Privatization – Impact On The Nigerian Money Market

Privatization – Impact On The Nigerian Money Market : (A Case Study Of The Central Bank Of Nigeria)

Privatization – Impact On The Nigerian Money Market : (A Case Study Of The Central Bank Of Nigeria)



Privatization is a part of structural adjustment programme. It involves redefining the role of the state by disengaging them from those activities which are best done by the private sectors with the objective view of achieving political process, although it has to be carried out as an economic exercise (Verr 1999).

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The government felt that some public sector businesses are performing below expectations. Some incurred large debts, which are being repaid and serviced by the government. The government also became worried that substantial parts of its capital votes were used to support public enterprise whose provision of goods and services were often expensive, inefficient and subject to political manipulation. The federal government therefore decided to privatize and commercialize their enterprise as a way of saving cost and installing the spirit of efficiency in the affected enterprises.

Privatization means the relinquishing of part or all of the equity and other interests held by the federal government or its agencies in enterprises whether wholly or partly owned by the federal government.


1. Divestiture options, the privatization of capital, a particular form of privatization is the development of infrastructure and

2. Non-divestiture options – commercialization, the privatization of management (management contracts, concessions and leasing and contracting out of public services).


Non divestiture options can help to create the necessary political will and to enhance the privatization process by demonstrating the commercial viability of public enterprises. They may serve as important measures in themselves as preparatory steps to divestiture such options include the following:

1. Management privatization, including management contract, leasing and operating concessions.

2. Restructuring and commercialization to be combined with management privatization as desired.

3. Contracting out of public services.


The privatization programme has affected the money market in the following areas based on the ranking source – based on questionnaire response:

(a) Improvement in the operational performance of the company’s privatized such as Nigeria Telecommunication, National Electric Power Authority.

(b) It has brought about increase in the volume of trading.

(c) Increase in the volume of operation.

(d) Increase in the number of securities.

(e) Increase in market capitalization.

(f) Increase in efficiency of the money market result from privatization. Public enterprises are said to be inefficient because their services are offered at subsidized costs and they operated without accountability. Privatization will encourage efficiency and project maximization.

(g) Equitable distribution of goods and services. With privatization, the money market system will create distribution of goods and services closely reflected the market distribution of private income and wealth.

(h) Increased competition: Privatization will increase liberty and encourage private initiatives in privatized industries and then enhance competition.

(i) The programme of privatization has greatly minimized the scope of political patronage in the form of board of appointments. Under the first phase of the programme, the federal government relinquished about 280 directorship positions in the privatized enterprises.


In terms of the overall benefits of the programme of privatization, to be national economy, the following are the most obvious:

(a) The programme has relieved the federal government of what was the huge and growing burden of financing the investment needs and operating deficits of privatized enterprises.

(b) The performance of privatization has increased so much the co-operate tax occurring to the national treasury.

(c) The privatization programme has brought about economic efficiency in the Central Bank.

(d) Enhance Debt reschedulement: It is one of the International Monetary Fund (IMF) conditionalities for the international community to assist the nation in its debt burden. With privatization, cost will be reduced on the part of the government and that will make room for successful negotiations on external debt rescheduling, refinancing and restructuring.

(e) The only point that should be noted of this point are the informed opinion of these experts of the effects of privatization on the money market and the economy, the general opinion seems to suggest that the programme is on course and would produce immeasurable positive contribution to the money market and the general economy.

The sceptist, among them think that we should not be quick to conclude seeing that nothing really works in a country like Nigeria. To this group, selfishness and greed would not let it work as it should.


There are appropriate measures to be taken in other to encourage the performance of the public enterprises corporatized or not as follows:

(a) Establishing a performance evaluation system.

(b) In the case of a management privatization with a sale option agreement on the option in order to give an incentive to the contractor or lease to improve the efficiency of the public enterprise. Exposing the public enterprise to competitions.

