CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Public enterprises are government business enterprises set
up primarily to provide social and economic services to the general Public.
Among the enterprises, however there are those that produce mainly the core
economic infrastructure called utilities. Public utilities are of social and
economic significance because they have direct impact on the standard of living
of the populace and have a bearing on the international competitiveness of the
economy. They also have direct forward and backward linkages to other sectors
of the economy. Hedrick (2010) stated
that inadequate services provided by the dysfunctional public utilities have
contributed immensely to the escalating domestic production cost, which
directly undermines the nation’s competitiveness as an investment location.
In Nigeria, like most other developing countries, the
ownership and control of key public utilities have virtually been the
responsibility of the government since independence in 1960. The case for
government control of public utilities, such as electricity,
tele-communication, gas, water supply and air transportation is based on the
argument that basic goods and services needs to be provided to the citizenry at
affordable prices and also that government needs to control the utilities due
to their relative significance in the national economy. The other grounds for
government policy in this area include the capital intensive nature of public
utilities and the alleged inability of the private sector to generate enough
resources to invest and exploit economies of scale associated with these
establishments.
Over the years, however, the inability of successive
Nigerian governments to provide the services in an efficient manner has led to
persistent calls for reform. In response, several policy initiatives have been
undertaken, including market regulation, deregulation, liberalization and
privatization. For example, regulation was an attempt to alter the socially
undesirable behavior which the monopoly status of public enterprises has tended
‘to encourage. However, most of the public utilities have continued to be run
inefficiently at low rate of return and to operate sub-optimally, with outmoded
and dysfunctional machinery and equipment due
to lack of exposure to competition and mismanagement of giants and
subventions.
According to Hendrick (2010) , Privatization involves the
sale of equities in public enterprises to private investors with or without the
loss of government control in these organizations. It may take the form of
deregulation of state monopolies by the abrogation of legislations restricting
entry into certain economic activities. The mechanism may be by sub-contracting
(i.e, operational and maintenance contracts or enterprises contracts) , work
previously undertaken by state employee to the private sector. In the view of Estache (2011), privatization
may operate in the form of divestiture, which is the actual sale of public assets
to the private sector through public offer of shares or private sales of
assets. Government usually embark on
privatization as part of restructuring the economic base of a country to
promote efficiency and free government of the burden of fiscal imbalance
brought about by government deep involvement in business enterprise.
As would be expected, the reform programmes adopted by
Nigerian governments since SAP have raised fundamental issues regarding the
ownership structure, economic efficiency, profitability and income distribution
as well as the appropriate balance between private and public sector roles in
the provision of utility services
1.2 STATEMENT OF PROBLEM
In most developing countries including Nigeria, government
participation in economic activity is usually significant. One of the various
ways through which the government has intervened in the Nigerian economy is
through the establishment of public enterprises. Public enterprises are
statutory bodies operating services of an economic or social character on
behalf of the government.
Ademolokun (2011), stated that the rationales behind the
establishment of public enterprises in Nigeria are many, some of the reasons
includes, generation of revenue that
will add to available national capital
for the support of development and welfare programmes, making it impossible for
important profitable enterprises to be controlled by the few individuals or
groups, organizing certain critical activities for national survival and
economic stability and providing employment opportunities. In the view of Sanda (2007) the national
Electric Power Authority (NEPA) and the Nigeria telecommunications
Limited (NITEL) are among the critical and strategic
organizations whose ‘activities are expected to contribute in no small measure
in our national development. This is so, more, in the present era of technology
and proper information management system. Conversely, the operations of public
enterprises in Nigeria have of recent turned to be a very better pill for the
government that set them up and the populace they were meant to serve. The
populace are complaining of shoddy services from these organizations while the
government has identified public enterprises in Nigeria as veritable drainage
pipes for the limited resources available for the government. Consequently, the
privatization and commercialization options became very attractive to the
government,
Report of boards of enquires on public enterprises in
Nigeria including those under this study had shown that the root cause of
non-performance of these public enterprises were poor funding and inept
financial husbandry.
The main focus or problem of this study is to identify how
sound management of revenue generation and accountability in a public
enterprises can stave the collapse of our selected public enterprises — NEPA
and NITEL. The study will also give attention on how the problem of poor
financial resources management like waste of fund, fraud and diversion of fund
could be curbed in our public enterprises. The study will explore how the
future prospects of these enterprises could be enhanced through the deployment
of well trained and skilled, well remunerated and motivated workers on revenue
generation and accountability duties.