CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Public enterprises are government business enterprises established primarily to provide social and economic services to the general public. Among these enterprises, however, are those that produce the core economic infrastructure generally referred to as utilities. Public utilities carry significant social and economic weight because they have a direct impact on the standard of living of the populace and bear on the international competitiveness of the economy. They also maintain direct forward and backward linkages with other sectors of the economy. Inadequate service delivery by dysfunctional public utilities has continued to contribute to escalating domestic production costs, a development that undermines a nation's competitiveness as an investment destination (Onuoha, Nwite & Ogbonna, 2023).

In Nigeria, as in most other developing countries, the ownership and control of key public utilities have remained largely the responsibility of government since independence in 1960. The case for government control of public utilities such as electricity, telecommunications, gas, water supply and air transportation rests on the argument that basic goods and services must be provided to citizens at affordable prices, and that government needs to retain control of utilities because of their strategic significance to the national economy. Other grounds advanced for this policy stance include the capital-intensive nature of public utilities and the historically limited capacity of the private sector to mobilise resources for investment and to exploit the economies of scale associated with such establishments (Nwali, Nwokeiwu & Oganezi, 2023).

Over the years, however, the inability of successive Nigerian governments to deliver these services efficiently has fuelled persistent calls for reform. In response, several policy initiatives have been pursued, including market regulation, deregulation, liberalisation and privatisation. Regulation, for instance, was conceived as an attempt to check the socially undesirable conduct that the monopoly status of public enterprises tends to encourage. Despite these reforms, most public utilities have continued to operate inefficiently, recording low rates of return and sub-optimal output, while relying on obsolete and dysfunctional plant and equipment, largely on account of insulation from competition and the mismanagement of subventions and grants (Udoyiu & Uko, 2023).

Privatisation, broadly understood, involves the sale of equity in public enterprises to private investors, with or without the relinquishment of government control over the affected organisations. It may also take the form of deregulating state monopolies through the repeal of legislation that restricts entry into particular economic activities. The mechanism may further involve sub-contracting, such as operation and maintenance contracts or enterprise contracts, through which work previously undertaken by state employees is transferred to the private sector (Ogbeide, 2023). Relatedly, privatisation may occur through divestiture, that is, the outright sale of public assets to private investors by way of public share offers or private asset sales (Eze, Nwibo, Umeh & Eze, 2023). Government typically embarks on privatisation as part of a broader restructuring of the economic base of the country, intended to promote efficiency and relieve government of the fiscal burden created by its extensive involvement in business enterprise.

As would be expected, the reform programmes adopted by successive Nigerian governments since the Structural Adjustment Programme (SAP) have raised fundamental questions regarding ownership structure, economic efficiency, profitability and income distribution, as well as the appropriate balance between public and private sector roles in the provision of utility services. More recent scholarship continues to confirm that weak administrative capacity, poor revenue mobilisation and inadequate accountability mechanisms remain central to the underperformance of Nigeria's public enterprises (Ifeanyichukwu, 2025; Udoyiu, Udoyiu & Uko, 2025).

1.2 Statement of Problem

In most developing countries, including Nigeria, government participation in economic activity is typically substantial. One of the principal channels through which government has intervened in the Nigerian economy is the establishment of public enterprises, which are statutory bodies that operate services of an economic or social character on behalf of government.

The rationale behind the establishment of public enterprises in Nigeria is varied. Among the reasons frequently cited are the generation of revenue to augment available national capital in support of development and welfare programmes, the prevention of monopolistic control of strategically important and profitable enterprises by a few individuals or groups, the coordination of critical activities necessary for national survival and economic stability, and the creation of employment opportunities (Nwali, Nwokeiwu & Oganezi, 2023). The National Electric Power Authority (NEPA), now restructured as the Power Holding Company of Nigeria (PHCN) and subsequently unbundled into successor distribution and generation companies, and the Nigerian Telecommunications Limited (NITEL), are among the critical and strategic organisations whose operations were expected to contribute substantially to national development, particularly in an era defined by technology and information management (Ogbeide, 2023).

