In 2003, Nigeria’s seaports were among the least efficient in the world due to inadequate infrastructure, corruption, and procedural entanglements caused by dozens of government agencies competing for slices of the ports’ revenue. Businesses suffered, investors stayed away, and shippers diverted their loads to ports in neighboring countries. Seeking to improve efficiency, ease the financial burden of administering the ports, and reduce corruption throughout the sector, President Olusegun Obasanjo invited private companies to manage Nigeria’s port terminals in exchange for commitments to invest in port infrastructure and to remit a share of profits and other fees. The ambitious reform was not easy. Opposition from Nigeria’s legislature nearly derailed the changeover, and acrimonious negotiations with labor unions threatened to prevent the smooth transfer of managerial responsibilities to private operators. Irene Chigbue, head of Nigeria’s privatization bureau, relied on a transparent and closely monitored concession process, political support from the presidency, and controversial legal arguments to achieve her goal. Private terminal operators brought substantial new investments and improved port operations, though complementary reforms were needed in customs and in the government’s regulatory functions to enable Nigerian businesses to realize the full benefits of the new system.
Jonathan Friedman drafted this case study based on interviews conducted in Abuja and Lagos, Nigeria, in January and February 2013. Case published May 2013.
Bureau of Public Enterprises
Containing Patronage Pressures
Civil service corruption
Institutional traps (spoilers)
Principal-agent problem (delegation)
Country of Reform: