THE ROLE OF ACCOUNTANTS IN THE PRIVATIZATION AND COMMERCIALIZATION OF PUBLIC ENTERPRISES IN THE NIGERIAN ECONOMY (A CASE STUDY OF NITEL PLC ENUGU)

THE ROLE OF ACCOUNTANTS IN THE PRIVATIZATION AND COMMERCIALIZATION OF PUBLIC ENTERPRISES IN THE NIGERIAN ECONOMY

(A CASE STUDY OF NITEL PLC ENUGU)

 

PROPOSAL

Privatization, the total transfer of government equity in public enter prices wholly or partly owed by the government to private investor and commercialization, the mailing of the government owned enterprises in sector viable and puffin oriented through changes in management pricing product delivery, service orientation, completion and operate service can always actualize it’s aim and objector though the influence and role of the accountancy this research work is aimed at ascertaining the various roles played by the accountant in the commercialization and privatization of path enterprises in Nigeria economy.

 

The accountants in Nigeria today face a lot of challenge in executing their service. In the course of this project, data gathered form related literature as well as from interviews and discussion, also, questionnaires will equally distributed and collected. The statistical analysis in the study will include the use of chi-square test homogencerty.

This research work also will focus

i         on information supplied by the accountant

ii        its contribution to the success of privatization and commercialization exercise. The accountant is important among other groups of professionals needed for the implementation of the exercise and they are the puller of any successful investment.

 

In carrying out the study, a case study research design from NITEL PLC will be employed to elite the role of accountants and the main reason why accountants should be given a free hand in the implementation of the exercise in order to enhance the profitability of such parastatals.

Chapter one

• Introduction 1

1.1    Background of the study                                   2

• Statement of problem 8


• Objectives of the study 9


• Scope and limitation of the study 10


• Significance of the study 11


• Research questions 12


• Statement of Hypothesis 13


• Definition of terms 14

Chapter two

Literature review                                                                    17

• Introduction 17


• Option of privatization and commercialization 21


• Modes of privatization and commercialization 23


• The establishment of the national council of

privatization and commercialization                 26

• The functions and objectives of

national council of privatization and

commercialization                                              26

• The steps of privatization 30


• The process of privatization in Nigeria           31


• The benefit of privatization          32


• The capital market and privatization 35


• The use of consultant and other expert 37


• The accounting habits of Nigeria pubic

enterprises.                                                         38

• Privatization and commercialization impact on

the accounts                                                       41

• The accountant and the public in general 45


• Problems of Nigeria Accounts 48


• What commercialized activities should aim at 49


• Misconceptions about privatization and

Classification.                                                     50

• History of NITEL 51

CHAPTER THREE

• Research Design And Methodology 53


• Population           53


• Sample selection 53


• Deception of instrument used in data

Collection                                                            53

• Questionnaire distribution and collection 54


• Other source of data 55


• Procedure of data analysis 55

Chapter Four

Data analysis and test of hypothesis                        57

4.1    introduction                                                         57
4.2    presentation and analysis of data                             57

• Analysis of responses 59


• Analysis of follow-up questions 63


• Testing of hypothesis 72

Chapter five

• Summary of findings 76


• conclusion 78


• recommendation 79


• bibliography 82


• Questionnaire 86

 

 

 

CHAPTER ONE

1.0    THE PRIVATIZATION AND COMERICA LIZATION OF PUBLIC ENTERPRISE

          INTRODUCTION

The accountant, as the pillar of any successful investment is very important among other groups of professionals needed for the implementation of the exercise especially in privatization and commercialization of public enterprises in Nigeria economy.

 

Privatization simply means the process by which with drawing its ownership interest in an establishment it owned and allowing practice individual to earn and establishment either partly or wholly. And commercialization itself simply means a practice whereby the government allows its establishment to produce goods and senesce and sale as a competitor market price under the amazement of surplus or profit generated from operation. Each enter pusher are expected here to use private sector procedures in the running of their business. For magnetization of profit.

Since Nigeria telecommunication service still needs a lot of improvement to enable a good communication in the economy, the accountant while has to apply in order to ensure:

1. Prediction in cost


2. Prevent minimization


3. Enhance productivity


4. Elimination of monopoly


5. Income to government


6. Enhances quality


7. Henithy competition


8. Reeducation of inflation etc.

 

• BACKGROUND OF THE STUDY

While the oil lasted in this county in the 1970s, many enterprises of questionable commercial and financial viability were established to brost the economy and to provide employment for the citizens by the government.

