¶ … Telecommunication Privatization in Nigeria
Definition of Privatization
Privatization is the process by which an entity is made privately owned thus the ownership is no more public. The debate of public and private goods and ownership is old. The privatization of goods and entities is considered quite more efficient the reason is that the private goods are owned by people that know that earnings will increase as more effort and struggle will be put. The aim of managing private goods is wealth and profit maximization thus these services are efficient but bear an expensive cost tag. On the other hand the state own or public goods that are created as through a process of nationalization, are less efficient yet still productive and are also cheap. The state offers public services to benefit its people thus these goods and services are cheap. But the people working in organization are working for salary and not profit thus they do not excel in performing their tasks.
Compare Privatized Telecommunication Companies in Nigeria to the Global Development
The global standard development in Nigeria was initiated during year 2006. From year 2000 when there was 0.1% population using internet, today around 26% population uses internet services (Internet Usage and Telecommunications Reports, 2012). The increase of tele-density and access to internet is lower in Nigeria than other major countries in Africa like Egypt yet the increase in acceptance and services is remarkable that is supported by privatization of companies. The national Telco Nitel was privatized in 2005. V-Mobile and privatization of other companies has simply catalyzed the growth. While the broadband subscribers have increased to a massive number of 1.6 billion, there are also nearly a hundred million subscribers in Nigeria alone. While the number is quite big for a country that started journey about a decade ago, the Nigerian regulatory bodies and telecom companies have a challenge to overcome traditional work environment, fight management issues and improve the financial conditions for operation of the industry.
3) Worldwide theories
The worldwide progress of telecommunication industry is driven by demand as well as the need to keep pace with time. The worldwide telecom growth theory suggests that the growth of the sector was need of era since people needed a fastest mode to get to know what's happening round the world especially in the war hit areas of Afghanistan and Iraq. The rise of Arabic media systems and the birth of iPod are the events that dragged the telecommunication industry globally to privatization since nations were not contended and did not rely upon only the state owned sources. In the global context, Nigeria faces quality, regulatory and price challenges that need full dedication from all the stakeholders.
a. The Theoretical Framework for Privatized Telecommunication Companies
The privatized telecommunication companies are increasing in number due to some advantages in the model of privatization. The private Telco's anywhere in the world and especially in the case of Nigeria benefit from change of ownership. More dynamic and productive teams take over the management of company thus make it more efficient. The more the number of private companies in the market, enhanced is the competition which demands the management to bring organizational reforms. The companies pursue to make best use of their time. Money, assets and people and that increase organizational and national productivity.
The Nigerian telecom companies, despite coming a long way to growth, need to take care of the management and ownership problems that have earlier delayed the growth rate and hindered penetration of telecom usage. The companies would need to manage the organizations as well as industry in a way to avoid any negative practices. If an effort of creating an oligopoly is made, the companies might face tough challenges both from the consumer base and the regulatory bodies. Thus, it is vital to be careful and to learn lessons from global telecom companies and avoid legal and social actions against the companies.
(i) Ownership change
The ownership of Nigerian telecom companies is shifted from the state to private parties during the privatization. The ownership change is a challenge due to many reasons. First of all being a less developed country, Nigerian managers need to manage international relations. Also the change of ownership is followed by resistance of employees that the management has to deal with. Private owners are far more output oriented so the employees often find it hard to accommodate (Dikki, 2013).
(ii) Market competition
The market competition theory believes that increased competition cultivates rivalry thus the firms in industry improve quality and reduce prices so that they can increase their client base. The market competition has increased in Nigeria because the privatization leads to increase in number of service providers from one to multiple. Thus the market competition is increasing in telecom of Nigeria.
(iii) Management reform
The...
Telecommunication Privatization in Nigeria The Challenges of Telecommunication Privatization in Nigeria In the 1990s, many multinational nongovernment agencies (such as: the IMF) encouraged the privatization of state owned entities in favor of privatization. The basic idea was to encourage these organizations to become more efficient, attract large amounts of working capital and to be more responsive to the needs of stakeholders. In Nigeria, this was touted as a solution for effectively dealing
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