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Today we came across an interesting and typical article dealing with privatization issues in Nigeria. We enjoy scouring the world in search of all kinds of news to demonstrate that the failure of Democracy is world-wide. This failure is not a blip in the radar and it cannot be fixed from the inside.

Moving on, let’s now take a look as to why privatization is not the answer in Nigeria… or for that matter, in any other country in the world.

Have we gone mad? An Absolute Austro-Libertarian daily advocating against privatization? Not exactly. Keep reading.

The Vangard News reports in its article "Privatization not the answer to power problems - SSAEAC" about the opinions of one Mr. Bede Opara, President General of the SSAEAC (union of electric workers).  Mr. Opara comments about the impending nationalization of all power supply generation stations in Nigeria.

Mr. Opara unleashes a long list of mostly nonsensical if not funny complaints:

  • Privatizations won’t work but we won’t rule out that it may work
  • Private companies are too small but they have the capability to do it
  • We have not tested these companies
  • Companies have no pedigree
  • Companies must prove that they can operate in Nigeria before they are allowed in Nigeria
  • Private companies must accept a branch of our Union in every installation
  • If companies have the will to perform, they will do well
  • We have mandated branch executives to negotiate new packages because new companies are taking over


Allow us to translate:

  • We don’t have a clue if privatizations will work but we don’t like our cozy way of life to be disturbed.
  • We have no clue about the companies that are coming, but we need to say something nevertheless
  • We don’t like the fact that companies coming, so we will insist in tests that are impossible to pass
  • We will try to squeeze out as much money as possible from the companies that are coming, just because they have plenty of money. Otherwise, they would not be here. Never mind that we failed miserably in obtaining the same conditions from the government. Nobody needs to know how incompetent we are


To match this really funny set of statements, the Nigerian president stated that they are in a transition phase and all companies have paid, therefore this sector will now take on a much more positive light for the benefit of Nigerians.

Again, a translation is necessary:

Money is coming in. We got rid of the generation sector, which was nothing but troubles. We now pass this hot potato to private companies.  We do not have a clue what will happen next, but whatever does, we will spin it to maximize political gains.

These two positions are typical in a Democracy.

The unions want money. They can’t see beyond money. They don’t understand the business and they don’t understand the finances. They have never been in a managerial position forced to make money or be fired. They have forced the government to give them an artificial monopoly when it comes to labour force. Unionized workers are notably difficult to reprimand or fired. There is no concept of partnership between unions and companies. In summary: clueless. Forecast: companies will get into financial troubles from the start.

The government wants money. They are OK with selling everything under the sun to get it. They don’t really care about their country or their citizens. And they will spin any news and pump unreasonable hopes and expectations to maximize political gain.

None of these parties understand how a market works.

Companies buying into Nigeria are there to make a profit. Which means:

  • Electricity will now cost what it truly costs to make it – prices will go up
  • There will be no mega flow of investment money to fix the existing decrepit system left behind by a set of incompetent governments
  • There will be no massive undertaking to electrify the whole of Nigeria

The companies will invest whatever is necessary to keep the generation facilities working and perhaps expand into profitable areas. Nothing more.

This is highly consistent with market economies. Companies only expand into profitable regions. Companies  are not in the charity business simply because they must make a profit to survive. This is the price we pay for having electricity.  No profit, no electricity. This is a world-wide rule.

If this privatization follows the most likely path that we have seen  in other countries, expect the following:

  • Unions will made ridiculous demands and will make operating a company impossible
  • The government will demand ludicrous investment levels and ridiculous electrification targets
  • The government will demand price caps
  • The companies will go broke
  • The government will either subsidize the companies or re-nationalize them

Until a new government comes into power who will, you guessed it, re-privatize the same companies. Go back up to the cycle and repeat until nauseated.

So, yes. We state that privatization is not the answer in Nigeria or in any other place in the world because of the ridiculous and irrational expectations placed on the private companies.

What almost all government and union types do not understand is that progress is achieved slowly. Privatization works as long as companies are left to their own devices and plans. Eventually, over time, these very same companies will face the fact that they either have to expand or die. As they expand they will create other markets and help other people. But this decision must come from within a company, not as an outside imposition.

Through democracy and the fractional reserve system (aka official counterfeit money) governments have come to believe that there is a free lunch. That voters can get stuff for free and that there will be no consequences. They all live in a make-belief parallel universe. The rest of us, we live in the real world where there is no free lunch.

So next time you see a privatization, ask the politician what are the expectations. Don’t be surprised if the answer is: ridiculous controls from the government and unions. When it comes to this, don’t bother arguing with them. It is pointless. They have brain-washed themselves or they are too cynical. In any case, you won’t change their minds. Don’t waste your time.

Remember the old saying: never argue with a lunatic, people may not notice the difference.

You have been warned.

Note: please see the Glossary if you are unfamiliar with certain words.



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