PRIME POLYTCHNIC AJOKOTA

LECTURE MATERIAL

ON

INRODUCTION TO PUBLIC
ENETRPRISE

LECTURERER: MR DANIEL
CHIMEBERE
INTRODUCTION TO PUBLIC ENTERPRISE AND MANAGEMENT

Definition of Public Enterprises

The multiplicity and diversity of the perspectives from which individual scholars and
practitioners view public enterprise have naturally resulted in a plethora of definitions.
However, certain key elements remain prominent in these definitions of public
enterprises. Let’s examine some of the popular definitions.

According to Obikeze and Anthony (2004), public enterprise refers to an organization

that is set up as a corporate body and as part of the governmental apparatus for
entrepreneurial or entrepreneurial-like objectives. They emerge as a result of
government acting in the capacity of an entrepreneur.

Public enterprises otherwise known as public corporations are public institutions or

government agencies, which are created, solely owned and managed by the state to
run certain activities of a specialized nature, requiring business-like administration.
They are established by Acts of Parliament, which define their powers, functions,
structure and their relationship with other government institutions.
(Eneanya, 2020)
A public enterprise is a publicly-owned enterprise that has been chartered under
federal, state or local government law for a particular business or financial purpose
(Dimock and Dimock, 1970:69).

The United Nations (1971), defined a public enterprise as an incorporated or large

unincorporated enterprise in which public authorities hold a majority of the shares
and/or can exercise control over management decisions.

Public enterprise also refers to an economic organization belonging wholly or partly

to the government and which has a legal status, financial autonomy, and is under state
control. It includes those "mixed enterprises" which are controlled by the state as well
as those enterprises which are, on occasion, established for nonbusiness purposes to
escape the shackles of existing bureaucracy.

Public enterprises provide many services which include utilities such as

telecommunications, electricity, gas supplies, water and sewage; transport such as
airline, rail, shipping services and urban public transport; financial services notably
banks and insurance, motor vehicles; companies such as tobacco and alcohol
companies.
EXAMPLES OF PUBLIC ENTERPRISES IN NIGERIA

They include the Nigerian Railway Corporation (NRC), Central Bank of Nigeria,
(CBN), Water Boards/Water corporations across the country, Nigerian Postal Service,
Nigerian Defense Industries Corporation, National Universities Commission, and
several government-owned or controlled manufacturing enterprises (breweries,
textiles, cement, steel, flour, vehicle assembly plants (PAN) fertiliser company,
mining etc.)

Meaning of Public Enterprises

Going by the definitions presented above, public enterprises essentially have the
features of several individuals who act as one. As such, the enterprise is viewed as an
artificial person authorised by law to carry on particular activities and functions.

It is described as a corporate body created by the legislature with defined powers and
functions and independently having a clear-cut jurisdiction over a specified area or
over a particular type of commercial activity (Ekhator, 2002:167).

As a corporate body, a public enterprise has a legal personality separate from that of
the government that establishes it. It can own property, enter into contracts, and sue
and be sued.

Public enterprise is part of government apparatus and three implications are hereby
highlighted.

Firstly, a public enterprise, by virtue of its intricate relationship with government, is

an instrument of public policy and its primary mission is in connection with
governmental objectives and programmes. It is therefore naturally under
governmental control.

Secondly, a public enterprise, by its nature, mostly manages public resources,

especially public money and this means that attention must be paid to mechanisms for
enforcing accountability.

Thirdly, the combination of financial and economic objectives with social and
political aims invariably makes it difficult to devise appropriate performance
measurement instruments (Obikeze and Anthony, 2004: 248-249).
OBJECTIVES OF PUBLIC ENTERPRISES

The major objectives of public enterprises could be summarized as follows:

a)To promote rapid economic growth and industrialization of the country and create
the necessary infrastructure for economic development. Public enterprises are
established with the objective of fast-tracking economic growth and industrialization.
The setting up of public enterprises to engage in economic and productive activities
boosts the gross domestic product (GDP) of a country and provides the infrastructure
needed for economic.

b)To earn a return on investment and thus generate resources for development. Public
enterprises are established in certain cases to make returns (profits or revenue) so as to
give the government more resources needed to execute development projects and
programs. However, making returns is not the major purpose of governments for
setting up public enterprises.

c)To promote redistribution of income and wealth. This objective of public enterprises
means that collective resources of the people (commonwealth) are used to provide
welfare services to certain disadvantaged segments of the population such as the aged,
unemployed, handicapped, poor, etc.

d)To create employment opportunities. One of the main objectives of setting up public
enterprises is to provide jobs for the citizenry. Public enterprises provide an
opportunity for people to get enlisted into public service.

e)To promote balanced regional development. Public enterprises are established with
the objective of promoting balanced regional development since public enterprises are
spread across all regions of the country. The establishment of public institutions and
Organizations in different regions and geopolitical zones of the country is to achieve
this objective.

f)To assist the development of small scale and ancillary industries. Small scale and
ancillary industries depend on certain services provided by public enterprises to
survive and grow. The services of Power Holding Company of Nigeria (PHCN),
Nigeria Port Authority (NPA), Bank of Industry (BOI), etc. aid the growth of small
scale and ancillary industries.
g)To promote import substitution, and to save and earn foreign exchange for the
economy. One main objective of government setting up public enterprises is to
encourage the production of certain goods and services in order to discourage their
importation; thus substituting for imports.

ORIGIN OF PUBLIC ENTERPRISES

The origin of public enterprises could be traced to the early 20th century when
government intervened in economic management through departmental organizations
which did not involve creating autonomous public bodies. In the alternative, it granted
license to a private enterprise for the management of natural or national monopolies
and where public bodies were involved in managing economic ventures, such bodies
did not enjoy financial autonomy. Public enterprises made a very strong appearance
after World War I for a variety of reasons, including managing the consequences of
the war, especially the economic crisis of the 1930s.

However, the public enterprise sector developed rapidly because of the spread of
Keynesian Interventionist. Between the two World Wars, political and ideological
considerations prompted the establishment of parastatals in the former colonial
metropolis.
The movement toward the establishment of public enterprises received a new impetus
after World War II for reasons related to both ideological considerations and economic
efficiency. Economic nationalism and the success of the Soviet Revolution paved the
way for nationalization and strong state intervention in national economic
management. When the former European colonies in Africa became independent in
the late 1950s and the 1960s, there were only a few public enterprises in different
countries. To attain some measure of economic independence and fast-track national
development, the public enterprise sector then developed at a tremendous pace in the
immediate years after independence through the 1980s and a huge public enterprise
sector was firmly established in most countries.

The weakness of the private sector, the lack of infrastructure, the low level of social
and human development, and the unfavorable social, economic and financial
environment are some of the reasons given to explain the proliferation of public
enterprises in all areas of economic and social development. Other reasons include the
urge to generate revenue to limit foreign economic domination and to provide a
substitute for a private initiative where it was not forthcoming.
Origin of Public Enterprises in Nigeria
Public enterprises in Nigeria own their early origins to Britain, her colonial mentor.
This is because early public sector organizations were established by Britain to
facilitate their exploitation of the country’s resources and potential. The origin,
growth and development of public enterprises in Nigeria can be categorized into four
phases as submitted by Ozor (2004). They are:

I. The colonial (foundation) period (1900 –1960)

ii.Independence (consolidation) period (1960 –1970)
Iii.Oil boom (expansion) period (1970 –1980)
Iv.Economic recession (privatization and commercialization) period (1980 -Date)

Phase I: The Colonial (Foundation) Period (1900 –1960):

This phase witnessed the first set of public enterprises owned by the government.
However, the establishment of the public enterprises by the colonial master was not
borne out of the need to promote socioeconomic development but out of sheer
exploitative interests of the colonial master. Britain was compelled to embark on the
provision of some infrastructure without which the colonial exploitative policies of
her overseas territories would not have been accomplished. Thus, the British colonial
Nigerian government began to construct some semblance of infrastructure such as
railways, ports, roads, airways, financial institutions (e.g commercial banks) and
utilities such as electricity, water works, etc. According to Ozor (2004), it was under
this condition that the nucleus of the Nigerian public enterprises emerged.
Corroborating this view, Ake (1981) submitted that the colonizers could not exploit
the colony’s wealth at no cost at all. In some cases, the extraction of the colony’s
resources necessitated some investments in infrastructural development such as roads,
water resources, railways, electricity, administrative structures, etc.