Restructuring: This implies the financial audit that can help to establish the assets and liabilities of public enterprises. It can take the form of:

(i) Financial restructuring involving writing of excessive debts of the public enterprise.

(ii) Operational restructuring involving the infusion of new investment into the public enterprise.

(iii) Organisational and labour restructuring which involves reorganization of the public enterprises into rational and any necessary labour shedding.

(iv) Preparation of the reform packages covering organizational structure, technical and financial restructuring can help to put the public enterprises on a sound financial and commercial tooting whether it is to be divested. Together with successful co-operation, it can help to enhance its sales value when it is divested.

DIVESTITURE OPTIONS: This includes the following:

(i) Private placement with strategic investor.

(ii) Sales to employees or management teams through employee share ownership plans, management or employee buy-outs.

(iii) Public share offering on stock market (usually for profitable large scale public enterprise).

(iv) Public actions usually for smaller medium sized public enterprise which does not require technical transfer.

(v) Direct, full or partial to general investors.

(vi) Sales to investment or mutual funds.

(vii) Most privatization

(viii) Liquidation followed by the sale of assets where the later can fetch a higher price than the sales of the entire enterprise.


The characteristics of the private development of infrastructure (substantial up from investment with small initial revenue streams and long payback period combined with monopoly power creative and risk for the private sector development and operator.

Monopoly market can be bestowed by the market where demand and lost and technical conditions of small sized of the market serve as effective barriers of entry for a defined period by contractual concession as part of the private sector developer and operator.

Government may share the risk with private sector developer or operative alternatively the risk may be assumed fully by the lather and reflected in the private sector developer or operator for example to meet social objectives are to be made explicit and transparent.

There may be a role for the donor community to reimburse practically the pre-selected bidders for their bidding costs and to finance the cost of feasibility studies in order to enhance the participating of local bidders.

Competitive bidding is necessary for the award of development and ownership, right and operating concession pre-selected of bid is important for this purpose.


All the strategies in this programme depend on a well designed privatization strategy. The issue to be emphasized should be as follows:

i. Defining the broad extent of privatization.

ii. Selecting techniques and as necessary their sequence appropriate to the policy objectives to be attained and needs of the pubic sector enterprises to be privatized creating confidence in the process example by starting with privatization with a high prospect of success, promoting effective corporate governance.

iii. Selecting clearly the political, economics and social objectives to be achieved.

iv. Establishing clear guidelines for valuation, the choice of the public enterprise for privatization and for the choice of the buyers.

v. Ensuring transparency and accountability in the privatization process through the allocation of a proportion of corporate shares to small investors (through mass privatization).

vi. Monitoring a programme to promote public awareness of the value of privatization to the economy so as to contribute to the building up of a board based consensus.

vii. Building marketing up front in each privatization operation in order to stimulate potential interest among investors and thus to enhance the value of the public enterprise to be privatized remembering that apart from small privatization are the same.

viii. Addressing the concern of employees by paying particular attention to their acquired rights, compensation measure for retrenched workers and to employment protecting and job creation measure.

ix. Taking steps, for example of specifying conditions in sales agreement in order to prevent abuses such as unauthorized transfer to their parties of privatized enterprises immediately after their divestiture.

x. Addressing the concerns of the consumers through the appropriate regulation of privatization monpolies and machineries to handle consumers complaints.

xi. Establishing mechanism for conforming the progress and result of privatization including compliance to commitments made by private investors.

xii. Providing for safeguard (such as the use of golden share) in strategic enterprise in order for example to prevent hostile tear cover. It is very important to create a supportive enabling environment which include macro-economic conditions a well functioning legal system and adequate financial market and institution for private sectors and enterprise development.


