Government-Private Sector Partnership And Rural Development In Rivers State
Abstract
This study is an evaluation of the sustainability of the public(government)-private partnership (PPP) as an option for rural development in Nigeria, focusing on River state. Given the obvious fact that the government alone can no longer finance rural development, a collaborative strategy became inevitable and PPP was considered the most appropriate. In this regard, the problem has arisen of identifying among the various variants of PPPs those that best mitigate corruption, generate efficiency, responsibility and effectiveness in the administration of the public sector in Nigeria, and particularly in River State. Therefore, primary and secondary sources were used for data generation. Based on the data generated, PPP has made progress in river state to reduce corruption, create jobs, reduce poverty, etc., since the environment is possible thanks to the relative security experienced in the state. The study concludes that collaborative government is on the agenda and recommends sustainability as a key factor, among other things, to maximize the benefits of the PPP approach in Nigeria, and particularly in River state.
Table of content
Abstract
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Significance of Study
1.5 Research questions
1.6 Hypotheses
1.7 Scope of the Study
1.8 Limitation of the Study
1.9 Operationalization of Key Concepts
CHAPTER TWO
LITERATURE REVIEW
2.1 Public-Private Partnership (PPP)
2.1.1 Characteristics of Public-Private Partnership
2.1.2 Private Sector Strengths
2.1.3 Public(government) Sector Strengths
2.1.4 The Thrust of Private-Public Partnership
2.1.6 Misconceptions about Public Private Partnerships
2.1.8 Benefits/Advantages of Public-Private Partnerships
2.1.8 Potential Risks of Public-Private Partnership
2.1.9 When Should Public-Private Partnership be considered?
2.1.10 When to partner with the private sector
2.1.11 Critical success factors for public-private partnership
2.1.12 Public-Private Partnership Practice in Nigeria
2.1.13 Public-Private Partnership and Privatization: A Comparism
Theoretical Framework
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research design
3.3 Sources of Data
3.4 Population of the study
3.5 Sample size determination
3.6 Sample size technique
3.7 Instrumentation
3.8 Reliability
3.9 Validity
3.10 Method of Data Collection
3.11 Method of Data Analysis
3.12 Ethical consideration
CHAPTER FOUR
DATA PRESENTATION, FINDINGS AND DISCUSSION OF FINDINGS
4.1 Data Presentation and Data Analysis
4.2 Findings
4.3 Discussion of Findings
CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1 Summary
5.2 Recommendations
5.3 Conclusion
BIBLIOGRAPHY
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The current global economic realities of the world economy is such that the managers of various National economies especially sub-Saharan Africa are increasingly faced with the challenge of adopting management strategy or reform that will help them navigate their state out of economic crunch, cut the cost of delivering public services, legitimize the government by ensuring effective and efficient social service delivery and stable polity.
Giving the failure of state led and dominated development approach of Nigeria and most African states after independence, the need for ideological shift from a welfare or social state to a capital or market oriented economy where the private sector will play significant role in the economy began to emerge. This development was fast tracked by the eventual collapse of socialism with the disintegration of the Soviet Union and consequent dominance of capitalism as the world economic system. The collaborative management style between the private sector and public sector became much prominent with the New Public Management (NPM) approach that started to make waves in the 1980s and 1990s of which public-private partnership is a core feature. In sum NPM is nothing but private solutions sought to remedy public sector problems. Hence,
Public-Private Partnership (PPP) is an arrangement between government and private sector entities for the purpose of providing public infrastructures, community facilities and related services. Such partnerships are characterized by the sharing of investment, risk, responsibility and reward between the partners. The reasons for establishing such partnerships vary but generally involve the financing, design, construction, operation and maintenance of public infrastructure and services, Kwan (1999:5).
PPP is therefore an infrastructure led development made possible through combined human and material effort of both public and private sectors. According to Obozuwa (2011:1), ―Many developed countries quickened their economic development by accelerating their infrastructural development; such as China and United State of America‖. In reference to Late President J.F. Kennedy, ―America has good roads, not because America is rich, but America is rich because it has good roads‖, Obozuwa (2011:1). The implication of the above statement is that, no country can be economically buoyant without good infrastructure. According to World Bank estimate in Obozuwa (2011:1), ―every 1% of government funds spent on infrastructure leads to an equivalent 1% increase in Gross Domestic Product (GDP), which invariably means that there is a correlation between any meaningful inputs in infrastructural development and economic growth‖. Good infrastructure generates income, employment and thereby reduces the rate of poverty in an economy. Impliedly, infrastructural development is equally a poverty reduction strategy. Lack of it results to other multiple socio-economic problems; likewise the provision of it brings about economic development and other socio-economic progress.
