SS3 Commerce Revision: Privatization and Commercialization

Commerce SS3 Second Term Week 4

TOPIC: PRIVATIZATION AND COMMERCIALIZATION

CONTENTS

• Meaning Privatization and Commercialization
• Merits and Demerits of Privatization and Commercialization
• Deregulation – Meaning, Advantages and Disadvantages

Privatization and Commercialization

Privatization has to do with the selling off of corporations (formerly issued by the government) to private individuals. In this way, former government- owned corporations become private business concerns owned and managed by private business men and women. Nigeria has had a long history with privatization, one of the most recent of which being the privatization of NEPA. In the same vein, commercialization is defined as the process of making state-owned enterprises to become [purely] profit-oriented enter[rises. It should be recalled that state-owned enterprises ideally are not meant to make profit as the products and services they offer are typically subsidized. However, when they become commercialized, they more or less get given the mandate to operate as a private firms and make profit.

Advantages of Privatization and Commercialization

1. They promote efficiency in production
2. The government gains more through increase in tax and profit revenue.
3. It promotes competition
4. It will lead to increase in consumer satisfaction
5. It brings about innovation and creativity.

Disadvantages of Privatization and Commercialization

1. It leads to uneven distribution of income
2. It leads to a wide gap between the rich and the poor
3. It leads to consumer exploitation
4. It fuels inflation
5. It leads to a reduction in employment level.

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