In the general benefit of the programme of privatization and commercialization to the natural economy, there are obvious conditions:

The performance of privatized enterprise so far has meant considerable improvements on the volume of the nation of treasury thus not the brain on public finance been removed, it has become a positive bonus with the subsidy soaking deficit being replaced by tax yielding profits now over 3.3 billion has been realized since the privatization programme is on progress from different 58 enterprises that are privatized by the technical committee on privatization and commercialization whose total original investment according to the records was 652 million. This means that the federal government has realized over 2.6 billion as capital gains. This provides that the bulk of government investment is not in these enterprises stated for privatization but in the large public utilities such as Federal Airport Authority of Nigeria (FAAN) former (NAA), Nigeria National Petroleum Company (NNPC), National Electric Power Authority (NEPA), Nigeria Railway Corporation (NRC)

Privatization has massively pounded personal share ownership in Nigeria even to data over 800,000 shareholders have been created almost twice as many times as there were in 1988 when we started the programme privatization.

The programme has also demystified the operations of the money markets, created a new awareness in the virtues of shareholding as form of savings rather than elitist past time which was thought to be and the economy.

In reducing the reliance of public enterprises of the government for financing the programme, privatization has encouraged new investment in the enterprises concerned. The cold hands of treasury control have been replaced by the warm hand of money market which are invisible. Example, within the cement and other successors alone. Absaka and Dangote Cement have been able to raise fresh funds to the tune of 290 million since their privatization to finance their plant optimization policy programme. The new operational authority of public enterprises and freedom from inter finance in day by day management decisions has improved the internal efficiency of these enterprises allowing them to liberalise purchasing, nationalize labour practice and so increase their profitability. An improvement will become even more noticeable when the utilities undergo the planned guided privatization.

Privatization floatation of privatization enterprises has greatly stimulated the rapid growth of the Nigerian money market. Such floatation has helped to depend and broaden the money market and have grown from November 1992.


As we journey through this reform process of privatization on public enterprise, the following issues must be constantly remembered.

i. The support of the highest political authority is an essential ingredient of success.

ii. The economic reform is a global phenomenon similar form of market oriented policies are appearing in every drivers form in a number of countries.

iii. Adequate to the new conditions are unique to two national programmes of economic reform are identified, the pace and instrument of economic difference in countries.

iv. The programme of economic reform requires a judicial mix of technical institutional and political innovations if they are to succeed.

v. The process of reform is long term and not one which is done one fall swoop. The most difficult challenges is to sustain the process.

vi. An implemented agency that has no rested interest in maintaining the status quo should be established and its leader must have direct access to the highest authority, the organization and staff of the implementation agency must emphasize.

vii. The general public should be kept informed of what is going on at every stage in the implementation programme through a properly conceived communication policy.

viii. In the seduction of method of privatization, mass participation should be encouraged by the public effects of shares through the Central Bank.

ix. Transparency should be a major demand in the privatization programme, each affected enterprises must have studied in great detail to ensure the maximum benefit in the divestiture. We know that there are some social and political fallouts, but nevertheless, the gain is going to outweigh the loss and Nigerian economy and nation will gain much from it.


Some years ago, even up to the 80s, many developing countries (Nigeria inclusive) in consonance with the Keynesian theoretical exposition in large scale involvement of the public sector in economic development programmes made fairly extensive use of public enterprises for resource mobilization analysis, location, particularly within the social services and utilities sector with the windfall gains from the crude oil sale during the commodity boom of the 1970s. The economic activities of public enterprises in Nigeria expanded significantly beyond the orthodox domain of social services and utilities with agriculture, manufacturing, mining, commerce etc Ayodele 1994.