In recent times,rural infrastructural development has assumed a central importance in Nigeria’s fight to attain social and economic stability. Both Federal and State government are using infrastructure as the focal point of their administration and policy enactments. This is equally obvious in
President Yar’adua’s seven-point agenda: power and energy, food security and agriculture, wealth creation and employment, mass transportation, land reform, security and qualitative and functional education.
The mixed feelings at this juncture is that ab initio, t he problem of Nigeria was not lack of infrastructures, due to massive infrastructure embarked upon by the government during the oil boom of the 70s. At the time of the oil boom era, state legitimacy was enhanced through massive public expenditure in critical sectors of the economy such as construction, commerce, industry, banking as well as in social services delivery, Adekunle (2011:4).
He also noted that ―at the first anniversary of the restoration of civil rule in Nigeria, the federal government alone had about 600 state enterprises in various sectors of the economy, most of which where in a parlous state and had unimpressive record of long years of under-performance‖. For, (FRN, 2000), these state-funded enterprises constituted a drain-pipe on the national treasury. The true picture is that, several of the state utilities were in a state of dysfunction having been crippled by corruption, inefficiency and indebtedness with many of them having no audit for years.
Given the preceding account, it becomes clear that, at the beginning, by the providence of oil wealth Nigeria had so many infrastructures in place.
Nigeria still basking on the 1970s oil wealth came the unexpected world oil market crisis of the early 1980s and the consequent sharp reduction of the oil earnings, ―from N10.1 billion in 1979 to about N5.161 billion in 1982‖, Adekunle (2011:4). Olukoshi (1993:1), maintained that the oil crisis spawned a major industrial crisis with many industrial concern either closing down or operating well below installed capacity utilization. In view of Ake (2009) in Adekunle (2011:5) ―the fact that the economy has slid into crisis, was further underlined by the increase in the percentage of budget deficit, which grew to 12 percent of the GDP in 1983. All the efforts of the state to stem the tide of the economic crisis including the economic stabilization Act of 1982, instituted by Shagari Presidency, failed to prompt Nigeria not to adopt World Bank and IMF – Inspired Structural Adjustment Programme in July 1986. The implementation of SAP meant not only that the adjusting countries need to generate export surplus to pay their debts, but also that they needed to profoundly restructure their economies along neo-liberal lines (UNRISD, 1995). With the reduction in public expenditure as one of the major policy components of SAP, Kuka (1999) in Adekunle (2011:5), state funding of infrastructure was adversely affected as the state’s ability to maintain social services and infrastructure visibly declined under SAP regime, till date, the Nigerian State’s ability to successfully finance the cost of expanding, improving and maintaining its public infrastructure has drastically declined. It is the same factors, for which President Goodluck Jonathan in October, 2011, alarmed Nigerians that the state is going bankrupt and cannot continue to subsidize premium motor spirit (fuel) and on the 1st of January, 2012, the fuel subsidy was removed which threw Nigeria into another three weeks of socio-economic crisis with lingering effects. All the above preceding account goes to suggest the imperative need for alternative source of infrastructure financing in Nigeria of which among the other themes of NPM (Privatization, Commercialization, deregulation, downsizing, etc), emphasized in Nigeria, Public-Private Partnership (PPP appears to be more appropriate and applicable in Nigerian context and at this time.
1.2 Statement of the Problem
In every economy, rural development is crucial to economic development. Economies with inadequate or underdeveloped infrastructure are bound to experience slow economic growth, and in some cases, social unrest with the attendant human and material casualty, Adekunle (2011:1). When an economy is faced with the challenge of infrastructural deficiency. Such economy can not successively develop sustainable human capital base or attract best skilled manpower. Therefore, countries desirous of competing for investible capital and exploiting the benefits of sustainable rural development need to upgrade their infrastructure to world investment standard, Adekunle (2011:1). According to World Bank (2008), ―infrastructural deficiencies remain a major challenge undermining Africa’s capacity to compete in the global market‖. Infrastructural deficit not only stunts economic growth and reduces international competitiveness; it also seriously undermines the poverty reduction efforts of African regimes, World Bank (2006).
In the case of Nigerian rural infrastructural situation, it is either obsolete, over utilized or out of use. Apart from the fact that it does not meet the needs of the investors, it inhibits investment and scales up the cost of transacting business in the country (FGN, 2004). To address the problem of rural infrastructure in Nigeria, government requires an annual investment of between USD 6 and 9 billion, which only the private sector is in a better position to mobilize, Adekunle (2011:2).
