Role Of Privatization In Service Delivery And Revenue Generation For The Government

Role Of Privatization In Service Delivery And Revenue Generation For The Government – (A CASE OF ENUGU STATE WATER CORPORATION)

Role Of Privatization In Service Delivery And Revenue Generation For The Government

When government decides to relinquish management and control of firms/corporations either fully or partially it then means that government wants her citizens to contribute in economic, social and political endeavours of their land.

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In the history of this country, the government sometimes decides to shift her traditional role of service delivery and formulate policies that would wholly involve individuals to participate in formal economic activities as well as service delivery (Obi E.A, et al: ed, 2005).

In Enugu State Water Corporation, loophole that affects efficiency, effectiveness and utilization of infrastructure are common. If this sector is liberalized, one may ask if privatization can play any significant role in popular participation for the government? An inside exploration on this research would resolve the above problem.

According to Business Times (1998), it is stated that within the last two decades, the process of “privatization” has gained wider acceptance and popularity”. Many countries in the developed and less developed world have embraced the term and launched (often extensive) privatization programmes and more are contemplating doing so. Nigeria has of course, undergone some privatization before. As many developing countries, Nigeria has since independence developed a large parastatals sector covering various economic activities. According to the same Business Times (1998), “A survey by Technical Committee on Privatization and Commercialization (TCPC) showed that there were six hundred (600) public enterprises at the federal level and about nine hundred (900) smaller ones at the state and local government levels”. For example, studies have shown that most of these parastatals are sadly infested with problems such as ill-conceived investment, political interference in decision making, costly and inefficient use of public resources and bureaucratic bottleneck and hence a growing budget burden. In 1985 for example, it was estimated that government parastatals consumed well over N23 billion while yielding an investing return of only 1.39 per cent. Going by this figure, the economy of the country is bound to suffer.


Ordinarily government should be responsible for certain service provision to citizenry, especially water. But as political, economic and social activities start to expand, the role of government began to seek for more hands to maintain effective and efficient service delivery. Thus the call or need for privatization of our most sensitive public utility. Water Corporation in Enugu state.

As part of the Structural Adjustment Programme (SAP) therefore, between 1988 and 1993, a total of one hundred and eleven (111) public enterprises were privatized based on the legal framework provided by Decree No 25, of 1998. Moreover, there has been no further privatization since 1993. In 1997, the Nigerian government set up a panel to examine the various options on privatization and commercialization of remaining State Owned Enterprises (SOEs), and the 1998 Budget has promised us “guided privatization”.

Now is therefore, an opportune time to look closely at the issue of privatization and its mechanics including the role of privatization in service delivery and revenue generation for the government. In simplistic terms, any transfer of ownership or control from public to private sector could be described as privatization. However, a more normal definition would require that the transfer be enough to give the private operators or owners substantive independent power. In many instances, though not always, this will imply majority ownership and control. Nevertheless, there are many different processes to achieve the same end result.


Today, privatization of firms and government firms are the issues on ground. In Nigeria this current development between government and her citizens is faced with a lot of problems and these problems however, go a long way to hamper its success thereby limiting its potentials for the contribution to national development. The quest to privatize public facilities in Nigeria citing Enugu State Water Corporation as a case has aroused several question, which on the other hand provoked some problematic questions for research.

Hence, the following research questions will stand as a guide to the thoroughness of this study.

1 To what extent has the quest to privatize Water Corporation in Enugu State affected service delivery and popular participation in the state?

2 Are there any identified factor or factors responsible for poor popular participation and poor service delivery for moving Water Corporation into privatization?

3 What are the perceived negative effects of privatising Water Corporation in Nigeria- Enugu zone as a study?

4 Has there been any government policy either to encourage or discourage the quest to privatize Water Corporation as well as encouraging individual to participate in service delivery?


Like every research work, this study has lots of purposes and aims guiding its research conduct. These aims provide the needed direction for the researcher’s searchlight.

Therefore, the study is aimed at investigating into the following objectives:

(1) To recommend the privatization of Water Corporation in Enugu State.

(2) To examine the need for privatization in the economic development of Enugu State.

(3) To dissect and explain the nature of administration in Enugu State Water Corporation.

(4) To analyze the impact of privatization on the lives of the people.

(5) To find out the extent of service delivery and revenue generation role of privatization.


This research study titled: The Role of Privatization in Service Delivery and Revenue Generation for the Government: A case of Enugu State Water Corporation”, is a critical and controversial issue in the contemporary Nigerian Society. This contention no doubt becomes pertinent for the critical analysis of the study to resolve and most importantly, present the justification of the study. This research however, will serve as a guide to our policy makers, economic planners, the government of the day and to the people to holistically appreciate the relevance of privatization in economic development.

Finally, this study will certainly improve and widen the intellectual horizon of all the students of Public Administration, Political Science, Economics department etc. It will effectively add to their prior knowledge of privatization as an integrationist and pragmatic strategy for immediate and unprecedented development of Enugu State Water Corporation.