Consequently, the economic recessions changed in the early 80’s and there was a general define in public veveme. As a result of this, attention being to focus activities and efficiency of these public enterprises were forms to be unproductive and inefficient, then the government appointed several study group to examine their operation with a view to determine the basis for a new finding scheme, operate capital structure as well as incentive measures to enhance their production and general efficiency in the face of declaiming government revenues and expanding demand for social service, it becomes apparent that government can no longer contemn to support such enter prices.

 

In the cumulative investment in about 100 parastatls, at the and of 1985 in a press briefing by the chief of general staff (former) air commodore Edith Ukiwe, revealed that of the N23.25 billion, federal government total investment in the public enterprises as at October 3, 1983, only a return of N933.7 Willion or 4% were generated.

A break down of the investment showed the following Pattern

Equity        11.43 billion

Loans        10.42 billion

General loans 1.40 billion

Total investment 23.25 billion

Apart from these, the enterprise total investment as at November 27 1995 was N801.1 also received a total of N11.5 billion as subvention from the federal government. In terms of returns, as the government. In terms of returns, as the government received N933.7 million as divided between 19980 and October. 1985. This represented an average return of N159 million or 1.39% on the equity. Component while on loan it recent N67.96 million and N26.12 million as principal and interest payment.

 

In another development, the president commander in chief of the Armed forces, Federal Republic of Nigeria president Olusegun Obasanjo on the occasion of inauguration of National council of privatization Tuesday 20^th July 1999 stated thus:

It is estimated that successive government have invested up to N800 billion in public owned High investment are below 90%. Those inefficiencies and in many cases huge loses are charged against the treasury with declining revenue and escalating demand for affected and affordable social services, the govern public has stepped up its yearning for state owned enterprises to become more efficient.

 

State enterprises suffer from fundamental problem of detecting capital structure excessive bureaucratic control an investigation, gross incompetence and in management, Compton and crippling complacence of which monopoly causes. Inevitable, these shortcomings really affected the nation’s economy. There are over 100 state owned enterprises in Nigeria. Many of these enterprises gulp billion of naira without gelding much positive result interns of consumes satisfaction which ought to be the top priority

It is conservatively estimated that this nation Nigeria may lost about 800 million (800,000,000) U.S. dollars due to inviolable power supply by NEAP and another 440 million  (440,000,000) U.S. dollars through inefficient juel distribution the Nigeria telecommunication service, still needs a lot of improvement to enable a good communication in the economy.

 

This is definitely a disappointing picture and a huge burden on already limited resources of the government. The only national remedy to all this is to reduce the burden through effective privatization and commercialization of public enterprise in other to really achieve the aim and goals of establishing them.

 

Moreover, the programme is seen as one of the essential antidotes of the government structural Adjustment programme (SAP) aimed at restructuring the economy that has been characterized by various problems such as inefficient allocation of available resources.

 

Also the programme is to cure the inefficacious and indisciphres in the stated owned enterprise. Duetr this inefficiencies lack of concern and indiscipline which causes poor performance, efforts are made to nationalize government parastatals, structure economic activities through more private sector investment and reduce government stock of unproductive investment

This will enable us obtain the following,

 

Attract the private investment necessary as a catalyst for economic growth, as to close the gaps in the Nigeria economy

1. To create more job opportunities, acquire new knowledge and technology and also expose the country to international competition there by meeting the needs of the consumers more effectively.


2. Control and operation of certain key economic enterprises form the public to the private sector.


3. To check the present absolute dependence the treasury for funding.

1.2    STATEMENT OF PROBLEM

The privatization exercise implies the invitation of the public to buy shares in the public enterprises. A prospective private investor will not buy such shares until he has found out the time state of such enterprises through the financial statement that is prepared by the accountant. Since the role of the accountant is evidenced, it becomes necessary to still find out if there are other roles the accountant can play before, during and after the completion of the programme.

 

It is obvious during the inception, of the privatization and commercialization programme that the government successfully which lead to how to identify the essential factors for implementation through the accountants. No7 withstanding, the researcher has to identity these problems and has to inquire frothier to enable him analyze the data collected for the achievement of the purpose.

Readiness of government to deduce the po9wer of bureaucracy to avoid first variation was implemented by drastically viewing the regulating and supervisory rule of the public sector. Creation of management wad, the alternative is to ensure that board representative of government in these companies are endowed with extensive business experience needed to over have management after the transfer of shares.