The rural infrastructural situation in River State is not different. According to the commissioner for commerce and industry who maintained that the state had been missing opportunities to position itself as an industrial base in the South-south and Nigeria, arguing that there was no justifiable reason for the companies to have shut down. He lamented that the value addition to the food chain through the sunrise flourmills had been lost, as well as the building and ancillary materials, foundries and engine tooling from the Niger steel or the acetylene and oxygen gas that could have been produced by Niger gas company.
However, the commissioner reiterated that he had discovered that jobs, which would have been generated by the industries were also lost, adding that his ministry had evolved a roadmap to see the firms come on stream using the private-public partnership (PPP) approach.
Given the above account, the posing questions to guide this study is therefore:
(1) How can private sector investors be attracted to invest in Nigeria and River State in particular?
(2) If the private sector mobilizes the needed fund, would that not imply the government relinquishing its position to the private sector?
(3) Can Public-Private Partnership among other elements of New Public Management (NPM) serve as one stroke, solution to the inefficiency of public organization in delivering public services in Nigeria and River State?
In respect to the reality of the above questions and the precarious nature of Nigerian economy, the problem of the study is therefore how to identify the particular variant among the various variants of PPP, that is most applicable and likely to generate efficiency, stability and fund for the effective management of public organizations in River State and Nigeria in general.
1.3 Objectives of the Study
The general objective of this study is to assess the viability of PPP as a strategy in public organizations in Nigeria. The specific objectives are to:
(i) To identify the ways by which private investors can be attracted to
Nigeria, and River State in particular.
(ii) Throw more light on the PPP as a concept for development.
(iii) To find out the effectiveness of PPP in the development of infrastructure in River State.
(iv) To make recommendations for better application of PPP in public organizations in Nigeria.
1.4 Significance of Study
Empirically, this study is to bring to the fore the risks, rewards and benefits inherent in PPP and douse misconceptions regarding the concept and encourage its application or adoption more than any other model of New Public Management (NPM) in public organizations in River State and the entire Nigeria. This will help the policy-makers and executors to avoid the pitfalls or gray areas inherent in PPP during implementation.
Theoretically, the study will serve as a contribution to knowledge regarding PPP as a viable option for infrastructural development in Nigeria and River State in particular. More so, it serves as a reference material for administrators and policy-makers at all levels of government.
1.5 Research questions
Given the above account, the posing questions to guide this study is therefore:
(1) How can private sector investors be attracted to invest in Nigeria and River State in particular?
(2) If the private sector mobilizes the needed fund, would that not imply the government relinquishing its position to the private sector?
(3) Can Public-Private Partnership among other elements of New Public Management (NPM) serve as one stroke, solution to the inefficiency of public organization in delivering public services in Nigeria and River State?
(1) How can private sector investors be attracted to invest in Nigeria and River State in particular?
(2) If the private sector mobilizes the needed fund, would that not imply the government relinquishing its position to the private sector?
(3) Can Public-Private Partnership among other elements of New Public Management (NPM) serve as one stroke, solution to the inefficiency of public organization in delivering public services in Nigeria and River State?
1.6 Hypotheses
1) Public-Private Partnership as at now is the most viable option for rural development in Nigeria, and River State in particular.
2) Public-private partnership will reduce inefficiency and ensure effective service delivery in public organization in River State.
1.7 Scope of the Study
In terms of scope of the study focuses on the assessment of government- private sector partnership as an option for rural development in River State and Nigeria as a whole. The study will examine in details the dominant issues public-private partnership as an option for rural development in River State.
1.8 Limitation of the Study
The major limitations includes: paucity of data or near absence of reliable data on the theme of the study, especially in hard copies, being a novel public management strategy in Nigeria. More so, the fact that River State, unlike Lagos State for instance, does not have enough institutions or projects borne out of PPP initiative is also a major limitation. In this regard, the study had to glean and rely extensively on soft copies for data.
1.9 Operationalization of Key Concepts
Public-Private Partnership: Is the collaboration of government and private sector organizations in the implementation of public services and programmes.
Infrastructure: Refers to those physical structures that facilitate the production of goods and services, without themselves being part of the production process.
Management: Involves the activities to control and monitor the people in an organization to achieve the desired goals of the organization.
Strategy: Is a method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.
Public Organization: Is a state owned, controlled and managed institution.
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