CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1
Conceptual Framework
This chapter
presents a review of previous studies related to this present study. The
chapter constitutes examination of studies related to privatization of public
enterprises.
Privatization
can be defined as the transfer of ownership and control of enterprises from the
state to the private sector. Iheme (2005) defines privatization as any of a
variety of measures adopted by the government to expose a public enterprise to
competition to bring in private ownership and control or management into a
public enterprise and accordingly to reduce the usual weight of public
ownership or control or management.
By section 14 of
the Decree 25, privatization is the relinquishment of part or all the equity
and other interest held by the federal government or its agency in enterprises
whether wholly or partly owned by the federal government.
According to
Ejimofe (2000), the term privatization means the transfer of power and
functions from the public sector, through the government to the private sector.
He further stated that privatization should lead to the general and financial
independence of a company, without dependence on subsidies or grants from the
government.
Orjih (2001)
said that privatization is the relinquishing of part or all the equity and
other interest held by the Federal government or its agencies in enterprises
whether wholly or partly owned by the federal government. He went further to
identify two forms of privatization as:
a.
Full Privatization: This is
the divestment by
federal government of all
its ordinary shareholding
designated enterprises. Mostly
affected are enterprises which produce goods that are not essential in
nature.
b.
Partial Privatization: This
involves divestment by the Federal Government of part of its ordinary
share holding in designated enterprises. The enterprises affected are the ones
government considers straight for their essential goods and services. In a
related development, Bakome (2008) also identified some forms of privatization,
which include a complete form of selling government owned public enterprises to
private buyers and remove government completely from any involvement in the
affairs of such firms.
Another form of
privatization according to him is to retain government ownership of the
enterprises which it is allowed to be run and managed on purely commercial
basis just like any other private business. Yet another form of privatization
according to him is by way of sharing ownership of enterprises between the
public and the private sector while leaving the day-to-day running of the
enterprises in the heads of private administrators. He further said that
deregulation can be considered as another form of privatization.
2.2
Theoretical Framework
According to
Ogban-Iyam (2007) who sees theory as a set of interrelated concepts that are
used to explain, describe, interpret and predict the relationship between
phenomena or variables, theory helps to provides us with a way of looking at
the real world.
Here, Structural
–Functional theory is used as a suitable framework of analysis for the policy
of privatization and commercialization of public enterprises in Nigeria.
Structural-Functionalism is a theoretical framework intended to explain the
bases for maintaining order and stability in society and relevant arrangement
within the society.
This theory
originated in the biological and medical science. It was adopted as a mode of analysis in
sociology and anthropology as evidence in the work of Emile Durkhim and Talcott
Parson. It was developed for political analysis by Gabriel Almond, S. P. Verma
who stressed that Structural –Functionalism involves two main concepts, such as
structures and functions. Structure refers to the arrangement within the system
which perform the functions. Also,
structure is the way in which the parts are connected together in order to be
arranged or organized. Function has been defined by Merton Robert as
those observed consequences which for the adoption or adjustment of a given
system.
According to
Orah Young (2001), function is generally defined as the objective consequences
of a pattern of action for the system in which it occurs. The basic assumption of the structural
functional framework is that all system has structures which can be identified
and these structures perform functions within the system necessary for its
persistence. It refers to the
structures that are found in any system and functions performed by structures.
This political system is defined as the various structures and institutions in
the society that perform political functions or that bear on political decision
making policy.
In analysis,
there are three branches or structures of government such as legislature,
executive and Judiciary. The structure can be analyzed from three main levels
as person, institution and subsystems. The whole of structure is analyzed into
parts each dealing with a particular sphere of activities
for instance political, economic and social subsystem. Therefore, structure of government lead to
substructure. It is the government and their bureaucracy that makes rules,
administering, adjudicating and formulated those economic policies by the
executive for economic growth of the country.
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