CRITICAL ISSUES IN MANAGING NIGERIAN PUBLIC ENTERPRISE: A CASE STUDY OF FEDERAL AIRPORT AUTHORITY OF NIGERIAN (FAAN)

(Accounting)

CRITICAL ISSUES IN MANAGING NIGERIAN PUBLIC ENTERPRISE: A CASE STUDY OF FEDERAL AIRPORT AUTHORITY OF NIGERIAN (FAAN)

TABLE OF CONTENTS

Chapter One

Introduction

1.1              Preamble                                                        

1.2              Background of the Study                                          

1.3              Statement of the Problem                                          

1.4              Purpose of the Study                                     

1.5              Significance of the Study                                          

1.6              Scope of the Study                                                                

1.7              Research questions                                         

1.8              Definition of Terms                                       

Chapter Two

Literature Review                                                                  

2.1              The Review                                                                

2.2              Problems and Prospects of Managing Nigerian Public Enterprises (A case Study of (3) selected Public Enterprises in Enugu.31

2.3              Roles and Functions of Nigerian public enterprises in diversified development                                                                   39

2.4              Controls of Nigerian Public Enterprises        

Chapter Three

Research Methodology

3.1              Research Design                                                                    

3.2              Area of Study                                                

3.3              Population for the Study                                                       

3.4              Sample and Sampling Techniques     

3.5              Instrument for data collection                                   

3.6              Method of Data Collection                            

3.7              Validity of Instrument                                   

3.8              Method of Data Analysis                                          

Chapter Four

Data Presentation and Analysis

4.1              Presentation and Analysis                  

Chapter Five

Discussion of Findings, Recommendation, Suggestions for Further Studies, Summary and Conclusion.

5.1              Discussion of Results                                     

5.2              Conclusion                                                                             

5.3              Implication of the Findings                           

5.4              Recommendations                                                     

5.5              Limitations                                                                 

5.6              Suggestions for Further Research                  

Bibliography                                                  

Appendix                                                                   

CHAPTER ONE

1.1              PREAMBLE

The government of any nation has some basic responsibilities to her citizenry.  One of such responsibilities is the provision of social infrastructure and cheap economic services to the people.  In other words, the government provides essential service to the public in her effort to ensure eve and diversified development.  The services are known to be indispensable to the people and most the time they are services of great necessities such that if left in the hands of the private investors will result to over explanation, marginalization and in extreme cases an undue monopoly.

However, as an organized body responsible for policy making and execution, the government delegates the responsibility of providing such public services to an established body which in the right sense could be referred to as the public enterprises ranging from the type of role assigned to them to the type of act or decree under which it is established.

So to say, whether it is intended that such enterprise would source funds on its own or make profit solely depends on the section of the decree/constitution that establish it.

Generally, they are called public enterprise because they provide and render public services.  These services are public because of the concept of externalities in that some consumers of these services pay while others who may be consuming it do not pay.  Sometimes the payment is not proportionate to the services consumed.  Despite the fact that some people who consume public services do not pay for it, the government however, cannot withdraw such services from them.

The belief is that whether the service is paid for or not that the general public have paid for them through tax.

According to Abubakar (1984) the establishment has objectives, which include the provision of infrastructural facilities and services at a very moderate price/rate to the vast Nigerian population.  This was the main reason why they were included as part of the development plan of 1972.  They were seen as machinery for development, national growth and the tool for high standard of living and increased per capital income.  The initial funding of public enterprises is by the government but it was expected that as time goes on the parastatals would source fund and capitalize itself through car ways from the proceeds f the changes it tags to the services rendered to the public.

Rotimo (1985) disclosed that they are not in practice being made to continually extend loan and subsidiary to some of them.  Once more the government in addition to providing the initial fund give loan and subsidy to the parastatals at the repayment period of 5 years.

The Nigerian populace and members of the board of policy makers had been disappointed for the overall performance of the public parastatals, which is far below expectation.  There are so many reasons why it is expected that public enterprises though not profit oriented should perform better.  One of such reasons stems from the fact that it is funded by the whole Nigerians through tax.

Another such reason is that available support are resources she enjoys from the government such support could be in for of subsidy provided by the government, loan extended to them at a low interest rate, exemption from tax levies and the monopolistic condition of their services.  Irrespective of these logistic available to the public enterprises they has suffered and in fact been pooled down by a lot of unimaginable crises.

The management position of the public enterprises is organisingly not encouraging.  The state of their overall productivity is in a total shamble.  Their efficiency and effectiveness reads zero.  The question now is whether the manager are actually competent or aware of the their management objective what is actually wrong?

Sometimes in the past, the government inaugurated series of public commissions to study the parastatas and make recommendations for their improved productivity.  Lidorji and Onasode Commissions were some of such Commissions inaugurated to investigate into the management position of the public enterprises.  Inspite of their numerous research and suggestions none of such reports had proved any significant development in the public sector which can imply that there is no change in the public enterprises.

The situation of poor productivity, inefficient services and gross negligent from the management circle of the public enterprises continues to deteriorate so much that recently that government is talking of privatization.

The government is seriously considering this inevitable alternative since it is believed that this will enhance performance of the public parastatals through cost effectiveness.  Again, if the private individuals are allowed to participate in the running and financing of public enterprises, government control and unceremonial intervention into the affairs of he public enterprises will be reduced to the barest minimum.