Conversely, the operations of public enterprises in Nigeria have, in more recent times, become a source of considerable concern both for the government that established them and for the citizens they were meant to serve. The public continues to complain of poor service delivery from these organisations, while government has identified many public enterprises as a drain on the limited resources available to the state (Adigwe & Okonkwo, 2024). Consequently, privatisation and commercialisation options have remained attractive to successive administrations as instruments for improving efficiency and reducing the fiscal burden of subventions (Udoyiu, Udoyiu & Uko, 2025).

Reports of boards of enquiry into public enterprises in Nigeria, including those examined in this study, have consistently identified poor funding and inept financial management as root causes of non-performance. More recent empirical studies similarly point to weak internal control systems, poor budgetary discipline and limited transparency in revenue reporting as persistent constraints on the financial health of Nigerian parastatals (Agbaje & Oladutire, 2023; Nwosu, Okafor & Eze, 2024).

The central focus of this study is to examine how sound management of revenue generation and accountability in public enterprises can avert the collapse of the selected enterprises under review, namely NEPA/PHCN and NITEL. The study also gives attention to how the problem of poor financial resource management, including waste of funds, fraud and the diversion of funds, can be curtailed in Nigerian public enterprises. It further explores how the future prospects of these enterprises might be enhanced through the deployment of well-trained, adequately remunerated and properly motivated personnel charged with revenue generation and accountability functions.

1.3 Research Questions

Based on the foregoing, the study seeks to provide answers to the following research questions:

1. What are the factors that affect revenue generation in Nigerian parastatals?

2. What are the modes or strategies of revenue generation adopted by Nigerian parastatals?

3. What measures should be adopted by parastatals to improve revenue generation and accountability?

4. What factors hinder revenue generation and accountability in Nigerian parastatals?

5. To what extent does the non-disclosure of proper accounting information affect revenue generation and accountability in Nigerian parastatals?

1.4 Objectives of the Study

The objectives of this study are to:

1. examine the sources of revenue generation of the selected parastatals in Nigeria;

2. examine the problems that affect the management of revenue generation of the selected parastatals in Nigeria;

3. determine whether effective revenue management improves the profitability of parastatals in Nigeria;

4. assess the effect of the mode of disbursement of grants to parastatals on revenue generation;

5. evaluate the financial control mechanisms used by the selected parastatals in Nigeria.

1.5 Hypotheses

In view of the problem and the objectives the study seeks to achieve, the following hypotheses are formulated:

(i) Effective revenue management and accountability is not significantly dependent on profitability in Nigerian parastatals.

(ii) The mode of disbursement of grants to parastatals is not significantly affected by revenue generation and accountability practices in Nigeria.

(iii) Inadequate disclosure of financial information does not significantly affect revenue generation and accountability in Nigerian parastatals.

1.6 Significance of the Study

The significance of this study lies in the vital roles that NEPA/PHCN and NITEL are expected to play in national life. The agency historically responsible for generating, transmitting and distributing electricity in Nigeria was the National Electric Power Authority, a parastatal of the federal government established by Decree No. 24 of 29 June 1972 and charged with developing and maintaining an efficient electricity supply across the country. NEPA was itself an offshoot of the Electricity Corporation of Nigeria (ECN), established in 1950, and was later unbundled into the Power Holding Company of Nigeria and, subsequently, into separate generation, transmission and distribution companies under the Electric Power Sector Reform Act (Ogbeide, 2023). Government's interest and investment in the electric power sub-sector were informed by the recognition that electricity consumption is a key yardstick for measuring living standards, and that once adequate electricity supply is assured, many other dimensions of economic activity tend to follow. Government has consequently continued to accord high priority to energy supply in national development plans and subsequent policy frameworks, including the Electricity Act 2023, which further decentralised electricity regulation to the states (Udoyiu & Uko, 2023).

