Financing and Accounting in the NigerianRailway Corporation
In this study attempt was made to appraise the financing and accounting of the Nigerian Railway Corporation. Data were collected and analysed. The data were collected through interviews with the Chief Accountant of the Enugu District of the Corporation, as well as from monthly financial transcripts (from the
Enugu District to the Corporation’s Headquarters) and published accounts of the Corporation, from 1993 to 1997. The data were analysed using cross tabulations, percentages, graphs, regression analysis and logical deductions. Based on the collected data a hypothesis was formulated and tested using a statistical technique, t-distribution. Reviews of related literature by distinguished authors were also carried out. After carefuIl analysis, it was discovered that the Corporation maintains proper accounting practice. It was also observed that the corporation is not adequately funded and that it is facing extreme liquidity problems.
Finally, there was proof that the Corporation can generate more revenue internally if it were able to receive increased external financial
assistance to enable it upgrade and up-date its facilities, particularly the rail tracks which had become obsolete and, above aIl, to generate more
revenue. Recommendations were finlally made for steps to be taken to substantially increase the financing of the corporation either directly by
the Federal Government or through privatization of the Corporation to enable private individuals inject the required funds for reconstruction
BACK TO THE STUDY
The history of parastatals/public corporations is traceable to the 18th century when British Municipal Authorities started running some public enterprises which manufactured gases.’ In the 19th Century, they began to supply electricity and tram-way services. In 1857 a special body that was created and designed to control the various facilities on the River mercy with the establishment of the Mercy Docks and Habour Board. The role of government enterprises in the economic development of modern nations cannot be over-emphasized. The unique historical circumstances- of the developing countries have made government involvement or extensive intervention in most sectors of the economy a necessity, Indeed, even the governments sf the advanced nations of the world at some stages in their own history were also compelled to intervene decisively in the shaping and growth of their respective
economies. Even in the United States of America regarded as a model of free-enterprise economy. state-owned enterprises operate public utilities
in some parts of that country.
1.1 BACKGROUND OF THE STUDY
When the colonial government of Nigeria conceived the railway idea it was primarily to serve administrative and economic purposes. Administratively, it was to link the southern and northern Nigeria to facilitate governance. Economically, it was to move agricultural produce from the hinterland to the sea ports for shipment to Europe as well as for the movement of the heterogeneous imported goods from Europe to various pads of Nigeria. The social aspect of rail services, namely, the movement of people, was naturally coincidental to the administrative and economic purposes. The colonial government commenced construction of the railway in 1898. The laying of the tracks started from Ebute-Metta, Lagos. The railway system which was steam-driven until the late 1 9601s, experienced continued expansion until it achieved 3,505 kilometer routes in 1964.
According to a brief issued in 1998 by the Sole Administrator of the Nigerian Railway Corporation (the Corporation had no Board at the time
of this study), the railway system in Nigeria comprises 3,505 Industries of the narrow gauge (3 feet 6 inches) single track, with steal/wood
sleepers.2 Total trackage including loops, sidings and yard lines was 4,332 kilometers. Early railway development avoided as far as possible, deep
cuttings, high embankments, long bridge spans, tunnels and viaducts with the result that the rail lines ran diagonally from South-West to North-East
and from South-East to North-West with junctions at Kafanchan and Kaduna. These lines were considered to be idea! for movement from hinterland to the coast for international trade but not favorable for movement of traffic which would have favored internal east-west development. The establishment of the Railways and its needs gave rise to, or facilitated. the development of industries between 19 14 and 1924.
The Nigerian Railway collaborated with Public Works Department in the early years of electricity undertaking which preceded the Electricity
Corporation of Nigeria (ECN) and powered electricity for Enugu and Minna. As for Ports Authority, ports management was a Nigerian
Railway corporation, until 1952 when Ports Authority grew out of the Nigerian Railway and Marine Department. The present Nigerian Railway Corporation was constituted by the enabling Act of January. 1955. The genera! objectives of the corporation as specified in the Act could be summarized as follows:
(i) Carriage of passengers and goods in a manner that will: – offer full value for money,
– meet cost of operations,
– improve market share and quality of service,
– ensure safety of operations and maximum efficiency.
(ii) Meet social responsibility in a manner that will meet the
– rail users.
– industry, and
– the general public.
