Problems of Public Enterprises in Nigeria

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What are public enterprises?



Public enterprises are companies and establishments which are owned,

operated, and financed by the government. These companies exist to

render essential social and welfare services to the public at

affordable prices. Examples of public enterprises in Nigeria are the

Nigerian National Petroleum Corporation (NNPC), Nigerian Ports

Authority (NPA), and many others. The primary purpose of public

enterprises is to provide welfare services. However, they are also

expected to make a profit so they can be self-sustaining. Public

enterprises are managed by a board of directors who are appointed by

the government for a specific period of time. Over the years, there

have been many complaints and observations of inefficiency and

stagnancy of public enterprises in Nigeria, this article is on the

problems of Public enterprises in Nigeria.









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Problems of Public Enterprises in Nigeria







Read on below:





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Inefficient Management



Public enterprises are usually run by a board of directors or

administrative heads who may not have expert knowledge or experience

in running an enterprise. This in turn affects the efficiency of the

enterprise.



Losses due to the principle of non-profit making



Public enterprises by their very nature are not founded on or operated

on commercial principles. Their primary purpose is social welfare, not

profit earning. Therefore, when a public enterprise incurs losses, it

is often overlooked. This is not the same in a private enterprise that

is run for the sole purpose of making a profit. Although it can be

argued that some of the public enterprises are earning profits, the

amount is nothing compared to expenses or revenue expected. Public

enterprises in Nigeria should take up a principle of totally wiping

out losses and minimizing profits.



Delayed Decisions



Public enterprises are often criticized for slowness in

decision-making processes. The delayed decisions are usually as a

result of bureaucratic processes. Most times, a file may need to be

approved by many officials before a decision can be taken. By the time

a decision is made, the business environment might have changed. This

often leads to losses in terms of project costs, due to prices and

inflation.







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Lack of Innovation



Public enterprises lack innovation due to monopoly and lack of

competition. Since, public enterprises know they are the only ones

providing an essential service, they find no reason to be on their

toes. The lack of innovation however negatively affects national and

economic development. For example, the private sector maximizes profit

by innovating new methods of production and techniques. Public

enterprises on the other hand often feel secure and are, therefore,

lazy.



Political Interference



In Nigeria, Public enterprises are used to fulfill personal objectives

and serve political interests. For example, most times, it is

politicians that decide appointments, location of projects, etc.

instead of basing these decisions on the needs of the people or

qualifications respectively. This in turn leads to loss and waste of

capital and human resources.



Lack of autonomy



Public enterprises in Nigeria lack freedom and flexibility. Most of

their operations are determined by politicians and not even by the

board of directors. This then affects their performance.



Lack of Audit and Inspection



Most public enterprises are not properly audited and inspected. It

leads to mismanagement of public funds. Most times, even when auditing

is about to take place, the staff of the enterprise is not

cooperative. This problem can be solved if an expert committee is

appointed to audit the accounts of each public enterprise.







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Unplanned production



Many of the public sector enterprises in Nigeria do not do proper

research and take into cognizance the needs of the consumers before

production. Since they are not producing what the people really need,

there is usually poor sales and many losses.



Instability of government



Since public enterprises are often controlled by politicians, projects

embarked on are used to serve individual and party interests. When a

new government comes into power, they then abandon a previous project

and begin a new one. This is why it is very common to see many

abandoned projects in Nigeria and new ones being announced.



Over-staffing



Most public enterprises are regarded as an employment scheme; hence

these enterprises are overstaffed. The expenses of the enterprise,

which includes salaries and pension costs are also high and cannot be

matched by the losses incurred.



Poor productivity



Most public enterprises rely on traditional means of operations which

leads to low productivity. Many employees have also not been

introduced to new technologies, all these lead to very poor work

culture and inefficiency.



Low capacity utilization



Capacity utilization is very low because of inefficiencies in

management, inefficiencies in processes and procedures, and low

employee efficiency.



Poor human resources management and relations



The work environment is most public enterprises are not healthy. In

some cases, there is unhealthy respect for the heads of the

enterprise, and the work environment is strained. Most junior workers

have very little freedom to be innovative because their senior

colleagues will feel threatened. Promotions are also not based on

performance but on the basis of seniority. This also results in low

productivity and poor quality of products and services are common.







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Low incentive



In most public enterprises, employees are not motivated to work well

because there is little or no incentive for work well done.



Nepotism and Corruption



Corruption in public enterprises can be seen in many ways such as

mismanagement of public funds, selection of projects based on

political bias, political interference in the appointment of leaders.

All of these have hindered the efficiency of public enterprises.



Poor work ethic



Many times, employees in public enterprises do not see the need to

work in a dedicated manner or seek the growth of the enterprise

because they do not view it as a business. Poor work ethics is what

leads to low productivity and poor quality of products and services as

is often the complaint.



Delay in financial allocation



Public enterprises are reliant upon the government for funding. These

funds are subject to various factors and can be delayed. Thus, public

enterprises are not able to plan or make long term investments which

affect their productivity and output.





















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