Public Goods, Private Hands

What would the world be like if things like roads, electricity, and water were to be privatized? Looking back, I remember during my high school days, economics was my favorite subject. Our economics teacher was likable, so she made us pay extra attention to the subject. Some of the topics we treated were public and private owned businesses. One thing I remember is that, no matter how functional they are in society, they have their advantages and disadvantages. Whether privatizing services like roads, water, and electricity is a good idea is a complex question with both perks and pitfalls. In the grand scheme of things, it all narrows down to the context where it is implemented- meaning, it all depends on the country. In my country, while privatizing services like roads, water, and electricity would have many benefits, the disadvantages would outweigh them.

It’s been more than 11 years since the electricity distribution and generation was transferred from the government- National Electric Power Authority (NEPA), to a privately owned company- Power Holding Company of Nigeria. One of the reasons why the electricity sector was privatized was because the country experienced frequent power outages, and the government was not doing anything to fix the issue. You could be enjoying the power supply and then it goes off in the next 10 minutes. The government could not fix this issue because it was facing financial problems. The Nigerian economy was in poor condition- electricity wasn’t even in the top 5 important things on its list. The government paid extra attention to other sectors and left the electricity sector hanging. To fix things, the electricity sector was privatized.

The goal of privatizing the electricity sector was to make it more effective and efficient. Citizens were tired of the frequent power outages and hoped that privatizing it would fix things. However, it has been more than 11 years since the electricity sector was privatized and Nigeria still experiences unreliable power supply. Over the past years, the price of electricity has been at its highest, compared to how it was before the privatization. This is proof that if other sectors like roads and water were privatized in Nigeria, it’d only make things worse, just like it did with the electricity sector.

One of the reasons privatizing roads, water, and electricity is not a good idea is inequality and accessibility. Compared to private sectors, public sectors are way cheaper, making them accessible to everyone, particularly those who cannot afford to pay expensive fees. Take a closer look at public schools, hospitals, and other services, the reason why they are always crowded is because they are cheap compared to expensive private services. Privatizing services like roads, water, and electricity means making them expensive, and in turn, accessible to those who can afford them. Water is the most essential service to citizens. I’m sure you’d agree with me that it is more important than roads and electricity.

Now, imagine a country where the water you drink is owned and controlled by private companies. Publicly owned services care about the people’s welfare, while privately owned businesses do not. If roads, water, and electricity were privatized, the main aim of the owners would be to make profits for its stakeholders, not to cater to the welfare of the masses. One of the ways to achieve their goals would be to hike the price of these services. So, what they are doing is providing these services to the public, but they are in turn, making it expensive. By doing this, they are limiting the number of people who’d be able to use their services.

As I mentioned above, privatizing important services like good roads, water, and electricity is like a double-edged sword - it has advantages and disadvantages. One of the advantages is that privatizing these services would lead to efficiency. Take a good look at private sectors like schools and hospitals. Why do you think most privately owned services are more standard than publicly owned services? This is because they are driven by profit motives. Meaning, they primarily care about their companies' interests (not their customers) and would do anything to make a profit. If these services were privatized, there would be an emphasis on maintenance - they would use the profits they make to maintain the services.

Thanks for reading.