The answer to a question as to whether the Nigerian Railways Corporation was living up to the above objectives is not far fetched. In fact, the 100-year old Corporation had experienced decades of downward slide. Although the Federal Government of Nigeria had introduced one or two redemptive measures, it was doubtful if these measures achieved or would achieve the desired result. One of such measures was the invitation of an Indian company. THE RITES.~ to manage the Railway under contract for three years from 1979 to 1982. This contract had little or no impact on the declining performance of the railway, generally speaking. Another measure which was still on-going, was a bi-lateral agreement with the Peoples RepubIic of China, worked out in 1995. Under this pact which was already being executed, the Chinese experts from China Civil Engineering Construction Corporation (CCECC), would be working as technical partners to the NRC under the leadership of the NRC Management. .The bilateral agreement was for a period of three years as the first phase of a fifteen-year reconstruction plan geared towards transforming the railway system in Nigeria. The programme which was currently being executed included
(i) Survey and design for rehabilitation of existing 4288 km railway lines.
jii) Track rehabilitation including formation maintenance of 3288 km trunk lines, reduction of dangerous curves and easing of steep gradients, signaling renewaI for 180 stations and maintenance of 2744m bridges.
(iii) Supply of locomotives and rolling stock, including 50 locomotives, 150 coaches, 400 wagons and 100 guard vans which were later substituted for 20 buses. During the course of this study. a report came that the Federal government had concluded plans to re-invite THE RITES of India when the Chinese might have left in January, 2000. The expectations were that THE RITES would run the trains, continue with the repairs of rail-lines, train rail-workers, import new locomotive engines and rolling stock as well as administer the corporation there were no indications as to hob long the Indians would manage the Corporation but their mandate was to turn the fortunes of the parastatal around. What is evident from the foregoing is that there is complete understanding
by all concerned that all is not well with the Corporation. What is not clear yet is whether the problem had been properly identified.
11.2 THE ORGANIZATIONAL STRUCTURE OF NRC
The NRC is a parastatal under the Federal Ministry of Transport. At the apex ;of the hierarchical structure of the Nigerian Railway Corporation is the Sole Administrator. Following the Sole Administrator are eight directors who are in charge of different areas of theCorporation’s operations and management. The directors include:
– Director of Administration (DA)
– Director of Civil Engineering (DCE)
– Director of Operations (DOPS)
– Director of Mechanical and Electrical Engineering (DMEE)
– Director of Finance (DF)
– Director of Health (DH)
– Director of New Lines (DNL)
– Director of Internal Audit (DIA)
The Corporation’s head office at Abuja is being relocated to Lagos on the orders of President Olusegun Obasanjo. It has seven districts, headed by
district managers, located strategically in various parts of the country in order to ease operational difficulties. The districts and there locations are
– Lagos District (Ebute Metta)
– Western District (Ibadan)
– Northern District (Zaria)
– North-Central District (Kafanchan)
– Eastern District (Enugu)
– North-Eastern District (Bauchi)
– North-Western District (Mina)
Functionally, activities are organised in the professional department.both at the headquarters and at the Districts. There are nine professional departments namely:
– Mechanical and Electrical Engineering
– Signal and Comlnunications
– Operating and Commercial
– Finance and Accounts
– Internal Audit
– New Lines
Financing and Accounting in the NigerianRailway Corporation
1.3 STATEMENT OF THE PROBLEM
Financing deals with ways and means of raising funds in a situation of scarcity and competition. Accounting, on the other hand, deals with custodianship of funds,recording of and reporting on financial transactions, in such a manner as to provide bases for assessment of performance and for decision making. Without doubt, one of the most critical problems of the Nigerian Railway Corporation is cash flow problem which affected the purchase of spare parts and payment of salaries. Cash flow problem also is responsible for the Corporation’s inadequate infrastructural support in terms of locomotives, rolling stocks
(passenger coaches and goods wagons), rehabilitation of tracks, bridges, signals and other administrative and technical problems which affected its
operations adversely. It should be noted that the Corporation has not been able to increase the kilometer route achieved since 1964 except for a recent attempt at linking Ajokuta Steel mill with Warri, the construction of which might not have reached 100 kilornetres.
In effect, the Corporation is still operating on the old tracks which were considered not suitable for the modern trend in the industry. In effect, this octopus of a transport corporation which took off on 3rd October, 1912, with a whooping staff strength of 29,263 and a network of 243 stations dotting the six geo-political zones of Nigeria appeared not to have kept faith with the objectives for which it was founded. The problem for the study therefore is to assess to what extent. if any. financing and accounting had impacted on the obviously poor performance of the Nigerian Railway Corporation.