A number of hypotheses are formulated to assists in answering the research questions and unraveling issues relating to the subject under study. These hypotheses are as follows:

H1 Privatization will bring popular participation in service delivery of the corporation

Ho Privatization will not bring popular participation in service delivery of the corporation

H1 Privatization will aid revenue generation for the government.

Ho Privatization will not aid revenue generation for the government.

H1 Privatization will enable the recruitment of more workers in anticipation of improved service of the masses.

Ho H1 Privatization will not enable the recruitment of more workers in anticipation of improved service of the masses.


This research work adopts the Marxian political economy approach. Adopting the political economy framework therefore brings us to the views of Karl Marx who developed a materialist theory, normally referred to as historical or dialectical materialism. Marx asserts that political economy is the anatomy of civil society. And this entails the study of the sum total of the relations of production, the economic structure of the society (Ezeani O.E 2004). The political economy thereby emphasizes the centrality of the mode of production of the material life which, according to Marx 1968), conditions the social, political and intellectual life processes in general. The mode of production refers not merely to the state of techniques, but to the way in which the means of production were owned and social relations between men, which resulted from their connections with the process of production. Ezeani O. E. quoting Aina (1986:4) opines that this approach emphasizes the importance of domination, exploitation, struggles and conflict between classes in any mode of production.

Implicit in the political economy perspective or framework is that the hierarchical structure of the society emanates from the established ways of organizing production and distribution of materials of life, which ensures the unequal expropriation of nature and the results of human work by social classes and groups. It is importance to note that the efficiency and effectiveness and/ or profit and high productivity sought by privatization policy is for the benefit of the indigenous capitalist class and their foreign collaborators alone.

The relevance of this theory to this research is that it introduces private hand to fully participate in the running of the government because Marxian theory advocates individual participation. When individual’s participation in the running of Water Corporation, through formal privatization, it will enable the corporation generate more fund for the government.


The study is restricted to the privatization of the Water Corporation of Enugu State.

In the conduct of this research, the researcher encountered such limitations as:

1. Dearth of literature:- There are limited number of published material on the role of privatization in service delivery and revenue generation for the government.

2. There is conflicting information on this subject matter. The essence of this among others is to reconcile such conflicts

3. Finance:- Insufficient financial resources for the procurement of the required materials for the work.

4. Time:- Limited time for the completion of this work despite the academic engagement that deserved our attention.


1. PRIVATIZATION– This is an economic act of government or process whereby the government sells its share in certain establishment or parastatals where it has controlling interest to private individuals.

2. SERVICE DELIVERY-This is the act of individual and government as well to jointly harness their pintails together towards using effectively and efficiently public utilities to satisfy the general masses.

3. REVENUE GENERATION– Government apart from revenue from crude oil has other means they generate fund. Government through privatizing our water corporation could generate fund from the prospective water users in our urban and rural setting.


In this chapter the researcher would review the related literature and different scholars view on privatization and the effect it will have on service delivery (Water Corporation)

In order to put an end to the economics problem encountered by the Enugu State Water Corporation in the delivery of service to the people of Enugu State, it will be important for the government to put privatization programme into consideration as one of the methods or policies to help alleviate such problems.

Privatization programme is a critical element of our economic recovery and development strategy. Privatization policy are currently being implemented in many countries of the world. In Africa, many countries have come to embrace privatization of public enterprise as a major instrument of economic reform mainly due to shifting ideologies donor pressure and dissimal performance of public enterprises with the resultant inefficiency, ineffectiveness and public dissatisfaction. In Nigeria, the story was different, the large-scale waste and inefficiency of public enterprises became very glaring and manifest in the early 1980s with the inception of economic crisis.

As Ezean: (2004:22) rightly put it:

“In Nigeria, the sheer waste and inefficiency of public enterprises because glaring from the early 1980s with the inception of economic crisis. Therefore after many years of unsuccessful efforts to reform the public enterprises sector, the privatization option was recommended and adopted as the most viable strategy for attracting investment and achieving efficiency which are necessary for economic growth”.

Adam et al (1992:6) noted that the term has been used to describe an array of action designed to broaden the scope of private sector activity or the assimilation by the public sector of efficiency enhancing technique generally employed by the private sector.

Okafor and Udu (ed 2002:201) have defined privatization as the process of transferring equity and other interest in enterprise hitherto, held by government to provide persons or groups of person involved in the ownership and control of such businesses.

Okorie quoting Kahinde (1986) is of the view that privatization is the systematic and programmed withdrawal of government from those activities which private enterprises can perform more efficiently than government enterprises.


The tremendous economic growth experienced by those countries that have adopted market approach, openness and competition influenced restructuring. The privatization of public enterprises has been a major plank of their economic reform. It is therefore, not surprising that there has been a significant increase in privatization of State Owned Enterprises in several parts of the world especially in the America and Eastern Europe, since the late 1980s and early 1990s. Privatization is designed to promote economic efficiency by imposing market discipline in the planning and management of enterprises.

