Investment Management Practices And Growth Of Public Enterprises

Project and Seminar material for Public Administration

Abstract

This study was on investment management practices and growth of public enterprises in Enugu state, Nigeria. The objective of this thesis was to identify investment management practices employed in public enterprises in Enugu State; and explain how the adoption of appropriate investment management practices promoted the growth of the enterprises. The purpose of this study was to analyse any observed growth of public enterprises in Enugu State in terms of the extent to which they employed proper investment management practices. In the course of this study, we adopted a survey research method. Three methods of data gathering namely; documents, questionnaire and oral interviews were used. Hence, primary and secondary data were used to analyse the data. In applying purposive sampling technique, responses from a total of 20 respondents were analysed. Mean score statistics and single classification analysis of variance (ANOVA) were employed to analyse the data.

Chapter One

Introduction

1.1 Background to the Study

The solidity of Nigeria’s public enterprises became significant immediately after independence on 1st October, 1960. On assumption of power, the nationalists articulated a clear role for public enterprises as instruments for promoting national development. The indigenization policy of 1972 as enacted by the Nigerian Enterprises Promotion Decree of 1972, which took effect from 1st April 1974, with its subsequent amendment in 1976 provided a concrete basis for governments’ intensified efforts towards participation in the ownership and management of public enterprises (Elijah, 2009). The government capital investments in public enterprise totaled 23 billion naira between 1975 and 1985. In addition to equity investments, government gave subsidies of 11.5 billion naira to various states for the maintenance of their enterprises (Ogundipe 1986). Government has a lot of roles to play in order to raise the standard of living of her citizens.

For instance, this developmental role of the state was provided for in the country’s 1979 constitution and also enshrined in the 1999 constitution. According to sections 16 of 1979 constitution and 24 of the 1999 constitution:

The state shall:

– Harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self reliance economy.

Nigeria’s public enterprise also known as public corporations are legal entities apart from government Ministries, Departments or Agencies and they engaged in economic activities with the sole aim of providing essential goods and services for the citizens so as to meet their social, demographic, ecological, cultural and economic needs (Ogohi 2014). Jerome (2008) noted that public enterprises include corporations, authorities, boards or other agencies owned, run, financed and managed by board of directors appointed by government. Though Abubakar (2011) argued that the reality of globalization and structural transformation of national economics have increased access to investment by private sectors through lowering of economic barriers by nations thereby leading to increase competitiveness between the private sectors and corporate entities Cole (2011) concludes that public enterprise mechanism is not only cost effective, socially responsible and more efficient for citizens but serves as the only instrument for propelling a developing economy towards meeting the need of it citizens both on the short, medium and long term basis. There has been serious debate for and against the justification, significance and effectiveness of public enterprises in Nigeria; while Cole (2011) for instance observed that public enterprises play a significant role to the socio-economic development of the nation, Ikechukwu (2013) argued that mismanagement of public enterprises has been the factor militating against its effectiveness and efficiency thereby affecting the full utilization and exploration. Consequently, these controversies were responsible for the initiation and implementation of the Privatization policy and subsequently to the Public Private Partnership (PPP).

However, Adesanmi (2011) contended that despite the social infrastructure being induced through the techniques of public enterprise its effective management has been the major bottleneck resulting from corruption, nepotisms, policy Somersault, inefficiency and politicization of the process. Aluko (2004) concur that though government have spent huge amount in investing in public enterprise but its performance and output in terms of financial returns on capital have been poor on one hand and delivering social services to these citizens which was the principal target of setting up public enterprise have not been justified. Therefore, these evidences proved over whelming need to realign the existing policies towards strengthening the management of public enterprise while public private mechanism also becomes paramount so as to provide a complementary role towards effective services for the citizens.

1.2 Statement of the Problem

Public enterprises supposed to complement the social and economic drive to boost investment and social infrastructure in a fragile economy like Nigeria which largely depends on oil as its major source of revenue however effective management of these public enterprise is the only avenue to achieving this objective especially knowingly well that government involvement in public enterprise could be dominated by political affiliation rather than socio economic domain which could boost the living standard of the citizens. This becomes imperative to appraise the management of public enterprise in Nigeria and how it has contributed to the socio economic development of the nation.

1.3 Objective of the Study

The objectives of the study are;

To ascertain the extent is public enterprise significant to Nigerian economy
To ascertain whether public enterprise been properly managed
To ascertain the challenges facing public enterprise in Nigeria
To ascertain the relationship between investment management practice and growth of public enterprises

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0: there are no challenges facing public enterprise in Nigeria.
H1: there are challenges facing public enterprise in Nigeria.
H02: there is no relationship between investment management practice and growth of public enterprises.
H2: there is no relationship between investment management practice and growth of public enterprises

1.5 Significance of the Study

The study will give a clear insight on investment management practices and growth of public enterprises. The study will be beneficial to students, any enterprises and the general public. The study will serve as a reference to other researcher that will embark on this topic.

1.6 Scope and Limitation of the Study

The scope of the study covers investment management practices and growth of public enterprises. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.7 Definition of Terms

Investment Management:

Investment management is the professional asset management of various securities and other assets in order to meet specified investment goals for the benefit of the investors. Investors may be institutions or private investors.

Economic Growth:

Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.

Public Entreprise:

Public enterprise, a business organization wholly or partly owned by the state and controlled through a public authority. Some public enterprises are placed under public ownership because, for social reasons, it is thought the service or product should be provided by a state monopoly.

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
Chapter three deals on the research design and methodology adopted in the study.
Chapter four concentrate on the data collection and analysis and presentation of finding.
Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain investment management practices and growth of public enterprises

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing investment management practices and growth of public enterprises

5.2 Summary

This study was on investment management practices and growth of public enterprises. Four objectives were raised which included: To ascertain the extent is public enterprise significant to Nigerian economy, to ascertain whether public enterprise been properly managed, to ascertain the challenges facing public enterprise in Nigeria, to ascertain the relationship between investment management practices and growth of public enterprises. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected public enterprises in Enugu State. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers, directors, administrative staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

Understanding the performance of Public Enterprises in Nigeria has varied in context as different people give different reasons for their performance rate but what is certain is that their performance has been rated as abysmally low. This is why the federal government of Nigeria has since independence adopted several approaches to ensure the revitalization of the Public Enterprises but all to no avail, necessitating the current trend of privatization and commercialization. Privatization of the Nigerian Public Enterprises as a reform process has evoked controversy as to its essence and justification. The justification of the privatization exercise and the reason for the low performance of the Nigeria Public Enterprises have led to the exploration of the understanding of the performance of the Nigeria Public Enterprises within the framework of modern organization theory. The justification also explained categorically and differently the reasons for the abysmal performance of the Nigerian Public Enterprises.

5.4 Recommendation

That the reason for the poor performance of the Nigerian Public Enterprises is embedded in the people’s attitude to work as they perceive work in the Nigerian Public Enterprises as no man’s work and therefore tend to look it and display high level of lackadaisical tendencies towards work and thereby reducing the efficiency of work and the performance of the entire enterprises. Therefore, the people need to be re-oriented on the essence of job commitment and proficiency at work.
That politicization of the policies in Nigeria has been identified as the core of the problems of Nigeria and that same also applied to the Nigerian Public Enterprises and as such if depoliticized will also ensure efficiency and better performance of the public enterprises.
The demands for high quality management of Public Enterprises have become too complex to be understood without prior planning and analysis. Government should discard the idea of planning for, funding and management of these enterprises and allow them to run as socio-economic services and be so accountable.

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