
- Giving Privatization a Bad Name, Punch Nigeria, 2021.
