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113 years of mismanaging Nigerian companies

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By Uduma Kalu
PRESIDENT Goodluck Jonathan on August 5 inaugurated a council to look into public companies acquired but mismanaged by private investors.

The president had frowned at the way the privatised companies were being mismanaged, saying, “these enterprises have been privatised and over the period, some of them over 10 years, and they are still dead”, even though government spent huge amount of resources on setting up the enterprises.

The idea was not just meant to make money for the government, but to create jobs and wealth for the people. Earlier in July, senator passed a motion to probe the Bureau of Public Enterprises, BPE, over its failure to turn around the fortunes of privatised federal government_owned companies.

Nigerian Airways grounded

The motion said,”… there are massive loss of jobs and colossal loss of economic returns to the Nigerian economy. For example, the privatised steel sector that used to employ up to 20,000 workers, now have less than 4,000 after the exercise.

The Electricity Meter Company of Nigeria, Zaria that was privatised in December 2002, recently fired about 90 per cent of its workforce.”

The senators listed The Daily Times Plc; the Electricity Meter Company of Nigeria, Zaria, the Peugeot Automobile of Nigeria, PAN as some of the companies that are not working. But this trend begin 113 years ago, with the electricity industry. There are also companies, some not even privatised and are also not doing well. They arrange from agriculture to manufacture, transport, steel, telecommunications etc. Below are some of them.

Nigeria Airways

Nigeria Airways Ltd., more commonly known as Nigeria Airways was founded in 1958 after the dissolution of West African Airways Corporation. It was wholly owned by the Government of Nigeria, and served as the country’s flag carrier. The airline was headquartered in Abuja. It had its heyday in the early 1980s, just after a KLM team two_year_management period; at that time its fleet comprised about 30 aircraft. It ceased operations in 2003.

Plagued of mis_management, corruption, and overstaffing, at the time of closure the airline had debts for more than US$ 60 million, a poor safety record, and its operative fleet comprised a single aircraft flying domestic routes as well as two leased aircraft operating the international network. It was succeeded by Virgin Nigeria.

Initially the airline was a tripartite entity in which the Nigerian government, BOAC, and Elder Dempster Line all had a participation. The Nigerian Government held a controlling interest of 51% of the shares that was boosted to a 100% on 1 May 1959. On 22 January 1971 the company was rebranded as Nigeria Airways.

Nigerian National Shipping Line

Nigeria formed the NNSL in 1957. At first 33% of the capital was held by the Elder Dempster Line and 16% by the Palm Line, both British companies, while the Nigerian government held 51%. In 1961, the Nigerian government acquired all the shares.

The NNSL started operations in 1959 with three vessels. By 1964 it had grown to a total of 16 vessels. The public company was assisted by private businessmen. The tycoon Sir Louis Ojukwu was an early member of the board, dying in 1966.

Decline

In 1988 the National Maritime Authority granted six Nigerian shipping lines “national carrier” status, including the state_owned Nigerian National Shipping Line. The NMA planned to extend this status to more domestic companies so as to reduce control of trade by foreign_owned lines.The Shipping Policy Decree of 1987, which established the NMA, gave approval for a 50_50 share between foreign and domestic lines for non_conference cargos.

However, in 1988 the 24 ships of Nigerian national carriers including the NNSL took only 11% of the cargoes at Nigerian ports. The NNSL and the private companies suffered from financial problems and lacked the facilities needed to attract cargoes. In the 1990s several of the company’s vessels were seized in different parts of the world for alleged breach of contract and unpaid bills.

The NNSL was liquidated in September 1995. Its assets were assumed by the newly formed National Unity Line (NUL). The NUL, fully owned by the Nigeria Maritime Authority, began commercial operations in July 1996 as Nigeria’s national flag carrier. The NUL had just one ship, MV Abuja. In August 2005 the government put the NUL up for sale. The company now had no vessels, but owned a shipping license. In July 2010 it was reported that the Nigerian Maritime Administration and Safety Agency, the successor to the NMA, had completed arrangements to establish a new national shipping line for Nigeria. A fresh attempt was made to relaunch and sell the NUL in 2011.

 

Nigerian Railway

Corporation

The Nigerian Railway Corporation is 112 years old and it runs a unilaterally designed track system of 1067mm cape gauge. Railway construction was started by the British colonial government in Nigeria in 1898 from Lagos in the Southern Protectorate. Railways were seen by the administration as a better way of consolidating power in the newly acquired territory. Also, railways were developed to gain access to the rich agricultural and mineral resources in the hinterland, explaining the diagonal orientation of the network running inland from the two major seaports of Lagos and Port Harcourt.

The Nigerian Railway Corporation (NRC) was established by an Act of Parliament in 1955 for the main purpose of carriage of passengers and freight in a cost_effective manner.

In 1983, NRC carried 15.11 million passengers, generating more than N29 million (80 naira = US$1), but the levels had nose_dived by 1993 to about 1.50 million passengers, generating less than N15 million. In 1993, NRC hauled only 106,000 tonnes of freight to earn N25. 84 million.

This disheartening downward trend, which reached an all_time low in 1993, was the result of government neglect—almost no government funds were released to the railways during this period. Operations were paralysed and NRC was forced to prune its workforce from 40,000 staff in 1984 to 23,800 in December 1992, but even this smaller number of staff was owed 9 months salary! The system was on the verge of total collapse, NRC properties depreciated greatly in value and some were vandalized beyond repair. This marked the beginning of the end of an effective railway network. Presently, NRC has a staff strength of about 14,000.

Similarly, at independence in 1960, NRC had 257 locomotives, 339 carriages and 3885 freight wagons to serve an estimated population of about 21 million people over 3505 route_km. However, by 1995, the rolling stock levels had dropped to 70 locomotives (with 50% daily availability from 1995–96), 150 carriages and 1500 freight wagons to serve an estimated population of about 88.5 million people.

NRC went more than once into bankruptcy during the last 20 years. Lack of maintenance on infrastructure and rolling stock and a high number of employees the railway produced huge deficits, not taken over by the state. In 2005 after several re_organisations of the system passenger transport was reduced to four departures weekly from Lagos of which two went to Kano, one to Jos and one to Maiduguri; from Port Harcourt four trains every week ran to Kano (two weekly), one weekly to Jos and one to Maiduguri.

 

CCECC and NRC Rehabilitation Project 1995–99

The agreement signed by the government of Nigeria with the China Civil Engineering Construction Corporation (CCECC) removed the 9_year vacuum created by the exit of Ogbemudia. The $6_million contract was like a ray of light in a dark tunnel.

NRC , now with 41 locomotives has resumed Jos–Port Harcourt, Abeokuta–Kano, Lagos–Idogo services, as well as Lagos mass transit and other suburban commuter services that had been abandoned for the past 15 years.

However, the impact of this project on train speeds is yet to be noticed.

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