1.2              BACKGROUND OF THE CASE STUDY

Airport today is overseen by the Federal Airport Authority of Nigeria (FAAN).  FAAN came into being subject to a decree created by military government in 1986.  Before then, it was known as the Airport Authority of Nigeria.  The Federal Government Aviation Authority and Airport Authority of Nigeria has before 1986 regarded as different bodies but by this decree, they became merged and called Federal Airport Authority of Nigeria.

As earlier mentioned the primary role of the FAAN is to maintain and manage Airport and in doing this create air spaces for Air Transportation in Nigeria.

Other functions of the FAAN include, the provision and maintenance of all necessary facilities and services for the safe, orderly, expenditure of the economic operation of Air Transport.  It has to generally secure the safety efficiency and regularity of Air Navigation and safe of aircraft and of person and properly in the Airport.

To provide adequate facilities and personnel for effective security at the airport. 

At the top of the management of the FAAN is the Managing Director, appointed by the head of state on the recommendation of the Minister of Aviation followed by the Governing Board (dissolved by the Military Government and yet to be reconstituted) below the board are the managers and at the bottom of the organization are the junior staff, which are less than the management staff as in the case of Enugu Airport that is 112 Senior Staff against 38 Junior Staff, in fact, this is funny.

The major management constraints of the FAAN emanates from the fact that they are not adequately funded, others are: Inadequate staff, inadequate information, old and obsolete equipment.  The last two (2) problems are closely related in that information in the Airport is supposed to be accurate and because they lack information gadgets like computer sets, it becomes impossible to get accurate and adequate information.

However, their machines are old and obsolete but cannot be replaced.

One peculiar thing about motivation of managers is that they have a comfortable and more relaxed working conditions like health services, staff school for their children, job securities and other facilities than the managers of private enterprises but the financial aspect of their motivation is very poor.

1.3              STATEMENT OF THE PROBLEMS

The question now is. Whether the management team of the public parastatals are in themselves truly efficient.

What is really the cause of this inefficiency? 

Is it the management of the government?

What can really be done to improve the management position of the public parastals?

What is so special in the private enterprise, management that they can seem to perform better than the managers of public enterprises?

1.4              PURPOSE OF THE STUDY

This study is carried out specifically to ascertain the issues in managing one selected enterprises of the government.

The study specifically attempts to find out the following:

How managers are motivated.

The extent of government and board control

The effect of socio-political and economic changes on the management control and information system.

The degree of human relation in the enterprises.

The efficient managerial techniques applied in the enterprises by managers.

What extent the management team can be blamed for the mis-management of the various parastatals.

1.5              SIGNIFICANCE OF THE STUDY

What is obvious is that if the management of the public parastatals is properly harnessed the performance of these parastatals will be greatly improved.

The potentials of effective management in any organization whatsoever cannot therefore be under-rated hence the assertion that management is the heart of the organization because it is the machinery that pumps resources round organization.

The government expects public enterprises to facilitate progress through prompt discharge of duties and rendering of services to the masses.  The dream of the citizenry had been that the public parastals would provide at a glance the services requested from them without wasting time.

The nation had expected that like catalyst the public enterprises would speed up and activate rapid development and growth rate in the economy.

Unfortunately, the managers of the parastatals have transferred the parastatalls resources into tools for individual economics development and progress.

It is therefore conspicuous how the ineffective manipulation of the various parstatals has been and is still a source of great concern to the government and the general public.

In every respect, the public enterprises have been structured in similar manner.  This similar quality makes it possible for the study of one selected parastatals to be mace and used as a basis for unraveling the variables of other parastatals.

It is therefore, expected that the result of this research should be applied generally to all other public enterprises.

It however, brings to light the issues that are responsible for the poor performance of the public parastatals, which are critical.

1.6              SCOPE OF THE STUDY

Earlier in this project work, it was noted that the public parastatals are similar in all respects among each other in all the states of the federation.  As such, it is expected that a study in one of them can represent the rest of the others states.

Nevertheless, this research is a very study of one (1) selected public enterprise in Enugu metropolis which include; Federal Airport Authority of Nigeria (FAAN).

1.7              RESEARCH QUESTIONS

(1)     Do managers understand the objectives of the organization, which they manage?

(2)     Is there compliance with the laid down policies of the government enterprises?

(3)     Are the resources of the enterprises treated with non-challance by management, workers, and the general public?

(4)     Do managers of public enterprises put in their best?

(5)     Are workers in public enterprises properly motivated by their managers?

(6)     Are managers of public enterprise properly motivated?

(7)     Does the government interfere with the management of public enterprises?

1.8              DEFINITION OF TERMS

It is of paramount important to defined some of the terms used in the research study.  since these terms could have different meanings to avoid difficulties.

The following terms are operationally used, defined in the study as follows:

(a)     Public Enterprise: This is defined as an establishment set by the Federal Government to reach the demand of the people (populace) in the society at a subsidized rate.

(b)     Management: This refers to the application of skill or a system of planning, organizing, directing and controlling of material and human resources and money to achieve optimum and efficient returns. 

This includes the application of skill in revenue generation and ensuring cost minimization.

(c)      Misappropriation: This simply means administrative and financial deficiencies on the part of the administrators to divert fund to their personal use than in the federal government treasury.

(d)     Government Intervention: This simply means government making policies to the public enterprises. 

Also decisions are being taken by the government in running the affairs of the organization.

(e)      Obsolete Equipment: These are equipments that had worn out, which will not be useful for the smooth running of the public enterprises in achieving their useful objectives.

(f)      Loans: This refers to grants from the government to the public enterprises at a low interest rate and tax exemption to help in effective running of their obligations.

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