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PRODUCT  TOPIC :  CAUSES OF POOR PERFORMANCE E OF GOVERNMENT OWNED COMPANIES IN EBONYI STATE.

PROJECT  TOPIC :  CAUSES OF POOR PERFORMANCE E OF GOVERNMENT OWNED COMPANIES IN EBONYI STATE.

 

CHAPTER ONE 

INTRODUCTION

  • BACKGROUND OF THE STUDY

                Nigeria government owned companies have grown rapidly in the past four decades. The federal government alone has a substantial number of such enterprises, at least one third of such one completely owned by the government. These companies provide one service or the other engage in industrial manufacturing unlike the private sector enterepreneur whose primary objectives is profit maximization or return on his investment, but government’s objectives is rarely mere profit maximization.

Apart from providing the basic infrastructures, government invests in these companies with the hope that they would be self-financing, and expand rapidly in such a way that they would create employment opportunities for the teeming unemployed.

It expects that they would contribute substantially to the cross national product, socio-economic development, modernization by developing abilities of the indigenous.

However, available records show that returns on investment have been extremely poor, according to big time federal government investments in 150 companies and corporation yielded less than one percent by way of dividends, bonus issues, loans payment and interest payments. They therefore constitute fiscal and financial burdens on the various governments.

Presently, most of the government owned companies do not pay taxes, most of their investment cost are covered by capital transfers. In most cases, their cash suprises is less than their depreciation, and in some instances, cash flow does not even cover running costs. At managerial and operative performance levels, the problem is also a general one. These companies generally have generated little and this had led to stunted growth, which have been limited by the extent of the availability of resources they receive from government. In worst situations, some of these companies have led various governments into huge losses of capital investment (capital depreciation) or government budgets and a substantial sources of external debts.

Inspite of all these, the most disturbing aspect of these dying and suffering companies are sold to the private entrepreneur, they will begin to turn out enviable profit.

To Pandy (1997) The major determining factor of the effectiveness and efficiency of an enterprises is not weather it is publicity or privately owned, but how it is managed.

Hence the study will look into the factors that led to poor performance of government owned companies, suggest solutions to the problem and make recommendations on the appropriate ways of improving their performance.

  • BRIEF BACKGROUND OF THE STUDY, EBONYI HOTEL LIMITED ABAKALIKI

The Ebonyi hotel limited was at it inception on November 8th, 1988, known as Ebonyi limited formerly in Enugu  State. The hotel was onwed by Dr. Alex Ekwueme former vice president of Nigeria. The hotel was under a private company then, it is answering Ebonyi hotel but it a branch of modotels Nigeria limited. Within that period the modotels hotel has many branches Ebonyi hotel limited, chalk valley hotel limited Oko, modotels hotel limited Owerri  and modotel Nigeria limited Enugu.

Ebonyi hotel limited was runned as a private company till the creation of the Ebonyi State when the hotel was sold. The Ebonyi hotel limited was sold on 20th, May 2003, during the leadership of Dr. Sam Omeni Egwu, the first Governor of Ebonyi State.

Ebonyi hotel limited Abakaliki is wholly government owned company formed by the development of government of the State. As a result of political region, the Ebonyi hotel is wholly owned by the Ebonyi State government.

  • STATEMENT OF PROBLEM

The company-Ebonyi hotel limited Abakaliki had operated at a loss for the past few years because it cannot generate sufficient cash from their operation due to lack of raw materials. This is attributed to unavailability of working capital. The present capacity utilization for the company are hardly up to 20%-result to losses in labour hour which are still on the payroll. Trade creditors are demanding the payback of their credit facilities. This company are forced to retrench some workers and if these problems persist much longer, they might be forced to close up.

PRODUCT  TOPIC :  CAUSES OF POOR PERFORMANCE E OF GOVERNMENT OWNED COMPANIES IN EBONYI STATE.

The question now becomes “what should government do in circumstances to save the situation” should government refuse further financial aid and over look the company?” or should it oblige to further financial assistance for the resuscitation of this company whose future performance it is not yet sure? This is a financial decision problem which the study attempts possible solutions.

  • OBJECTIVES OF THE STUDY

The objectives of the study are the following.

  1. To examine the operation and performance of this company
  2. To find out factors responsible for the company persistent poor performance.
  3. To discover which factors played keyroll in affecting this company operational performance.
  4. To find evaluate factors that are most prominent and most responsible in running government owned
    • SIGNIFICANCE OF THE STUDY

These government owned companies have acted as drain-pipes in the nations wealth both at federal and state levels. The study is therefore relevant first to various government agencies involved in making investment decisions with the public funds. It is equally relevant to policy-making bodies of government as far as participation in commercial enterprises is concerned. It is hoped that this study will benefit top management of these government owned companies whose operations are not steady, by providing a kind of check-up list for efficient business management. For the academic and the purpose of arousing deeper and genuine interest on the subject matter for further research aimed at eliminating these terrible situations from our system.

  • SCOPE OF THE STUDY

The study covered one company in Ebonyi State. Normally, the testing of hypothesis of this nature require a random sampling drawn from a small population to validate the initial postulation that most these government owned  companies in Ebonyi State perform below expectation.

The study does not ignore this important research requirement, but sees the concentration of the Ebonyi State only as not neglecting because the validity of the generalization because it has become an accepted fact that most government owned companies perform badly. For this reason, the researcher believes that what is obtain in rat village is obtainable in the rabbit village also.

Therefore my findings in this company would be applicable to other government owned companies.

  • LIMITATIONS OF THE STUDY

The actual limitation of this study was the difficulties and unwillingness of the management agencies of the company being studied to release need information records and some documents. These documents, they said are not for public consumption. Both the original book of accounts were not released, annual reports and financial statements were not available.

  • RESEARCH QUESTIONS

This study or research shall at the end try to give answers to the following questions.

  1. What factors are responsible for the persistent poor performance of government owned companies in Ebonyi State?
  2. What are the factors playing a key role in affecting these companies operational performance?
  3. What are the general factors that one most prominent and most responsible in running government owned companies.
  • DEFINITION OF TERMS

Employment: This involves work especially when it is done to earn money.

Development: It is the gradual growth of some thing so that it becomes more advanced and stronger.

Modernization: To make a system, method, etc, more modern and more suitable for use at the present time.

Companies: This is a business organization that makes money by producing goods and services.

Cash flow: This is the movement of money into and out of business as goods are bought and sold.

Entrepreneurs: This is a person who makes money by starting or running businesses, especially when this involves financial risks.

PRODUCT  TOPIC :  CAUSES OF POOR PERFORMANCE E OF GOVERNMENT OWNED COMPANIES IN EBONYI STATE.

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