Privatisation fruits for labour

By Razaq Adedigba

Irene Chigbue, DG, BPE

Labour issues have always been paramount and critical in determining the effectiveness of economic reform and privatisation.

Really, the emotive and sensitive nature of privatisation derives from its impact on job creation or erasure, severance and pension benefits, salary arrears and job security. No wonder the sharpest resistance to privatisation often comes from workers, a dissent more popular than the equally strident ideological rebellion from the politico-economic class determined to sustain the status quo.

As a rule, the Bureau of Public Enterprises (BPE) has taken the sensible decision to involve workers and their unions in the design and implementation of privatisation programme, in recognition of the essential place occupied by labour in the economy.

Since privatisation is about the transfer of the ownership, control and management of public enterprises to private entrepreneurs with the requisite capital, technical and management acumen, labour, the indispensable factor of production and distribution of goods and services, is vital to its success.

Workers’ acceptance and understanding of government’s reform programmes, especially privatisation, is invariably influenced by the perception of their likely impact on their welfare. This explains why the BPE recognises labour unions and professional bodies as veritable vehicles of fostering social engineering and enhancing confidence in the complex and sensitive privatization programme. As the BPE continues to engage vested but powerful interests opposed to economic reform and privatisation, it needs the vigilant support and strategic involvement of workers and civil society groups in the programmes.

The BPE and labor unions have actually come a very long way, thanks in part to the spirit of trust and mutual cooperation that ensured the full acceptance and active participation of workers’ representatives in the privatization policy decisions and programme execution. This followed protracted consultative meetings and focus group sessions with labour union officials that lasted for six months, from December 2000 to May 2001 in Abuja , Lagos and Port-Harcourt.

A painstaking cultivation through dialogue and communication techniques of union leaders has helped the BPE obtain valuable inputs and critical feedback from workers and other privatization stakeholders. The information gathered was used by the National Council on Privatization (NCP) in the design, formulation and subsequent adoption of the labor policy framework.

The NCP has been benefiting immensely from the wise counsel of labour by virtue of the full membership of the president of Nigeria Labour Congress (NLC) in the Council, as enshrined in the Privatization Act. Besides being represented at the highest privatisation policy making body, workers were also fully integrated into the organs of privatisation implementation, such as the 11 standing technical sector reforms implementation committees. Each of the 11 committees has two labour representatives serving on it. The BPE also relentlessly solicited and secured the support and valuable contributions of senior staff associations represented by the Trade Union Congress (TUC).

In the same token, the labour unions also displayed maturity and flexibility in rising up to the challenge posed by the global wind of economic restructuring and integration. Labour leaders and their unions are aware, from experience, that, unless the national economy becomes competitive and a significant growth achieved, the future of Nigerian workers will be bleak.

It is through such constructive partnership with the BPE that labour union officials and workers, while embracing economic reform and privatization as imperative for the country, drew constant attention to certain issues which require urgent solution.

Some of these pertinent and patriotic issues are:
·That privatization will lead to mass retrenchment of workers and job losses.
· That pension entitlements, salary arrears and severance benefits may not be paid.
·That what used to be public assets may be owned by the few rich.
·That public monopoly may be replaced by the more insidious private monopoly.
·That national security may be undermined.
·That some powerful foreign interests may take over the commanding heights of the economy.
·That the valuation of enterprises may not be properly done.
·That the environment may not be protected.
·That land compensation may not be honored.
·That workers may not be allowed to own shares.

These concerns are legitimate and quite understandable. But most of them have been redressed by and because of privatization. Truly, it is hardly remembered in public discourse today that Nigerians owe the BPE and the labour unions eternal gratitude for championing a comprehensive pension reform in the country. The 2004 PENCOM Act is the direct result of the pioneering role which the BPE spearheaded in its bid to tackle the pension problems identified in the course of privatizing public enterprises.

Critics have also conveniently underplayed or ignored the fact that Nigerian workers have received payments in total sum of N129 billion from the BPE for the settlement of labour liabilities, including salary arrears, terminal benefits and pensions.