In order to evacuate the raw materials, especially ones from the producing centers to
the coast for onward shipment to Europe, the railway system was established by the
colonial government and Nigeria Railway Corporation (NRC) was established in 1955
to manage the railway system. In the same token, ports were established and
controlled by the Nigerian Ports Authority (NPA) in 1954 to manage water
transportation. Air transportation was also established with the name Nigeria Airways
Corporation in 1957. Post and telegraph were also established during this period. In
the old industry, the Nigerian National Petroleum Corporation was established to
oversee the activities of players in the sector. In a nutshell, many enterprises including
banks, companies and corporations were established and managed by the colonial
government through the Royal Niger Company.

Phase II: Independence (Consolidation) Period (1960 1970)

At independence, the enterprises were inherited by the Nigerian national government.
The Nigerian government soon realized that political independence was not matched
by economic independence and that the Nigerian economy lacked a home base. Public
enterprises established during the colonial period were few, weak and could not
satisfy all thirsty aspirations generated by the hopes and expectations of political
independence. This situation was aggravated by the fact that there were no strong
local capitalists and native entrepreneurs to fill the yearning gap to carry on the
economic development of the country. As a result of this lack of private indigenous
funds, personnel etc. required for such economic development, the government had to
embark on the establishment of public enterprises since it was the only body capable
of generating enough of the required capital and personnel. Consequently, the
Nigerian government (both the federal and the then regional governments) established
public enterprises which championed economic development and social upliftment in
the country. It was during this time that such enterprises as the Central Water
Transportation Company, Nigerian National Oil Company (NNOC), Nigerian Steel
Development Authority, Nigerian External Telecommunication (NET), (state) Rural
Electrification Boards, etc. were floated.

Phase III: Oil Boom (Expansion) Period (1970 –1980)

The failure of the first national development plan with regard to the development of a
vibrant economy dominated by the private sector, which was caused by the weakness
of the indigenous entrepreneurs and machinations of foreign powers, made the
Nigerian government change its policy from that of seeing private sector as the main
engine of development to that of the government itself becoming the major purveyor
of economic and social development through the use of public enterprises. This,
therefore, marked the beginning of another phase in the growth and development of
public enterprises in Nigeria.

Public enterprises during this phase assumed a stimulator and accelerator of national
development in the face of capital scarcity and structural defects in private business
organizations. Presumably, public enterprises were to become the main engine of
growth rather being one of the instruments of promoting the development of an
economy in which the private sector would be dominating. The economy was very
buoyant during the period under discussion and consequently made it possible for the
government to expand, create and finance the ever-increasing number of public
Enterprises.
Indeed, because of the abundance of resources made possible by the revenues from
crude oil earnings, the inherited public enterprises were expanded and new ones were
created during this period. The ports were improved as further dredging was carried
out, the rail system improve by the purchase of steam locomotives which makes it
faster and more comfortable and air transportation expanded with the acquisition of
more aircraft by the Nigeria Airways corporation.

Phase IV: Economic Recession (Privatization and Commercialization) Period

(1980 -Date)
During this phase, the tempo with which public enterprises were expanded and
consolidated had waned. This was as a result of the gap between revenue and costs of
these enterprises continued to widen and, in many cases, losses started to appear.
Government blamed the poor performance of the public enterprises on managerial
inefficiency but on the other hand, the chief executives of these enterprises tried to
explain it In terms of intrusive government policies and obstructive controls which of
course, were easily discernable. There was also massive corruption visible
everywhere both within the government and public enterprises.

The decline in oil revenues which occurred during this period brought the lapses and
the financial burden of the public enterprises on the government to the limelight,
hence the questioning for the first time, of the very rationale of public enterprises as
an engine of growth. In relation to the state of the Nigerian economy, which made
inefficiency of the public enterprises open and therefore vulnerable to attacks and
mutations for their eventual privatization. According to Usman (1987), this was
triggered by the collapse of the world market price as well as the decline in the
volume of crude oil exports. Nigeria depends almost completely on the export of
crude oil for foreign exchange earnings. The continued deterioration of government
fiscal fortunes made government reverse its policy of using public enterprises as an
engine of growth and development. This was partly because of the poor performance
and partly because of the generally poor state of the Nigerian economy. It was this
situation that made ex-president Ibrahim Babangida introduced the Structural
Adjustment Programme (SAP) in Nigeria, in which privatization was one of its major
cornerstone components. It was in this way that public enterprises in Nigeria grew and
developed until the present stage when the trend reversed to privatization and
commercialization.

The enabling legislation-the Privatization and Commercialization Decree was

promulgated in 1988, and during the first phase (1988-1993), a total of 73 public
enterprises in Nigeria were privatized/commercialized (Ozor, 2004). Since then, a
significant number of Nigeria’s public enterprises have either been privatized or
commercialized.

CHARACTERISTICS, CREATION AND REASONS FOR THE

ESTABLISHMENT OF PUBLIC ENTERPRISE
Public enterprises share certain characteristics in common, they are as follows:

i. Creation of an Act of parliament: A public enterprise comes into existence as a

result of an act passed by the legislature or a decree under military rule. Public
enterprise also defines its aims and objectives, powers and duties, immunities, the
form management and relationship with established departments and ministries.

ii.A legal person: It is a legal person, capable of suing and being sued, entering into
contracts, acquiring and owing property in its own name and can also dispose of
property than ordinary government departments
.
iii. Government ownership and management: Public enterprises are owned and
managed by the central or state government, or by the local authority. The government
may either wholly own the public enterprises or the ownership may partly be with the
government and partly with the private industrialists and the public. In any case, the
control, management and ownership remain primarily with the government.

iv. Considerable financial freedom: Except for appropriations to produce capital or to

cover losses, a public enterprise is usually independently financed. It obtains its funds
from the treasury or the public and from revenues derived from the sale of goods and
services. It is authorized to use and reuse its revenues.

v. Public welfare: Public enterprises are not guided by profit motive.

Their major focus is on providing services or commodities at reasonable prices which
can be afforded by the generality of the citizenry. Public health and educational
institutions in Nigeria provide services at a highly subsidised rate so that they can be
afforded by the masses.

vi. Public utility services: Public sector enterprises concentrate on providing public
utility services like transport, electricity, telecommunication, health, etc.

vii. Public accountability: Public enterprises are governed by public policies

formulated by the government and are accountable to the legislature.

viii. Excessive formalities: The government rules and regulations force the public
enterprises to observe excessive formalities in their operations. This makes the task of
management very sensitive and cumbersome.

ix. It is ordinarily not subject to the budget, account and audit laws and procedures
applicable to government departments. Their audit is to be done by the Accountant-
General of Nigeria or any other person appointed by him. However, both the accounts
and audit are commercial in nature.
CREATION OF PUBLIC ENTERPRISES
The creation of a public enterprise raises some important legal issues. Whether a
government is setting up a parastatal from scratch or is taking over ventures belonging
to private interest, the choice of the legal status of the enterprises depends greatly on
the prevailing constitutional and legal provisions on government intervention in
business and on private property protection.

i. Creating a Public Enterprise from Scratch In a democratic setting, the primary

responsibility lies with the legislature. This is to restrict individual rights and public
liberties, as it affects free competition and whatever reduces the freedom to embark on
economic activity in a society that recognizes private initiative must be backed by
law.

ii. Taking over Private Business

The process of taking over private enterprises or transferring the ownership of private
enterprises to the government is called nationalisation. Enabling law is needed to
affect such a transfer, in some cases the enterprise being taken over is specifically
mentioned in the law, but in other cases, some general criteria are indicated to
delineate the activity or type of entities concerned.

iii. Dissolving a Public Enterprise Public enterprise can be dissolved by liquidation, a

transfer to private ownership (privatisation), or a merger with another public
enterprise.
In the last case, the executive arm of government can handle this, but in other cases,
an act of parliament is required (Adamolekun, 2002).

REASONS FOR THE ESTABLISHMENT OF PUBLIC ENTERPRISES

There are several reasons for the establishment of public enterprises. They are
outlined below:
i.The desire to use the public enterprise as an instrument of effective plan
implementation in a context where it appears futile to devise a development plan for
the private sector.
ii. The need to secure economic independence. This is done to stave off the
domination of the economy by foreign entrepreneurs.
iii.The urgent desire to assure government control over ‘strategic’ sectors of the
economy (e.g. central banking, broadcasting, iron and steel, roads, shipping, etc.).
iv.The need to separate some activities from the civil service and allow more
autonomy in their running.
v.The perceived need to provide employment for the citizens in a context where the
private sector offers very limited employment opportunities.
vi.The need to ensure state control of key profitable enterprises with a view to
generating revenues that will add to the available national capital for financing
development programmes and projects.
vii.The desire of some socialist-orientated regimes to use state control of key
profitable enterprises to pursue the objectives of preventing the concentration of
wealth or of the means of production and exchange in the hands of a few individuals
or of a group (i.e. promoting equitable distribution of wealth). (Obikeze & Anthony,
2004: 253).

