Examkin

Question

Difficulty: Very hardPrivatization, Commercialization, and Deregulation of Public Enterprises

Match each public sector structural reform policy in Nigeria with its corresponding operational financing mechanism and ownership framework.

  • Outright Divestment (Privatization)The state surrenders majority or entire equity interest and managerial authority to private individual or corporate investors.
  • Total CommercializationThe state retains 100% ownership but completely abolishes operational subventions and capital grants, requiring full cost recovery from market sales.
  • Partial CommercializationThe state retains ownership and continues providing capital expenditure grants, but expects the enterprise to fund recurring operational costs independently.
  • Sector DeregulationThe state removes statutory monopoly privileges and administrative price controls, allowing private enterprise entry into the market space.

Answer

Outright Divestment (Privatization) matches surrendering state equity to private investors; Total Commercialization matches state ownership with total withdrawal of operational and capital subventions; Partial Commercialization matches state ownership with continued state capital grants alongside self-funded operational expenses; Sector Deregulation matches removing statutory monopolies and price controls to enable open market competition.
Privatization refers specifically to equity sales to private entities. Total commercialization mandates complete financial independence (no capital or operational subventions) under continued government ownership. Partial commercialization retains state capital support while requiring operational cost recovery. Deregulation dismantles statutory barriers to invite private market participation.

Step-by-Step Solution

1
Analyze the core distinction regarding equity and ownership transfer.
Privatization is the only policy among the options that changes ownership from public to private equity.
Ownership transfer defines privatization, distinguishing it from commercialization and deregulation.
2
Differentiate between Total Commercialization and Partial Commercialization on financial grant structures.
Total commercialization receives zero government grants (neither capital nor operational), whereas partial commercialization still receives state grants for capital expenditure while covering recurring operational costs through revenues.
The allocation of capital grants vs operational self-sufficiency forms the technical boundary between full/total and partial commercialization.
3
Identify the mechanism of deregulation.
Deregulation alters industry rules, legal entry restrictions, and tariff controls rather than modifying enterprise management or internal balance sheets directly.
Deregulation opens market access to competitors by dismantling legal monopolies.

Key Concept

Public Enterprise Reform Frameworks (Privatization, Commercialization, Deregulation)
Rate this question

Topics

Privatization, Commercialization, and Deregulation of Public Enterprises

More questions from this topic