Problems of financing government corporations (case study of tracas)

financing government corporations
financing government corporations
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Problems of financing government corporations(case study of tracas)


This research paper is on the problems of financing government corporations (TRACAS CASE OF STUDY).
In carrying out the research, the researcher intends to find out the outlet to which commercial banks finance the activities of TRANSPORT COMPANY OF ANAMBRA STATE LIMITED, to ascertain whether the ability of TRACAS to meet debt repayment schedule of financiers militate against is availability of funds, to determine the extent to which the government of Anambra state have helped in financing the corporation.
The researcher collected data from both primary and secondary sources. Data collected was presented and analysed and hypothesis formulated was tested using the chi-square method of testing hypothesis.
The researcher found out the following insufficient finance from commercial banks has a significant effect on the activities of TRACAS;
Inability of TRACAS to meet debt repayment schedule of finances militate against the availability of funds from TRACAS; inability of funding TRACAS has a significant effect on as activities and performances; inability of government of Anambra state to finance TRACAS.
The following recommendation, were made government should try and provide enough fund to corporations through commercial banks. They need to act as their guarantor in searing the fund. The high interest changed is to be looked into to enable corporations to service their borrowed fund.
I suggest that if all these recommendations were properly implemented it will go a long way in improving the efficiency of corporations in this nation.


Title Page
Approval Page
Chapter One

1.0 Introduction
1.1 Background Of The Study
1.2 Statement Of The Problem
1.3 Objectives Of The Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance Of The Study
1.7 Scope And Limitation Of The Study
1.8 Limitations
1.9 Definition Of Terms

Chapter Two

2.0 Review Of Related Literature
2.1 Overview Of Government Corporation Finance
2.2 Government Participation In Public Corporations
2.3 Rationale For Public Enterprises
2.4 Problems Of Public Enterprises
2.5 Issue Of Financing Government Corporations
2.6 Characteristics Of Public Corporation And Their Impact On Their Pricing Policy And Financial Situation
2.7 Financial Problems Of Public Corporation
2.8 Commercial Banks Financing And Interest Rate.
2.9 Inadequate Funding And Its Impact On Corporations

Chapter Three

3.0 Research Methodology
3.1 Research Design
3.2 Population Of The Study
3.3 Sample And Sampling Technique
3.4 Sources Of Data
3.5 Method Of Data Collection
3.6 Procedure For Data Analysis

Chapter Four

4.0 Data Presentation And Analysis
4.1 A Brief Introduction Of The Chapter
4.2 Questionnaire / Distribution
4.3 Presentation Of Data
4.4 Test Of Hypothesis
4.5 Interpretation Of Results

Chapter Five

5.0 Findings Recommendation And Conclusion
5.1 Findings
5.2 Conclusion


Public corporations are enterprises which are partly or wholly owned by the government, which private enterprises have been unable to take care of due to lack of adequate capital.
In any organization, there are so many components put together that make for an effective performance. One of these components is the fund. The problem that arises is the adequacy of the fund for effective other of the operations of an organization, through out its life time many organization which started well at the initial stage have failed by the wayside due to shortage of available funds.
Government have generally started playing a major role in economic development and in starting large enterprise in public sector. Many parastatals care into being when it was believed that rapid economic development required the state to table on the role of an enter premier. I should also be known that government movement in running public sector help in shaping its economy. Government ownership of these enterprises is to help improve its social and economic well being of her people and those amenities that the entrepreneurs cannot provide.
Public enterprise could be classified into four categories according to the degree of government participation in ownership and intervention in management. Firstly, governmental enterprises – composed of various government departments. Secondly government invested enterprises, where the government held at least 50% of the equity and appoint to management. Thirdly, subsidiary company of governmental invested enterprises which allow the government to invest indirectly through government invested enterprises and others. Lastly, governmental backed enterprises where the governmental holds less than 50% of the stock.
In developing nation there is a general believe that government should own and control enterprises due to insufficient capital on the side of these enterprises; and government gave majority control of than and appoint top management.
Over the past decades, the number and variety for public enterprises in developing countries have greatly expanded. In a developing country like Nigeria, the overall performance of these enterprises has been rather disappointing. They have supported staggering losses, thereby becoming a major drain on National budgets and the principal source of heavy external borrowing. They have equally purled to generate the expected job opportunities. Before independence, government establishments were the major employers of labour, but these days with many private enterprises set up by entrepreneurs more people have gained employment with these enterprises and this has reduced the dependence on government establishment and large firms for employment.
However, the followings have contributed to the poor performance and poor efficiency in these enterprises:
1. Obscure and sometimes conflicting managerial goals.
2. inadequate management accountability and autonomy
3. Excessive government interference in day to day management.
4. poor personnel and incentive systems
5. Complicated budgets and procurement processes.
6. inappropriate pricing and credit policies
7. Poor financing.
They have contributed to poor performances of public enterprises. The financing and management of these parastatals caused a serous problem in our economy. Its only very few government enterprises that are independent in the issue of financing, others solely depend on government. The fate is yearly tied on the national budgets because they are financed by way of grants, subsidies or loan from government. This equally means that if the government budget is delayed or cut down proposed expenditure, the funds of these enterprises will also be affected. This will determine their performance for that very year whether surplus or deficit is to be made.


