Investment Management Practices And Growth Of Public Enterprises

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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. The data were presented in tables, bar chart, pie chart and graphs. Research revealed that the extent to which: capital budgeting decision practices were applied in public enterprises in Enugu state was low in ENTRACO, low in IKH, average in ESMC and high in NLR; control practices were adopted in public enterprises in Enugu State was average in ENTRACO, average in IKH, high in ESMC and high in NLR; and employees of public enterprises were motivated was low in ENTRACO, low in IKH, average in ESMC and high in NLR. Consequently, auxiliary enterprises in ENTRACO was 0, in IKH was 0, in ESMC was 1 and in NLR were 3. Internal rate of return in: ENTRACO was 19.8%, IKH was 10.2%, ESMC was 33.9% and NLR was 34.2%. ANOVA revealed that the application of appropriate investment management practices in public enterprises in Enugu State influences their growth. This analysis was in agreement with our empirical findings. Based on our findings, we recommended that public enterprises should adopt; internal rate of return technique to ascertain the internal rate of returns on investments; reappraisal of investment to determine whether value for money was being obtained from any level of investment; and sponsoring of employees for studies on project initiation so as to equip the employees with the skill of initiating investments.


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;

  1. To ascertain the extent is public enterprise significant to Nigerian economy
  2. To ascertain whether public enterprise been properly managed
  3. To ascertain the challenges facing public enterprise in Nigeria
  4. 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;

  1. H0: there are no challenges facing public enterprise in Nigeria.
    H1: there are challenges facing public enterprise in Nigeria.
  2. 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.

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