A Two Stage Data Envelopment Analysis and Regression Evaluation of Technical Efficiency in Privatized Nigerian Firms

This study investigates the impact of Nigeria's privatization policy on the technical efficiency of selected manufacturing firms. Employing a robust two-stage analytical framework, the research first uses Data Envelopment Analysis (DEA) to compute output and profit efficiency scores for ten fully privatized firms over the periods 2013–2018 (pre-privatization) and 2019–2023(post-privatization). In the second stage, these efficiency scores are regressed against key determinants concentration ratio, firm age, and firm size to identify factors influencing performance. Findings indicate a general improvement in the average technical efficiency of firms after privatization, particularly in terms of output. However, results are mixed at the individual firm level, with some entities showing strong performance under state ownership. The regression analysis reveals that firm size is a significant determinant of post-privatization output efficiency, while concentration ratio and age significantly influence profit efficiency. The study concludes that while privatization has broadly enhanced firm performance in Nigeria, its success is contingent on firm-specific characteristics and the competitive market structure. The research underscores the need for policies that promote competition and address institutional constraints to fully realize the benefits of divestiture.