CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE STUDY
This research examines the benefits and challenges of public private partnership (P3) in Akwa Ibom State of Nigeria. Focusing primarily on its challenges and benefits as a process of greater avenue for wider citizens participation in public sector management.
Akwa Ibom, a public service dominated state, looks forward to open up her economy to industrialization. To this end, the state gets a number of public sector reform programmes. Inspite of this move to set her economy on a progressive level, inefficiency, corruption and mismanagement thrive.
It is a generally accepted fact that in a free enterprise economy, the problem of national economic development and growth sustainance is usually the join responsibility of the public private sectors. The public sector combats adverse challenges to development and creates an enabling environment for effective private sector participation in development process. While the private sector responds to the favourable environment by increasing investment in the State Akpakpan (2003).
In addition to the above, Ekpo (2007) observes that the pursuit of a nation’s economic growth through public sector institutions is usually considered to be slow, bureaucratic and weak in enforcing discipline and risk avoiding. Whereas development through private sector institutions are usually considered to be dynamic, innovative, risk taking and forward looking.
However, the manufacturing Association of Nigeria (MAN) asserts that the functions of the two sectors must complement each other for a meaningful economic growth to take place.
Toyo (2000) in his contribution says that the productive activity of these two sectors depends on the quality of labour, degree of capital accumulation, the progress of technology and the effectiveness of management. The effective utilization of these factors constitutes the key to achieving economic growth. In Akwa Ibom State, a look at the economic landscape reveals a more than proportionate public sector dominance over the private sector. This might be the result of the pre-independence structure of the economy which was dominated by the multinational corporations in Nigeria. Infact, in the post-independence era, government participation in economic activities was seen as a useful countervailing force against the multinationals dominance. A substitute for the absence of the private sector in key areas of the economy TOYO (2001). During this period, public enterprises played a key role in supporting economic growth. At a point, government economic activities became pervasive, as a result of managerial incompetence, corruption and politics. The result was distortions in investment decisions leading to economic decline and shortages.
According to Ike (1992) as well intentioned as the government programmes and policies have been the private sector’s performance has been observed to be dismal. Even though the economy has been experiencing substantial growth during the Structural Adjustment Programme (SAP) period as reflected in the Gross Domestic Product (GDP) growth of 1.2% in 1987, 4.2% in 1988, 4.0% in 1989 and 5.2% in 1990. the private sector is sick.
Ejiofor (1991) in his contribution notes that the contribution from the private sector has been minimal. This situation has attracted adverse criticism of the sector by top government functionaries. They specifically accused it of consuming almost 70% of the nation’s total foreign exchange earning, while contributing very little to the economy. Further accusation include the inability of the sector to look inwards for raw-materials supply but rather depending on imported inputs to produce and inflating of product price to make jumbo profits. The private sector through the manufacturing Association of Nigeria (MAN) has blamed its inability to perform on conflict and inconsistency in government policies, bureaucracy in implementation of policies and leakages within the economy. Government has been blamed for baning some of the essential raw materials without adequate local substitute, high cost of foreign exchange etc.
From the afore-expression, this study seek to identify the challenges and benefits of public private partnership in AKwa Ibom State, that the intended partners may stand to get in their partnership dealings. Thus formed the background of this study.
- STATEMENT OF THE RESEARCH PROBLEM
Akwa Ibom State with a population of 3.4 million is richly endowed with oil and solid minerals. Being the second largest oil producing state in Nigeria, it has strong cash flows from the federation account. Abundant agricultural resources (Land, farm, livestock, forestry, fisheries, Access to Sea/ocean etc). Has unexploited Maritime resources along its long coast line (Natural harbour which can be developed into Seaport and beaches for vessels of different sizes and for tourism and commerce). Couple with large presence of human capital, skill base and international good will and much more AK-SEEDS(2004). A survey conducted by AK-SEEDs (2004) shows that the average income per capita in Akwa Ibom State is $10. this implies that an average citizen survives on N50 per day. Too low amount for any decent living.
AK-SEEDS went further to notes that Akwa Ibom State is noted as the 7th poorest state in Nigeria. Poverty is widespread and deep-rooted because of lack of opportunities for sustainable livelihood. Youth unemployment is estimated at about 60%, about 5% of the people turned out of school system get jobs. This is a crisis of wastage in human resources. The public sector is the dominant job provider and the prospect for playing such role is fast declining.
Agriculture is the dominant pursuit engaging more than 90% of the people. This sector which includes livestock, fisheries, forest resources, cash crops, tree crops, etc are yet to be exploited because of low investment and technology. The informal sector is characterized by low productivity, low income and use of manual technology. Akwa Ibom State has a weak small and medium industrial sector.
It inherited a good number of state-owned enterprises, but moribund, some privatized. The low level of industrialization in the state has deprived it of the dynamic potentials to drive development. Thereby making the state critically dependent on the public sector for livelihood. Lack of a number of modern entrepreneurs largely account for the low level of industrialization in the state.
1.3 OBJECTIVES OF THE STUDY
In Akwa Ibom State, the public sector partner with the private sector in various capacity of human endeavours, thereby this research work looks forward to evaluate the benefits and the challenges this partnership dealings open up to the state.
1.4 SIGNIFICANCE OF THE STUDY
This study bent on providing better information on the benefits and challenges that are at presents unfold to Akwa Ibom State due to public private partnership. To the public private sectors, the study will increase an understanding of the possible benefits and challenges at presents and the issues they may likely come across in case of future plan for partnership dealings.
It will also be of immense importance to researchers who may wish to carryout further studies on the level at which the people of Akwa Ibom State benefits on P3 and the challenges they faced (it will add to the existing literature and research work on the benefits and challenges of P3 in Akwa Ibom State). Lastly, this study is significance to the researcher as this is considered as his partial fulfillment of his award of Bachelor of degree in economics.
1.5 SCOPE OF THE STUDY
For the purpose of conducting relevant research work and well analyzed outcome, this research work is limited to Akwa Ibom State. It focuses primarily on the benefits and challenges of public private partnership in the State.
1.6 DEFINITION OF TERMS
Some of the terms used in this study is defined so as to provide easy understanding of the research work, than its conventional meaning. Thus eliminate possible confusion.
- Public Private Partnership (P3): Are arrangement between government and the private sector for the purpose of providing public infrastructure and services. This is characterized by sharing of investment, risk, responsibilities and benefits among partners Uzodinma (2008).
- Public Sector: Has been defined as that portion of an economy whose activities (economic and non economic) are under the control and direction of the state Todaro (1985).
- Private Sector: Has been defined as that part of an economy whose activities are under the control and direction of non-governmental economic units such as households or firms. Todaro (1985).
- Partnership: Is a mutual relationship that calls for agreement between two or among several interested partners; that aims at achieving a common goal and benefits to the group Uzodinma (2008).
- Public Servant: Those who work in the public sector Onu (2000).
- Privatization: To sell public owned enterprise to private individual’s for efficient management Iyoha (1998).
1.7 LIMITATION OF THE STUDY
This research work was restricted to Akwa Ibom State.
Time, materials and financial resources are the major factors that limit this study. Inspite of these challenges, this study is completed at this codified level.
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