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PROBLEMS OF STATE-OWNED ENTERPRISES IN ENUGU STATE

CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

The history of state-owned enterprises or state involvement in business enterprises dates back to the period of British administration in Nigeria. Ibie (1970:27) revealed this information and according to him, he grouped the enterprises into four and declared that the history did not come by choice rather by patrimony.  During this period and according to customs, the British administrations were kept in charge of the colonial public sectors.  This group includes the utility service industries, education, water, health, electricity etc during the wake of political independence, these state-owned services were retained automatically by the indigenous public sector.  The second groups were the foreign private sector who were previously in charge of the three chain factors of production – management, capital and entrepreneurship.  This was a situation where the distributive trades were largely in the hands of the foreign private sector.        
After independence, it was felt that to allow the expatriate community to be in charge of the means of production and distribution would conquer or subdue the sovereignty of the country to neo-colonialism.  But despite the anomaly created by this group, things were redressed by the indigenization measures of the seventies and this went a long way in enlarging the participatory and regulatory roles of the public sector.        
According to Ibie, the third group was borne out of the post independence desire, which was buttressed by the in surge of the oil wealth of the public sector in order to enhance the progression of economic development by playing a catalystic role in strategic sectors where the indigenous private sectors was still feeble to take initiative .  This was the justification for the public sector to make significant impact into iron and steel development, petroleum etc.        
The fourth and final group of these business group was that of thorny spinners, which was regarded by public officers as not being creative in private sectors.  It was felt that a thrust into this business would be expanding the revenue generating base of the public sector with the hope of operating and managing them as efficiently and as profitably as the private sectors were doing.  The belief gave rise to the public sector ventures in such organizations like Hotels.        
Despite all this, it was the general believe that the nationalists that took over the administration of country after independence in 1960 were faced with the theory problems of galvanizing the different segments of the economy for the achievement of rapid technological and industrial growth.  It is the belief also that in most growing economics, money was in short supply.  Also in addition, skilled personnel was short and private investment was very low.        
However, today we have several federal and state owned enterprises such as Protea Hotel (Nike Lake Hotels) Enugu, Airport and Presidential Hotels etc respectively.        
Ugwu (1994:35) revealed that Presidential Hotels was established in 1980 by Eastern Nigerian Development Co-operation (ENDC) with its branches at Enugu, Onitsha, Abakaliki, Aba, Owerri and Obudu in Cross-River State and Enugu was the headquarters. The hotels were establishment as catering rest house with the purpose of catering for government officials then in the colonial administration.  It was not a commercial venture when it was set up under the Eastern Nigeria Development Cooperation (ENDC). The catering rest house was later changed from catering rest house to progress Hotels by Ojukwu when he was made the governor of the Eastern region (1966-1967).        
Between 1930 and 1945 under catering rest house and progress Hotels, the establishments were made a non-commercial venture because of subvention or grants it was receiving from the government.  Another change was made again during Ukpabia Asika administration.  At this stage, it was changed from Progress Hotels to Phoenix Hotels.  But it was still under the umbrella of East Central State and these hotels catered for both governmental and non-governmental purposes.        
During the period when Anambra and Imo State were created in 16th March 1976 by General Murtala Muhammed, these hotels later changed to Paramount Hotels.  Later during the year 1980 and 1985, the Paramount Group with the branches in Onitsha, Enugu and Abakaliki were merged with Hotels Presidential Limited Enugu to form Anambra Hotels Limited.  The merger was for administrative convenience because the Paramount Hotels Group retained their internal working structure throughout the period.        
Then from 1986, the administration of Anambra hotels group regained its autonomy.  Protea (Nike Lake Resort) Hotels is a form of hotel industry where rendering services to the public are affordable. It also has other forms of attraction like featuring of golf, swimming, skipping and outdoor services that attract vacationers.        
Most resort Hotels are built near streams, mountains or oceans while some are in Islands and they serve as vacation spots for all human race. Resort Hotels also provide according to the book “encyclopedia” volume 9, services that are cheap and affordable.
1.2   Statement of the Problems        
The continuous interference by government affected the growth and maintenance even the management of the organization.        
Secondly, the issue of prompt payment of staff salaries is a negative problem and government is known for not paying her staff salaries as at when due.  There is also the problem of training.  The state government even federal government finds it difficult sending her staff on training and lack of this affects the manpower planning of the organization.  Manpower planning is one of the major management problems facing state owned enterprises.  It is a function of personnel of the organization.  This means aiding in the development of manpower forecasts and models the organization.  If training is not there, it creates a big problem.        