 

The financial management of most of these companies over the years have resulted to a very weak balance sheet, debt incurring and negatron network in order for these companies to altercate funds fo4rm the private section, financial reconstruction and in some ones debt rescheduling will be essential and is suggested that this function is being handled by financial experts.

 

• OBJECTIVES OF THE STUDY

The objectives of this research work is to investigate or Enquirer for the following

1. The role of accountant in the privatization and commercialization in Nigeria ie the impact the accountants role has played so far in the implementation of privatization and commercialization programme.


2. With reference city above, the intent to which the role played has enhanced the successes fulness of the exercise

• Dig dip into the type of information the accountant supplied in the exception of the programme.

1. To inquire into the veliablitity of the information supplied by the accountant in the implementation of the exercise.

 

1.4. SCOPES AND LIMITATION OF THE STUDY

Obviously, there are many public enterprises that are stated for privatization and commercialization whether full or partial in each respect.

Based on the fact and in order to maintain uniqueness and effectiveness the paper/research will be restricts to one parastatals NITEL PLC.

Specifically, my target population is the accounts departments, the chief accountant of the above parastatals affected by the current privatization and commercialization exercise

 

• SIGNIFICANCE OF THE STUDY

The privatization and consumer codization exercise is expected to improve productivity increase efficiency, prorate completion, increase returns on capital and above all propel economic growth and development. the programme will also benefits the economy, employee, the management, consumers and the society at large.

1. To the employee, the exercise will not only afford them the opportunity to secure a job, but also increase job satisfaction, motivation and moral of the workers


2. To the consumers, they would be one of the greatest beneficiaries of the exercise through reliable and better products and services.

• To the government; it would benefit the government through increased revenue as these companies become more profitable.

1. Lastly, it would increase the level of share ownership in the country and boost capital market development as investment is done through the market.


2. From the aforementioned points, it has been revealed that there is going to be a justification for this study as both the federal and state government, investors, companies, general public etc would appreciate the contribution to both the planning, implementation of the programme and it would be cleared that without the exercise would not be successful


3. From this, the accountant could be refereed to as the corner stone’ of privatization and commercialization exercise.

 

1.6    RESEARCH QUESTIONS

There are many questions the research of this work invalid likes to find answer to in other to be successful.

1. What critical are used to qualify pubic enterprises for privatization and commercialization respectively?


2. To what extent can the accountant contribute to the success of the privatization and commercialization exercise?


3. Does it mean that the role of the accountant is more prominent then the role of other professional in the exercise?


4. If the above (c) is yes, in what ways and to what extent


5. What information would the accountant supply in the complementation of the exercise and to what extent has it helped in admiring the exercise aims?


6. Is the information supplied timely, accurate, brief and efficient?


7. What are the accounting standard that qualified an establishment as a parastatals or public enterprises.

 

1.7    STATEMENTS OF HYPOTHESIS

The following hypothesis shall be tested by the research in the course of carrying out this research paper.

1. Ho: The accountants do not play positive role in igniting the privatization and commercialization of public enterprise.

Hi: That the Accountants play some posture role in initiating the privatization and commercialization of public enterprise

2. Ho: information provided by the accountant do not conitubute to the success of the exercise

Hi: That the information supplied by the accountant, contribute to success of the exercise

3. Ho: The accountant is not important among other group of professionals needed for the exercise implementation.

 

• DEFINITION OF TERMS

• PRIVATIZATION: This is the total transfer of government equity on public enterprises wholly or partly owned by the government to private investor in other records it simply means to convert form priblic to private ownership.


• COMMERCIALIZATION: This is the mailing of the government owned enterprise is a sector viable and profit oriented through changes in management pricing product dehveny, seance, orientation, completion and operate vision.


• ACCOUNTANT: This is one whose profession it to keep financial statement, in an orderly manner so that information can easily be ascertained. It is one that keeps and examines business and all the books of accounts.


• PASTATALS: These are government owned enterprises or public enterprises established to provide service for the general public at little or no cost.


• FULL PRIVATIZATION: This is the total transfer of all government’s ordinary share holding in the designated enterprises.


• PARTIAL PRIVATIZATION: It is simply means situation where government own part of share in organization and individual also own some share from that the same organisation a enterprises.


• FULL COMMERCIALIZATION: This means that the enterprise so profitably on a commercial basis and be able to rise fund form the capital market without government quita. Each enterprise is expected to use private sectors procedures in the ringing of their business.


• PARTIAL COMMERCIALIZATION: This can be described as enterprises in which it is expected to generate enough nevenue to cover their operating expenditures. The government may be giving them capital grant to finances their capital project.

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