An Examination Of The Problem And Prospect Of Financing State Government Projects Through The Capital Market Presented
The study which examined the problem and prospect of financing state government projects through the capital market presented revealed that there is a significant difference in the project financing from state government project in finance problems and those in dilapidated in Capital market. The findings also revealed that there is a significant difference in the project financing from state government project in state with adequate funds set aside and those in state without funds set aside. The findings showed that there is significant difference in the project financing from state government project in poor management state and those in state
1.1 Background of the Study
The function of the state government in recent times include the provision of amenities infrastructures which are capital intensive in nature over the years most state government especially in the developing countries have been carrying out such functions with finds from external sources as loans, grants and development assistance or aids. These sources have often been complemented with domestic resources as statutory allocations from the federation accounts, internally, generated finds and domestic.
However, events in the last few years have indicate the inadequacies of these sources. Nigerians experience in financing capital projects has been similar to those of other developing countries with large revenue from oil. Thus, with the downturn in the economy, following severe external stocks in the international oil market the necessity to work for viable alternative ways of financing capital projects becomes imperative; there has therefore been a general shift of focus to the capital market in financing government capital project this term attempts an examination if the problems and prospects of financing market.
1.2 Statement of Problems.
Effi9cient implementing of capital market strategies by the state government in financing capital projects will help a lot in completing numerous abandon projects and stabilize the nation’s economy. Over the years, state government in the country experience abandoned projects in their state government tom pay debts own to its creditors, etc for all these reasons the researcher now want to find out the exact factors militating against completion of these capital projects.
1.3 Objectives of the Study
- To identify the problem facing state government either in the executive level.
- To know whether the finds set aside nor executive a particular projects will be sufficient or not.
- To find out possible solution of solving these problems.
- To know whether these problems are caused as a result of poor management of finds in the executive level.
- Finally recommendations, solution which can prevent occurrence of such problem.
1.4 Research Hypothesis
Hypothesis 1: there is no significant Difference in the financing of state government project on finance problems capital market.
Hypothesis 2: there is no significant Difference in the financing of state government project with adequate funds set aside and those in state without funds set aside in Capital market.
Hypothesis 3: there is no significant Difference of poor management state in the financing of state government project from capital market .
Hypothesis 4: there is no significant Difference in the financing of state government project using preventive strategy and those without preventive strategy in Capital market.
1.5 Significance of the Study
The theoretical frame work of financing state government project through the capital market were related and equated with the practice in Nigeria by state government which is an empirical model.
1.6 Definition of Term
Capital market can be said to be a market for the institutionalization by long term project financing assist the state government in carrying out their project.
The problems associated in the state as a result of abandoned project by the state government and the problems have been attributed to poor channeling of find to the appropriated project.
The implementation of project by the state government will help a lot in enhancing the developing of project and stabilization of the nation’s economy.
Summary Recommendation and Conclusion
The researcher observed that the state government has got all calibers of staff that can help generate enough revenue for the state government. For example graduates of at least HND in accounting or finance are heading all the sections in finance and supplies department revenue, internal audit payroll and main account.
It was also found that external sources of revenue (Government Grants) have continued to play a leading role in the sources of revenue to the state governments. Other sources like motor park fees, market fees, and development rate are just mere pittance since the sum from all these sources cannot pay her staff salary for one month.
The researcher discovered that though there is an internal audit section headed by qualified personnel (B.Sc. Accounting), such auditors are not given the chance to operate. Both past and present chairman / sole administrators in the state government are all out to make wealth through fair or foul means. Any attempt to stand on their way in the name of proper and thorough auditing is often rebutted by allmeans.
Again, the external auditors, which sometimes visit the state governments, are always bequeathed with their own of this duty. Their audit reports can be imagined than described.
Revenue agents and Area clerks are not adequately supervised. This has caused the state government to loose some of the little revenue, which would have been generated internally.
Again, the researcher discovered that most of the state government does not make proper use of their yearly approved budget/estimates. The importance of approved budget, estimate in the proper management of the finance of our state government cannot be overemphasized.
It was also discovered that misplacement of priority is one of the bane of our state government since any chairman or sole administrator can embark on any problem that can help them achieve their aims. The researcher also found on state government invested in the mass transit operation.
The researcher made an attempt to find out the various sources of finance as it affects the various state governments and how these finance could be managed.
The result of the entire study shows that the main sources of revenue available to our state government are through external sources. For instance, government grants forms over 85% of their total revenue as at date, internal sources like motor park fees, market fees, development rates, maternity fees etc. forms the remaining 15%. And because of the face that some of these sources have not been fully tapped, most of the state governments rely heavily on government grants.
This could be done by reversing to their traditional sources of Internal revenue and explore new ones. We think that if this is tackled effectively that the future of state governments in Nigeria will look bright.
To avoid a situation whereby state government depends on government grants, most of the state government robust revenue sources, which was taken over by the state and federal government, should be given back to them. Similarly, efficient revenue collection machinery should be set in motion.
The internal auditors should be protected adequately to enable them performed their duties. The chairman or sole administrator should be made to answer some queries should anything happens to any internal audit in cause of discharging his legitimate duty.
Also, good recommendations and prizes should be given to offices that perform creditably well.
The revenue officer should pay from time to time surprise visits to the revenue agents and area clerks in their area of assignment. He should sometimes summon the community through their receipts and rates tickets are at par with those materials given to them (the area clerks and revenue agents) by the state government councils.
The mass transit, which is the only investment by the state government council, should be made financial and self- accounting. The revenue realizes from its operation should be enough to maintain its fleet of vehicle, pay the staff redeployed there and pay the surplus to the councils.
As much as possible effort should be made to adhere strictly to the yearly budget/estimate since the importance of budget implementation in proper financial management cannot be over emphasized.
Expenditure should as far as possible be based on priority. The chairman / sole administrator should ascertain the most pressing problems of the rural dwellers and there should be continuity in the execution of project.
Moreover, the government should honor their financial obligation to the state government by prompt and regular disbursement of grants to them.
The hanky panky and shabby treatment often visited on the state governments have immensely contributed to their abysmal performance, financial recklessness and acts of indiscipline.
Also, state government should be allowed to contract external loans within a stipulated amount and provided that such loans are self liquidating, self sustaining and confers benefits to the people.
A state government cannot make meaningful impact by merely meeting its routine expenses. To make a mark, efforts should be geared towards increasing the internal revenue effort in order to generate revenue surpluses for capital investment.
Steps should be taken to maximize the revenue yield from the existing sources. Efforts should also be made to identify and exploit new sources of revenue.
Again, state government should exploit the opportunity to raise capital market funds through the issue and sale of state government bonds. But to succeed in such venture, a state government must have a well-articulated and commercially viable project to which the bond issue would be tied.
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