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EVALUATION OF CAPITAL BUDGETING IN THE PUBLIC SECTOR ORGANIZATIONS IN NIGERIA

ABSTRACT

Capital budgeting decision usually involves substantial’s expenditures on new assets. These decisions are particularly important because the firm losses much of its flexibility by looking into projects and because budgeting decisions define the firm strategic direction. Capital budgeting in Ikorodu local government is very vital and must be approached with all sense of diligence. This project is intended to create awareness in capital budgeting in Nigeria local government. The need for this study arises from the variation in capital budgeting in Ikorodu local government that has been noticed and this research work hoped to improve the standard. In order to achieve this, project has gone into so many past works of authors and related literatures. The data for the study were made up of primary data. Interviews and questionnaires were used for proper and precise responses. The questions were of the closed type. This was done to empower the respondents and chi-square was used to analysis the result. Capital budgeting decisions are made in terms of both quantitative factors (monetary measure of costs and benefits) and qualitative factors (non-monetary measure of costs and benefits). Capital budgeting decisions are particularly difficult in non-profit organizations such as national and local government organizations, since it is not always possible to precisely quantify the costs and benefits of a project. The major findings that emerge from the study can be summarized as follows: i.There is relationship between effectiveness of Ikorodu Local government and optimal allocation of resources ii.There is relationship between efficiency of Ikorodu Local government and optimal allocation resources. iii.Effectiveness and efficiency of capital budgeting improve the revenue generation of Ikorodu Local government From the above mentioned summary of major findings, it is observed that capital budgeting is very relevant to public sector organizations. It was recommended that capital budgeting aids planning of annual operations, co-ordinating the activities of the various parts of the organization, communication of plans to various responsibility centre manager, motivating managers to achieve organizational goals. Control of activities and evaluation of the performance or governmental institutions or government and its enable the management of nonprofit organization to make more informed decisions about the allocation of resources to meet the overall objectives of the organization.

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Trade Union is the Principal institution of workers in modern capitalist Societies. They are political institutions with elected leaders and they have political characteristics and seek to use political power to influence governmental agencies in their immediate interests; their primary objective is bargaining effectiveness (Okogwu, 2008). Ananaba (2005) postulated that Unionisms is one organization in which the individual tries to survive in a group. Trade unionism is presumptive. First, it is to be assumed that labour and capital are at variance with each other as far as the reasons of production are concerned. The employer representing capital wants to maximize his profit whereby the workers representing labour wants to maximize his benefits. Each of them has a case, both sides must get “Justice” for the sake of the economy.

The Babangida government in Nigeria (1985 – 1993), for example, constantly resorted to detaining the Nigerian labour congress (NLC) leadership to forestall demonstrations or strikes. In February 1988, it wound up the Nigerian labour congress executive council and appointed a sole administrator to pre-empt protest against fuel prices rises, although in vain. But this is the same government that gave the Nigerian labour congress N50million to build its national secretariat. The Nigerian experience evidenced the bi-polarity in International relations. The trade union congress having been split on the question of affiliation with the National Council of Nigeria and Cameroon (NCNC) in the late 40s, the trade union movement in Nigeria experienced its second split in the 1950, over international affiliation with each of the national centers favouring affiliation to the west or the East respectively.

The cat and dog relationship between capital and labour predated the industrial revolution. The 1sttrade union in Nigeria was the Southern Nigeria Civil Service Union found on August, 19th 1992, and become Nigeria Civil Service Union in 1914. However, the Yoruba will say “The labourer can neither enjoy his reward alone” Roper has captured it succinctly! “An increase of wages may mean an increase of dependents, an improved housing standard may invite uncontrollable overcrowding and the apprenticing of relatives may disguise serious exploitation” therefore, unionism is a political activity”. Ananaba Wogu (2005) rightly argues:-

The African workers are a qualitative minority without, then, government cannot function; without them, commerce and industry would cease to operate. Wages paid to them are often not only for them and their immediate families but common assets shared by their father and mothers, brothers and sisters, and other extended families…  therefore, the great improvements in the standard of living of mankind could not have been attained without workers and their organizations. He concludes that “The truth must be acknowledged that what is done in the interest of workers and their organizations is a service to their countries, and what is done against them is a disservice to their country.