CLASSIFICATIONS OF PUBLIC ENTERPRISES

There is no single, best way of categorizing public enterprises, and no classification is
fully satisfactory in all circumstances. In general, several categories of public
enterprises can be identified on the basis of their origins, ownership, activities or
domains of intervention, and funding mechanisms. More prominently, public
enterprises have been classified

Classification of Public Enterprises by Economic Activities According to Burk

head (1956),public enterprises might be classified according to the economic
activities they conduct. Accordingly, there are two types of public enterprise.

i. Enterprises engaging in financial transactions, e.g. Central Bank of Nigeria

(CBN), Nigerian Industrial Development Bank (NIDB), National Insurance
Corporation of Nigeria (NICON), etc.
ii. Enterprises engaging in the production of goods and rendering of services. E.g.
Transport, water, electricity, education, health, etc.

As you can see above, this classification of public enterprises is basically centred on
the nature or type of economic activities that a public enterprise has been mandated by
the law to engage in.

Classification of Public Enterprises by Legal Consideration

According to Laleye cited Adamolekun (2005), a public enterprise takes one of three
legal forms: a public or statutory corporation, a state owned company, or a mixed
economy enterprise in which the state is the major shareholder (51 per cent or more).
Hence public enterprises can be classified as shown below:

i. Public/Statutory Corporation
These are enterprises, which arise when the government assumes responsibility for the
management of an economic or social pursuit through a special entity that has its own
legal personality and still keeps some of the special prerogatives or privileges
associated with a governmental organisation. The blend of these features is aimed at
enabling the organisation to function effectively as an autonomous body while it
remains an instrument of government policy. Enterprises that fall under statutory
corporations include the Central Bank of Nigeria (CBN), Nigerian Television
Authority (NTA), and Federal Radio Corporation of Nigeria (FRCN) among
others.

ii. State-Owned Companies :These are companies created by the government under
the provisions of ordinary company law, though they belong entirely to the
government. They are registered in the registry of companies, with the government as
the sole proprietor.

Government, therefore, appoints the Board of Directors as is customary in private

companies. Example of such companies includes New Nigeria Newspaper Ltd, New
Nigeria Development Company Ltd., and Odua Investment Company Ltd.
iii. Mixed-Economy Enterprises
These are enterprises where the government is the majority shareholder (51 per cent
or more) in a partnership with private entrepreneurs. In such companies, the
government usually dominates the board since it is the major shareholder. One
example of such enterprises is Peugeot Automobile Nigeria Ltd. (PAN), the rebranded
Nigeria National Petroleum Company(NNPC) Ltd, and Power Holding Company of
Nigeria (PHCN) (Adamolekun, 2005).

CLASSIFICATION OF PUBLIC ENTERPRISES BY RESPONSIBILITIES OR

ROLES

Oshisami and Dean (1984)categorised public enterprises into four types based on the
roles and responsibilities they are mandated to perform:

i.Public utilities: such as the Nigerian Railway Corporation (NRC), Nigeria Airways
(defunct), Power Holding Company of Nigeria (PHCN), Nigerian Ports Authority
(NPA), Water Corporations, Post and Telecommunications Dept. (P&T) defunct,
water corporation. Nigeria Television Authority (NTA), Federal Radio Corporation of
Nigeria (FRCN), Federal Housing Authority (FHA), etc
ii. Financial institution: Central bank of Nigeria, Nigerian industrial development
bank, federal mortgage bank of Nigeria, bank of agriculture, bank of industry.
iii. Commercial and industrial companies: Nigerian steel development authority,
NNPC, PPMC, Nigerian national shipping line, Nigerian national supply company
iv. Regulatory or service board: Electoral Commission INEC, Public Service
Commission ,Nigerian Enterprise Promotion Board. Marketing Boards, Advertising
Practitioners Council of Nigeria.

ORGANISATION AND MANAGEMENT OF PUBLIC ENTERPRISES

Organizational Structure of Public Enterprises Organizational structure basically

illustrates the various division of tasks into positions of responsibility in the
organization which is most often determined by specialization and competencies. Job
positions and responsibilities in public enterprises are structured into Board of
Directors, General Manager, Secretary to the Board and various Heads of
Departments and Units.
i.The Board of Directors At the apex of the organizational structure of public
enterprises is the board of directors. The powers and duties of the directors are usually
stated in the document incorporating the enterprise known as the Article of
Incorporation. However, on the whole, the board of directors is usually the policy-
making body, not the executive one. The board of a public enterprise plays a key role
in its management. Government from within and outside the government circles
appoints the board of directors of a public enterprise. Its primary responsibilities
include:
a.Formulation of policies and priorities within the framework of broad government
policies and priorities (Adamolekun, 2004);

b. Approval of public enterprises' budget, monitoring of its performance and

protection of its management from Encroachments of sectional interests
(Adamolekun, 2004). The performance of a public enterprise is, therefore, largely,
dependent on the quality of its board. Adamolekun (2004) ,identified two types of
boards of public enterprises: the policy board and the executive board. The policy
board is composed mostly of persons from outside the organization with the chief
executive as the only internal board member. The policy board is more widespread
than the executive board. Most public enterprises in Nigeria have policy boards. The
executive board is composed mostly of persons who are heads of major units of the
organization, with the chief executive as the chairman. There are normally few
outside members appointed to represent outside interests on the board. The Nigerian
Railway Corporation is an example of a public enterprise that has an executive board.
The main advantage of the executive board is that the body responsible for policy is
not separated from management. Again, the appointment of a few outsiders to the
board, apart from ensuring that perspectives from outside the enterprise are
considered, also constitutes a form of control. It is important to state that the size and
composition of the boards vary from one country to another as well as from one
public enterprise to another. The size usually ranges from a minimum of five to a
maximum of about twenty-five members. In general, the size of an enterprise’s board
depends on its scope and strategic importance within the economy. Worthy of note is
the lack of consensus on who should be appointed to the board. The tenure of the
board membership varies from one country to another, ranging from two to six years,
and could be renewed (Adamolekun, 2004).

ii. The General Manager/Managing Director/Director General or equivalent .The

General Manager is the chief executive of public enterprises and therefore saddled
with the responsibility of overseeing operations of the enterprises. He supervises the
actual operational functions of public enterprises. He usually possesses professional
knowledge of one or more areas of the corporation’s operations.
The General Manager plays a vital role in the success or failure of public enterprises.
As Olisa et. al. (1990) state, “he is the person who comes into direct contact with all
the corporation’s staff, and he can take a wide range of decisions on his own initiative,
in order to ensure that the corporation is functioning smoothly and effectively”.
Several Heads of Departments who are in charge of various departments, divisions
and sections of the public enterprises usually assist the General Manager.
iii. The Secretary of the Board The Secretary of the board records the board’s
transactions and
decisions. In many public enterprises, the Secretary is a lawyer, who gives legal
advice to the organization whenever necessary.
The Secretary, therefore, helps “to clear any doubts or misinterpretations about the
boundaries of authority, and function between all categories of officials of the
corporation” (Olisa, et. al. (1990:86). In the University, the Registrar serves as the
Secretary to the Governing Council, Senate, Congregation, Convocation and other
statutory Committees.

iv. Below the General Manager in terms of the hierarchy are Managers or Heads of
departments, sections and units. The managers and heads are representatives of the
chief executive (General Manager) in their various official capacities in the
organization and therefore directly report to him. They take directives from the
General Manager and execute them judiciously in their various departments, sections
and units.

MANAGEMENT OF PUBLIC ENTERPRISES

The management of public corporations is done through the management boards and
the policy board. Each of them is briefly explained below:
a) The Executive Board: In the Executive Board, the majority of members of the
board are staff of the same organization. They are usually the heads of the various
departments of the organization.
However, a few outside representatives are brought in to represent some outside
interest.
The executive board is basically saddled with the implementation of policies and day-
to-day operations of the organisation. For example, the Nigerian Railway Authority is
an example of a public utility that has an executive board.
b) The Policy Board
The majority of the members of the policy board are from outside the organisation
with few members from within the organisation.

The policy board is responsible for managing all the policy decisions of the
organisation, but the implementation of policies and the day-to-day operation of the
organisation is carried out by the managing director. This method is applied to most
public corporations in Nigeria. (Ujo: 1994: 82).
Note: For efficient management and effective administration, the enterprises are
divided into major departments with the General Manager as the Chief Executive. The
departments in most of them are as follows:
Administration, Accounts, Personnel, production, and Commercial Departments,
among others. The heads of these various departments are known as managers. For
instance, the head of the Production department is known as the Production Manager.

