THE IMPACT OF FINANCING INFRASTRUCTURAL FINANCING (A CASE STUDY OF AKWA IBOM STATE)
1.1 INTRODUCTION (BACKGROUND OF THE STUDY)
Part of developments in any country is widely held to be infrastructural. Infrastructural development, in a simplistic sense connotes the increase and improvement in industries and production processes leading to greater output of goods and services as well as the welfare of the entire citizenry.
In Akwa Ibom infrastructural development has taken a central place in the various development plans or programmes with the ultimate goal of breaking the vicious circle of poverty and under development.
Inspite of the lofty development plans, which focused on infrastructural development in Akwa Ibom State, the state is still lagging behind when compared with some of its contemporaries in the league of states in Nigeria.
With the burst in oil revenues and other rest natural resources, Akwa Ibom was viewed to have reached the turning point and set forth in the path to economic growth and industrial development.
Contrary to expectation, Akwa Ibom is apparently lagging behind its aforementioned contemporaries. There seems to be some missing links in the path to infrastructural development attempts have been made to explain the rather paradox; one key factor seems to the recurring and to which the backwardness in our infrastructural development have been attributed to. This of course is due to lack of sufficient capital.
Infrastructural development involves massive and intensive Investment in Capital Stock i.e. Stock of productive assets. Since these represent long-term investment, it is thus expedient to source for the appropriate finance to meet the nature of investments financial institutions like banks are saddled with the important role of financial intermediation by mobilizing and channeling fund towards productive capacity generation and expansion.
Between 1987, when the state was created and 1999, Akwa Ibom has witnessed an exponential increase in the numbers of banks (commercial and merchant).
Naturally, the same burst was expected in the level of savings and amount of loanable funds available for investment in the industrial sector that world take the economy out of the doldrums it would be an over-simplistification to assume an equal proportional relationship between the numbers of banks and availability of loan able funds for infrastructural investment.
To what extent have Bank been able to fulfill this all important role? It is widely held that banks in Nigeria have not performed adequately well in providing finances for infrastructural development. The banking sector is narrow and lack the depth that are critical in improving infrastructure and creating the conditions that are congenial for private sector participation in the infrastructural and industrial development processes. Akwa Ibom State Government, under the leadership of Obong Victor Attah, was able to establish a number of development strides to aid infrastructural development one of such stride was the establishment of investment and industrial promotion council tagged AKIIPOC. The Akwa Ibom investment and industrial promotion council, AKIIPOC is a statutory body established by an act of parliament of Akwa Ibom state house of Assembly
Owing to lack of adequate socio, economic facilities in Akwa Ibom State, it became imperative that in order for the state to undergo social and commercial transformation, the establishment of AKIIPOC was necessity.
1.3 STATEMENT OF THE PROBLEM
Akwa Ibom State, with the population of 3.4 million people was created in 1987. Like every other state, Akwa Ibom faces numerous infrastructural challenges. Its unique set of challenges can therefore incorporate: very low per capital income, absolute poverty, inadequate infrastructural facilities, including water supply, unemployment, Urbanization poorly equipped laboratories and libraries and shortages of health services institutions. It is this sort of negative situation inspite of abundant natural and human resources that has warrant the investigation of the ways and means of financing the infrastructural facilities particularly in the state.