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In Nigeria, however, after the initial spurt in the late 1980s, (implemented through the Technical Committee on Privatization and Commercialization) the pace slowed considerably during the 1990s. The deceleration of the factors such as the governments desire to restructure some of the companies, adverse political climate, and the concern about the inadequacies in the implementation of the programme. Yet it is interesting to note that privatization remained a major economic agenda of each and every successive government since the adoption of the Structural Adjustment Programme (SAP), in 1986.

The sustained interest in privatization reflects the desire to lessen the dominance of unproductive investment in the public sector, reduce complex administration controls and place a greater reliance on market forces, encourage rationalization of public sector enterprises, generate revenue for the government, develop the capital market, achieve a wider share ownership in the economy, and reduce public sector borrowing requirements.

The above ideas represented the objectives of privatization exercise as stated in the Structural Adjustment Programme documents. There have also been preserves from donors, creditors and multi- lateral financial institutions for Nigeria to privatize, as a prerequisite for support of adjustment and debt relief programme.

The common usage of the term privatization means transfer of ownership, management, end or control of business enterprises from the public sector to the private sector. It also refers to opening up or breaking a public monopoly by allowing competition by private producers or operators. For example, liberalization of the air transportation broke the monopoly of domestic flights by the Nigerian Airways with many private operators competing in the airline market. Similarly, the promulgation of Decrees No 28 and 29 of 1998 abolished the monopoly status enjoyed by National Electricity Power Authority (NEPA) which inhibited competition. Essentially, privatization describes a variety of policies, which encourage competition and emphasize the role of market forces in a place of statutory restrictions and monopoly powers. More importantly, the concept encompasses the broad ideas of the economy being totally private sector-led with the government offering complementary and legal support for economic growth and development.

The federal government started the initiative to privatize through the establishment of the Technical Committee on Privatization and Commercialization, an agency charged with responsibility for implementing the provisions of the Privatization Decree No.25 of 1988. TCPC has since been reorganized and is presently known as the Bureau for Public Enterprises. TCPC evolved five methods for the privatization of public enterprises (PES) normally public sales or shares, private placement, sales of assets, management buy-out and deferred public offer.

1. Public sales of share took the form of either offer for sale or offer for subscription. The former refers to the sale of a part of all the shares held by government to the private sector (individuals, organization etc). The latter refers to a situation in which financial/management restructuring requires that the company gets new money to finance investment, etc. The money raised through the sale of shares is made available to the company to meet its financial commitment

2. Private placement comes into play when in some cases, government holding in the company may be so small that a public issue would be uneconomic in terms of transaction costs. In such cases, individuals or organizations may be invited to bid for them. This may be in spite of the fact that the organization involved might have met all the listing requirements of the Stock Exchange.

3. Sales of assets applies to several public enterprises, which are drainpipes on the treasury. Over the years. Nigeria has spent large sums of money on uneconomic ventures and industries that brought at best very low rates of return on investments. Indeed, several others are loss makers. Furthermore, in an attempt to revamp such industries the government had given subsidies subventions or even loans, which were never repaid. Besides, if the future outlook of such PEs is considered hopeless, then the two earlier methods would be inappropriate. In such case, the ventures are liquidated and their assets sold piecemeal through public tender.

4. Under management buy out this affected enterprise or a substantial part of its equity capital is sold to the workers.

5. Deferred public offer is made in cases about which, the government is convinced that the enterprises may be viable and that if they were offered for sale, the amount realized may be lower than the actual value of the enterprise. In that circumstance, the deferred public offer approach may be adopted meanwhile the government negotiates with willing buyer who undertakes to sell an agreed percentage to the Nigerian public say 40%, within a specified period of takeover, say five years.

In the 1960s and the 1970s, Nigeria established a large number of enterprise based on the prevailing conventional wisdom at the time that government needed to assume the commanding heights of the economy in order to accelerate the pace of development. The TCPC reported the result of a survey it conducted which showed that the parastatals owned by the Federal Government numbered about 900 in 1990 with a total book value of investment amount to about N36 billion. The investments were in the areas of banking and insurance oil exploration refinery and marketing cement, paper mills, hotels and tourism, fertilizer plants, motor assembly plant and sugar companies.

The return on the huge investment was at best marginal as many of the enterprise were loss-makers. That constituted an additional burden on the government, which have to provide subventions and subsidies. The enterprises according to the report of the 1983 presidential commission on parastatals revealed defective capital structure resulting in heavy dependence on the treasury for funding mismanagement, corruption and nepotism, bureaucratic bottlenecks in their relations with supervising ministries and misuse of monopoly power.


Nigerian intellectuals have through diverse services revealed the purpose of the present privatization policy .P.U Okorie quoting Ogunna (1999) Identified the following as the primary objectives of government privatization policy.