CONTROL AND ACCOUNTABILITY IN PUBLIC ENTERPRISES

Definition of Control:
Control is the function which a manager performs that enables corrective action to be
taken.
Controls are signals, standards and landmarks or progress points which management
watches to ensure that desired objectives will be achieved. In the case of public
enterprises, control is the measurement and correction of activities of public
enterprises to ensure the accomplishments of short and long range plans. Examples of
controls are: budget, return on investment, profitability, absenteeism, and efficiency.
Definition of Accountability
Accountability is being answerable for the performance of given responsibilities and
according to set standards or objectives. It answers the question “how well”. In the
case of public enterprises, it means reporting and explaining how the resources of the
organisation were used to achieve predetermined goals/objectives. Implicit in
accountability is the reward. Recognition and reward should be given for good
performance while inadequate performance should be sanctioned. Public
enterprises are accountable to their supervising authorities/the government and the
public.

Examples of accountability methods are quality of product and over service rendered,
annual reports, external audit, judicial inquiries, press conferences, physical
inspection, and scrutiny by other agencies.

CONTROL OF PUBLIC ENTERPRISES

Public enterprises being owned by government, either wholly or partially, are subject
to some control. The two main forms of control are ministerial control and
parliamentary control (Ezeani, 2006).
i. Ministerial Control: Ministerial control of public enterprises takes various
forms:
firstly, a public enterprise must inform its supervising ministry, obtain its permission
before it makes any major changes, and embarks on any new important lines of
operation, especially, where such major changes affect the public interest. For
example, a public corporation, such as the Power Holding Company of Nigeria
(PHCN), must obtain clearance from its controlling ministry before it takes any major
decision on almost all the major areas of its operation. Examples are personnel issues,
increases in electricity bills, the introduction of new products into the markets,
Construction or purchase of important technical installations, etc. (Olisa et. al., 1990).

The second form of ministerial control is in the appointment of board members. The
President is politically responsible for the appointment of the board and can dissolve
it if he is not satisfied with their performance. Usually, the controlling ministry has a
representative on the board whose role is to explain government position on important
issues, and ensures that the corporation’s affairs are managed along public service
rules and other conditions of service of the public enterprise. Each ministry, at the end
of the year, prepares an annual report which it submits to the government through its
supervising ministry.
The ministry after studying the reports asks questions where necessary, before
submitting the
report to the government with its own comments. The minister also appoints auditors
to audit the account of public enterprises and intervenes whenever there is a crisis,
like employees of public
enterprises embarking on riots or strikes or destruction of public
property.
ii. Parliamentary Control/National Assembly :Apart from ministerial control,
public enterprises are ultimately accountable to the National Assembly through their
ministers who are the political heads of the specific government ministries and
oversee public enterprises. Parliamentary committees maintain oversight functions
over public enterprises (Adamolekun, 2004).
Parliamentary control takes the following forms (Ujo, 2001:83):

a. Control through the annual report: A public enterprise usually submits a

comprehensive annual report of its activities to the parliament through the Minister.
b. Control through the annual account: A public enterprise usually submits its
annual account for a given financial year to the parliament. Such annual accounts and
reports are subject to scrutiny and debate in Parliament, and
c. The Financial Committee of the House may summon the Minister whose ministry
supervises a particular public enterprise to explain or discuss issues concerning
his/her corporation.
iii. Judicial Control:
Many public enterprises in Nigeria, have at one time or the other been subjected to
judicial control by the government. From time to time, a government sets up a
commission of inquiry into the affairs of one or other of its public corporation (Olisa,
et. al., 1990). This action is prompted by public or employee outcry about corruption,
mismanagement or incompetence in the company/organisation.

THE OBJECTIVES OF CONTROL IN PUBLIC ENTERPRISES

The objectives of control in public enterprises are as follows:
1. The major purpose of control is to ensure that the objectives of the public enterprise
are achieved.
2. The effectiveness of public enterprise control is to ensure that the resources of the
organisation are adequately used such that outputs are greater than inputs.
3. To ensure the implementation of government policies and targets.
4. To ensure financial responsibility. It facilitates accountability of management to a
higher authority and watches for misuse of funds.
5. To ensure the achievement of social objectives of the government and achievement
of non-commercial objectives.
6. To curb the undue use of the power of management.
7. To minimise centralisation/concentration of power by supervising
ministry or board.
8. To provide timely, accurate and sufficient information to appropriate authorities and
the public for the appraisal of the effectiveness of public enterprises.
AGENCIES OF CONTROL OF PUBLIC ENTERPRISES
The agencies of control of public enterprises are:
1. National Assembly/Parliament
2. Minister/ Supervising Ministry
3. Board
4. Accountant General/Auditor General
5. Public Accounts Committee
6. Special Agencies of Control, for example, Consumer Associations, Economic and
Financial Crimes Commission, and Independent Corrupt Practices and Miscellaneous
Offences Commission.
1. National Assembly/Parliament as a Control Organ In any democratic setting,
parliament is assigned the function of control and account of public enterprises.
THE NEED FOR PARLIAMENTARY CONTROL ARE:
i.To fulfil constitutional responsibilities;
ii.To protect capital invested in the public enterprises;
iii.To safeguard public interest;
iv.To ensure uniformity in policies of government;
v.To monitor the implementation of policies;
vi.To control the civil servants in the supervising ministries
and public servants in the public enterprises.

2. Methods of Control by Parliament

a.Parliamentary questions;
b.Discussions;

c.Debates on outstanding issues; and

d.Parliamentary Committees on public enterprises for in depth analysis of issues.
3. Minister as a Control Organ :A Minister exercises control through one or the other,
or a combination of the following methods (Prakash et. al., 1997):
(i) Formal Ministerial Control
(a) Administrative Devices :Issue of general policy directions; Issue of specific
directions; Approval or veto of specified categories of actions and policies;

Participation in management as chairman, member of the board, etc; Appointment of

government board and top officials of the enterprises; Power to call for reports,
returns, etc. and Power of suppression
(b) Financial Devices :
Approval of issue of additional capital; Approval of capital expenditure beyond
specified limit; Appointment of financial adviser; and prior approval of the operating
budget
(ii) Informal Ministerial Control :Under suchcontrol method, the Minister concerned
is able to wield more effective control over SOEs informally. Such in formal control is
exercised through consultation and discussion between the Minister and the Board
behind closed doors or pressures, wire pulling or other informal contacts.
4. Accountant General/Auditor General:
In many countries, audit control is vested in an auditor general. The power of the
auditor general varies from country to country depending on the legal frameworks.
Basically, the audit control by Auditor-General covers the following:
(i) Provision of funds
(ii) Regularity
(iii) Sanctions to expenditure
(iv) Propriety
(v) Efficiency audit.
5. Public Accounts Committee: This is a committee of the Senate consisting of not
more than 40 members, who are saddled with the responsibility of examining the
accounts of government organisations showing the appropriation of the sums granted
by the House to meet Public Expenditure, together with the auditor’s reports thereon.
The Committee shall for the purpose of discharging that duty, have the power to
summon persons, subpoena papers and records, and report its findings and
recommendations to the House from time to time. The Auditor General shall bring to
the attention of the committee any prepayment audit queries raised by the internal
auditors of a ministry, department or agency but overruled by the chief executive
6. Special Agencies of Control: Examples are: Consumer Associations, Economic and
Financial Crimes Commission, and Independent Corrupt Practices and Miscellaneous
Offences Commission.

PROBES AND COMMISSIONS OF INQUIRY INTO PUBLIC

ENTERPRISES IN NIGERIA

Due to problems faced by public enterprises in Nigeria in the recent past, which
included corruption, inefficiency and poor management, the Nigerian government
attempted to solve these problems by taking certain steps. A commission was set up
under Michael Ani to look into the problems of public corporations and make
appropriate recommendations. The Ani Commission had recommended that the
responsibility for personnel matters be removed from the boards and entrusted to an
independent body to be called the Statutory Corporation Service Commission
(SCSC). The recommendation was implemented at both the federal and state levels.
However, after its review in the early 1970s, the Udoji Commission recommended
that it should be abolished. The government accepted the recommendation and SCSC
was eventually abolished.

The second option to solve the problem of public corporations in Nigeria by the
government was to invite foreign management consultants to manage some of them.
In 1979, the federal government brought into the country some experts to manage
public corporations. A two-year management services agreement was signed between
the federal government and Rail India Technical and Economic Services Corporation
(RITES) for the management of the Nigerian Railways Corporation. Another
agreement was signed with the Metallurgical Engineering Consultants of India
(MECON) to manage the Nigerian Steel Authority. The government later terminated
these agreements and reverted to the previous methods of management (Ujo: 1994:
84).
PROBLEMS OF PUBLIC ENTERPRISES IN NIGERIA
The problems of public enterprises in Nigeria are many and also varied.
They include lack of proper objectives, uncoordinated development programmes, bad
leadership, government interference, monopoly, inadequate infrastructure, and
conflict of objectives, among others. This unit will acquaint you with some of these
problems that have bedevilled public enterprises in Nigeria.

