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Question

Difficulty: MediumIndigenization, Privatization, and Commercialization Policies

To reduce fiscal deficits and enhance operational efficiency, the Federal Government of Nigeria divested 70% of its equity in a state-owned utility firm to private individuals and institutional investors. Which economic policy reform is directly demonstrated by this transfer of equity?

  1. PrivatizationAnswer
  2. B
    Commercialization
  3. C
    Indigenization
  4. D
    Nationalization

Answer

Privatization
Privatization refers to the policy measure of transferring state ownership, equity, or control of public enterprises to private investors to boost efficiency and relieve government fiscal burdens.

Step-by-Step Solution

1
Analyze the primary action described in the scenario
The government is selling 70% of its shareholding in a state-owned enterprise to private investors.
Equity transfer from government to private holders alters the ownership structure.
2
Distinguish between Nigerian public enterprise reform policies
Selling public equity to private entities defines privatization, whereas commercialization retains state equity while requiring profit-oriented operations.
Privatization explicitly requires equity divestment, while commercialization only reforms operational management.

Key Concept

Privatization versus Commercialization in Nigeria
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Topics

Indigenization, Privatization, and Commercialization Policies