1. To widen the scope of private sector participation in the economy.

2. To revive the ailing non-performing public corporation so as make them strongly viable and efficient.

3. To make the non- performing public corporations profitable and productive so as to contribute to national economic growth and development.

Okorie quoting Ihunnda (2003) identified the following as the objectives for introducing privatization policy in Nigeria

1. To restructure and rationalize the public sector in order to reduce dominance of unproductive investment in that sector.

2. To ensure positive returns on public sector investment in commercialized enterprises.

3. To re-orientate the enterprises for privatization and commercialization towards a new horizon of performance, improvement, self sustain ability and overall efficiency.

4. To create wide share ownership and enhance participation of Nigerians in the ownership of production investment.

5. To create a more conducive economic environment for both local and foreign investors

6. To check the present absolute dependence on the treasury for funding by otherwise commercially oriented parastatals and encourage their approach to the Nigerian capital market.

7. To initiate the process of gradual liaison to the private sector of such public enterprises, which by their nature and type of operation are best, performed by private sector.


Service is a system that provides something that the public needs, organized by the government or a private company. For instance education, water, health clinic etc.

In defining service delivery Brawley (1975) posits that human service delivery can be regarded as the occupation that can reasonably by regarded as providing service to people it includes journalism, hospitality, transportation, fire service, education, water service and health service etc. In this definition, service delivery is not just viewed as an activity but also an occupation performed by some individuals who are paid. The service provided are quiet welfare meant to be consumed by human beings for their well being.

Mishan (1981) contributes that service delivery of that which is invisible and for which a consumer, firm or government is willing to exchange something of value. This opinion regards service as indivisible item, which cannot be touched, distributed by a recognized body (example government). The service can be exchanged for something of value, which is commonly money. He goes further to state that a public good is a good or service to which the exclusion principle is not applicable and which is provided by government if it yields substantial benefits to society.

The government soley to leave outstanding impacts on the society provides the public service or goods. This goes to mean that the evidence of public service delivery should be seen in the public who are to be served.


In an effort to review the origin of privatization policy in Nigeria we retreat to reveal that the policy was first experimented in Britain from 1970-1974, before the Thatcher administration implemented it in a large scale after 1979.

Ogunna (1999) tracing down to the history of efforts made by successive administrations in Nigeria towards implementing privatization to 1964, it will be noticed that as a result of “embarrassing observations that public enterprises in the federation have been performing below acceptable standards, some have failed totally, and others have succeeded to put tax payers money to the drains” various panels, committees, commissions and study groups were therefore set up by various regimes to make a thorough study of the problem and make recommendations to government. (Ogunna, 1999 quoted by Okorie; 2005). Few examples of the committee of officials reports which resulted in seasonal paper No 7 of 1964 according to Ogunna were:

1. The Ani report of 1966, which resulted in the 1968 white paper.

2. The policy of the Federal Military Government on the statutory corporation and state owned companies.

3. The Adebayo Report of 1970-1971

4. The second National Development Plan of 1975-1980.

5. The Udoji Public Service Commission Report 1974.

Ogunna concluded “These panel made recommendations aimed at improving the performance of the public enterprises. Their major recommendation were the management of public enterprises and the application of modern management styles and strategies”

Shehu Shagari’s administration indicated willingness to implement privatization policy when he set up presidential commission on parastatals under the chairmanship of Gameliel Onosode in 1981. Buhari administration established a study group on statutory corporation and state-owned cooperation’s with the terms of reference as to undertake an in-depth study of these corporations of their privatization, identify those, which could be privatized, and recommended the methodology for the achievement of the programme in the public interest (Ogunna 1999:172). The study group recommended as follows:

1. Government should adopt the principle of selective privatization

2. Privatization should only be pursued where conditions are favourable and vital national interest would not be jeopardized.

3. Privatization should only be seen as a gradual process and each case should be considered on merit and carefully worked out before implementation.

4. If the value of share, which needs to be sold to achieve the deserved level of private sector participation, is very substantial, government shall consider giving special terms to promote the sale. For example, government could allow for one third of the value of the share applied for by a person to be paid at the time of application.

5. Since the principal aim of privatization is to improve efficiency in the delivery of service, enhance financial and operational performance and private equity, participation must be large enough and properly structured to provide for the autonomy of the enterprise. Thus, private sector majority shareholding should provide for at least 35%-40% to be sold to large share holder who are capable of buying up to a minimum of 3.5% -5% of the shares while the rest is sold to small share holdings.

According to Okorie (2005) Ogunna concluded by saying that in accepting the recommendations, the Buhari administration stated that “privatization should only be seen as a gradual process and each case should be considered on its merit and carefully worked out before implementation”.

On assumption of office in 1985, Ibrahim Babangida adopted privatization and commercialization as one of his economic measures and stated thus in his 1986 Budget speech “In respect of existing public holdings in commercially-oriented enterprises, government has decided to divest its holdings in agricultural production, hotels, food, beverages, breweries, distilleries, distribution, electrical and electronic appliances and all non-strategic industries”.

