A Literature Review of Privatization Models, Theoretical Framework for Nigerian Railway Corporation Privatization

Abstract

Privatization is the transfer of ownership from the state to the private sector. The main idea behind this economic strategy is to relieve government from the saddle of management of state enterprises that can be seen to be best managed by the private sector for maximum performance. The main method and critical choices for the privatization of the Nigerian Railway Corporation are management-buyout, concession, management contract, leases, share option and franchises. In addition, the research paper discusses the main performance indicators, such as effectiveness, efficiency, productivity, infrastructural investment, and profitability. These are the parameters set to measure the performance of privatized state enterprises after privatization discussed in the research study.

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“…On the other hand, privatization can be defined as the outsourcing of a public service to a private company [33,34]. The advantages of using this type of management include cost savings, as services can be provided at a lower cost and in a more efficient way [30,[35][36][37]. Within this category can be found the contracting out form, which can be defined as a form of privatization in which a private company makes residual profits from the provision of the service [34,38], and the public-private partnership (PPP), where the local authority and the entrepreneur share the operating results on the basis of what is fixed in the contract.…”

Is state-owned enterprise merging private enterprise “market choice” or “space crowding” ? —Based on the motives of equity transfer of mixed-ownership enterprises

“…According to the financial data analysis of 1362 Japanese listed companies from 1991 to 2009 in the NIKKEI NEEDS database, ownership transfer to private and foreign individuals has improved financial efficiency [ 11 ]. Abioye [ 12 ] studied the critical success factors of railroad privatization in Nigeria and revealed that the transfer of ownership and control from state-owned enterprises to private parties drives efficient and effective operations within enterprises, thereby increasing the productivity and profitability of state-owned enterprises.…”

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“…Though recent academic literature (Ugunlana undated, Okeowon et al 2019;Aladejani et al 2021, Games 2021, Abioye et al 2016 all addressed Nigeria public debt burden and its sustainability under various tittles, none is related to the current case of the Nigeria railway modernization project. We examined the hypothesis: is the Nigeria Railway modernization projects truly unstainable?…”

“…Quite a large volume of empirical literature (Okwe, 2020, Ogunlana undated, Aladejana et al 2021, Abioye et al 2016, Ajayi and Oke 2021 exist in relation to Nigeria's debt burden study. As it were, none of these works discoursed the much vilified Nigeria public debt burden arising due to the financing of the Nigeria railway modernization project.…”

“…Besides, many of the debt management strategies: debt rescheduling, debt refinancing, etc., are "exceptional financing" known to be "costly" and accumulate significant arrears which create further distortions in debt. Abioye et al (2016) examined the role of railway transport in the growth of the Nigeria economy. The authors analyzed in a table (precisely Table 4 on page 107) various governments' (Shagari through Babanginda down to Jonathan in 2015) investment tranches in the Nigeria Railway Corporation and total accrued revenue in each of the thirty two (32) years included in the study, 1983 to 2015.…”