The workplace is known for the financial tussle between workers and employers. Employers being owners of capital usually have the upper hand in the bargaining process and even dictate terms of employment unilaterally in some cases. Workers on the other hand, know that this imbalance have to be corrected so as to stand a better chance of realizing their demands in the workplace. Hence, the desire to form trade unions; this in return has brought about various benefits for workers such as: Economic benefit, social benefits, welfare benefits and political benefit.

However, these unions adopt structures suitable for their demand in the workplace. Union most especially in Britain and United States, adopts the craft structure initially before evolving into industrial ones and some later metamorphosed into general unions. These structures were adopted in order to strengthen the unions and to enhance their impact in the workplace. However, the formation of trade unions does not imply the automatic realization of worker’s demands. Workers’ demands are only realized based on the union strength. It has often been asserted that unions in Africa are too weak to bargain effectively (Roberts and Greyfie De Belle Combe, 2007). It is in the light of this that lecturers across different universities in Nigeria came together in (1978) to form the Academic Staff Union of Universities (ASUU).

The union was formed with the objectives of establishing and maintaining high standard of academic performances and proper condition of service for its members among others. Therefore, the workplace is a place of power relations between the workers and the employer. This is as a result of the existence of more divergent views and interest than the convergent ones they have. So it is a situation whereby the party that wields together power tends to take the greater share of the workplace benefits. Furthermore, unions have to be strong if they are to achieve the demands of their members if otherwise, the unions would fall for the cheapest exploitations of their employers and these would be a detriment to the union structures and also definitely affect the union strength which would eventually give the employee and upper hand in the workplace. Therefore, the stronger the structure of the trade union, the stronger its strength and the better it will achieve its aims and objectives.

1.2       STATEMENT OF THE PROBLEM

It can be understood from the foregoing that the responsibilities of the trade union are enormous and its problems are legendary. Though, unions exist virtually in every sector of the economy, the Academic system is no exemption. The Union (ASUU) strength in the workplace happens to be in doubt because many of their problems arises as a result of non-compliance to negotiated agreement by either of the two parties involved in the negotiation process. Basically, there are several demands of ASUU from the government to improve the working condition of their members and to some extent; this has not been meaningfully achieved. In this sense, if the demands of ASUU are not well taken care of the leadership of ASUU deems it fit to call upon their members across the nation to embark on a “STRIKE ACTION” whenever their negotiation with the government fails. Also, most strike actions embarked on by ASUU is as a result of the fact that most agreement entered into by the union (ASUU) and the government are not always implemented by the government and this has been destructive to the academic field thereby creating unnecessary criticisms from various social institutions such as Religious Institutions, family, peer groups etc.

Furthermore, ASUU in their desire to improve the employment conditions of their members are faced with problems from successive government in various negotiations in the course of agitating for good working conditions of their members. The union found it so difficult to influence government policies, practices and Actions. Therefore, when collective bargaining, joint negotiations, statutory labour codes fails, the only machinery left to ASUU to express their grievance is to embark on “STRIKE” which eventually affects the nation as a whole.

1.3       OBJECTIVES OF THE STUDY

The purpose of this study is to:

i) To find out the effectiveness of the existing structure of ASUU.

ii)  To determine the effect of this structure on its activities.

iii) To examine the influence of the structure on ASUU negotiation strategy

iv) To examine various demands of ASUU members.

v)  To determine ASUU authority/government relationship

vi) To determine the extent at which ASUU has satisfied the interest of its members.

vii) To provide plausible recommendations for improved ASUU performance and university Education.

1.4  RESEARCH QUESTIONS

1) Is there a relationship between ASUU structure and working conditions of its members?