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Babangida became the first administration to take practical steps towards implementing privatization of some public enterprises and introduced partial commercialization. In some cases Ogunna reported, the administration reduced its holdings in some public enterprise such as banks and insurance companies.

The Abacha Administration continued with privatization policy through a policy it called: “guided privatization” Guided privatization according to Ogunna and Ani (1998:19) is a carefully planned and systematically implemented programme of government withdrawal from control of business enterprises which can be more efficiently and effectively run by private operators. Government, thus accepts the move to privatize existing State-Owned enterprises in order to improve their performance and the overall performance of the economy. But to avoid the negative consequences, the exercise must be carefully concluded. The idea is to take a few enterprises at a time so that experience at each stage of implementation will be used to improve the process. According to C. C. Ihunda, he also identified the elements of guided privatization as follows:

1. Limitation of shares ownership to some core investors with relevant expertise to participate in the ownership of the enterprises with specific share holding.

2. The retention of 40% of the equity in the affected enterprises by government while 20% of the shares would be sold to Nigerians suggesting a 40-40-20 percent equity structure for government, foreign entrepreneur and Nigerian investors respectively.

3. The insurance of widespread share to be given financial assistance in form of loans to acquire shares in affected enterprises.

4. The setting up of a team of experts on privatization in order to ensure that the exercise achieves its desired objectives of job creation, acquisition of new knowledge, skills and technology, and exposing the country to international competition.

5. The setting up of a Nigerian Trust Fund to manage the proceeds of privatization.

6. The setting up pf a high-powered National Committee on privatization to approve and concretize the sale of any venture.

Ihunnda further revealed that under the Structural Adjustment Programme (SAP) of Babangida Administration in 1986, public enterprises were classified into five broad categories.

1. Those which are to be fully privatized

2. Those that are to be partially privatized

3. Those to be fully commercialized

4. Those to be partially commercialized

5. Public institutions

Meanwhile, privatization and commercialization Decree No 25 of 1988 earmarked 67 companies for full privatization, 43 for partial privatization, 11 for full commercialization and 14 for partial commercialization. Ihunda in conclusion remarked that “generally, the belief is that the programme will usher in an overall economic prosperity in the country. But that can only be achieved if those saddled with the responsibility of implementing the programme do so with honesty, sincerity and professionalism. The ideas set out by the programme are lofty and its realization is no less generous”.

Abubakar regime which came into power in 1998 wholly accepted the privatization policy of the regime it succeeded in line with its ideology on political and economic freedoms (Ogunna 1999: 175) The aim of Abubakar’s privatization policy was to privatize all State-Owned commercially oriented companies and parastatals. Action was based on the following.

1. To enable government raise huge financial resources with which to finance other development projects.

2. To relieve government the financial burden of annual financial subvention to state owned commercially oriented companies and parastatals.

3. To make the State-Owned commercially-oriented companies and parastatals operate more effectively and efficiently.

In order to ensure realization of this goal General Abubakar established a council on privatization under the chairmanship of the Chief of General Staff and charged the council with the responsibility of taking policy decisions on directing and supervising the execution of privatization.


From the information on the history of Nigeria’s privatization policy the following were made clear.

1. Privatization policy in Nigeria is neither the creation of the present Obasanjo’s regime nor that of Nigeria. Britain under Thatcher practiced it as far back as 1979 i.e about twenty – six years ego. Consideration for privatization as an economic policy to be implemented in Nigeria commerce since 1966 (Oguna 1999).

2. All past Administrations including shehu Shagari, Buhari, Babangide, Abacha, Abubakar attempted to implement the policy but had limitations of either stopping at the stage of committee recommendation without implementation or implementation stopped because of the administration short life span.

3. The past administrations that attempted to implement it properly such as Babangida, Abacha and Abubakar were all ,military heads of state that operated under military circumstances.

4. All the above – mentioned administrations accepted that privatization and commercialization was needed as a way out of Nigeria’s economic problems.

5. Chief Olusegun Obasanjo’s decision to fully implement the programme is the only civilian administration under a democratic environment that has taken up such challenge.

Whereas, freedom of expression were not guaranteed under the military, the present democratic system of organizing the state has put in place, structures that encourage wide consultation and criticism of government policies. Given this unique but most courageous step of the Obasanjo’s administration to implements the policy. It is considered necessary to more elaborately present his privatization and commercialization policy by plainly including his inaugural speech at the occasion of the inauguration of the National council on privatization on 20th July 1999.


Those who argue against privatization in support of Karl Marx views in Nigeria have outlined some points against the policy. Okorie quoting Nweke J.O. (2004) who in his call for communalism as an alternative economic policy for Nigeria instead of privatization presented the following points against the policy.

