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Question

Difficulty: MediumIndigenization, Privatization, and Commercialization Policies

A state-owned broadcasting enterprise was restructured by the Federal Government of Nigeria to operate strictly on commercial principles, charge market-reflective rates, and fund its operations without relying on government subventions. However, the state retained 100% of the enterprise's equity ownership. Which public enterprise reform policy does this scenario illustrate?

  1. Full commercializationAnswer
  2. B
    Partial privatization
  3. C
    Indigenization policy
  4. D
    Full privatization

Answer

Full commercialization
The correct answer is full commercialization because under this reform, the state-owned enterprise is expected to operate as a self-sustaining, profit-driven entity without government financial subventions, while the state retains total (100%) equity ownership.

Step-by-Step Solution

1
Analyze the equity ownership structure in the scenario
The government retains 100% equity ownership and control of the enterprise.
Ownership transfer distinguishes privatization from commercialization.
2
Analyze the operational and financial directive given to the enterprise
The enterprise must operate for profit, fix prices commercially, and receive zero government subvention.
Operating without government grants while remaining completely state-owned is the hallmark of full commercialization.
3
Match the features to the corresponding economic policy
The policy is full commercialization.
Partial commercialization may still receive capital grants, whereas full commercialization requires complete self-financing and profit orientation without equity divestment.

Key Concept

Distinction between Commercialization and Privatization
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Topics

Indigenization, Privatization, and Commercialization Policies