CHAPTER 13: NATIONALISATION AND INDIGENISATION/DIVESTITURE

13.1COMMERCIALISATION

Commercialisation is a government policy aimed at making state-owned enterprises efficient and profit-oriented.
It allows the government to invite private individuals and investors to participate in the management, financing, and operation of public enterprises that were formerly owned and funded solely by the government.

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13.2 REASONS FOR COMMERCIALISATION

1. To promote efficient management of public enterprises.
2. To encourage individual and collective participation in economic activities.
3. To generate more revenue for the government.
4. To eliminate inefficient and unproductive enterprises.
5. To make enterprises profit-oriented through effective management.
6. To grant operational autonomy to public enterprises.

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13.3 ADVANTAGES OF COMMERCIALISATION

1. Reduces government expenditure on unviable enterprises.
2. Promotes efficiency in production and service delivery.
3. Increases government revenue.
4. Provides consumers with a wider range of choices.
5. Encourages competition, innovation, and new ideas.

13.4 DISADVANTAGES OF COMMERCIALISATION

1. Leads to high cost of goods and services due to profit motive.
2. Can cause retrenchment of workers.
3. Neglect of social and consumer welfare services.
4. Unequal distribution of income.
5. Low standard of living for the masses.

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13.5 PRIVATISATION

Privatisation is a government policy that transfers ownership and control of public enterprises to private individuals or corporate bodies.

13.6 REASONS FOR PRIVATISATION

1. To introduce efficient management.
2. To encourage private ownership and participation.
3. To generate revenue for the government.
4. To eliminate inefficient enterprises.
5. To provide consumers with freedom of choice.
6. To grant autonomy to industries.

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13.7 ADVANTAGES OF PRIVATISATION

1. Improves efficiency in management.
2. Generates more revenue for the government.
3. Encourages innovation and quality production.
4. Promotes competition among investors.
5. Gives consumers wider choice of goods and services.

13.8 DISADVANTAGES OF PRIVATISATION

1. High prices of goods and services.
2. Low standard of living for the masses.
3. Retrenchment of workers.
4. Unequal distribution of income.
5. Neglect of consumer welfare.
6. Conflict between employers and employees over wages.

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13.9 NATIONALISATION

Nationalisation is a government policy whereby privately owned enterprises are taken over and controlled by the government for economic, political, social, or strategic reasons.

13.10 REASONS FOR NATIONALISATION

1. To prevent exploitation by monopolies.
2. To avoid wasteful competition.
3. To ensure uninterrupted supply of essential services.
4. For strategic and political reasons.
5. To prevent foreign domination of the economy.
6. To finance capital-intensive industries (e.g. railways).

13.11 ADVANTAGES OF NATIONALISATION

1. Prevents exploitation by foreign businessmen.
2. Ensures steady supply of essential services.
3. Creates employment opportunities.
4. Improves standard of living.
5. Eliminates wasteful competition.
6. Encourages efficient use of resources.
7. Protects strategic industries.
8. Ensures equitable distribution of resources.
9. Eliminates private monopoly.
10. Enables mobilisation of large capital.

13.12 DISADVANTAGES OF NATIONALISATION

1. Discourages private initiative.
2. Lack of competition may cause inefficiency.
3. Poor management due to corruption.
4. Political interference in decision-making.
5. Misallocation of resources.
6. Possible retaliation from other countries.
7. Excessive government control may slow development.

13.13 INDIGENISATION

Indigenisation is the transfer of ownership and control of enterprises from foreigners to citizens (indigenes).
Its main aim is to reduce foreign dominance and increase indigenous participation in the economy.

13.14 ADVANTAGES OF INDIGENISATION

1. Encourages indigenous participation in business ownership.
2. Develops local skills and technology.
3. Promotes industrial growth.
4. Reduces foreign domination.
5. Creates employment opportunities.
6. Prevents capital flight.
7. Promotes self-reliance.
8. Encourages rapid industrialisation.
9. Improves standard of living.

13.15 DISADVANTAGES OF INDIGENISATION

1. Discourages foreign investment.
2. Can strain international relations.
3. May cause capital flight.
4. Businesses may be taken over by inexperienced persons.
5. Wealthy individuals may dominate the economy.