He first argued in line with Karl Marx that capitalism emerges as a product of man’s revolution in science and technology which is an offshoot of industrialization and industrial revolution, that in Europe in the 1760s. He further said that capitalism as a mode of production has been under-going changes and transformations since its emergence. Such changes are made possible through innovations and technological revolutions designed to ensure that the capitalists maximize profits and accumulate capital, which leads to the following problems.

1. Labor alienation and deprivation

2. Crises over production process

3. Unemployment

4. Labour deprivation

5. Marginalization

6. Technological imbalance

7. Dependence and lopsided development

Nweke concluded by quoting Karl Marx assertion in his ‘communist manifesto’ “The history of all existing societies in the history of class struggle between freeman and slaves, patricians and plebians, lords and serf, Guide master and journey-man” Relating it to Nigerian society, Nweke stated “The history of mankind is the class struggle between the oppressor and the oppressed that always stand in constant opposition to one another. This war without end based on conflict of interest, is carried on uninterruptedly, sometimes hidden and some times open”. Another scholar, Adeoti J.O. (2003) in his argument against privatization, quoted Major-General Buhari in his statement against privatization thus” The government would rather go into commercialization… because as a result of the study group on the commercial companies, we found that there is large public investment which would be unfair of this administration to sell to a few people (that investment)so that people who bought these share will realize so much profit”

In addition to this, he highlighted the social cost of privatization in Nigeria to include”

1. Threats to public interest: This is because public parastatals have the dual responsibility of:

i. Operating in the public interest.

ii. Seeking to achieve profit as commercial undertaking.

It is obvious (according to him) that once these enterprises are privatized public interest will be thrown into wind.

2. Privatization leads to creation of private monopolies: This implies that in many instances, privatization means a replacement of public monopolies. This may lead to an increase in the prices of the services provide by the parastatals, and since price of commodities and services are inversely related with their value, the tendency is that the standard of living of the consumer would be lowered.

3. Valuation problems: In the absence of a market for the shares. This may lead to an over-subscription, which may not be in the interest of the taxpayers. For instance, American International in 1982, and Britain Telecommunication and Jogua in 1984 were nearly over subscribed at give away prices. The prices at which these enterprise will be sold will be similar to that mentioned above considering the nature of the under development of the Stock Market in Nigeria.

4. Transitional Domination: It may be the case that were indigenous private sector could not raise funds for the purchase of these parastatals, foreigners may out- rightly buy them up or use their local firms. Hence, rather than alleviating the balance of payment crises of the country, privatization may further compound it.

5. Economic inequalities:- Privatization will enhance economic inequalities and produce social polarization. Hence, succession to wealth and property will tend to become hereditary within particular social groups.

Thus the line which distinguishes the have and the have not will be further thickened as the patterns of shares acquisition might succeed in transferring the bulk of the acquired shares into the hands of a few rather than to the hands of the generality of the people.

6. It has been suggested that advocates of privatization confuse efficiency with money making, hence the false presumptive superiority assumption of the private sector to the public sector. The question is, is profit the only motivation for the establishment of these enterprises? Should we measure viability in terms of money alone? What about the provision of certain utility service?, which the private What about the provision of certain utility service, which the private sector. entrepreneurs can, but will not, provide because of profit consideration? It has therefore been suggested that indicators of efficiency and effectiveness should take cognizance of the service and facilities these parastatals are to provide. Those who favour privatization do so considering the total amount invested and the returns therefore. This approach is misleading since the primary objectives of some parastatals is not profit making. Certain service such as electricity, water supply and education should be fundamental rights for the citizens.

7. Mass retrenchment of workers: Privatization may also lead to mass retrenchment of workers by new owners of acquired parastatals, which might be subjected to private sector standard.

8. If the privatization plan is carried out in accordance with the outlined policy spelt out in the 1986 budget speech, the Nigerian state will most certainly ceases to control the major sectors of the economy.

Though the privatization drive has been sanctioned by the present administration, we only hope that caution will be exercised to ensure a systematic privatization of management of the corporation, more so that it has been demonstrated that management problem is responsible for the inefficiency and low return that pervaded the functioning of the corporations.


The State Water Corporation started as Water Supply Division of the Public Works Department until 1978 when the Water Board was then carved out of the ministry of Works Housing and Transportation. At the moment the Enugu State Water Corporation derives its status from Enugu State Water Corporation Edit 1996, which is deemed to have come into force on 27th August 1991, further amended in 1999. The functions of the corporation include among others to develop, provide, conserve and distribute in the state water for public, domestic and industrial purpose and charging adequate fees. In carrying out these functions the corporation has the power to:

1. Prepare all plans necessary for the maintenance and redevelopment of its undertakings.

2. To construct, reconstruct, operate and maintain water works, pumping stations, building and other works necessary for the discharge of its functions.

3. To carry any water-pipe along, through across or under any street, but in so doing the relevant regulations of the competent authorities shall be complied with.

4. To abstract water from any lake river, stream or other natural water sources within the state.

5. From time to time, examine any surface or underground waters within the state for the purpose of determining in which, if any pollution exists.

