Handing over of Imo Standard Shoes Company to Imo State Government on Friday 29th July 2022 by AMCON (Asset Management Corporation of Nigeria) is welcome news to every Imo citizen. The factory was taken over by AMCON due to Imo State indebtedness to them to the amount of N1.6 billion naira. The settlement of this debt by Governor Hope Uzodinma’s government is a great achievement. However, in order to avoid further embarrassment and humiliation in future, the shoe factory must be privatised as soon as it starts functioning properly.
I am particularly happy because the factory’s revival will create many jobs for the youths in the State. Already Imo State was rated as the State with highest unemployed youths in the county. I hope this government move will be extended to many other moribund Imo State industries. If this is done, I bet you that unemployment rate will be reduced and the criminal activities and many other vices in the State will be reduced too.
I was recently told that an old couple in my village became ill and died of hunger in their home. I also heard that their children were unemployed and could not help their parents. This is a typical situation in Imo State villages hence burials take place almost every week in the villages. I hope you feel like me – an explosive anger well up inside you. Your anger should not be directed to the children who could not take care of their old parents. Rather we should blame the Imo State industrial strategy that gives rise to alarming unemployment in the State.
Dee Mbakwe foresaw the problem of unemployment in Imo State and as soon as he became Governor of the State, he invited my late Director, Chibuzor Ajuka, of Zojak Industrial Projects Ltd and told him that he needed industrial investments in the State.The following day, I was sent to Lagos to deliver a letter to Dr Gothrie of SPIBAT. That is how SPIBAT came to Imo and established a number of industries on Turnkey Transfer basis. Thirty-five years on 90% of those industries that were later privatised are still working and creating jobs for Imo citizens. If not the military intervention in the late 1983, many more communities in Imo State would have had manufacturing industries in their locality. That is how jobs are created all over the world.
Mbakwe’s strategy was similar to that of countries in Asia region. Like Mbakwe’s government, most Asia governments participated in business sector. Such participation has been an integral part of their quest for industrialise status. This is noticeable in China, Indonesia, Malaysia, etc. Until recently all businesses of a significant size in China were owned by either the central or local government. Government involvement in setting up industries is very important because most businesses require heavy capital outlay but individuals or companies do not have such amount of money. A typical example is the I.6 billion naira paid by Imo State government on Friday. These enterprises range from steel plants, airlines, construction and heavy industries.
In Malaysia the role of government is very pervasive as the government has specifically created firms so as to enable it to implement its economic policy. In fact, up until the early 1970s, the State ownership of industries ruled. This is because ownership was seen as the chief instrument for the promotion of economic growth and industrial development. But contrary to this perception, nationalised industries began making losses, and became inefficient throughout the world. As a result, and in order to keep these industries on, the governments continue to subsidize them. So what sounded cutting edge in the 1960s had become a boomerang!
It is therefore no exaggeration to say that the arrival of privatization, riding on a wave of resurgent economic liberalism has fundamentally transformed the political landscape everywhere. As one can see that the management of these industries have been problematic everywhere including Imo State hence some industries were privatised.
Therefore privatisation remains the best option. All things being equal, the money realized in the sale of the industry should be enough to pay back the remaining debts on it. But if the Imo State Standard Shoes company is not privatised, what happened to it with the previous governments will be repeated. Politicians in Imo State will again interfere in the running of the company.
Can you imagine previous governments using the company as collateral to borrow money! But if the company is privatised, the government will not have the right to interfere in its management, yet jobs will continue to be created for the people of Imo.
Also, State–run industries tend to be bureaucratic. A political government may only be interested to improve a function when its poor performance becomes politically sensitive. Such problem can be resolved easily by the private ownership.So one can see the importance of privatising the Imo Shoes Company and it should be done as soon as possible.
Privatisation can take the form of (1) bid from a consortium or private firms.
(2) It can be by sale of shares to the public and making sure that the government does not take the majority share.
(3)It can also be sold to foreign companies. But if we are selling to foreign companies, we must make sure that what happened in Zambia will not be repeated in Imo State. The sale of local industries in Zambia to foreign company, who immediately after acquisition shut down the plants so as to eliminate local competition of their parent’s company abroad. The result was that local products disappeared off the market and were replaced by better foreign products. This move inevitably led to increased unemployment and its negative effects in Zambia. It should also be noted that corruption during the privatisation process can result in significant under-pricing of the assets.
Finally money realised can be used to establish another industries and privatise it soon after. By this method Governor Uzodinma will be able to set up a number of industries in different communities during his time in the office.
Lawrence U. Ekeh
(Author; Industrialization, Patriotism and National Prosperity)