General Problems of Public Enterprises

The fundamental problems of Public Enterprises are the defective capital structures,
excessive bureaucratic control or intervention, inappropriate technology, gross
incompetence, mismanagement, corruption and crippling complacency which
monopoly engenders. Public Enterprises equally served as platforms for patronage
and promotion of political objectives and therefore even when their managements
have the will and the capability to work honestly they will still suffer from operational
interference by political appointees. Furthermore, most of the leadership of public
enterprises in Nigeria are corrupt and they feel only accountable to the political office
holders who got them their jobs instead of serving the public interest (Ejiofor:
1984:18).

Incompetent Management
It is mandatory for the management of every organisation to carry out its
organisational objectives effectively. Hence it is expected that the management would
have the technical or managerial competence to do their duties. But in most of
Nigeria’s public enterprises, the management
teams are not appointed on merit basis, rather appointments are considered on
politicalconnections or primordial reasons. Consequently, the appointees lack skills
expertise or experience, and the management may end up mismanaging the
enterprises. Similarly, Board members of public enterprises may not possess any
requisite skills to perform their functions because they are politicians who are usually
compensated for their political patronage or contribution. Max Weber’s assertion that
candidates for a position in organisations must be selected on the basis of technical
qualifications is not adhered to in appointing both management and board members.
This also results in recruitment and selection being based on emotive, primordial and
purely sentimental reasons. The effect of incompetent staff is gross inefficiency in
their operations. Moreover, political instability and lack of continuity of
developmental programmes affect public enterprises in Nigeria.

Government Interference
With the limited autonomy granted to public enterprises, they are expected to be free
from the day-to-day bureaucratic bottleneck of the mainstream civil service and
government. In reality, however, political office holders regard public enterprises as
their “property” and frequently interfere in their affairs. Ministers and/or
commissioners who are managers of ministries of public enterprises interfere in issues
normally within the jurisdiction of the board or management for political or personal
reasons. Consequently, their interference could lead to distortion of policies,
corruption and overstaffing of public enterprises which often accounts for their
inefficiency.

Monopoly
Most public enterprises operate as monopolies and therefore and therefore faced with
the same problems which afflict monopolies. Since monopolies do not have
competitors, they don’t take the challenges to either innovate or offer better services
seriously because they know that their customers have no alternative Competitive
market promotes efficiency since there are always options to choose from.

Conflict of Objectives
While Public Enterprises are established to provide essential services as a public
utility, they are also expected to make some profit as a business outfit. These twin
objectives are contradictory and have been the main reason for the non-performance
of Public Enterprises. For example, despite political interference from the government
at the expense of economic rationality, Public Enterprises are still expected to make
profits.

Economic and political rationalities are hardly compatible. (Obikeze & Anthony,
2004)

CAPITAL STRUCTURE AND FUNDING OF PUBLIC ENTERPRISES

Finance is the live wire of every organisation and public enterprises are not left out.
Finances are required to run virtually all operations of public enterprises. Finance is
needed to acquire buildings and other fixed assets. Finance is also needed in form of
current assets and circulating capital forthe day-to-day running of the enterprise. The
capital structure and source of funding for public enterprises have been classified into
two major forms.
They are external and internal sources of funding.
External Source of Funding:
External source of funds basically entails funds emanating from outside public
corporations or enterprises. External sources of funds to public enterprises comprise
government appropriations, loans from national financial institutions, local private
entrepreneurs (equity subscriptions), and international sources. We shall discuss in
detail each of these sources of funding in the subsequent units.
Internal Source of Funding
This is revenue generated internally by public enterprises from trading surpluses,
taxes and dividends and earnings from sales of goods and services after payment of
employed capital. The amount of revenue derived internally by public enterprises is
usually small due to the fact that they are not primarily established to make profit.
Furthermore, government’s control over public enterprises tariffs and prices
constrains their capacity to make profits (Adamolekun, 2005).

GOVERNMENT APPROPRIATIONS AS ASOURCE OF FUNDING FOR

PUBLIC ENTERPRISES

Government appropriations can take the form of either outright grants from the
government (central, state or from both) or direct share capital subscription by the
government. Buttressing this, Ozor (2004) submits that government funds could be
made available to public enterprises in various ways which could be outright grants or
share capital giving the government the right to receive the undistributed profits of the
enterprise; as an interest bearing and repayable loan, and as a noninterest bearing but
repayable loan. However, it is important to note that this mode of funding public
enterprises has the implication of making them very imprudent in managing resources
since they know that government must eventually come to their aid in case of
sustained losses.

According to Adamolekun (2004), government soures include:

(a) Capitalisation funds: These are funds provided by the government in order to
meet the needs of public enterprises, in terms of equipment, plant, and running
capital.
(b) Grants: Public enterprises receive various grants from the government. Grants can
be statutory or special. Special grants are given for specific projects or activities,
whereas statutory grants also referred to as subventions are regular and mandatory.
(c) Subsidies: These are funds given to public enterprises to assist them to offset the
losses they incurred due to the following reasons: operation of uneconomic routes;
government control of tariffs and prices, etc.
(d) Loans given to them by the government to ease their financial management
problems or to assist them in specific projects or interventions that are of special
interest to governments (Adamolekun, 2004).

The main disadvantage of loans is that they are not a reliable source of revenue.
(e) Equity: This is a situation whereby “Government in its capacity as a shareholder
in a joint venture, contribute to increase the capital of the enterprise or to increase its
share”(Adamolekun, 2004).

PRIVATE INVESTMENTS AS A SOURCE OF FUNDING

Private Investments: Another source of financing public enterprises is private
investments.
This is done by private individuals buying shares in public enterprises when such is
available (i.e. equity holding). Government can purposely do this. In well organised
and profitable public enterprises, the private sector can also invest by buying the share
capital of the enterprises which offer their shares to the public. This is how some
enterprises in developing countries like India obtained their capitalisation. However,
this source of financing is rare in Nigeria.

Another way of private financing of public enterprises is through borrowing or

obtaining a loan from finance houses. In other words, public enterprises can raise
funds by borrowing from financial institutions i.e. commercial banks, development
banks and industrial development banks. Such loans are often guaranteed by the
government which established these enterprises.

It is worthy of note that private investments in Nigeria as in other parts of the world
constitute a negligible proportion of public enterprises’ finance.
This is due to a number of reasons.
Firstly, private investors are not too keen to invest most of the time in public
enterprises because government interventions to a large extent make it difficult for
them to break-even and therefore unable to make profits, not to talk of paying
dividends to their shareholders.
Secondly, the capacity of public enterprises to borrow is limited by the government
and most of the time, they are not allowed to borrow money from financial houses.
Thirdly, the lack of sufficient local entrepreneurship with adequate capital to
embarkupon such capitalintensive enterprises which made the government go into
public enterprises in the first place.

SELF FINANCING AS A SOURCE OF FUNDING

Self-Financing
Self financing is a process whereby a public enterprise can plough back its profits for
the purpose of expansion. In other words, this could be a source of funds, however,
only on the proviso that profits are made. Apart from self-financing from profits,
public enterprises can have other sources for self-financing their expansion. For
instance, where a public enterprise has a strategic reserve of development funds, or
when it obtains funds from previous investment elsewhere or when it disposes of
some of its

Other forms of selffinancing for public enterprises, though limited to commercialised

public enterprises include ploughback profit, loans and individual capitalisation.
i. Plough-back earnings: It simply entails ploughing back past earnings for the
purpose of expanding the enterprise in order to make more earnings. In this case, part
or all earnings are kept in the corporation to be used to expand the business and not
shared out as dividends to shareholders.
ii. Loans:Commercialised enterprises like private organisations can get loans from
financial houses if they so wish or where the need arises without checks, in so far as
they can meet the demands or requirements of the financial houses. Thus, privatized
and commercialised enterprises have been able to raise funds through loans from
financial houses or debentures, unlike pure public enterprises. This, however, does not
constitute a significant aspect of financing for public enterprises in Nigeria
iii. International sources: public enterprises also derive external funding from
international sources, such as foreign private sector (financial institutions, as well as
entrepreneurs), international development agencies, and in some cases, foreign
governments (Adamolekun, 2004).