The breakdown of some of these major expenses is as follows:
* NITEL and Mtel
The BPE paid N6.8 billion to settle salary arrears and N53.7 billion to pay terminal benefits. This brought the total paid liability to N60.5 billion, a figure representing more than 90 per cent of the sale proceeds.
* NPA BPE paid N31 billion in settlement of severance package to NPA and Dockworkers. This amount does not include the Pension liability of more than 8000 pensioners.
* NICON Insurance
At the closure of this transaction, a severance benefit of N3.8 billion was paid to workers.
* NAFCON
N8.5 billion was used by the BPE-appointed liquidator to settle the staff gratuities and other outstanding liabilities.
* Savannah, Bacita and Sunti sugar companies
The Bureau and the liquidators paid workers of these three companies benefits totaling N3.6 billion: Savannah , N1.2 billion; Bacita, N2.3 billion and Sunti, N107million.
* Nigeria Airways
A commitment of N8.2 billion was made to the staff by the liquidator on behalf of the BPE. The payment was for salary arrears, pensions and 45 per cent of gratuity.
* ALSCON

The eight-month salary arrears of staff and other labour liabilities totaling N1.3 billion were fully paid by the BPE.

More importantly, to ensure fairness and equity in the implementation of the privatization scheme, the programme policy allocates to the staff of the listed enterprises a maximum of 10 per cent of Federal Government’s own remaining shares. Unfortunately, however, labour unions and senior staff associations have not been successful in acquiring their shares. Workers and their unions would need to shake off their slumber and rekindle interest in the purchase of these shares, as the BPE is ready to render whatever assistance required for a change of attitude in this regard.

BPE, nevertheless, values the critical approach being adopted by the labour unions and other stakeholders in continuing to partner with the Bureau with a view to deepening transparency, accountability and adherence to due process of the reform programme.

The BPE will continue to count on workers and their unions to build a strong network of privatization monitors to fulfill the mutual objective of achieving national economic competitiveness, industrial growth and rapid modernization.

The BPE recognises that the workers, many of whom have worked for close to 30 years in such public enterprises as NITEL, NEPA and the NPA, have a personal stake in the enterprises and genuine concerns about the changes introduced by the reform agenda. We all have families; we all have aspirations and responsibilities, personally, and for our children. We all want a job.

Since privatization often looms as a 'threat' magnified by our real but usually imagined fears, the BPE accepts that it has an obligation to the worker. It has continued in conjunction with labour unions of privatized or about-to-be privatized enterprises to design policies and implement programmes for the protection and welfare of workers, particularly any who might be discharged.

The BPE works jointly with unions and employees to determine how best to handle industrial relations issues in the process of privatization and within the newly privatized enterprises. In fact, often employees have chosen packages in preference to continuing their employment in recognition that the BPE offers a fair and equitable severance package.

Workers found that new demand for their skills worked to their advantage: many took their entitlements and moved on to a new job. Those with experience but needing to upgrade their skills benefited from training opportunity and set up their own small scale ventures. Some became the top rate managers or consultants with their new employers.

Even workers disengaged for redundancy and right-sizing exigencies, have had good jobs in the multiplier effects of the boom in production and ancillary jobs created by the revitalized privatized enterprises and new companies set up as a result of sector reform. The motley jobs in recharge cards production, hand sets production and sale as well as numerous telephone call centers across towns and villages testify to this point.

To a large extent, the BPE has implemented a fair and equitable privatization severance packages for Nigerian workers. Using privatisation proceeds to settle backlog of wages has been a successful approach in settling workers’ entitlements. This involves massive amounts of funds, in many instances much more than what the enterprise attracted as sale price.

Lately, however, it is regrettable that some apparently unfeeling labour union officials have been engaging in acts and utterances capable of undermining the gains and spirit of the constructive partnership between the BPE and labour. They have shunned invitations for discussions and negotiations over labour issues in the course of the reform and privatization of some public enterprises, especially the electric power and oil and gas sectors.

Nigerian workers have no choice but to prevail on the few but vocal union leaders to back down from their unhelpful recalcitrance and take full advantage of the opportunities made available to them in the current inevitable economic reform. They should stop chanting the requiem of hopelessness and despair and sing the song of redemption and economic emancipation.

Adedigba is of the Public Communication Unit of BPE

NCI: Towards creating FDI-friendly environment

By Sulaimon Olanrewaju

According to Kjetil Bhovarn, a Swedish professor of Economics, the whole of Africa does not receive as much foreign direct investment (FDI) as Singapore. Yet all other regions of the world benefit from FDI. Despite efforts by Africa and Nigeria to attract FDI, there is little result to show for their effort. In eight years of democracy, the FDI that has come to Nigeria is nothing to stir a cheer. Yet over the years Nigeria has tried to liberalize the economy, the tax regime and even the legal system all in a bid to attract foreign investment.

FDI inflow is a vehicle to development. It is the driver of globalization which is the reality of the present era, the age of a borderless world. Therefore, for a country or a region to fully realize its potentialities, for a country to grow its economy and liberate its citizenry from the grip of poverty, it must position itself as a destination for foreign direct investment. Hence, as developed as the United States of America, Western Europe and Japan are, they still aggressively attract FDI. That is why the economies keep on growing. Therefore for Africa to experience its much desired economic development, it has to devise a means of attracting FDI.

