Finance As An Instrument Of Effectiveness In Public Administration

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Finance As An Instrument Of Effectiveness In Public Administration


The aim of this study is to highlight finance as an instrument of effectiveness in public administration using Lagos State Government as a case study.

Lagos State being the smallest state in the Federation and being a highly populated state, the State Government would require funds for the implementation of its policies and programmes and the delivery of services to meet the needs of its citizen.

A thorough investigation was conducted into the ways in which their funds are generated, it also talked about the problems affecting the revenue generated in the state and how it can be solved.

Having analyzed all this, the result shows that finance is an instrument of effectiveness in public administration.

Chapter One


1.1 Background to the Study

The term public administration consist of two words ·”public and administration” the word public is an adjective qualifying “administration” According to Nnoli, (2000:45), Public administration is the machinery as well as the integral process through which the government performs its functions. it is a network of human relationships and associated activities extending from the government to the lower paid and powerless individual charged with keeping daily touch with all resources, natural and human and all aspects of the life of the society with which the government is concerned. It is a system of roles and role relationships which defines it as clear and practicable terms as possible and in as much detail as possible the intentions and programme of government; that means available internally and externally to accomplish them, where, when and how they are to be accomplished; who is of benefit from them and finally, it is a system that causes these intentions and programme to be realized in real life, it is a pattern of routinized activities, involving decision making, planning, advising co-ordination, negotiation, conciliation, arbitration command and data gathering, through which the government carries out its responsibilities. Public administration according to Adamolekun can be define as the activities concerned with the management of government business and the study of these activities and he stressed that it can be used as a practice or as a knowledge. As a practice it is concerned with the activities that comes directly under the government of any given society and as a knowledge public administration concerns the understanding of government administration (Bamgbose, 2002: 105).

There are various types of Public administration part of which are:

Government department or Ministry which is the oldest types of public administration whereby government provides services to the people and in return the people will pays their taxes example is the Ministry of health, Ministry of Finance, Ministry of works and so on.

Government Company: these are basically created for making money like other private company. They go into any form of trade like banking, insurance e.t.c and provide services for the people who can afford it and the government always have above 51 % of the total share.

Government Agencies: these arc agencies sponsored by government to carry out a particular task and it does not last forever i.e. once it complete its task i.e. will diminish e.g. N.A.F.D.A.C which is aimed at checking and controlling drugs and health related issues, N.D.L.E.A which is aimed at checkmating drug trafficking, task force e.t.c.

Public Corporation: these are bodies setup by government to render services Oto the people at a taken price e.g. N.N.P.C.

For the smooth running of all these activities the government funds will be required and leads us to finance.

Finance can be define as the management of money (Awiye, 1993:161).

Public Finance developed as a branch of economics concerned with the finance and economic activities of the public sector. It encompasses all the activities carried out by government in generating all allocating revenue towards ensuring efficiency of the state and the general well being of the people (Idowu, 2004:2)

Public Finance can also define as that branch of economics that is concerned with the revenue expenditure and debt operations of the government and assesses the effects of government and the impact of these measures. It identifies and assesses the effect of governmental financial policies i.e. it tries to analyze the effects of government taxation and other sources of revenue and expenditure on the economics situation of individual, institutions and the economy as a whole (Salami, 2003:233). Public Finance cover areas such as Resources allocation, income redistribution and stabilization Public Finance has to with money at the disposal of the government. The government is saddled with a lot of responsibility among which are:

  1. To provide for the socio, economic well being of the people i.e. providing the people with some basic social amenities like health centres, school e.t.c.
  2. To protect the people against nay internal or external aggression i.e. protection of life and property of the people of the state.
  3. Procuring materials for the effectiveness of the government i.e. Funds to implement its various task, project, policies and programme. To achieve all these finance is required.

Funds is usually scarce or inadequate, to be prosperous therefore, the government must put in serious effort to raise or generate money economically and use it judiciously. These are two (2) Sources of public finance which are: Internal and External Sources. Public Finance includes Four (4) major decisions which are (a) Public Revenue (b) Public expenditure (c) Public debt (d) Physical administration.

However, due to the inadequate of finance to the government there is need for us to talk on the management of public finance or financial management. Financial management can therefore be define as the process of planning and controlling of financial resources of a firm, it includes the firms acquisition, allocation and management of firms financial resources (Kehinde and Abiola, 2005:2) Public Financial management according to M.P Sharman can be define as that which is to make funds available for the government activities and to ensure the lawful efficient utilization of funds.

History of Lagos – State:

Lagos State was created on May 27th 1967 by the State (creation and transitional provision) Decree 14 of 1967 which carved out of the prevailing four (4) regions, 12 States. The state however, took off as an administrative entity on May 1st 1968, following the enactment of the administrative divisions (establishment) edict No3 of April 1968. Its jurisdiction comprises of the city of Lagos and the four (4) administrative divisions from the then colony province of Ikeja, Ikorodu, Epe and Badagry. Lagos State occupies an area of 358.861 hectares or 3.577sq km. Lagos State is the smallest in the federation.

The Lagos State Public Services:

The public services refer to all organization that exist as part of government machinery for the implementation of policies and programmes and delivery of services to meet the need of the citizens. The Civil service is define as the body of men and woman employed in a capacity and non -political career basis by the federal and State government primarily to render advice and faithfully give effect to their decision (Bamgbose, 2005: 105). The public service, local government service is the largest in the federation and under the present dispensation, it is made up of 23 ministries, 4 commission, 48 boards and parastatal organization. The number of public servant is 95, 849 i.e. Local governments – 20.000: Primary school -28,121: Non – Teaching -10,361 and civil servant -47 361. The Public service comprises crops of public effective implementation of government policies.