PRIVATISATION AND COMMERCIALISATION IN NIGERIA

Privatisation of Public Enterprises in Nigeria:
Within the Nigerian context, privatization involves the disposal of all parts of shares
held by the government directly or through any of its agencies in the concern under
consideration to carry on business. In other words, privatisation involves the sale of
government shares in any enterprises to nongovernmental entities (institutions or
individuals).
The Nigerian economy is mono-cultural –being dependent on petroleum for over 90%
of its earning from the rest of the world. It is like putting one’s eggs in one basket.
Thus, the so-called structural adjustment programme of government aims at
correcting this defect in the commercialisation of some of our public enterprises,
hadbeen put in place with the hope that they would bring about desired structural
changes.

In July 1988, the federal Military Government promulgated Decre No.25, the
Privatisation and Commercialisation Decree which gave legal backing to the
execution of the privatisation and commercialization programme in Nigeria. The
objectives of the programme are:
i. To re-orientate the enterprises for privatisation an commercialisation towards a new
horizon of performance improvement, viability and overall efficiency.
ii. To develop the capital market.
Iii .To restructure the capital of affected enterprises in order to facilitate good
management and access to the capital market.
iv. To restructure and rationalise the public sector in order to lessen the dominance of
unproductive investments in that sector.
v.To ensure positive returns on public sector investments in commercialised
enterprises.
vi.To check the present absolute dependence on the treasury for funding by otherwise
commercially oriented parastatals, and encourage their approach to the capital market.
vii.To initiate the process of gradual cession to the private sector of such Public
Enterprises which, by their nature and type of operations, are best performed by the
capital market.
viii.To promote wide share ownership. The Decree provides for the establishment of
the Technical Committee on Privatisation and Commercialisation (TCPC) which is
vested with the responsibility of implementing the programme.
COMMERCIALISATION OF PUBLIC ENTERPRISES IN NIGERIA

Commercialisation in Nigeria began in 1990 in the following areas.

(a) Use of financial resources
(b) Profitability
(c) Development of its functional strengths and elimination of its
weakness
(d) Product/service range
(e) Human resources and organisation
Some of the perceived problems of commercialisation include:
(i) Policy environment (not being conducive)
(ii) Special privileges to some groups (negating the objectives of the
programmes)
(iii) Capital markets (not being able to cope) social costs (labour unions
objecting)
(iv) Inadequacy of preparation (TCPC coping)
(v) Administrative capacity (training may help)
(vi) Transparency of the process (enlightenment campaign)
(vii) Other forms of privatisation (e.g. contract)
(viii) Measures for improving those that remain (important, may be
neglected)
(ix) Investment of proceeds.

The primary goal of privatisation and commercialisation is to make the public

sector the programme leading engine of growth in the Nigerian economy. The
government intends to use the privatisation programme to reintegrate Nigeria back
into the global economy, as a platform to attract foreign direct investment in an open,
1air and transparent manner
1. Full Privatisation: Among the 72 parastatals slated for privatisation are: the Federal
Airport Authority of Nigeria; Nigeria Airways Ltd (Aviation), Nigerian Hotels Ltd
and Festac 77 Hotels Ltd (Commerce and Tourism), Nigerian Telecommunication Ltd,
Nigerian Mobile Telecommunication Ltd), NICON Insurance Ltd, Afribank Nigeria
Ltd, FSB International Bank PLC, Assurance Bank Ltd (Finance), Daily Times of
Nigeria PLC. New Nigerian Newspaper Ltd, Federal Radio Corporation of Nigeria
(Information and Culture); National Fertilizer Company of Nigeria. Ashaka Cement
PLC, Benue Cement PLC (Industries): Port Harcourt Refinery and Petrochemical Ltd
(Petroleum resources); Steel Rolling Mill, Oshogbo, Jos and Kastina; Ajaokuta Steel
Company Lid. National Electric Power Authority (Power and Steel): Nigerian Mining
Corporation. Nigerian Coal Corporation (Solid Minerals): NigerDock: NAHCO,
(Transport); Save Sugar Company: Royal Swaziland Sugar(African
Investments), and so on.
2. Full Commercialization: Seventeen (17) Parastatals were scheduled for
commercialisation. Among them are: National parks Board; Ayip Eku Oil Palm Co.
Ltd (Agriculture); Nigerian Postal Service (Communication): Tafawa Balewa Square
investments Ltd (Defence); Nigeria Social insurance Trust Fund (Employment,
Labour and Productivity); Nigerian Bank for Commerce and Industry (Finance);
News Agency of Nigeria: Nigerian Television Authority (Information and Culture):
Nigerian National Petroleum Corporation (Petroleum Resources); Nigerian Ports
Authority; Nigerian Railway Corporation (Transport): River Basin and Rural
Development Authority (Water Resources). Federal Mortgage Bank; Federal Housing
Authority (Works & Housing).
3. Partial Commercialisation: Public enterprises scheduled for partial
commercialisation are: Nigerian Railway Corporation; Nigerian Airport Authority:
National Electric Power Authority; Nigerian Security Printing and Minting Company
Limited; All the River Basins Development Authorities: National Provident Fund;
Ajaokuta Steel Company Limited: Delta Steel Company Limited, Nigerian Machine
Tool Limited; Federal Housing Authority: Kainji Lake National Park; Federal Radio
Corporation; Nigerian Television Authority and News Agency of Nigeria.

DEFINITION AND PRINCIPLES OF CIVILSERVICES

Definition of Civil Service :The civil service is a term used to cover the public
servants who are direct employees of the federal and state governments, other than the
police, the armed forces personnel, judicial personnel and the teachers. Its usage
excludes also employees of statutory corporations and boards (Nwosu, 1977).
According to Adebayo (1986), the civil service comprises all servants of the state,
other than those holding political appointments, who are employed in a civil capacity
and whose remuneration is paid out of money voted by the legislature.

Adamolekum(1983), sees the civil service as "the body of permanent officials

appointed to assist the political executive in formulating and implementing
governmental policies." He also sees the second usage of the term as referring to "the
ministries and departments within which specific aspects of government are carried
out". Though people often see civil service and public service as the same thing, they
are technically not the same. Public service as a term is broader in scope than civil
service.
Hence, it includes not only those who work in the regular government ministries and
departments but also statutory corporations, boards and the armed forces. Hence,
Adamolekun (1983) defines it as the totality of services that are organised under
government authority. It can therefore be said that civil service is narrower in scope
and excludes some government employees who are public servants (Obikeze and
Anthony,

The civil service is the administrative structure employed in civil capacity to fulfil
government policies and programmes. This can be viewed in terms of structures i.e.
ministries, departments, etc. or the human occupants of public offices i.e. permanent
secretaries, ministers, and higher administrative staff.

The Nigerian Interpretation Act of 1964 does not expressly define the term civil
service. However, Section 2 of the Pensions Act of 1951 defines “civil service, as the
service in a civil capacity under the government of the federation or in a college,
university or a pensionable employment under local authority." The civil service is
distinguishable from the military service and police service in that while the latter two
are principally concerned with the safeguard of the country from external and internal
dangers, the former is concerned with purely civil and non-technical affairs of the
state. Members of the civil service are employed in a civil capacity as distinguished
from military, judicial or police capacity. Military officers, judicial officers, police
officers and many other technical officers like doctors, engineers, and draughtsman
are, strictly speaking, not civil servants.

Civil servants are mainly of two categories: lower clerical staff and higher
administrative staff. The higher administrative staff are directly responsible to the
political heads of departments. The lower clerical staff help the administrative staff
and work under its direct supervision and control. The state reaches the citizens
through the civil servants who are the well-trained, skilled and permanent body of
professional class of officials, and who have taken government service as a career
(Ekhator, 2003: 254).
 The Principles of the Civil Service
The civil service is guided by the following principles:
(a) Anonymity
The principle of anonymity states that civil servants should be seen and not by
principle be heard. Though they advise political office holders on issues relating to the
government they neither take the blame nor the glory of such policies. They are not
expected to be seen defending such policies. That job is better left for political office
holders and not career officers. Civil servants as far as possible, are anonymous, and
should not be seen as craving publicity.
(b) Neutrality
The civil servant must be politically neutral. His job is to serve the government of the
day with full dedication irrespective of what he feels about that particular
government. He ought not to allow personal prejudices to colour his dedication to his
duty. Heis not expected to be a card-carrying member of a political party or get
involved in partisan politics though he is expected to vote at election times. The
essence of making the civil servant politically neutral is hinged on the fact that since
he does not leave with a change in government, he is not expected to have a strong
attachment to any particular government so as to enable him to give his best to make
government policies succeed irrespective of his personal feelings towards such
policies or government.
(c) Impartiality
Civil servants are paid from tax payers’ money which does not belong to anybody or a
group in particular. They are, therefore, expected to discharge their duties without fear
or favour. Since the constitution emphasises the equality of all citizens, they are
supposed to be treated equally by civil servants. In rendering service to the public, the
civil servant is expected to treat everybody with a high degree of impartiality.
Favouritism is against the principle of the civil service and should not be encouraged
in any guise whatsoever.
(d) Permanence The civil service is often defined as a permanent body of officials that
carry out government decisions. It is permanent and its life is not tied to the life of any
particular government. Governments come and go but the service remains, or to use
the; Nigerian jargon, soldier go, soldier come but barrack remain. The civil service in
this regard is the barrack that remains (Obikeze and Anthony: 2004).