Adequate infrastructural facilities are necessary for the overall development of every sector of the economy. In the wake of liberalization and globalization. Its presence and importance for the proper growth of small and medium enterprises cannot be underestimated inspite of all this, the small and medium scale enterprises are constantly facing the problem of infrastructural bottlenecks, which restrict their day-to-day business operations as well as their future growth prospects infrastructure needed by entrepreneurs includes all kinds of transportation facilities like railways, waterways, roads and airways. Lack of any of these can cause serious damages to the firm’s value chain process, that is to the production consumption and distribution of the product of small and medium entrepreneurs, who already face problems of lack of finance, inadequate marketing facilities, technical obsolescence etc some of the major problems face by small scale entrepreneurs are: inadequate infrastructural facilities create the problem of acute shortage of basic raw materials, especially those that are scarce and needed to be imported from distance place, needed by small and medium scale entrepreneur or enterprises. Small and medium enterprises in Akwa Ibom state finds it difficult to distribute their product to the markets located at far off places because of incomplete construction or non-existence of basic roads. Lack of proper airways and waterways facilities also restrict the growth prospect of those medium/ small scale firms whose target market are located abroad. Shortage of power supply, due to which they are unable to make full utilization of plant capacity. Most of them find it difficult to install their own power generating plants. Hence, small medium scale entrepreneur continued to face the problem of infrastructure bottlenecks in terms of presence of inadequate transportation facilities, lack of funds etc
Looking at the state of infrastructure today, there is the need to querry on the level of tax compliance by business and individuals. To this end, not a few tax experts are of the view that the only way to give back to businesses is by improving the state of infrastructure which will help their business grow, because an improve infrastructure system reduces firm operational cost which then improve or increases profit margin. Without doubt the need for improve infrastructure cannot be over emphasized. For instance, non utilization of tax proceeds contributes to losses entrepreneurs face in their businesses resulting from poor infrastructure. Ordinarily investors and manufactures are supposed to leverage on the services provided by government to facilitate their operations.
1.4 OBJECTIVES (PURPOSE OF THE STUDY) THE PURPOSE OF THIS STUDY IS TO:
i. find out the problem of financing infrastructural facilities in Akwa Ibom State.
ii. Examine the sources of revenue that could be channeled to the provision of infrastructural facilities in the state.
iii. Highlight the priority areas of infrastructural facilities in the face of scarce resource and
vi. Find out the ways and means of minimizing the problem of financing infrastructural facilities.
1.5 SCOPE AND LIMITATION OF THE STUDY
This sections tends to limit itself to the methods and instrument of financing infrastructural facilities in Akwa Ibom State only. On this note, I would get the financial data from the budget department, ministry of finance and project monitoring department and evaluation department of the ministry of economic department for presentation and analysis.
Inadequate time and money and the period to submit the research project are the limiting factor to this research work, otherwise the investigation would extend to other government agencies and local governments for even more details analysis of wider information.
1.6 METHOD OF THE STUDY
The method of the study is concerned with gathering of information from both primary and secondary data for analysis. Use of research question is to be considered as well as questionnaires which the researcher would send to respondents in the designated department.
1.7 RESEARCH QUESTIONS
i. What were the problems involved in financing the constructions of roads and bridges and other infrastructural facilities?
ii. What were the flows/lapses in the implementation of infrastructural policies by the government?
iii. What were the sources of revenue channeled to capital projects?
1.8 SIGNIFICANCE OF THE STUDY
This research work would stand as a reference document to subsequent Akwa Ibom state Government. Furthermore, this work would be a source of secondary data to persons who would wish to go into research work, particularly, student of business and financial studies in the polytechnics and even universities. The study would further be of importance to those in private and public administration.
1.9 DEFINITION OF TEAMS
1. Infrastructure: The basic system and services which are necessary for a country or an organization
2. APiico: Akwa Ibom investment and industrial promotion council.
3. Analysis: The detailed study or examination of something in other to understand more about it or a careful examination of substance in order to find out more about it
4. Development: The gradual growth of something so that it becomes more advance, stronger etc.
5. Financing: The process of giving money to run a business or project.
6. Banks: organization that provides various financial services for example keeping or lending of money
7. Government: The group of people that are responsible for controlling a country or a state.
8. Globalization: The process for example a company, operate all around the world.
9. Liberation: To free a person or country from the control of something or control of somebody else.
1.10 ORGANIZATIONS OF THE STUDY
This study will be discussed in five (5) chapters with a view of exploring the entire curriculum of the subject matter.
Chapter one will establish the general over view of the subject matter which contains, the background of the study, statement of the problem purpose of the study, research question significance of the study, organization of the study and definition of terms.
Chapter two (2) will review the related life nature with a quest of knowing the general trend of financing infrastructural facilities in Akwa Ibom State.
Chapter three (3) will show the research design and procedures
Chapter four (4) will make general analysis of data as well as interpretation of such data