Added: 15.06.2010 15:27
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The Problem of Privatization

Privatisation often stems from the idea that government run organisations can never be as efficient and cost saving as private run organisation...

Privatisation often stems from the idea that government run organisations can never be as efficient and cost saving as private run organisation. Due to this reason, government own organisations no matter how sensitive the organisation might be are privatised.

Apart from the loss jobs that might be occasioned by the transition process, there are also many other problems that can arise as a result of privatisation due to the alignment as “public-private partnerships”.

The way privatisation is mainly practiced in most countries, gives more power to the government and weakens the private sectors. Firstly, when a government project is “privatized,” the government generally retains the highest authority over that project and manoeuvres system in their favour, thereby regulating cost whenever it pleases them. A high cost in this kind of project is deliberate for individual or lobbyist interest. This may lead to an unstable price in the market – that is, ‘price back upward from “market prices” toward “political prices”.’

Another problem is that the organizations that happen to gain from the privatization scheme by the award of contracts might not be efficient and competent enough to handle the contracts. At the end, such an organization will resort to hiring political influential lobbyists to execute the contract. As a result of this, instead of privatization becoming a remedy for government failures to run organizations, it becomes a mercenary to inflict problem on private sector.

Lastly, there is also setbacks on the so called: “public-private partnership” because while the government retains high level of authority over privatise companies and projects, the subsequent private contractors that will be involved in the project will be embolden with the responsibility for the outcome of the projects. In this kind of situation, when problem arises the blame will be pass directly to the contractors, neglecting the authoritative regulations that have directly or indirectly induced the problem. However these problems are very rampant in the US and in Nigeria.

Solution to the problem to privatisation looks very narrow, since many in the government today stand to gain from the resulting turbulence. When would government officials start putting the interest of the people that elected them into office first before their interest?


Research question: How can the turbulences that stems from privatisation be advoided?

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