Privatization Appropriateness of the Presentations

In evaluating the two research papers presented for this assignment, it will involve determining the appropriateness of the papers, the literature review presented in the papers, the methods employed, the quality of the data analysis, along with readability, relevance and the contribution each paper makes towards the question at hand: is privatization the best solution in Nigeria?

Owolabi Bakre from the Brunel Business School in the UK argues that in the process of rescheduling its debt (which was $30 billion owned to Western creditors as of 2002) with the International Finance Corporation (IFC), Nigeria's problem was hijacked by the IFC in its contentious -- and much criticized -- "structural adjustment programs" (Bakre). Basically Bakre is attacking the Nigerian government and basing his arguments on scholarly points he makes throughout his 62-page paper.

To wit, Bakre is opposed to privatization of publicly owned enterprises. He uses the example of the Nigerian Telecommunications Limited (NITEL) to point out how privatization can lead to corruption, mismanagement, and in time privatization is just a way for corrupt public officials to buy into structural adjustment programs that do not create wealth and only benefit the elite in Nigeria and elsewhere.

On the other hand, the second paper is an argument for privatization, using the NITEL situation as a basis for justifying the need for privatization in Nigeria. The second paper goes to great lengths to be readable and relevant, but it is clear from the outset that the second paper has as a theme an attack on government-owned enterprises (how corrupt they are and why privatization is necessary).

Both papers are lengthy and occasionally verbose to the point of almost bordering on redundancy. But they are quite appropriate for this contrast and comparison exercise.

What are structural adjustment programs? The World Health Organization explains that SAPs are "…economic policies for developing countries" that are administered by the World Bank and the International Monetary Fund (IMF). Loans are given to countries (under the SAP) with certain conditions; the SAP requires governments to make adjustments to economic policies that will purportedly help the country become debt-free or at least approach a fiscal situation that is healthy (WHO).

Methods Employed - Readability

Bakre is very thorough and detailed in his views and assertions. He uses carefully thought-out narrative to make his points albeit he is not objective and doesn't pretend to be objective. His narrative is very easy to read. Bakre used reports from some of the very internal agencies that were responsible for the advent of privatization in Nigeria; he also used reports from the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices Commission (ICPC), and the Code of Conduct Bureau (CCB).

Meanwhile he not only criticizes the concept of privatization -- by pointing out that privatization was "implicated in the collapse" of Enron, Xerox, WorldCom, Lehman Brothers, Fannie Mae, the Halifax Bank of Scotland, among others -- he also criticizes the "…criteria used for assessing the success of privatization." Bakre argues that many poor and corrupt Third World countries were "…under particular pressure from the World Bank and the IMF to privatize," and that indeed privatization was "forced on corrupt socio-political economies" like Nigeria. This was done notwithstanding the fact that there were "successive corrupt Nigerian regimes" that of course welcomed the loans from the World Bank and IMF.

So the debt was "rescheduled" and in effect, the IFC required Nigeria to privatize and to accept structural adjustment. The acceptance of the IFC's conditions went against public opinion in Nigeria Bakre explains, and yet the corrupt leaders in Nigeria (the "pro-capitalist elite in government") allowed the structural adjustment to be put in place, which could have undermined the Nigerian Constitution and put democracy in a difficult situation, he continues.

Why did privatization fail to create wealth in Nigeria? Bakre insists that once the money was secured and privatization had begun, "Nigerian political and economic elites were using their power and influence to buy some of the firms at give-away prices" and "corruption also led to black hole accounting." That black hole accounting is a metaphor used by Bakre to explain that "a substantial part of the proceeds of privatization were directed to private bank accounts" -- which by any measure is blatant government corruption.

Corruption in Nigeria vis-a-vis the privatization strategies doesn't always manifest itself as governmental people sticking cash in their pockets or diverting IFC loans directly into their personal bank accounts, Bakre goes on. Sometimes corrupt officials lavish "favorable contracts" on their friends, their backers, or cronies. And there is generally a kick-back or otherwise draconian benefits for the corrupt official...

And yet "…corruption explains why major Nigerian roads are impassable" and why there are constant power failures; corruption explains why Nigerian hospitals "lack necessary medical equipment and drugs, despite yearly budgets that are earmarked for these purposes" (Bakre). The author goes into intricate details on page after page, pointing to the problems resulting from: a) SAPs; b) the failure of the World Bank to live up to its own "Article of Agreement"; and c) the provisions of Nigeria's Constitution (including the Public Enterprises (Privatization and Commercialization) Act of 1999.
The NITEL is the salient example that Bakre uses to argue against privatization. NITEL went from a "once thriving national operator" with 553,471 functional lines and income over $452 in 2002, to about 100,000 lines in September, 2005, and income dived to about $10.7 in 2005. How could a company fall flat in just three years? It was, Bakre asserts, due to "corruption and mismanagement on the part of the politicians and public officials institutionally appointed to manage the privatized affairs of NITEL. The corrupt bottom line to this unbelievable downturn in profitability for NITEL is that there is a "patrimonial system of governance" in Nigeria. A report from the Nigerian Senate Committee on Privatization concluded that the withdrawal of money from public funds was unconstitutional.

A Phenomenological Study of Privatization, Leadership… NITEL

Meanwhile another view of the privatization of NITEL is presented in a 162-page paper which purports to have interviewed 20 NITEL employees to get their responses to questions about organizational leadership, efficiency, accountability, and staff training, among other aspects of the NITEL program. This paper clearly points to the "…history of sub-standard crisis management, corruption, and low productivity" under the government control. So, did privatization help or hinder NITEL, that was the central question. First of all when a government-owned telecommunications company admits that 60 out of every 100 lines is "faulty," that is an unconscionably outrageous failure to provide a needed service.

The twenty people interviewed were offered "open-ended questioning" and there were "systematic procedures for data collection," the report explains. After going through a lengthy list of reasons why the framework for this research (a systems theory) was incorporated -- and accounting for the large volume of literature that explains various approaches to research -- each question employed was dissected in terms of what it hoped to achieve and on page 123 "Findings" vis-a-vis the questions were offered.

Not surprisingly, the seven "core themes" showed why (in the view of this paper) privatization is preferable to government-owned enterprises. As to "organizational leadership," the consensus of the 20 workers was that the leadership does clearly communicate the goals, the mission, and the objectives of NITEL. Regarding "overcoming performance gap" the participants explain that NITEL takes "…a proactive approach toward identifying and addressing gaps in performance"; moreover, the higher the company sets its goals, the better employees will work to overcome performance gaps and have a "competitive edge" (p. 125).

On the subject of "staff training and development" the respondents believe that NITEL truly cares about the "career progress" of employees; the respondents believe that because NITEL reportedly "…conducts consistent and ongoing training and education." Moreover, NITEL goes to the trouble to identify "…characteristic skills needed by potential leaders" and trains those individuals to "…take initiative, become innovative, empower others, create and nurture organizational cultures, and foster team spirit" (125). The topic, "employment of ethical measures" brought interesting responses from the twenty employees, including the fact that policies are in place for "remediation, practical application and disciplinary measures" when ethical standards are not met (126).

"Employee and customer relationship" issues were a strong theme emphasized by the workers; that is, the "overall relationship that NITEL develops with employees, suppliers, customers, shareholders and other stakeholders" is a relationship in which customer satisfaction is on the same plane as employee satisfaction (126). The "Implementation of best practices" question was answered in a positive framework. The participants insisted that NITEL "continuously strives to be the best in the industry through implementation of best practices" (126). As to "performance management systems," the twenty employees said NITEL works to create and "balance value for…