6. To construct public fountains in any street or other public places.

The Enugu State Water Corporation is made up of four functional departments namely

1. Engineering Department: This department takes care of the technical aspect/function of the corporation, installation of pipes and fixing of old or damaged equipment.

2. Finance and supply Department: They handle all the expenses of the corporation. They take are of the corporation revenue and expenditure.

3. Administration Department: these department co-ordinates all the activities of the corporation with the purpose of achieving the effective and efficient utilization of human and material resources.

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4. Commercial Department: This is the department that is responsible for the distribution of goods and services on a large scale. They also aid service which makes mass distribution possible.

The four departmental heads together with the general manager constitute the management committee. The corporation operates eight. (8) Zonal offices located at Nsukka North (Enugu Ezike), Nsukka South (Nsukka Town), Udi, 9th mile, Ogui, New Heaven, G. R. A and Uwani. Either a Zonal Engineer or Zonal officer who directly reports to the General Manager at the Headquarters, Enugu heads each zone. The zonal Engineers/Officers handle the day to day operations of their respective zone while the major problems/breakdown and decision are referred to the general manager at the Headquarters.


The water supply situation in Enugu State has been far from adequate particularly in the urban towns of Enugu, the state capital as well as in Nsukka and general in the semi-urban towns and rural communities. In terms of water production capacity, the National Water Rehabilitation Project when completed will satisfy the water needs of the urban towns in Enugu State and Ukehe.

The major constraint in realizing this impact is the distribution network, which consists mainly of old, and weak asbestors cement pipeline that no longer sustain the hydraulic pressure in many sections of the system. This is evident from the frequent cases of pipe burst and leakage all over the city.

Another point is the issue of low revenue generation. The low revenue generation is not due to low tariff but simply due to very low collection efficiency. Problems affecting revenue generation include: inadequate transport, inadequate billing system and bill distributors, poor consumer records, lack of incentive to work for the general good of the corporation, erratic water supply and public attitude towards settlement of water bills for unreliable supplies.

Meanwhile power outage has been a great setback in the rendering of service by the corporation. Public electricity supply to the Ajali – Owa Water Works – the source of the Greater Enugu Water Supply Scheme has been unreliable and epileptic. The power line, which was dedicated at inception of the scheme, has since become source of supply to other rural communities. This is also the trend in Nsukka and the few semi-urban and rural schemes, which have NEPA connection. All the urban schemes have functional stand by generating set but hardly are they operated due to lack of fuel and lubricants.

Shortage of skilled manpower also has its own effect on the corporation. The Enugu State Water Corporation is inadequately staffed and has its trained and experienced staff decimated over the years through forced retirement and resignation arising from lack of job satisfaction and low morale. Out of a total of 865 employees in 1999, 791 (91.4%) are Trade Test Certificate, First School Leaving Certificate and West African School Certificate holders. A total of 37 (4.3%) are degree and HND holder whereas 21 (2.4%) employees are without any qualification. There is also high turnover of chief Executives of Enugu State Water Corporation, which has created instability in the corporation and affected its organization and management.

Recruitment and hiring operation are carried out haphazardly in the Enugu State Water Corporation. Manpower planning polices and guidelines are virtually non-existence. Owing to poor finance Staff Training (save for those done under the National Water Rehabilitation Project (1992-1997) and development, staff reward and motivation and other human resources development methods are not is existence. Staff morale is at its lowest ebb as staff has learnt to live with arrears of up to six months salaries for years now. The human resource management corporation is tied to civil service structure making carrier development uninspiring.


The distribution problem due to topography and lack of pipeline extensions in some areas has led to the booming of water vendors in tankers for very large quantities needed in homes and industries while sachet “pure water” are used mainly by travellers and other. Most time due to the epileptic nature of the supply system due to break-down, pipe burst or any other failure in the system, it becomes necessary that water be lifted to where it is needed by other means. The system of water transportation is the only source of water in many rural areas where no water scheme exist or where the existing one is not working until the bottleneck in the water schemes are addressed water vendors will continue to have a thriving business in Enugu State.


In light of the reasons for privatization, policy makers have to formulate clear objectives for a privatization programme. Thus in water corporate therefore, it often turns out, however, that some objectives relate to economic gains while others stress socio-political gains, especially in socialist countries undertaking reforms. The objectives of the programme will influence the type of privatization adopted, the method of implementation, the associated policies towards deregulation and financial restructuring. Equally in service delivery, in order to assess the success of a programme, outcomes needed to be measured against the objectives that governments had set for privatization. And objectives which are usually articulated in policy statements and documents guide implementers and inform the designed to achieve its aims. However, some counties express objectives in such general terms, and without related targets for achievement, that an objective judgment of the impact and success of the privatization exercise become difficult, if not impossible.

The objectives of privatization programme include the following.