The communications sub-sector of the national economy comprises the means of sending and receiving information and messages, and is vital to the smooth functioning of any modern economy. Successive national development plans have emphasised that the provision of adequate and reliable communication services is essential to efficient economic operation. Unfortunately, NEPA/PHCN and NITEL, like many other public enterprises in Nigeria, have historically struggled with poor service reputations. The liberalisation of the telecommunications sector from 2001, which culminated in the privatisation of NITEL in 2015 and the emergence of private operators such as MTN, Globacom, Airtel and 9mobile, has been widely linked in the literature to improvements in service delivery that government-run NITEL had failed to achieve (Nwali, Nwokeiwu & Oganezi, 2023).

This study is significant because it clarifies the factors that affect efficiency in the management and accountability of public enterprises in Nigeria. It is expected to assist managers of such enterprises in exercising sound management and accountability practices capable of boosting revenue-generating potential. The poor performance historically associated with public enterprises charged with providing power and communication facilities in Nigeria is widely attributed to weak management of revenue generation and accountability (Nwosu, Okafor & Eze, 2024). A study of this nature is therefore positioned to highlight revenue management and accountability problems in public enterprises which, if resolved, would place such enterprises on a sounder financial footing.

1.7 Scope of the Study

This research focuses on ascertaining the management of revenue generation and accountability in selected Nigerian parastatals. The study was conducted in Enugu State, focusing on the operations of NEPA/PHCN and NITEL within the state. Enugu State was selected because the results of the study can reasonably be generalised to other parts of the country, given that the nature and operational characteristics of the two parastatals examined are broadly similar across the federation. The researcher therefore restricted the scope of the study to Enugu State, while drawing on national policy developments, including the post-2013 privatisation of the power sector and the 2015 divestiture of NITEL, to situate the analysis within the broader national reform context (Ogbeide, 2023; Udoyiu, Udoyiu & Uko, 2025).

The study covers a period from 1980 to date, drawing on both respondent feedback and officially recorded data, including post-privatisation performance indicators, to provide a fuller account of how revenue management and accountability practices have evolved across the pre- and post-reform eras.

1.8 Limitations of the Study

Every research undertaking has inherent weaknesses, and inferences must accordingly be drawn with caution. This study is not without limitations arising from certain extraneous variables. One limitation stems from its reliance on recorded and historical information; sourcing relevant materials, particularly records detailing how revenue was generated and accounted for in earlier decades, proved challenging. Incomplete responses and occasionally inconsistent information from respondents constituted a further limitation. These limitations, however, do not materially diminish the relevance or contribution of the study.

1.9 Definition of Terms

Management: In this study, management is conceptualised as the process of achieving desired organisational results through the efficient utilisation of human and material resources. Management entails planning, organising, staffing, leading, interpersonal influence and controlling enterprise resources (Bedeian, 2004).

Accountability: Accountability is defined as a rational and structured process of justifying the use of resources, involving responsibility for the functions discharged by an officeholder (Imaga, 2007; Kankpang & Nkiri, 2019).

Accounting: According to the American Institute of Certified Public Accountants, accounting is the art of recording, classifying and summarising, in a significant manner and in terms of money, transactions and events that are, in part at least, of a financial character. The American Accounting Association similarly describes accounting as the process of identifying, measuring and communicating economic information to permit informed judgement and decisions by users of that information (American Accounting Association, 1966, as cited in Kodjo, 2004).

Public Enterprise: A public enterprise is a public organisation that emerges as a result of government acting in the capacity of an entrepreneur, established to provide goods or services of an economic or social character (Ademolekun, 2011; Nwali, Nwokeiwu & Oganezi, 2023).

PHCN: Power Holding Company of Nigeria, formerly known as the National Electric Power Authority (NEPA), and subsequently unbundled into successor generation, transmission and distribution companies.

NITEL: Nigerian Telecommunications Limited.

GOBs: Government-Owned Businesses, also referred to in contemporary literature as State-Owned Enterprises (SOEs).

REFERENCES

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