Privatization

Back to: COMMERCE SS3

 

Welcome to class! 

In today’s class, we will be talking about privatization. Enjoy the class!

Privatization

CONTENT

1. Privatization
2. Commercialization

Privatization is the process whereby ownership and control of the businesses, companies, industries or co-operation are transferred from the Government (public sector) to a private individual (private sector)

Advantages of privatization

1. It promotes efficiency in the business that are commercialized or privatized.
2. Government generates more revenue during the implementation of policies.
3. It leads to competition and innovation as well as improvements in the quality of goods and services.
4. There is a great reduction in the level of public expenditure on enterprises that are not viable.
5. It deepens or widens the capital market.
6. It gives consumers an increases range of choice.

Disadvantages of privatization

1. It leads to an uneven distribution of income.
2. It leads to inflation i.e. increase in prices.
3. It leads to mass retrenchment of workers.
4. It leads to the reduction (lowering) of the standard of living of the citizens.
5. Privatization process may not be transparent thereby allowing a few rich people to take over choice government business.

Evaluation

1. What is privatization?
2. State five advantages of privatization.

Commercialization

Commercialization is the running of government enterprises with profit motives.  It means changing from service orientation to profit orientation of government-owned enterprises.  The ownership and control of such enterprises will still be under the government.  The provision of subvention, grants and subsidies to such enterprises are either partially or totally removed.

Advantages of commercialization

1. It promotes efficiency.
2. It generates funds for the government.
3. Reduction of government’s expenditure.
4. It promotes the principle of accountability.
5. It makes the enterprises to be self-sufficient.
6. It enhances the competitiveness of such commercialized enterprises.

Disadvantages of commercialization

1. It may lead to a reduction in the workforce.
2. It may lead to increases in the price of goods and services.
3. It may lead to the exploitation of the consumer.
4. It may lead to an uneven distribution of wealth.

General evaluation

1. What is Commercialization?
2. Differentiate between Commercialization and Privatization.

Theory

1. Differentiate between Privatization and Indigenization.
2. List five disadvantages of Commercialization.

 

In our next class, we will be talking about Economic Groupings in West Africa.  We hope you enjoyed the class.

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