With this expansion in 1980s, an increasingly dominant PES, sectors, accounting for about 50% of the Gross Domestic Programme and 66% of the modern sector employment had emerged in Nigerian (FRN 1986) by this time also the number of PES at the federal level alone had reached about 600 enterprises and some 900 smaller ones at the state and local government levels (TCPC 1993). Also by the 1986 estimates total investment in these PES at the federal levels is about N36.456 billion which the technical committee on privatization and commercialization enterprise (BPES) revalued using the 1993 estimates, as being about N500 billion, of this investment estimates, public utilities (PUs) public enterprises producing hard core infrastructures as electricity meter, telecoms, and transport accunted for about 37.4% (TCPC 1993). For the maintenance and sustenance of the economic activities of the public enterprises the Nigeria government had usually depended about 40% and 30% of its fixed capital and recurrent expenditure respectively on them annually at the Structural Adjustment Programme (SAP) period. (FRN 1986) incidentally far as long as Nigeria’s windfall gains from the crude oil sales lasted, nobody complained about the inefficiency and inadequacy of public enterprises with their associated financial wasted even with the expansion of economic activities.

The seriousness of the expansion of public enterprises and virtually the policy strife which allowed the public sector to take the commanding height in Nigeria cannot be over-emphasized. If it could be recalled that one major reason which led Dinka to 1979 unsuccessful military coup was the accusation that the Nigerian was hiring so much on the public sector for the motivation by economic development. It may recall also that the prices of crude oil at the global oil market persistently rose and reached about N40 per barrel in 089 with Nigerian crude oil reduction reaching about 25 million barrels day by day. This price declined persistently to about public within the first greater of the 1986 with production equally to % of merging defining revenue therefore put Nigeria in precious financial posture calming in the economic crises unparallel in this history of Nigeria. These services since could not meet the demand aspirations to the populace, in fact, the result of the Onosode Presidential Commision of pubic enterprises (1984) reveals that most of PE’s was infested with some problems not produce the desired result in Nigeria. This government has proposed to privatize all public enterprise in the social services and utilities sub-sectors along with the scope of privatizating economic parading in Nigeria emphasizes the sharp contraction of the public enterprises sector and also more dominant private sector participation in economic activities (rande walli, 1989; Bouin and Michalet, 1991). The effective implementation of the privatization programme raises fundamental theoretical and empirical issues which requires some clarifications. The identification of some of much issues and their classification are attempts in the rest of this paper.


Actually, the commercialization and privatization decree of Federal Republic of Nigeria perceives privatization as the transfer of government owned shareholding in designated enterprises to the private shareholders comprising individual and corporate bodies. By this perception, government would restrict itself and its economic activities n public enterprises to private shareholders. This type of arrangement is the wholesale privatization scheme, besides there are other scenarios of the privatization programme, aimed at the attainment of economic efficiency that are usually brought into cause policy confusion example at one extreme of such policy scenario is where some public utilities (NIPOST, NITEL and NEPA) are maintained in the light of the need to develop a public enterprises sector that would be the engine of economic growth and development under this scheme and participate in the economic activities in any sector of the national economy. This process of reform is usually called the reorganization approach to the privatizationprogramme (Ajakaiyi 1984). Besides, there is the growth oriented privatizations, approach in which privatization is unrestricted to the non utilities public enterprises producing social service are privatized while sparing us in order to use their products to develop a vibrant private sector economy. Under this scenario, the tariff of cost-push inflationary process.

Under the reorganization, privatization products tariffs are left unregulated, nonetheless, establish tariffs are mainly for cost discovery and not necessary for project maximizationists therefore propose the adoption of cross subsidies tied to performance targets (Ajakaiye 1984, Ayodele and Ajakale 1985). Inspite of the recognition of these varying impacts on the economy, Nigeria has embedded the wholesale privatization the macro and micro institutional approach, the macro institutional approaches to its theoretical sector wide approach, which is predicated on the stringent assumption that all public enterprises in diverse activities share common problems. Many which relate to public ownership, which constitutes the base of public men inefficiency requiring a common framework to solve the problems. This approach provides a concrete base for the liquidation of viable enterprises, the scale of those with commercial orientation both managed by the private entrepreneur and the reorientation of the operational objectives of several others couched under the efficiency approach concentrate on the enterprise at a time for changes moving to several others, one after the other, such changes, emerge from the process of restructuring of individual enterprises. The experience gathered from one could ease the problem in subsequent enterprises; incidentally, Nigeria started its whole privatization programme adopting the macro institutional framework, we did not produce the desired results perhaps, this failure explains why government has resorted to the adoption of the micro institutional approach informed by guided privatization (FGN 1999) conceptually perceives this concept in its 1998 budget speech as the private of public utilities starting with one enterprise at a time so that the lesson of experience will be used to improve upon the programme. In the regard, the element of the guide programme in country include:

1. Limitation of share ownership to some core investors with relevant expertise to participate in the ownership of the enterprise with specific shareholding.

2. The setting up of a Nigerian trust fund to manage the proceeds of privatization.

3. The setting up of a high powered national committee of privatization to approve and concretize the sale of any venture.

4. The insurance of wide squad share ownership among Nigerian who are to be given financial assistance to acquire shares in affected enterprises. The process lay much emphasis on all sectors and open private investment so as to promote competition and efficiency in the system in this regard. All decrees and legislature acts that inhabit competition in the relevant sectors will be amended. This makes it possible for the private as electricity development telecom, petroleum reforming coal and bitumen production under the assumptions that the competition infrastructure services provision would enhance efficiency and ultimately reduce costs.


The professionals and the policy makers and economic planners tend to hold the view that the privatization policy (guided and unguided) can yield substantial benefits in terms of greater efficiency renewed investment, budgetary savings and the privatization of the scarce resources for the improvement of public finance (Obadan and Ayodele 1998). The economic rational for its policy in Nigeria derive broadly from three main considerations which touch on the nature and structure of the precarious financial and monetary conditions in the country.

The first naira economic in nature, centers on the need for the restoration of fiscal balance in the light of the inflationary impact of the country’s excessive budgets of which public enterprises constituted a major course, infact, the SAP placed a rain on government expenditure such that budget deficits should not exceed 3 to 4% the Gross National Product. It could therefore be economically wise that privatization which would allow government to shed of part of its, for the attainment of this goal. The second dimension is the microeconomics in nature, which focuses on the importance of improved deficiency in the public enterprises sector. This concern derives from the conception without much hard date that the private sector. This has usually be couched under the assumption determination of successful financial performance. It therefore implies that the privatization of public enterprises sector and economy as a whole.

Thirdly, the international in dimension highlight the need to reduce the size of government involvement in economic activities especially recognizing that the country is heavily burdened by the extent of debt. This view have been such as the key component of the middling through policy approach adopted by the World Bank international monetary through policy credit national debts, burden through the implementation of economic reform programme, the public enterprises. In fact, it is logically known that the share of public enterprises in Nigeria external debt was about 20.5% up till 1980.


On the basis of the market failure theory and inspite of the foregoing economic rational, Gelbraith (1978) and Samuelson (1983) doubt the efficiency of the market system (privatization) in managing and equitable allocating resources for national development according to these analysis, the limitation of the price system can only be checked using regulatory devices such as:

(a) Subsidization policy

(b) The strict ministerial control, which the theories do not allow to function.

(c) Private activity regulations.

Stressing the lot throat advertising and other promotional Samuelson (1983) describes the system as a mechanism, which involves coercion via the allocation of goods to those who can afford their equilibrium price. These criticisms may not blanket region of privatization as freedom (1962) responds to the criticism using input weaknesses of the public sector such as:

(a) Difficulties and impediment of controlling huge public organization which most of public enterprises stand for.

(b) Difficulties in assessing public programme.

(c) The inefficiency which political consideration can breed and also the lapses associated with the framework of the public sector.

(d) The slowness of government bureaucracy.

In fact, a balance of this argument and counter-arguments limit Nigerian’s reliance of the government and the tendency to raise its incentives towards the privatization programme.


