THE PROBLEMS OF FINANCING GOVERNMENT CORPORATIONS

ABSTRACT

          This research paper is on the problems of financing government corporations (TRACAS CASE OF STUDY).

          In carrying out the research, the researcher intends to find out the outlet to which commercial banks finance the activities of TRANSPORT COMPANY OF ANAMBRA STATE LIMITED, to ascertain whether the ability of TRACAS to meet debt repayment schedule of financiers militate against is availability of funds, to determine the extent to which the government of Anambra state have helped in financing the corporation.

          The researcher collected data from both primary and secondary sources.  Data collected was presented and analysed and hypothesis formulated was tested using the chi-square method of testing hypothesis.

          The researcher found out the following insufficient finance from commercial banks has a significant effect on the activities of TRACAS;

Inability of TRACAS to meet debt repayment schedule of finances militate against the availability of funds from TRACAS; inability of funding TRACAS has a significant effect on as activities and performances; inability of government of Anambra state to finance TRACAS.

          The following recommendation, were made government should try and provide enough fund to corporations through commercial banks.  They need to act as their guarantor in searing the fund.  The high interest changed is to be looked into to enable corporations to service their borrowed fund.

          I suggest that if all these recommendations were properly implemented it will go a long way in improving the efficiency of corporations in this nation.

PROPOSAL

THE PROBLEMS OF FINANCING GOVERNMENT CORPORATIONS: A CASE STUDY OF TRANSPORT COMPANY OF ANAMBRA STATE LIMITED (TRACAS).

The purpose of this study is to expose the problems of financing government corporations that has led to their poor performance.  Limiting the study to TRACAS this research work is to;

Ascertain the effect of inadequate funding of TRACAS to provide adequate scanty on the obtaining of finance;

Ascertain whether the ability of TRACAS to meet debt repayment schedule of financers militate against its availability of funds.

Determine the extent to which the high interest rate charged by commercial banks affect the loan seeking habit of TRACAS.

          My data will be collected from both primary and secondary sources. The data will be presented and analysed when collected hypothesis will be tested using chi-square method.

          The volume of this job will cover from chapter one to chapter five.  The paging should be according to the sub-heading of each chapter.

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgement

CHAPTER ONE

INTRODUCTION

1.1            Background of the study

1.2            Statement of the problem

1.3            Objectives of the study

1.4            Research Questions

1.5            Research hypothesis

1.6            Significance of the study

1.7            Scope and limitation of the study

1.8            Limitations

1.9            Definition of terms

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1            Overview of government corporation finance

2.2            Government participation in public corporations

2.3            Rationale for public enterprises

2.4            Problems of public enterprises

2.5            Issue of financing government corporations

2.6            Characteristics of public corporation and their impact on their pricing policy and financial situation

2.7            Financial problems of public corporation

2.8            Commercial banks financing and interest rate.

2.9            Inadequate funding and its impact on corporations

CHAPTER THREE

RESEARCH METHODOLOGY

3.1            Research design

3.2            Population of the study

3.3            Sample and sampling technique

3.4            Sources of data

3.5            Method of data collection

3.6            Procedure for data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1            A brief introduction of the chapter

4.2            Questionnaire / distribution

4.3            Presentation of data

4.4            Test of hypothesis

4.5            Interpretation of results

CHAPTER FIVE

FINDINGS RECOMMENDATION AND CONCLUSION

Findings

Conclusion

Recommendation

Bibliography

Questionnaires

CHAPTER ONE

INTRODUCTION

Public corporations are enterprises which are partly or wholly owned by the government, which private enterprises have been unable to take care of due to lack of adequate capital.

          In any organization, there are so many components put together that make for an effective performance.  One of these components is the fund. The problem that arises is the adequacy of the fund for effective other of the operations of an organization, through out its life time many organization which started well at the initial stage have failed by the wayside due to shortage of available funds.

Government have generally started playing a major role in economic development and in starting large enterprise in public sector.  Many parastatals care into being when it was believed that rapid economic development required the state to table on the role of an enter premier.  I should also be known that government movement in running public sector help in shaping its economy.  Government ownership of these enterprises is to help improve its social and economic well being of her people and those amenities that the entrepreneurs cannot provide.

          Public enterprise could be classified into four categories according to the degree of government participation in ownership and intervention in management.  Firstly, governmental enterprises – composed of various government departments.  Secondly government invested enterprises, where the government held at least 50% of the equity and appoint to management. Thirdly, subsidiary company of governmental invested enterprises which allow the government to invest indirectly through government invested enterprises and others.  Lastly, governmental backed enterprises where the governmental holds less than 50% of the stock.

          In developing nation there is a general believe that government should own and control enterprises due to insufficient capital on the side of these enterprises; and government gave majority control of than and appoint top management.

          Over the past decades, the number and variety for public enterprises in developing countries have greatly expanded.  In a developing country like Nigeria, the overall performance of these enterprises has been rather disappointing.  They have supported staggering losses, thereby becoming a major drain on National budgets and the principal source of heavy external borrowing.  They have equally purled to generate the expected job opportunities.  Before independence, government establishments were the major employers of labour, but these days with many private enterprises set up by entrepreneurs more people have gained employment with these enterprises and this has reduced the dependence on government establishment and large firms for employment.

          However, the followings have contributed to the poor performance and poor efficiency in these enterprises:

1.                 Obscure and sometimes conflicting managerial goals.

2.                 inadequate management accountability and autonomy

3.                 Excessive government interference in day to day management.

4.                 poor personnel and incentive systems

5.                 Complicated budgets and procurement processes.

6.                 inappropriate pricing and credit policies

7.                 Poor financing.