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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The basic reason for establishing public enterprises in all economies has been to enhance development. Government participation in enterprises in Nigeria dates back to the colonial era. The absence of indigenous and foreign companies with requisite capital to invest on railways, roads, bridges, water, telecommunications, electricity and ports facilities stimulated colonial government to embark on the provision of these capital–intensive infrastructural facilities (Igbuzor, 2003) while state involvement in enterprises continued significantly even after independence (Nwoye, 2010). Reasons for Nigerian government involvement in the creating and running of public enterprises include lack of adequate resources for the private sector to provide certain goods and services, political consideration, to guide against monopoly in the provision of basic facilities, and to ensure public access to basic social amenities. Other reasons as observed by Aboyade (1974) are to protect the consumer from exorbitant prices and ensure national security and accelerated development.

The promulgation of Nigerian enterprises promotion decree 1972 (Nwoye, 2010) and Indigenization decree of 1973 (Chambers, 2008) enhanced the development of public enterprises in Nigeria. Consequently, by 1985, there were over 1500 public enterprises owned by the federal, states and local governments in the area of energy, mining, banking, manufacturing, agriculture, telecommunications, transportation, commerce, Insurance among others. Thus, between 1975 and 1995, the federal government invested over $200b in state-owned enterprises (S.O.Es) across the country (Anya, 2000; Nwoye, 2010). The Nigerian economic crisis of the mid 80s and subsequent global economic recession and collapse of oil market placed the federal government in a precarious fiscal monetary policy that could no longer sustain the multiple S.O.Es in the country. The quest to salvage the internal economic crisis, therefore, led government to seek for foreign loans from International Monetary Fund (IMF) and the World Bank. Divest of public enterprises was given by these world financial institutions as a condition for economic assistance. Consequently, structural adjustment programme (S.A.P) was adopted with fundamental objective of deregulation and privatization. S.O.Es are to be fully or partially privatized; fully or partially commercialized (FGN, 1986; Nwoye, 1997; Ibanga, 2005).

The structural adjustment programme is expected to attract substantial investment, increase employment and reduce poverty (Iyoha, 2000; Ndebbio, 2000; Jao, 1996). This is because, according to Ndebbio (2000) labour demand is directly related to industrial investment, for example, in every 10% increase in capital investment in small and medium enterprises (S.M.E); labour demand (new jobs creation) would increase by 1.97%. Anya (2000) observed that the first phase of privatization indicated a rush and consequently relieved government of the huge and growing burden of financing S.O.Es. The programme created a large number of shareholders and broadened the Nigerian capital market from N8.9b in 1987 to N65.4b in 1994. The development increased corporate taxes significantly and considerably reduced the scope of political patronage in form of unnecessary enlargement of board appointments. In fact 280 directors relinquished their appointments after phase one privatization (Anya, 2000). Phase one also created 800,000 new shareholders raised N3.3b as proceeds and increased employment (Mahmoud, 2004; Elias, 2001; Boubakri and Cosset, 1998).

During this period, marketing communication tools were not effectively employed to attract foreign investors who could provide market access, new technology, sufficient revenue and management expertise. Other countries where privatization and commercialization recorded huge successes employed marketing communication to attract foreign investment and consequently transfer technology. Most of these successfully privatized economies have laid emphasis on educating the public through consultations and integrated marketing communication. Hence, the use of marketing communication tools is not only essential, but also crucial to the success of privatization. In fact Welch and Fremond (1998) observed that special efforts to inform institutional investors have encouraged them to participate in many privatizations. Although the bureau of public enterprise (the body charged with the responsibility of privatizing and commercializing S.O.Es) has a duty to sell state assets for their fair market values, it is expected that policy makers must balance its desire to maximize profits with other priorities, such as; broadening share ownership, deepening domestic capital market and promoting competition. Privatization programmes should attract foreign investors and to achieve this, foreign investors should be communicated through trusted and reputable marketing communication tools as well as treated the same as domestic investors (Welch and Fremond, 1998).