The question, however, is why are some regions of the world attracting FDI while others are not? Why are investors going to an area while they are ignoring others? Why are foreign investors storming Singapore and neglecting Africa? Even in Africa, why do foreign investors prefer to go to South Africa and not Nigeria? What do those countries which are FDI destinations offer investors that others need to know? What do they do that the less fortunate countries, in terms of attracting FDI, need to know? These questions and more are part of the riddle that the Nigerian Investment Promotion Commission (NIPC) will attempt to find answers to at its 4th National Conference on Investment (NCI) which starts tomorrow in Ibadan, Oyo State capital.

The conference, which is organized by NIPC in conjunction with Odu’a Investment Company Ltd. and Bank PHB, will focus on “Creating enabling investment environment for the realization of Vision 20:2020.”

President Umaru Yar’Adua is expected to declare the conference open as the Special Guest of Honour while Chief Adebayo Alao-Akala, Oyo State governor, will be the chief host.

The conference provides a platform for investment development and promotion institutions, federal ministries, departments and agencies, state ministries of commerce and industry, associations and professional bodies, multilateral agencies and trans national corporations, organizations and individuals from both the public and private sectors to deliberate on, mobilize broad-based support for and provide a road map towards creating an enabling investment environment to attract FDI into Nigeria.

The objective of the 3-day conference is to provide an avenue for sensitizing the investing public on the investment opportunities and incentives available in the country.

It is also to strengthen the existing collaboration among the stakeholders in the Nigerian economy to sustain the improving Nigerian investment climate.

The conference will also afford stakeholders an opportunity to interact and network with one another to proffer measures and strategies that could make Nigeria the preferred investment destination among emerging markets. It will also create an avenue for building the capacities of the state investment promotion agencies (IPAs).

Before the official opening of the conference, there will be a technical session of officials where reports of the last NCI would be considered. The session will afford participants to receive an update on progress recorded by stakeholders on the previous conclusions of the conference and presentation of memoranda.

After the opening ceremony there will be two plenary sessions. The topic of the first session will be “Enhancing the competitiveness of SMEs in the context of Foreign Direct Investment (FDI)”, while the second will be “Development and implementation of sound and stable macro-economic policies”.

Sub-topics under plenary session include, “Creating linkages between Trans National Corporations and SMEs”, “Evolution of microfinance banks in Nigeria and the implications for improving SMEs’ access to financial and non-financial services”, “Packaging business for investment promotion” , “Engaging the private sector in infrastructure development”, “Addressing the challenge of multiple taxation” and “FSS 2020 and the challenge of developing and implementing sound and stable macro-economic policies.”

NIPC came up with the idea of having National Conference on Investment in 2004 with the aim of stimulating investment growth throughout the nation. The first conference was held in Abuja that year. But in order not to make it an Abuja jamboree that will not have any effect on the generality of the people, the Commission decided to hold the conference in different parts of the country annually. In 2005, it was held in Kano, while the 2006 edition held in Port Harcourt.

Over the last four years, the conference has been able to record some achievements. These include, establishing a permanent platform for cross-fertilisation of ideas amongst stakeholders in investment promotion, capable of engendering networking that would provide the basis for formulating appropriate investment policy framework that is internationally competitive and capable of making Nigeria the preferred investment destination among the emerging markets.

It has also been able to increase the sensitization of participating states investment companies and promotion agencies on the need to improve investment environment in their domains and reduce the cost of doing business just as it has increased awareness of government’s investment policy direction, which would gradually lead to a convergence of opinion on the best way forward for the nation and a harmonization of investment policies at both state and federal levels.

The conference has increased interactions among state IPAs, policy makers and international development organizations. It has also increased collaboration and partnership between NIPC and the states in improving investment climate.

NIPC has done quite well over the years. It has created the One Stop Investment Centre, which affords investors to register their businesses on the spot without any hassle. It has also been involved in stimulating investment at the state level. But for the effect of NIPC to be strong, it has to work hard at ensuring that inflow of FDI into the country is increased. Apart from what the federal government is doing to position state-owned enterprises for FDI through privatisation, the NIPC can also train the Organised Private Sector (OPS) on what to do to attract foreign funds. It can also team up with the appropriate government agencies to make the Nigerian investment climate conducive to foreign investors. Doing this, among others, will quicken the realisation of making Nigeria a destination for FDI, which is the rationale behind the establishment of NCI.