As it was noted, the public enterprises sector has absorbed huge investment expenditure creating assets, whose values vary with time because of inflationary pressures. This is the main concern related to the proper evaluation of such assets with respect to the whole time of evaluation (SAP period) getting sincere evaluation to do a good assets of good buyers to allow for the fulfillment of the objectives of the privatization programme. These cases of evaluation must be based on the present value and not SAP estimates, and is along in annual basis.


One major aspect of privatization is the effective sales of public enterprises, to prevent the worsening of the asked distribution of income in Nigeria.

In this regard, this concern relates to the issue of who buys what is in order not to make the poor poorer. This to say 40:40:20 equity structure of government foreign entrepreneurs and Nigerian investors should be carefully revisited to make sure the Nigerian have the opportunity to handle their own developments in their own ways; in addition, the equity structure should avoid technical decolonisation of Nigeria via the policy. The share allocated should be higher while those foreign and government entrepreneurs should be significantly lower on that order.

Objective indicates of privatization The recognition of the experiences of countries as while Korea and Mexico from the privatization policy objectives should change from the opened ended ones, there are three relevant objectives indicator currently proposed by Ayodele (1996) they are as follows:

i. The financial returns of the public enterprises institutional reform via privatization must guarantee desirable return to allow for enterprises self sufficiency, reliance and self financing in order to make business sustainable possible.

ii. The level of productivity, the financial returns to the investment syndrome must not be driven to such point as to jeopardize the maximization of capacity utilization to ensure maximum productivity.

iii. Enterprise savings, investment deficit operations must not be indicated significantly high tariffs against declining productivity contrary to the aspiration of the policy.


In recognition of the foregoing, the privatization policy must reflect the five components of enterprises reform practitioners. These are equitable divestiture sector bureaucracies (World Bank 1995), they may not be as separate options but as mutually supportive components of an overall under the policy. In order to allow for the effective operations of these policy, executors and professionals must not use the following precautions about a successful public enterprises.

i. Ability to introduce competition and the need to liberalise of autonomy to manager under the privatization policy.

ii. Ability to sustain business without public subsidies and the need to have access to credit on a more commercial basis under improved tariffs regulation processes.

iii. The ability to attain improved structure via the policy.

iv. Ability to drive wells, more especially noting that the initial size of the public sector was large.


For some time now, the Nigeria government and international monetary agencies have been engaged in dialogue regarding the budget and extent of the privatization of public enterprises in Nigeria and in the second decade debate has been going on in Nigeria between the people and the government regarding the need of privatization whether to private, what to privatizeand what not privatize and how to privatize whatever is to be privatized. In Nigeria, having followed the debate, with keen interest having at some time been part of the debate, sometimes very informed but all times coloured like life by the experience role and expectations of the various debaters.

According to Odife (1994) privatization is a tool for economic management of modern industrial economic. The word privatization has come from the word private as opposed to the public sector. It is taken from private referring to transferring ownership management and control of business enterprises from the public sector to the private sector. The action itself followed the activities of Magaret Thatcher’s government in the United Kingdom. Thatcher’s place and circumstances in which to put the idea to work and they worked miraculously and have become “almost” universally applicable. We have qualified the universal applicability of the concept by almost to emphasize that leader still have a role to play in ensuring that privatization remains what it is, a tool for economic management and not the end in itself.


U.S. economic model consider the participation of government in business as a result of market failure, broadly define, and the market in question is largely the market for short-term capital, the money market. If this thesis is true then the role of money market in privatization is even more crucial than commonly appreciated.

A market is a framework for the exchange of goods and services. A money market for exchange of short-term capital. Nigerian government recognizes the importance of the money market and rights from the colonial era, have made attempts to establish and sustain capital to key economic units. Let me expatiate, in the immediate pro-independence era, revenue from agricultural exports were applied in the establishment of the first industrial joint ventures in Nigeria. Even in the immediate post-independence era. Policies of import substitution industrialization were pursued in the establishment of industries which was the only way to move economy forward in the fact of market failure, can we regard it as the absence of adequately endowed capitalist of entrepreneurs and of private sector. The massive capital flows, which passed through the accounts of the federation, the federal as well as the state governments, do not fortify the size of the local money market of anything. It confirms the failure of economic management and is a further justification in privatization.

