THE EFFECT OF FINANCIAL MISMANAGEMENT ON NATIONAL DEVELOPMENT

Abstract

The public sector accountability failure in Nigeria has not only increased the height of corruption but also resulted in enormous waste of national resources and poor service delivery which might have negative consequence on the economy. This study examine the effect of financial mismanagement on national development in Nigeria. A survey research design was employed and the population consists of public sector organizations in Osun state in Nigeria. The sample organizations include Ministry of Finance (MOF), Ministry of Health (MOH), Ministry of Education (MOE) and Accountant General Office of the Federation (AGF) with 300 staff selected at random upon which copies of questionnaire were administered. Primary sources were employed in gathering data. A well-structured questionnaire of four sections was given to three hundred (300) respondents, out of which one hundred and seventy-one (171) of the questionnaires were retrieved. Descriptive statistics, percentage, graphical and Chi-square statistics using SPSS 23 version were used in analyzing data. The study indicate that a unit increase in corruption, poor public financial management, institutional problem, staff absenteeism/ late coming to work, leaking and/or abuse of government information and lack of political will creates public sector decay in Osun state public service.

CHAPTER ONE

INTRODUCTION

• Background of the study

Nigeria is heavily populated and naturally blessed with millions of acres of arable land, 38.5 billion barrels of confirmed oil reserves, immeasurable gas reserves, diversity of unexploited minerals and a wealth of human capital with a predictable population of over 200 million (Abdulkadir 2018). Nigeria is rank eighth in the world’s largest oil exporter, and Africa is largest economy with the rebasing activity of 2013. Nigeria accounts for about 15 percent of Africa’s population, provides 11 percent of Africa’s total output and 16 percent of its foreign reserves while it accounts for half of the population and more than two thirds of the output of the west African sub-region (Oteh, 2010). Fatile (2012) opined that Nigeria was one of the richest nations in the early 1970s but has been reduced to one of the 25 poorest countries on the verge of the 21stcentury; this is even as it hosts the third highest number of underprivileged people after china and India. Nigeria stills fall far away from developmental progress required to impact the welfare of the average Nigerian given that over half of the country’s population survive on less than a dollar per day (Oteh, 2010). The purpose of having governments is to provide for the security and wellbeing of their citizenry. Government exists primarily to cater for her citizens and ensure those needs are provided for efficient and effective management of social and economic wellbeing. Government achieves these goals by providing clear processes and structures for all phases of executive management (decision-making, strategic arrangement, managerial control, supervision and accountability). The Mismanagement of public funds is associated with the misuse and potential loss of funds and therefore raises questions about the integrity of the people in charge of the funds. Misappropriation constitute a deliberate act of the misuse of money. It is the channeling of money and other assets allocated for a specific official purpose for either personal use or for what it is not meant for. Such action constitutes an unauthorized spending of money or other assets for personal gain. Misappropriation is therefore the  highest type of fraud in the public sector as  People  intentionally  divert  public fund for  personal  aggrandizement  without any fear or  negative conscience  (Ibanichuka and Onuoha 2012). The fraud of this type is committed  through the following means; Outright abscorndmentof corporate or government assets for personal use.; Payment of salary to ghost workers; Payment for dubious purchase and contract ; inflation of contract prices; The diversion of government funds  into private use; use of office impress for personal allowance; The Unauthorized spending of public funds or asset; making Payment against uncleared cheques; The forfeiture of a disease staff gratuity and pension benefits and the Misuse of medical allowances and reimbursements; etc.

• STATEMENT OF THE PROBLEM

The issue of mismanagement of fund constitute a fundamental problem to national development. The case of mismanagement, misappropriation and embezzlement of public funds in the Nigeria has become the new normal, this has given rise to decay and underdevelopment of state and national assets. The financial misappropriation of public funds hinders the provision of basic social and economic infrastructures and the development of the nation at large. The problem confronting the study is to appraise the effect of financial mismanagement on national development. A case study of Osun state.

• OBJECTIVE OF THE STUDY

The study has one main objective which is divided into general and specific objective, the general objective is to examine the effect of financial mismanagement on National development, and the specific objectives are;

1. To examine if there is any significant relationship between financial mismanagement and national development
2. To examine the effect of financial mismanagement on economic growth

• To ascertain the effect of financial mismanagement on the infrastructural development of Osun state

1. To explore the role of government in curbing financial mismanagement
   • RESEARCH QUESTIONS

The following research questions were formulated by the researcher to aid the successful completion of the study;

1. Is there any significant relationship between financial mismanagement and national development?
2. Does financial mismanagement have any effect on economic growth?

• Does financial mismanagement hinders infrastructural development of Osun state?

1. Does government play any role in curbing financial mismanagement among public servant?
   • RESEARCH HYPOTHESES

The following research hypotheses were formulated by the researcher to aid the completion of the study;

H₀: There is no significant relationship between financial mismanagement and national development

H₁: There is a significant relationship between financial mismanagement and national development

H₀: Financial mismanagement does not hinders infrastructural development of Osun state

H₂: Financial mismanagement does hinders infrastructural development of Osun state

• SIGNIFICANCE OF THE STUDY

This research work is centered in the effect of financial mismanagement on national development.  The significance of this research are:

It will enable the research ascertain the remote and immediate problems involved in the mismanagement on finances in public sector. The study will also be of importance to researchers who intend to embark on a study in a similar topic as the findings of this study will serve as a pathfinder to further study. The study will also be of great importance to students, teachers, academia’s and the general public as the findings of the study will add to the pool of existing literature on the subject matter and also contribute to knowledge.

• SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the effect of financial mismanagement on national development with emphasis on Osun state. But in the cause of the study, there are some factors that limit the scope of the study which was beyond the researcher’s control;

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
3. c) Finance: Limited Access to the selected to the required finance was a major limitation to the scope of the study as a result of the Covid-19 restriction.

1.8 OPERATIONAL DEFINITION OF TERMS

Financial Mismanagement

Financial mismanagement is management that, deliberately or not, is handled in a way that can be characterized as “wrong, bad, careless, inefficient or incompetent” and that will reflect negatively upon the financial standing of a business or individual.

Finance

Finance is the process of channeling money from savers and investors to entities that need it. Savers and investors have money available which could earn interest or dividends if put to productive use.

National development

National development is the change in growth and development, which includes social, cultural and economic change

1.9 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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