CHAPTER ONE

INTRODUCTION

1.1 Background to the Study From the time of political independence in the 1950s and 1960s, most governments of developing nations made the public sector to play a central role in their economies, particularly in the provision of social services. The principal reason for the emergence of the public sector in a country is the government’s decision to intervene directly and actively in the economy in order to achieve purpose or objectives of its development plan. In achieving this developmental goal, public enterprises were established to play the leading role in the economic activities of these nations. In Nigeria, public enterprises were created mainly to foster development and National integration. Nigeria like most developing countries, has since independence and in the decade of the seventies of the oil boom years developed particularly large public enterprises incorporating economic activities such as Banking and insurance, oil prospecting, exploration, exploration, refining and marketing. In short, they are involved in the power, telecommunication, transport, manufacturing sectors. The following quotation from Nigeria’s second National Development Plan 1970/74 typifies the rational for the development of public enterprises in Nigeria. “Statutory corporations and state owned companies have become an important tool of public intervention in the development process. Their primary purpose is to stimulate and accelerate national economic development under conditions of capital security and structural defects in private business organisations. There are also basic 2 considerations arising from the dangers of leaving vital sectors of the national economy to the whims of the private sectors often under the direct remote control of foreign large scale industrial combines. Public enterprises are thus crucial in Nigeria’s quest fro the true national economic independence and self- reliance. Federal Government Investments as at 30th November, 1990, was put at over N36 billion at their historical book values. At today’s replacement costs, they are probably worth over N100 billion. The returns from these investments never exceeded 2% per annum, which is less than 25% of the annual subventions from the government to the parastatal sector (Abubakasr (2002 ,P: 3) But the countries experience with public enterprises, as been that of a disappointment. Several reasons were advance as the causes for their poor performance. They include; political relations with parent ministries, politically appointed managerial personnel, poor financing, lack of administrative autonomy, uneconomic localization of industries, poorly defined goals and objectives, low managerial capacity, contentions relating between management and boards of directors, fraud or corruption, poor feasibility studies before embarking on projects and poor internal organisation structure. These public enterprises become a drilling pipe for corrupt government official and their private collaborators to siphon large sum of government money. As rightly put by the World Bank (1986). 3 Public enterprises constitute one of the major areas of governmental expenditure and from which there is no hope of profits. As such that thy are therefore the major causes of indebtedness throughout the 3rd world, gobbling-up in some cases more than 50% of external credits. From the World Bank report, it is clear that huge part of Nigerian National debts are indeed debts incurred by public enterprises. The decline and the deterioration in the performance of these public enterprises has always been a serious concern to every successive government of Nigeria. These public enterprises are not only inefficient but also ineffective in terms of the services they render and the revenues generated. Among these public enterprises is the Nigerian Railway Corporation (NRC). The Nigerian Railway Corporation (NRC) was one of the public enterprises that the Nigerian government inherited as the time of independence in 1960. NRC was one of the oldest public enterprises in Nigeria. The Railways services stated in 1901 and was legalize officially with the passage of NRC Act of 1955 for the purpose of carriage of passengers and foreign in a cost effective manner. It was the cheapest safest mode of transportation in Nigeria up till the 70s. Its establishment was seen as a way of opening up the interiors areas of the country for economy activities. So its role as a vehicle to foster social economic development of the country then cannot be over emphasized. The development of railways in Nigeria in the early 20th century, which was legacy of colonial government contributed to the growth of many town that ultimately become large industrial and commercial cities, such as Kano, Kaduna, 4 Zaria, Jos, Ibadan, Lagos, Enugu etc. the railways also helped to developed the potential of tourism as well as fostering infrastructural development in the country. Today, that can not be saw of NRC the decline and deteriorating condition of Nigerian railway corporation since the 70s has been a source of concern to successor government of the country. As of today the Nigeria Railway Corporation (NRC) is completely dead. This study is out to assess the effect of NRC non performance to social economic development of Nigeria.

1.2 Statement of the Problem

The Nigeria Railway Corporation is the oldest government corporation in Nigeria. The railway until late 70s was the dominant means or mode of transpiration in the country. Then the railway was seen as a catalyst for social economic development. The railways then according to Asika (2000) play the following roles. i. It was the first largest employer of labour then even perhaps more than the civil service. ii. It offered the cheapest and most efficient means of transportation iii. It was environmentally friendly and recorded few accidents in history iv. It is one important source of unification of Nigeria and up till now the symbol of unity, v. Nigerian ports Authority (NPA) grew out of NRC’s Marine Department and NPA until 1982 was a department under NRC even NEPA, Post Office and telecommunication grew out of it.

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