The Features of Civil Service

The administrative institutions in Nigeria are a legacy of the British model. Since
Nigeria inherited virtually all administrative institutions from Britain, her erstwhile
colonial rulers, the Nigerian public service is based on the West Minister model. The
main characteristics of the Nigerian public service include the following:
{a}. Professionalism :The most significant feature of civil service is that it is a
professional class of officials who are trained and skilled. Like other professional
groups of people engaged in a different profession, the profession of civil servants is
to run the administration. It does not mean that civil service is a single profession like
shoe-making or brick laying, rather, it is a sum total of multiprofession ranging from
mail delivering to administering a local government area council, all engaged in a
single aim, i.e. the execution of public policy.
{b}. Hierarchy :
Hierarchy is the second fundamental characteristic found in civil service. By
hierarchy we mean the separation between superior and subordinate offices; i.e. each
lower office is under the control and supervision of a higher one. Then, there exist
fixed salaries which are paid in accordance with the nature of the job and
responsibility as well as the social status. In addition, there are chances of promotion
and career advancement based on seniority and merit. Moreover, there is a right of
appeal and statements of grievances from the lower to the higher authority.
c. Legal basis
The civil service system is always provided with a legal, basis. This may, to a large
extent, be customary and uncodified or it may be in the form of ministerial regulations
as in the United Kingdom, or it may be set forth in considerable detail in, a written
constitution for the political jurisdiction. Generally, it possesses a statutory base either
in an elaborate civil service code or in a collection of civil service laws.
d. Personnel agency
In some countries, there is a provision for a central personnel agency or agencies that
are in charge of maintaining the civil system. To this end, usually, the British model is
adopted by a large number of countries, where the responsibility of the selection of
civil servants is given to the civil service commission. In Nigeria, the Federal Civil
Service Commission and the state civil service commissions are responsible for the
recruitment of federal and state civil servants.
e. Security of tenure or permanence
This means that changes in government do not bring about changes in public servants.
Governments come and go but public servants remain as long as they perform their
work properly. Public service is a career to which public servants can devote their
time and energy until they attain retirement age. It is only in very serious cases of
misbehaviour that they can be dismissed or retired.

f. Political neutrality
This means that public servants should not be a member of anypolitical party. They
should not take part in partisan or party politics. They cannot contest elections or
comment publicly on political matters. If they wish to do so, they have to resign their
appointment.
g. Impartiality
The public servants are expected to apply the laws of the land without any fear or
favour to any person or group of persons in the society. Thus, public servants should
serve all members of the public to the very best of their ability. They should act with
maximum fairness toward all members of society. There should be no discrimination
of any kind.
h. Anonymity
This means that they must work without any aim of making fame or name. They
should remain anonymous, whatever blame or praise for any act of omission or
commission will directly go to the minister who is the political head of the
department.
i. Meritocracy
Another significant characteristic feature of the public service is that both recruitment
from within and recruitment from without are based on merit. To be recruited into the
service one has to satisfy certain given standards such as educational qualifications,
and good performance in the qualifying examination and interviews. Above all,
promotion within the system is based on seniority, efficiency and experience.
j. Established procedures of work
In a developed civil service system, well-established procedures are planted for the
conduct of common personnel transactions such as recruitment, training, promotion,
demotion, dismissal, performance evaluation, compensation, etc. These standardised
methods provide objectivity in the choice of entrants to the civil service and also help
in offering equal treatment to everybody already in service (Ekhator, 2003: 255256).

FUNCTIONS OF CIVIL SERVICE

The functions of the civil service may be discussed under the following main heads.
These are as follows:
(a) Advice: The primary function of the civil service is to advise the political
executive. Ministers depend on the advice of their higher administrative staff who is
the reservoir of information and wisdom regarding the subject matters which they
administer. Even to formulate his own programme, the political executive relies on
the civil service officials while administering many problems which arise -which are
usually solved by the civil service before reporting to the political head, if at all, for
approval or mere information.
(b) Programme planning: Broadly speaking, planning is the duty of the political chief
executive. Planning and periodic adjustments of the revenue structure is a
responsibility of the minister for finance; agricultural prices and water policy -
functions of the ministers for Agriculture and Water Resources; petroleum policy, a
function of the minister for petroleum, etc. But there is a field where the civil servants
also perform the function of planning, and this is the field of delegated legislation.

The legislature makes laws in broad outlines for execution and implementation of
which certain basic rules and regulations are required. The civil servants who execute
those laws determine the specific steps to take in order to bring to fruition a policy or
a law already agreed upon. To the extent that the policy decision is ambiguous or
vague, programme planning may actually affect policy though in principle. Its
purpose is merely to effect policy. Programme planning involves a careful
analysis of the job to be done. It is a deep perception of the whole operation. The
success of any new policy will depend ultimately upon good programme planning.
Good performance planners develop by experience. They learn the art by daily
practice and not by reading books.
(c) Policy formulation: The civil servants advise their political head, the minister, on a
wide range of policy matters. Thus, civil servants play crucial roles in policy
formulation.
(d) Drafting bills: Top civil servants aid their political bosses to draft bills or prepare
legislative proposals. This is a usual practice in a parliamentary democracy.
(e) Policy implementation: Once a minister has decided on what to do, it is the
responsibility of the civil servants to carry out such decisions.
(f) Budget preparation: The civil servants prepare the annual financial statements of
their respective ministries. This annual financial statement which is technically called
the yearly budget comprises the income and expenditure of the government. The
various financial statements from the various ministries are integrated into one
document known as the budget.
(g) Law making: Besides bill drafting, the civil servants now make minor laws known
as delegated legislation.
(h) Negotiation with outside groups: Civil servants discuss, bargain or negotiate with
interest groups, other governments and international organisations on behalf of their
own government.
(i) Quasi-judicial function: In recent times, civil servants protect civil liberties by
institutional administrative inquiries into alleged wrong doings of public officers and
where such allegations are proved right, they recommend disciplinary actions to be
taken against the affected officers.
(j) Production Another important function of the civil service is production. Goods
produced may be tangible goods like kilograms of rice and kilometres of concrete
roads, and less tangible services such as cases of legal disputes decided or school
children educated. Every official involved in administration needs work standards to
enable him to determine whether his organisation is reasonably living up to mark,
whether his subordinate staff are competent and whether there is a rise or fall in the
level of efficiency and output.
(k) Organisation and methods: The primary purpose of which a civil service is set up
is to effect improvement of working methods so as to remove waste and loss of efforts
and secure complete utilisation of available resources. This function is performed with
the aid of units specialised in what has come to be known as organisation and
methods of work often called O and M (Ekhator, 2003: 257-2458).

APPOINTMENT TO THE PUBLIC SERVICE

Unit Structure

Authorities for Appointment : Appointments to public offices in the Federal Civil