Hence, effective privatization requires a carefully conceived and systematic approach to communications; one that integrates communication analysis and planning at every stage of privatization formulation and implementation. Therefore, in a situation where the B.P.E seeks to privatize critical sectors (for example, power and petroleum) in the face of sustained opposition from labour union, the role of marketing communication tools cannot be overemphasized. Effective marketing communication must be based on facts – a clear understanding of views from different stakeholder groups and strategic designed messages targeting different audience through the most appropriate marketing communication tool(s). Now, given that opposition to privatization and commercialization is currently more vocal than its supporters, Adam Smith International (2005) stated that B.P.E urgently needs to mobilize support for privatization and to make their case more convincing about the cost of the current system and the benefit of reform. Thus, integrated marketing communication strategy could mobilize support of the consumer, civil societies, labour groups and businesses when policy makers release accurate information regarding the costs of the failed policy of investing resources in S.O.Es. Nigerian government greatest challenge in this policy reform is how to attract sufficient number of competent prospective investors who will participate in the privatisation exercise. While B.P.E occasionally advertise transactions, the researcher believes that it lacks sufficient finance to promote Nigeria as a destination for investment, nevertheless, with proper application of marketing communication tools, B.P.E can improve the overall perception of Nigeria business climate. The researcher opines that efforts of B.P.E in various enlightenment campaign is not effective, hence, the need to adopt an effective marketing communication strategy in order to reduce opposition and avert potential delays. The researcher believes that change in marketing communication strategy will make implementation of privatization and commercialization faster and effectual.

1.2 Statement of the Problem

The beneficiaries of privatisation who should partner with policy makers lack knowledge of the benefits of the policy reform, thus, it is difficult for beneficiaries to participate in a programme they do not understand. Marketing consultants and practitioners who should pilot the various public enlightenment programmes by employing effective marketing strategy to reach out to these beneficiaries were relegated to the background. Similarly, staff of the bureau (BPE) who are charged with the responsibility of implementing the policy reform have little knowledge of how to employ marketing communication tools (advertising, sales promotion, public relations, personal selling and direct marketing) effectively to communicate change. Effective communication entails designing and deploying effective message, employing the right marketing communication tools or integrated marketing communication strategy, responding to enquiries and other challenges from the public, the media and opponents. All successfully privatized economy are equipped with effective public policy communication master plan to ensure that government communicates effectively and successfully – neither overlooking a key stakeholder nor side-lining any step in the communication process.

The researcher believes that failure of Nigerian government to launch and sustain effectual marketing communication campaign in seeking supporting coalition of stakeholder groups have seriously caused the delay in full implementation of privatization and commercialization policy. These stakeholder groups include politicians, civil servants, business people, workers and union leaders. Other stakeholders are host communities, parastatal managers, industrial suppliers, customers, journalists, investors and citizens. Therefore, each stakeholder group has different desire or interest and each group requires different media. Consequently, the inability of B.P.E to systematically segment the market and target each stakeholder groups with suitable marketing communication tools constitute the research problem for this study, hence, the need to close the knowledge gap. The focus of this study is to access the marketing communication tools employed so far by the bureau of public enterprise (B.P.E) in privatization and commercialization of state–owned enterprises, ascertain how effectively these tools were employed and suggest the best marketing communication strategy in achieving policy objectives.

1.3 Objectives of the Study

The main objective of this study is to investigate the marketing communication tools employed in privatization and commercialization of state-owned enterprise. Specifically, this study seeks to:

1. Determine the extent to which marketing communication tools were utilized in creating awareness of privatization and commercialization of state-owned enterprise in Nigeria.

2. Determine the effectiveness of these marketing communication tools in facilitating the privatization and commercialization process.

3. Ascertain the impact of the perceived level and effectiveness of marketing communication on public/stakeholders’ participation in privatization and commercialization.

4. Determine the role marketing communication played in promoting a people- participatory and acceptable privatization and commercialization programme in Nigeria.