1.2 Statement of the Problem

Finance plays an important role in the running of the Government business and it is the therefore faced by various setbacks, part of which will be identified in the study.

Revenue Allocation

A key problem is that of revenue allocation, since 1970 have been driven largely by political consideration and by formular factors such as jurisdictional population and by state equality rather than factors associated with economic development imperatives (Adedotun, 1991:103).

Tax Evasion

Tax according to (Idowu, 2004:52) is levy imposed on persons, corporate bodies, goods and services, it is a source of revenue to the government which it uses in discharging its responsibilities. Tax evasion therefore refers to the situation whereby persons, corporate bodies do not conform to paying their levies, that is to say refusal to pay their taxes. This is a major problem affecting finance in any government.


This remains an endemic disease in the public service, there is no sector that is exonerated. It is so serious that Nigeria has been regarded as the most corrupt country in the world twice by the transparency international. Corruption being a socio economic and political scourge that has eaten deep into the fabric of the society and public service, it has arrested development in the state and made public service a second priority, and it is affecting the revenue generation process as the money allocated are used for the leaders selfish interest and contracts are awarded to incompetent contractors as a result of the bribe they have received.

The usage of manual procedures in carrying out the business and the accounting of the government makes the work slow, cumbersome, error prone and inefficient.

1.3 Objectives of the Study

The main aim of this research study is to test the effect of finance on the public administration of Lagos State and the objectives are:

  1. To examine the effects of finance on the social and economic wellbeing of the people of Lagos – State.
  2. To examine the impact of finance, as a tool for the effective propagation, execution and implementation of project, policies and programme of the Lagos State Government.
  3. To examine the impact of finance on manpower training and development in Lagos State government.

1.4 Hypotheses

It is important to put some assumption and proposition to support In view of the analysis intended in this research work to have a logical and empirical conclusion on the effect of finance in the public administration of Lagos – State.

In other words, the following hypotheses will be tested.

  1. H0 = That tax evasion can hinder the generation of revenue.
    H1= That Tax evasion cannot hinder the generation of revenue.
  2. H0`= That the inadequate allocation of funds can have negative effect on the finance of Lagos state.
    H1 = That the inadequate allocation of funds cannot have negative effect on the finance of Lagos state.
  3. H0`= That corruption can hinder the generation of revenue In Lagos state government.
    H1 = That corruption cannot hinder the generation of revenue in Lagos state government.

1.5 Significance of the Study

The study is expected to contribute to the existing stock of knowledge particularly related to those in relations to the management of funds.

This study shall extend to the frontiers of public administration as to modify and perfect the policy used in allocation of finance and to enlighten the populace of Lagos state, student and civil servant on the importance of finance and how it helps in the improvement of citizens standard of living.

1.6 Scope and Limitation of the Study

The basic premise on which this study is based IS that public administration of Lagos state is dependant on finance and how finance affect performance level in Lagos state government. The study will be restricted to Lagos state.

Furthermore, there would be limitation due to cost of research time lapse, lack of enthusiasm of respondent and other environment constraints.

1.7 Definition of Terms

Public Administration:

Public administration can be defined as the activities business and the study of these activities.


This is the financing of government economic activities which deals with the financial operation and financial development of the government,

Public Financial Management:

Chapter Five

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on finance as an instrument of effectiveness in as case study. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was on finance as an instrument of effectiveness in public administration, Lagos State as case study. The study is was specifically focused on examining the effects of finance on the social and economic well-being of the people of Lagos State; examining the impact of finance, as a tool for the effective propagation, execution and implementation of project, public administration, Lagos State policies and programme of the Lagos State Government and examining the impact of finance on manpower training and development in Lagos State government.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are staff of public offices, Lagos State.

5.3 Conclusions

With respect to the analysis and the findings of this study, the following conclusions emerged;

  1. That That tax evasion can hinder the generation of revenue
  2. That the inadequate allocation of funds can have negative effect on the finance of Lagos state
  3. That corruption can hinder the generation of revenue In Lagos state government

5.4 Recommendation

Based on the findings the researcher recommends that;

  1. Governments should prepare plans and budgets with high level of participation and ownership of the public. This could be done through broad stakeholders meetings, discussions and conferences. The firm should also provide information to the public on budgets and plans. The information on budgets could assist the public to understand the obligations of the sector.
  2. Secondly, the NNPC should institute effective measures to follow systematic budget processes especially in the area of periodic reviews and reporting. For example, budget review fora could be scheduled every quarterly. The NNPC should also strengthen sector budget committees to be responsible and able to supervise sector resource ceiling between the agencies in the different sectors. Spending above the budget estimates should not usually be encouraged.
  3. The organization should ensure that audit reports are acted upon. There should be regular public expenditure review meetings at which expenditures would be discussed widely by the county with donors, civil society organizations and citizens. This would ensure that mistakes done in a budget year is not repeated in subsequent budget years. Moreover, the NNPC should work in coordination with law enforcing agencies to ensure that public officers who misappropriate public resources are punished accordingly.
  4. The risk managers of state owned enterprises should examine weaknesses in internal controls and regularly advice the management on the how best to minimize or eliminate risks. The supply chain managers of state owned enterprises in Nigeria should ensure that specified goods at fair prices are procured.
  5. Public Sector account system must be securely monitored to ensure that accountancy/accounting system in the public sector is effective and adequate, provide for proper financial control and accountability of stewardship and provide useful information for the effective control and management of government operations.

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