Service are made on the authority of the Federal Civil Service Commission. These
appointments are made either:
(a) By letter written under the direction of the Federal Civil Service Commission; or
(b) By formal agreement between the officer and the Federal : Government or its
appointed agents. Subject to Rules 020205, 020206 and 020207-Permanent
Secretaries/Heads of Extra Ministerial Offices have the power of appointment which
has been delegated to them.
(i)The Federal Civil Service Commission shall make appointments to posts graded
GL.12 17. Such appointment shall be made as the need arises for the available
vacancies after an advertisement. Officers intending to transfer their services shall
take part in the annual Public Service Examinations for posts GL 07-10.
(ii) Subject to modalities to be prescribed by the Federal Civil Service Examinations
from time to time, each Ministry/Extra-Ministerial Office shall select from the pool
of successful candidates at the Civil Service Examination prescribed in Rule 020102.
(iii)There shall be an annual competitive Civil Service Entry Examination for posts
graded GL. 07-10 for new entrants and serving officers wishing to transfer from other
scheduled services. This examination shall be conducted by the Federal Civil Service
Commission in conjunction with the Office of the Head of Civil Service of the
Federation, Administrative Staff College of Nigeria and the Public Service Institute of
Nigeria.
(iv)To qualify for this examination, candidates must possess an Honours Degree or
Higher National Diploma not below upper credit in relevant disciplines as provided
for in the Schemes of Service. Final selection shall be made by the line
Ministries/Extra-Ministrial Officesin line with their requirements.
(a) Each ministry/Extra-Ministrial Office shall appoint :Junior Staff on GL. 06 and
below. This shall be handled by the Junior Staff Committee of each
Ministry/Office, with a representative of the Federal Civil Service Commission and
the Head of the Civil Service of the Federation at any meeting of the Committee,
subject to the approval of the Permanent Secretary/Head of Extra-Ministerial Office.
(b) Appointment in the Federal Ministries/Extra Ministerial Offices in the State shall
be from the residents of that state who possesses the qualifications prescribed in the
approved Scheme of Service.
(c) Each ministry/Extra-Ministrial Office shall work out the actual establishment or
requirements for each State Office. The Junior Staff Committee (Local) shall conduct
the interview to appoint the officers subject to the approval of the Permanent
Secretary/Head of Extra-Ministerial offices.
(d) Promotions to all posts in the Federal Public Service other than those of
Permanent Secretaries are vested in the Federal Civil Service Commission, which,
has, however, authorised Permanent Secretaries/Head of Extra-Ministerial Offices to
promote eligible candidates to posts in respect of which the powers of appointment
have been delegated.
(e) Seniority in any department shall be determined by the entry date/the assumption
of duty certified by an authorised officer as reflected in the appropriate register.
(f) Date of birth recorded on appointment by an officer shall not be changed
throughout the career of the officer. Any contravention shall be regarded as an act of
serious misconduct. Recruitment
020201 -“Recruitment” means the filling of vacancies by the appointment of persons
not already in the Public Service of the Federal Republic of Nigeria. It, however,
excludes the transfer of officers from other Public services in the Federal Public
Service. 020202 Direct appointment to the Federal Public Service may be in any of
the following categories:
(a) As trainees or pupils;
(b) On probation in a pensionable post;
(c) On non-pensionable contract to a non-pensionable post, or against a pensionable
post for a specified period; and
(d) On a temporary basis other than (c)

(e) When posts prove difficult to fill, they shall normally be advertised. 020204
Except where the Federal Civil Service Commission decides otherwise, all first
appointments to the pensionable establishment in posts other than trainee post (see
Rule 020203) will be on probation. An officer confirmed in a lower pensionable office
will not however be regarded as on probation in a higher post to which he/she is
promoted nor will an officer seconded or transferred as a confirmed officer from
pensionable service elsewhere. 020205 -To be eligible for appointment into the
Federal Public Service, every applicant must:
(a) Not be less than 18 years and not more than 50 years of age;
(b) Posses such minimum qualification as may be specified from time to time
including computer literacy;
(c) Be certified by an authorized Health Care Provider as medically fit for
Government Service;
(d) Possess a testimonial of good conduct from the last employer or if not previously
employed, from the last school or college attended;
(e) Possess requisite qualifications as provided for in the Scheme of Service; and
(f) No officer shall be appointed into the Federal Public Service without authorization
for appointment from the Office of the Head of the Civil Service of the Federal and
Supervisory Boards in the case of Parastatals. 020206 -No candidates shall be
appointed to any post in the Federal Public Service without the prior specific approval
of the Federal Civil Service Commission if:
(i) The candidate has been convicted of a criminal offence; or
(ii) He/she has previously been employed in Government Service and been dismissed
or called upon to resign or retire therefrom. Such approval must always be obtained
irrespective of any delegation of the Commission’s power. 020209 -It is the duty of
every Permanent Secretary/Head of Extra Ministerial Office to ensure that all
officers/staff in his Ministry/Extra -Ministerial Office sign an Oath of Secrecy Form I
and that the Oath so signed is carefully preserved. 020210 -No Public Officer shall
become a member of any Secret Society. Any Public Officer who is a member of such
Society shall renounce his membership forthwith by making a Statutory Declaration
to that effect, resign his appointment, or retire from the service.
020211 -Contravention of Rule 020210 shall be regarded as an act of serious
misconduct and shall attract appropriate disciplinary action which may include
dismissal from service.

Rules for Appointment on Probation and Contract 020301 -Officers on probation

will be required to serve for two years before being confirmed in the service. This
period may however be reduced to not less than six months by deduction of any
previous period of Public Service rendered satisfactorily in posts of cognate status
involving similar duties. The period of probation shall not exceed two years unless an
extension may result in the increment penalty referred to in Rule 040206 if the
Commission so decides. 0202303 -To be eligible for confirmation in the Permanent
Establishment, an officer appointed on probation is required to pass the prescribed
examination, if any, during his probationary period and to complete his probationary
period to the satisfaction of the authority empowered to appoint him. At the end of the
period of probation, the officer will, unless his probationary appointment is
terminated or extended, be confirmed in his appointment.
Rules for Appointment on Contract 020401 -A contract appointment is a temporary
appointment (which does not provide for the payment of a pension) to a post of the
level to which an appointment is made by the Federal Civil Service Commission for a
specific period as opposed to an appointment on pensionable terms and temporary
employment. The contract appointment must be recorded in a formal document of
agreement. 020402
-(a) The Conditions of Service of a Contract Officer are those provided for his/her
contract and the privileges, emoluments or allowances described in these Rules do not
apply to him/her unless they are specifically so stated in the contract itself. Any
question of the interpretation of a contract affecting his/her Conditions of Service
should be referred to the Office of the Head of the Civil Service of the Federal.

Transfer and Secondments

020501 -Transfer is the permanent release of an officer from one scheduled service to
another or from one class to another within the same service.
Secondment means the temporary release of an officer to the service of another
Government, approved body or any recognised International Organisation or body for
a specified period.
020502 -Inter-Service Transfer/Secondment: The following
procedures shall apply in processing Inter-Service Transfer and Secondment:
(i) Applications for Transfer/Secondment to posts graded GL 06 and below shall be
determined by the Ministry/Extra-Ministerial Office of the applicant’s choice.
(ii) That applicant for Transfer/Secondment to posts graded GL 07 -10 in any
Ministry/Extra-Ministerial Office shall be determined by the Federal Civil Service
Commission. Since GL 07 10 is an entry point, Officers seeking transfer from
scheduled establishments are required to sit for the Annual Competitive Civil Service
Entry Examination.
(iii) Confidential reports covering the last three years (or whole service if less than
three years) of the officer’s service shall be furnished.
(iv) Secondment of an officer to the service of another Government, Approved Body
or recognised International Organisation at his own request shall be for a maximum
period of two years in the first instance after which the officer must apply for an
extension, seek for transfer or return to his former post. All extensions must be
approved by the appropriate Committees and the Federal Civil Service commission.
The total period of such secondment must not exceed four (4) years.
020503 -(a) Senior Posts: Transfers from one senior post to another or from one class
to another within the Federal Public Service require the prior approval of the Federal
Civil Service Commission. An officer must have served for a minimum period of 6
months in his original Department before seeking transfer to another Department. An
application for such transfer must be submitted to the Permanent Secretary/Head of
Extra Ministerial Office of the applicant and must state the application's reasons for
desiring a transfer and his qualifications for the work to be undertaken. Such
applications should be forwarded to the Federal Civil Service Commission by the
Permanent Secretary/Head of Extra-Ministerial
Office together with a statement as to:
(i) How the applicant has performed his/her duties;
(ii) Whether the applicant is considered to be well qualified for the post desired; and
(iii) Recommendations as to the grant or refusal of the application.
(b) Junior Posts: Transfers from one junior post to another within the Federal Public
Service or from one Department to another may be arranged, with the consent of the
officers being considered for transfer, at the mutual discretion of their Permanent
Secretaries/Head of Extra-Ministerial Offices.

Acting Appointment
When it is necessary that a particular duty post (of status not lower than Senior
Clerical officer) should continue to be filled at a time when no officer of
corresponding substantive rank is available for posting thereto, some other officers
may, with the approval of the Federal Civil Service Commission; be formally
appointed, by notice in the Gazette, to act in the duty post and assume either fully or
in part, the duties and responsibilities thereof. The mere fact that the substantive
holder of a duty post will be absent therefore for a short period (e.g. on casual leave or
on sick leave) does not in itself justify an acting appointment; there may however be
circumstances, (such as compliance with statutory provisions) which necessitate the
making of an acting appointment for a relatively brief period. The decision of whether
an acting appointment is necessary or desirable in any particular case will rest with
the Federal Civil Service Commission.

Acting appointments are not intended as a means of testing the suitability of officers
for promotion; they will normally be made only in order to fill posts that are
temporarily vacant and their duration should be limited accordingly.

Recommendations for acting appointments must be forwarded to the Federal Civil

Service Commission on general form 66 and must include thereon a certificate to the
effect that the acting officer will assume the full duties and responsibilities of the post
in question. Approved acting appointment will be gazetted by the Federal civil
Service Commission but it will on no account be backdated to a period in excess of
six months from the date of receipt of the recommendation by the commission.