5. Find out the level of public participation in the privatization and commercialization programme

6. Find out whether the specific marketing communication tools that have so far been used by the body charged with privatization and commercialization was rationalized

1.4 Research Questions

1. What are the Marketing communication tools utilized in creating awareness of

privatization and commercialization of state-owned enterprise to stakeholders in Nigeria?

1. Were marketing communication tools effective in facilitating the privatization and commercialization process?

2. What is the impact of the perceived level of effectiveness of marketing communication tools on public/stakeholder’s participation in privatization and commercialization?

3. What is the role of marketing communication in promoting a people-participatory and acceptable privatization and commercialization in Nigeria?

4. What is the level of public participation in the privatization and commercialization programme?

5.  Are the specific marketing communication tools that have so far been used by the body charged with privatization and commercialization rationalized?

1.5 Research Hypotheses

H1: Marketing communication tools were not utilized in creating awareness of privatization and commercialization of state-owned enterprise to stakeholders in Nigeria.

H2: Marketing communication tools were not effective in facilitating the privatization and commercialization process

H3: The perceived level of effectiveness of marketing communication tools in the privatization and commercialization programme has not hindered public/stakeholders’ participation

H4: The role of marketing communication in promoting a people-participatory and acceptable

privatization and commercialization is inactive.

H5: The level of public participation in privatization and commercialization is not high

H6: The specific marketing communication tools that have so far been used by the body

charged with privatization and commercialization is not rationalized

1.6 Significance of the Study

Gaining political and social support for reforms is more than a public relations exercise. The obstacle that can overwhelm a privatization and commercialization campaign is not the type that will be handled with propaganda; therefore, what effective privatization requires is carefully conceived message and strategic approach to public enlightenment – one that employs integrated marketing communication at every stage of privatization policy formulation and implementation. The researcher believes that this study is critical and obligatory and will contribute immensely to the field of marketing communication. When this study is completed, it will improve understanding of the role of marketing communication tools in dealing with stakeholder groups when government is formulating and implementing policies. Once government policy objectives are understood, it makes stakeholders eager to endorse reform and also makes reform likely to succeed.

The study will be useful to these categories of people in a special way:

1) Politicians will learn the essence of communicating campaign message to their constituents and it will guide them towards applying specific tool or integrated marketing communication to public enlightenment programme because when constituents understand and accept or reject messages, the spate of rigging, violence and other corrupt practices will drastically reduce.

2) This study will disabuse the minds of civil servants affected by privatization and commercialization or any other policy reform. They may be directly affected by organizational change and need to understand the implication as individuals and why change is necessary.

3) Business people will benefit from the outcome of this study because they will understand the fact that privatization provides greater economic productivity, opportunity and profitability. Once investors are well informed of government decision to reform and privatize, they will support reform.

4) This study will be useful to labour leaders, because once union leaders understand that interest of their members or colleagues are considered seriously, they will contribute to a peaceful transition.

5) This study will be useful to host communities of state-owned enterprises that feel neglected and are entitled to certain compensations. They will understand that a better managed facility will encourage the private sector to give back to the communities through corporate social responsibility.

6) Marketing consultants and practitioners’ roles will be appreciated more by the outcome of this study because their services are required to send effective messages to stakeholders by using each or combination of marketing communication tools.

7) This study will also change the mind-set of journalists who are prone to controversies and bias and often pitch themselves in support of any opponent of government. When the journalists and the public are well informed, their antagonistic tendencies will be minimized.

8) The completion of this study will benefit foreign investors who are sceptical about the reality, genuineness and success of Nigeria’s privatization and commercialization policy. A good marketing communication strategy will convince the investors that the risk of investment is overweighed by potential profit in privatisation transaction.

9) The outcome of this study will benefit Nigerian citizens who are always interested in policies that will improve their lives but rarely about the mechanism of change, hence, government needs to communicate a vision of the future that support policy reforms.

10) Finally this study will be useful to academics (students and scholars) and researchers who will explore areas where marketing communication tools are employed for positive change.

Thus, this study is a further contribution to literature in the relevant subjects.