ABSTRACT
The aim of this study titled “The Economic Effects of Monetization Policy in the public service” was to examine the rationale for the implementation of the monetization as well as determine how the policy affects the general price level, unemployment, workers’ income and standard of living. To achieve this aim, a survey of some selected Federal government establishments were carried out. Data was collected from both primary and secondary sources. The data were presented in tables as frequency distribution. In analyzing the data, the statistical techniques of frequency and percentage were applied.
The major findings of the study were the rationale for the monetization policy
was the wasteful use of government resources by public officials. The objective of the policy was to promote efficient utilization of government’s properties and resources. The economic effects of monetization policy include increase in money supply and income of workers, as well as unemployment level. The conclusion drawn is that although the policy increased money supply but there is no evidence to show that it brought about increase in the general price level.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
For sometime now, “monetization” has become a household word in Nigeria, especially in the public sector. A lot of discussions have been made about this concept in relation to its meaning, nature, implementation and benefits to public servants and the government as well as its economic implementations. But, one thing is certain: government means well by designing and implementing this policy (Oduenyi, 2006:23). Its conceptualization is traceable to the National Economic Empowerment and Development Strategy initiative of the Federal Government (Ugbaja,
2005:2).
The National Economic Empowerment and Development Strategy (NEEDS) was formulated by the Obasanjo administration in response to the mirage of social, economic and political problems confronting the country.
The document identified bottlenecks to sustainable economic growth and development of the economy with strategies and workable policies and measures carefully formulated and meant to be implemented in stages in such a way that the economy would not experience undue pressure. The ultimate goal is the liberalization of the economy from age-long structured impediments. One of the polices therein is monetization of fringe benefits of all categories of public service employees (Chukwu,
2006:2002).
The monetization policy is an Act of parliament that came into existence with the enactment of certain political, public and judicial office Holders Act of 2002 and was later extended to cover all federal civil servants. It is on record that many top public officials maintained a fleet of official vehicles in their offices and homes. Similarly, telephone, electricity and other public utility services in the official quarters of public servants maintained by government were open to various forms of abuse and misuse.
One main consideration underlying the implementation of the monetization policy is the desire to reduce the pressure on public resources, arising from government’s involvement in the physical provision of fringe benefits (Odife, 2005:2).
Thus, it is expected that monetization will curb the excesses of public officers as Government will no longer provide chauffeur – driven cars and furnished quarters for public officials, correct the wrong perception of government utilities as services provided with limitless resources and positively impact on our national value system and ethics. It is also expected to have far – reaching impact on Government planning budgeting and discipline. In addition, it is expected to reduce the tendency for corruption by offering public servant higher wages, bonuses and improved working condition (Biodun, 2005:18).
Consequently, Government introduced the monetization programme, on the conviction that the policy will reduce to the barest minimum, such negative fiscal tendencies as waste and abuse of public facilities.
Against this background, this study will attempt to examine and determine that economic effects of the implementation of this policy on the Nigerian economy with a view to finding out, if any, the possible negative effects on employment inflation and workers productivity as well as the informal sector activities.
1.2 STATEMENT OF THE PROBLEM
Expectedly, monetization policy should ease government fiscal burden, improve financial management in the public sector among others. Unfortunately, these have not been fully achieved due to some problems.
Firstly, the implementation of the policy entails some public expenditure that has increased the financial burden.
Secondly, the increased financial outlay may have impacted on price levels.
Thirdly, the disengagement of many able – bodied public servants would definitely lead to massive unemployment rate in the economy.
Fourthly, given the problems of entrepreneurship in the economy, the policy would also have an adverse impact on informal sector activities.
The study, therefore, seeks to determine the impact of monetization policy on inflation, employment of resources among others.
1.3 OBJECTIVES OF THE STUDY
1. The objectives of the study are;
2. To examine the rationale for the monetization policy.
3. To find out, if any, the effect of the policy on general price level.
4. To find out how the policy affects unemployment.
5. To find out the effect on workers’ productivity.
6. To find out the effect on informal sector activities.
1.4 RESEARCH QUESTIONS
The following questions will be addressed in this study.
1. What is the rationale for the monetization policy?
2. To what extent has the policy affected general price level?
3. To what extent has the policy affected unemployment?
4. What is the effect of the policy on workers’
productivity?
5. How has the policy affected informal sector activities?
1.5 HYPOTHESES.
The following hypotheses are postulated for this study; Ho; Inefficient use of government resources is not the
rationale for monetization policy.
H1; Inefficient use of government resources is the rationale for monetization policy.
Ho; Monetization policy has not significantly reduced employment into the public service.
H1; Monetization policy has significantly reduced employment into the public service.
Ho; Monetization has not significantly affected general price level.
H1; Monetization has significantly affected general price level.
1.6 SIGNIFICANCE OF THE STUDY
The study will be useful in many ways.
Firstly, the government will find it useful in formulating policies relating to resource use in the public service. The information in the study will show how resources have been conserved through monetization although its implementation involved huge budgetary allocation.
Beside, it is expected that the policy will impact on inflation and unemployment. The findings of this study will provide information that will make the government brace up to this policy fall – outs.
Secondly, the study will also be useful to management of private sector businesses. It will provide information that will be useful should they decide to implement monetization of fringe benefits. Besides, most organization in the organized private sector, which has not monetized fringe benefits, will see the need for this policy and the benefits of the policy to both the organization and its workers.
Thirdly, the study will also be useful to public servants who have been favoured by this policy. Through its benefits to public servants, the policy now encourage public officers
to own vehicles, houses and furniture, thereby assisting them to plan better for their retirement. The study will generate information that will enable them eliminate the trauma of transition from public to private life which sadly has resulted in many public servant dying shortly after retirement.
Finally, the study will add to the little literature on monetization policy. This will serve some academic need of students who will carry out studies in related areas in the future. The study will also serve as a data bank.
1.7 SCOPE OF THE STUDY
The study focuses on monetization policy in the public service. However, the scope is restricted to its economic effects on the Nigeria economy.
1.8 LIMITATIONS OF THE STUDY
This study is limited to the analysis of economic effects of monetization policy on unemployment, inflation, workers productivity and informal sector activities as well as the problems arising from the policy implementation.
This material content is developed to serve as a GUIDE for students to conduct academic research
ECONOMIC EFFECTS OF MONETIZATION POLICY IN THE PUBLIC SERVICE OF THE NIGERIAN ECONOMY
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