Privatization in Nigeria are the role of the Nigerian money market in privatization so far. It has been to serve as a platform for the distribution of the share of the enterprises being privatized. The investors are so dispersed and their individual holding, so small that they have no means of exerting any influence on the management of the company after privatization. It was to remedy this defect that zonal associations of shareholders were created with government support to fight for board representation. The trading clearing give settlement practices, the money market has left most investors in the cold. The high level of transactions lost in the market and the weakness of the postal system means that investors can only realize the benefit of the participation in the privatization of great risk and cost.

The companies themselves have fared perhaps lonely a shade better. Some financial institutions have been tightly very hard to avoid being taken over by the insiders. High transaction cost make it expensive to take money from the market and the shallowness of the market and the amount of money that can be raised there even by bryonies catch best records. Thrice vitality and the existence of a large informal market inefficiency of the money market era framework for resource allocations and mobilization. Lagos Central Bank has 2 million investors in quoted securities by itself excluding possible duplication and double counting. The number is impressive. However, the low poverty suggests the need for both qualitative and quantitative improvement. For large number, substantially better endowed would be required to make a meaningful impact on the share of such companies even become available under any privatization programme in Nigeria.


This chapter concentrated on the various processes involved in obtaining and analysizing the data for this study. It would cover the research design, sampling procedure and research instrument, data collection and analytical techniques.

Abdellah and Levin (1979) cited in Baridean (1995) explained that research design did not meant he specified method for collecting data but rather the modern fundamental questions of how the study subject would be brought into the scope of the research setting to yield the required data. The general study subject precludes the experimental design which is peculiar in the management and social sciences. This combines two methods namely; survey method and evaluative research method, the latter involves looking at certain inputs processes and output variables in what you are evaluating.



In this chapter, the researcher presents and analyses the two data the primary and secondary data collected in the study and it was analysed under the simple descriptive statistics. The hypothesis was tested using the T-test statistics that test the difference between means.


As it was shown in chapter three, we obtained our primary data from questionnaire tools and we distributed 60 questionnaire and respondent was only 55 making a rate of 91.67% the distribution was to the money market institutions and some staff of the Central Bank. The entire respondent claim good knowledge of the privatization programme and were able to define it properly.


How has the money market been affected by the incoming of the privatization programme?



The inference which is drawn from the analysis of the result which is obtained from the primary data is that in the opinion of the respondents, the privatization programme has affected the money market considerably. This is shown by their mean or average ranging of the total effect of privatization on the Nigerian money market to be 3.86 or 77.14% by implication over 77% of the respondent believe. That the exercise has produced considerably effect on the market even though this percentage rating can be considered to be high enough. It would not be conclusive to base the conclusion on this note the author conducted tests of two hypothesis.

In the first hypothesis, result, it shows that there is significant different in the value of transaction recorded by the Nigerian money market between the period prior to and period after privatization. This result tends to contradict the earlier findings from the primary data evidence, for instance as seen on table 46 over 80% of the respondents believe that the programme would increase the value of the operations of the money market. The mean ranking was 4.2. However, this not supported by the result of the analysis of secondary evidence.

Again, the result of the second hypothesis affairs that there is no significant difference in the market capitalization of the Nigerian money market between the period before and period after the introduction of privatization exercise. This means that there is no significant change in the market between the pre and post privatization era that we can attribute to the programme. Going by these evidence, privatization as we have seen it in Nigeria thus far has not significantly affected the money market as expected. This development is very surprising especially when consideration is given to the much noise being made every where in the country extolling the virtues of privatization. A notable point made by our informed respondent however is that the programme is still on course that we are left to see the better part of its full implementation, and when once this is done; the results would be immeasurable in terms of contributions to the money market in particular and the whole country in general. Skeptists however are worried and healthily too, that the extolled virtue of privatization may both after all be realized in view of the money structural institutional and social problems prevalent in the country. To them even if everything remains as desired, the evils of selfishness and greed would not let it work as expected.