1. Improving economic efficiencies (productive, allocative and X- efficiencies produced by the corporation) against the background of poor economic performance of the corporation. Improves efficiency is to be reflected in lower product prices and improved product quality.

2. Reducing fiscal deficits through increased tax revenues on the corporation output, reduction in central government transfer to the enterprise sector, and receipts from privatization sales.

3. Reducing government interference in the corporation and shifting the balance between public and private sectors, as well as developing the private sector and promoting market forces in the corporation.

4. Broadening ownership of businesses through wider shares and assets ownership, thus creating popular capitalism and fostering economic equity.

5. Generating new investment including foreign investment.

6. Developing the capital market and deepening the financial system.

7. Enabling the corporation to access markets, capital and technology and expose them to market discipline.

8. Reducing the administrative burden of government.

9. Providing the opportunity to introduce competition.

Ordinarily, Water Corporation is suppose to be a service delivery corporation as well as a revenue generation outfit for government, but prior to these days of privatization little or no impact was made hence the need and public outcry for privatizing Water Corporation so that the culture of service delivery and revenue generation would be enhanced or relatively being put in place.

Does it mean that government alone cannot effective handle Water Corporation to a lucrative level? When talking about privatization, does it mean that government would not in any way participate in the management and control of this Board? Who are to take over the management and administration of Enugu State Water Corporation.

In every ramification, it can be contexted based on the fact that other countries experience on privatization working towards service delivery and revenues generation, privatizing Water Corporation in Nigeria (Enugu State) is a timely call. For government and the people of Nigeria to make a visible headway towards achieving the millennium goal of water for all by 2015, Nigerians must have to stand in for privatization of Water Corporation.

When this corporation is privatized, there would be popular participation of individual in the management of service delivery as well as generating revenue for the government of the day. However, the meaning of this concept asserts that it acknowledges the fact that private interest, and profit motives are the basis for effective management of enterprises. By its nature public enterprises according to Okorie P.U (2005) are set up by government for public goods and without profit motive directed to private interest. This makes it lack the will to be efficient as it is commonly known and said in Nigeria that “government business is nobody’s business”.




This study was embarked upon due to the ineffectiveness of Enugu State Water Corporation to enhance performance and to generate revenue for the government, which resulted into epileptic water supply in Enugu metropolis.

In this study, hypothetical statement of facts were formulated and tested to find solution to the above stated problems. After carrying out my test on hypothesis I, my findings proved that there would be popular participation in service delivery of the corporation. It is the hope, aspiration and choice of every society to involve her citizen into economic affairs of the state to enhance competition, efficiency and effectiveness of purpose.

Another significant finding proved was in hypothesis II where privatization will aid revenue generation for the government. It is obvious that when Water Corporation is privatized, more people will be involved having a new course of living for the society as well as enhancing revenue for the government.

Finally, the findings from hypothesis III proved that privatization would enable the recruitment of workers in anticipation of improved service to the masses. Unarguably therefore, the policy of privatization among government establishment will create more job opportunities, better ways of managing and utilizing resources in our society.


Capitalism as an economic system is obtained in almost all the nation today. Developed societies long ago had embraced the idea of government and her citizens participating in the economic affairs their sate. Today, the nation called Nigeria is said to be waking up from her economic slumber, thinking, dreaming and negotiating on how to bring in the spirit and ideas of privatization in her economic policies. Though privatization policies are not new to Nigeria, but it is in recent time that the idea is made manifest to all the facet of Nigerian society.

Capitalist states like united states, Britain, and France whom had instituted the policy of privatization years back can recount the dividends of its. Citizens’ standard of living have been improved, governance as well as administrative burdens have been shared between government and her citizens via privatization of some key establishments. Today, Nigeria is poised towards privatizing her water corporation and some other establishments, her citizens are beginning to brace up for the challenges ahead, and the experience of what privatization will given. With privatization, there are bound to be popular participation and revenue generation for the government as well as improve standard of living of the masses.


As a result of ideas obtained and discoveries made during this work in Enugu State, the following recommendations are given by the researcher.

i. Before the privatization, there is need for the government agencies and media houses to sensitize the general public on the meaning, aims and benefits of privatizating Water Corporation in Enugu State.

ii. As the case may be, government should not hand over fully the management of this corporation to private investors, there is need for government presence.

iii. Both local and foreign investors should be encouraged to invest in this business, this would enhance technological transfer.

iv. When privatized, there should be adequate checks and balances between government and those prospective investors from time to time by the public.

v. When privatized, the activities and progress of the establishment should be made public to compare and contrast the old Water Corporation before and after privatization.

vi. When privatized, government should not forget that water is an essential gift of nature unto which no life can exist with. Therefore, there is need for experts (water engineers) to be on their regular routine to ensure steady supply to the masses.

vii. Lastly, when inefficiency and gross misconduct are discovered at large extent the management should be disbanded and made to face the consequences immediately or better still be laid off for serious ones.

Role Of Privatization In Service Delivery And Revenue Generation For The Government

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