2) Has the existing structure of ASUU influenced its negotiating strategy?

3) What effect does the mobilization strategy of ASUU have on its members?

4) Is there a relationship between ASUU’s structure and public responses?

1.5       STATEMENT OF HYPOTHESES

1. H0: There is no relationship between the existing structure of ASUU and the negotiation strategy of its members

H1:  There is a significant relationship between the existing structure of ASUU and the negotiation strategy of its members.

2. H0: The mobilization strategy of ASUU does not have any effect on its members’ responses

H1: The mobilization strategy of ASUU has a significant effect on its members’ responses

3. H0: There is no significant relationship between ASUU’s structure and conflict among its members

H1: There is significant relationship between ASUU’s structure and conflict among its members

1.6   SCOPE AND LIMITATION OF THE STUDY

Though, we have four (4) unions in the University system of Nigeria, but the study would be restricted to just one of the unions which is the Academic Staff Unions of Universities (ASUU). This is as a result of time and financial constraint. Also, there are various issues as regards trade union but this study shall lay more emphases on trade union structure and union strength. Nevertheless, other issues that affect trade unions would be discussed briefly as long as it has some level of relevance to the project topic.

1.7   SIGNIFICANCE OF THE STUDY

This study shall be of significance to various members of the ASUU Union in the University because of the alternative administrative and governance approach it would come up with. The study would also be of relevance to other students who would wish to conduct further studies in this topic of all levels be it undergraduate or post graduate who virtually intends to study the structures and strength of trade union critically.

1.8   DEFINITION OF TERMS

 Trade Union: Any combination of workers or employers whether temporary or permanent, the purpose of which is to regulate the terms and conditions of employment of workers whether the combination in question, would or not be a part this act, be an unlawful combination by reason of its purpose being in restaurant of trade and whether its purposes do not include limitations to its members (The Nigerian Trade Union Act of 1973 section 1).

Trade Union Structure: The principles which underlie the pattern of union organization: the criteria of inclusion and exclusion, the laws of demarcation and division (Hyman 2006)

Strength: The power to induce the taking of a course of action on the embracing of a point of view by means of argument on entreaty. It is also, the permanent of virtue of power to resist stress or force.

Strike: This is defined as the temporary stoppage of work in future pursuance of a grievance or a demand.

Collective Bargaining: (ILO) defined collective bargaining as “negotiation of working conditions and terms of employment between employers, a group of employers or one or more employer’s organization on one hand, and the representative of workers organization on the other hand, with a view to reaching an agreement.

Bargaining Power: Prof Tayo Fashoyin, defined bargaining power as the ability of one party in the negotiation to secure agreement on its own term or at a point of closest to his preferred position. Bargaining power is transitory in nature. It is not the monopoly of one party.

Negotiation: This is a formal discussion between two or more people who are trying to reach an agreement.

Demand: This is a very firm request for certain things or action in order to carry out specific taste and functions.

Grievances: This is a negative reaction or expression displayed by individual or group of individuals in disagreement to certain rule, Acts, negotiations, agreement, policies etc.

Collective Agreement: Section 47 of the Trade Dispute Act CAP 432, laws of the federation of Nigeria 1990 defines collective agreements as any agreement in writing for the settlement of disputes and relating to terms of employment and physical conditions of work of any person.

1.9    ORGANIZATION OF THE STUDY

This research work is divided into five chapter’s that is chapter one to five. The chapter is the introduction part, which covers the background of the study, statement of the problem, the objectives of the study, research hypothesis, significance of the study, scope and delimitations of the study, definitions of terms and organization of the study. Chapter two contains literature review and theoretical framework. Chapter three contains the research methodology which covers the research method (instrument) or approach, the population of the study, the sample and sampling procedure, the method of data collection and method of data analysis and interpretations. Chapter four contains the data presentation, analysis and interpretations. In this chapter, the data gathered from the respondents will be presented analyzed and interpreted. Chapter five contains the summary, conclusion and recommendations based on the result in chapter four.

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