The study is an attempt to analyse the impact of privatization on the development of the Nigerian money market. Using statistical tools, the analysis reveals that:

– There is no significant difference in the value of transaction of the money market between the period before and after the introduction of privatization.

– There is no significant difference in the total market capitalization of Nigeria money market between the period before and after the introduction of privatization.

These revelations suggest that the privatization exercise has not significantly fared well in the development of the money market as expected. It is also true that the programme is still on course. The implementation is not yet in more remains to be done. It is therefore the suggestion of the researcher that the programme should not be stopped half way. The only thing to be done is basically adjustments along the following directions.

– There should be equity and fairness in the selling of government owned securities, every person should be given equal opportunity to exercise his right to purchase or not to purchase as the case may be.

– Much education still needs to be given to the Nigeria populace on the exercise and the benefit thereof.

– The government should help in arranging credit facility for the benefit of the poor unprivileged members of the society who are interested in investing.

– The policy having what is core investor should be entertained, as this will breed unacceptable and ugly practices in the course of the programme.

– Every person should be given equal chance.


In as much as the objective or goal of capitalism is maximization of shareholders – funds, it is not in the best over-riding public interest to privatize or commercialize all public enterprises because of the inherent implication on the socio-cultural and economic environment of Nigeria.

I therefore recommend that there should be a kind of demarcation and categorization of the public enterprise to be privatized, partially or fully.

Since it has been established that the profitability of Central Bank of Nigeria Plc has increased due to its privatization and commercialization policy, the management should try as much as possible to maintain the standard already laid down as a result of privatization system and also implying only suitable and qualified staff to pilot the affairs of the company or organization in all sphere.

The working conditions of the staff of the company should be improved. This will act as a motivating force on staff and will lead to co-ordination and profit maximization though privatization and commercialization on money market will generate more funds. I recommend that this money should be used for revamping the economy.

Finally, government should ensure that shares are evenly distributed to the public to avoid being monopolized by the first class and very rich citizens of the society.


1. Name of respondent:

2. Organization or Company:

3. What are the nature of your business or services.

4. How long have you worked in your organization?

5. What is your rank/position in your organization?

6. If you are not working for Central Bank, what is your relationship with this organization?

7. Have you heard of the privatization programme? Yes No

8. What do you know of privatization?

9. What roles is your organization playing in the privatization implementation process?

10. How many companies do you know that have privatized?

11. Do you think that the privatization programme has in any way affected the Nierian money market? Yes No

12. How has the money market been affected by the incoming of the privatization programme.

Please tick the extent to which options represent your opinion (Rank as appropriate: 0 – No effect, 1 – Minimal effect, 2 – slight effect, 3 – fairly great effect, 4 – great effect, 5 – very great effect.

(a) Increase in number of securities

(b) Increase in volume of trading

(c) Increase in value of appreciation

(d) Increase in the market capitalization

(e) Improvement in the operational performance of the companies privatized.

(f) Increase in the breath, depth and reliance of the market.

(g) Improvement in the money market capitalization

(h) Others (specify)………………………………………………………..

13. Comment freely on the effect of privatization on both money market and

on the economy generally.



14. Are there any arguments for or against privatization programme?

(a) No argument

(b) Positive argument

(c) Negative argument

(d) Indifference

15. What are those problems associated with the privatization programme?

(a) Absence of effective time schedule

(b) Inadequate publicity

(c) Bureaucracy

(d) Fear of Hi-jack

(e) Uncontrolled unemployment

Privatization – Impact On The Nigerian Money Market : (A Case Study Of The Central Bank Of Nigeria)



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