There is also the issue of financial problem.  the proliferation of state-owned enterprises at the state level in the last decades couple with their virtually continuous dismal economic and financial performances have worsened the financial problem of state-owned enterprises in the whole world.        We also have poor capitalization problem.  One wonders why government owned profit oriented enterprises are unable to attract loan, finance from the bank institutions.  Whereas their private sector counterparts command line of credit with relative ease from the same financial institutions.       
 In addition, where such loans are to be made, the financial houses ledge against possible by insisting that the perspective government guarantee such loans.  More so, we have the problem of unstable management boards.  Every new administration, military or civilian begins by dissolving owned enterprises or companies and appoint new members to replace them.  The civilian administration sees these board appointments as patronage for those who supported them in the election.  The appointment are hardly ever based on merits, the military who usually come into government on a corrective platform, see an early necessity to replace these civilians appointees as part of the programme to remove or reduce corruption in public life.  As the case may be, we equally have the problem of integrity factor.  Our government owned enterprises or rather state-owned enterprises have performed badly over the years and this is due to the fact that they are being run by corrupt officials.  The integrity factor, no doubt worries quite a good number of knowledgeable and public-spirited Nigerians.  These and more are the problems of state-owned enterprises and efforts to remedy them have not yielded any fruitful results.        
Given the numerous problems inhabiting the efficiency of state owned enterprises in Nigeria generally, Presidential Hotels and Protea (Nike Lake) Hotels Enugu in Particular the need for a study of this nature is not in doubt.
1.3   Objective of the Study        
The research aims to study the problems of state owned enterprises in Nigeria and Enugu in particular with specific references to both Presidential Hotels and Protea (Nike Lake) Hotels Enugu.        As a more detailed level of analysis, the research will focus on the following issues:
(i)                To ascertain the role of advertising in creating mass awareness for state-owned enterprises amongst public.(ii)               To know whether the timing of state-owned enterprises and the demand for them are well synchronized in the government parastatals
.(iii)             To ascertain the factors underscoring the current problem the enterprises are having and to establish ways in which the staff can be effectively used to secure and maintain confidence and acceptance of state-owned enterprises.
(iv)             To improve understanding on the nature and role of management and their job.
(v)              To look at the staffing as it affect state-owned enterprises.
(vi)             To make recommendations to the government.
1.4   Significance of the Study        
Giving the overriding importance of state-owned enterprises for the growing population and for the speedily development in hotels in Nigeria a big challenge to government policy planners to formulate far-reaching and appropriate policy in the hotel sector.        
The marketing agencies in the state-owned enterprises are challenged equally to devise a better marketing means so that customers could be given the right services at the right time and at normal prices.        More so, a critical look at the problems of state owned enterprises is expected to bring about some short coming that are connected with service on the basis of which flesh solutions and means may be given.        
Therefore, we sincerely hope that the recommendation that will be emerging from this study shall inject a new scope of operational efficiency into the state-owned enterprises front in Nigeria and positively adjust the nations food deficit balance sheet and other economic problems.
1.5   Research Questions
Question I:      Have you ever been dissatisfied with the attitude of the services of this enterprises?
Question II:     How do you consider the services of this enterprises to the public?
Question III:    Does non-payment of staff salaries affect the management of this enterprises?
Question IV:    Is government interference the major problem facing the state-owned enterprises?
Question V:     Each time you are in need of the enterprise’s services do you normally get it at the right time?
1.6   Scope of the Study        
The study of which is the problems facing state-owned enterprises in Enugu State.  The research work is specifically based on two selected areas in Enugu State, which are presidential hotels, Enugu and Protea Hotels Enugu but was called Nike Lake Hotels Enugu earlier on.  This study tries to find out solutions to the existing problems of state-owned enterprises, which includes non-payment of staff salaries, government interference, which is the major problem, inability of the public to get the required and needed services at the right time, lack of staff training, promoting and creating of mass awareness etc.  
These problems makes it difficult for the state-owned enterprises to render services when needed and government do not have a say in the problems facing the state-owned enterprises, thereby causing great problem in the economic development and economic growth.
1.7   Limitations of the Study        
This study is limited to Enugu State.  It covers two areas in Enugu State, namely: Presidential Hotels and Protea Hotels (Nike Lake Resort), which were selected on the basis of convenience.  It is however believed that there are no major differences between the system of operation and problems facing both these state-owned enterprises since they are operated under the same economic conditions.
1.8   Definitions of Terms
(i)    STATE-OWNED ENTERPRISES: These are establishment that are established by government to render public services to the people.
(ii)    MANAGEMENT: This is the act of running or controlling a business or similar organization.
(iii)   HOTEL: A building where people stay usually for a short time, paying for the services rendered to them like paying for their rooms and their meals.
(iv)   ENTERPRISE: A large company or business developed by the people of a country mostly by he government.
(v)   PROBLEM: A thing that is difficult to deal with or to understand.  A question or thing that can be answered by using logical thought or mathematics.

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