The transport company of Anambra state limited (TRACAS) was launched on 12th September 1988 by the military Governor of Anambra state co. Robert Nnaemeka Akonobi under the spices of the federal urban mass Transit programme (FUMTP). This programme is aimed at alleviating the transportation problem of the people which was occasioned by the dearth of computer vehicle (buses, cars).
To ensure that the traces are efficiently managed, the Anambra state government decided to privatize it, thus; TRACAS was incorporated on the 8th December 1988. The Anambra state government has a 30% hold in TRACAS while remaining 70% will go to the public. Staff will also own shares in the company. The motto of the company is service and comfort.
The TRACAS Logo is the map of Anambra state and a palm tree. The palm is a tree of immense economic value to the people of Anambra state palm wine, palm oil, palm kernel oil, etc are all products and by product of this tree, its significance in the economy of the state cannot therefore be looked over.


The transportation company of Anambra state ltd has a fleet of 200 vehicles as at the time of writing this project comprising the following.
a. Luxury buses
b. Mini buses
c. Station wagon cars
d. Small buses


Tracas affers two types of services which are as follows:-
a. charter service
b. normal depot to depot service


This type of service are made up of
a. intra – city services
b. inter- city services


The intra-city service is in operation in Enugu and Onitsha. In Onitsha the company operates five routes. Each of these routes is depicted with a particular number/ colour for easy identification by commuters. In Enugu they operate only one route.


Four major routes are operated on the inter-city service to major towns in the state, they are;
Awka – Ekwuluobia
Awka – Onitsha
Awka – Nnewi
Awka – Nnobi


At each of the depot, tickets are issued by the ticketing clerks on the various routes, to commuters on payment of the appropriate fare. The passenger is also given a tally with the fully, the passenger will join the queue and proceed to board the bus on the announcement of the number of his/her tally.
Vehicles are boarded with passengers which is stated in a bus waybill. It indicates the total fare collected. There is equally a bus sheet that has the number of vehicles loaded from a depot daily and the number of passengers lifted.
Fares are paid to booking clerks who at the end of each day operation, account to the revenue clerk. All revenue collected is paid into the bank by the revenue clerk. Each bus after leading is dispatched by a loading supervisor.
The composition of the board is as follows:-
1. The commissioner for works, Housing and transport Anambra state
2. Commissioner for finance Anambra state
3. The general manager of the company
4. The accountant of the company
5. The Administrative manager.
The commissioners are representing the government while the other three an representing the company.
The management team is appointed by the board of directors, the composition is as follows
– General manager
– Deputy general manager
– Administrative manager
– Account
– Operation manager
– Public relation office
– Purchasing officer
The company has the following departments
-Accounts department
-Traffic department
-Stores department
-Workshop and engineering department
-Security department
-Interval audit department
-Planning and Monitoring department
Organizational chart of TRACAS


The problems facing government parastatals are of different factors. In the area of finance the problems are as follows:-
– Lack of adequate fund
Due to inadequate fund, government parastatal tends to operate at a low capacity or inefficiency this making services being rendered to the general public poor.
-inability of the government to finance corporations
transport company of Anambra state for instance has being haring problem of financing, this is because government does not finance them the way they could and as a result it has affected their earning from transportation and other sources of revenue.
– Non-availability of fund due to poor state of the economy.
As a result of poor state of the economy, government earning from both domestic and foreign source were affected and so government subjection to corporation tell drastically.


The purpose of this study is to know the financing problem of government corporation which actually have hundred their efficiency and profitability and ways it can be solved.
The objectives are:
1. To determine the extent to which commercial banks finance the activities of transportation company of Anambra state limited.
2. To ascertain whether the ability of transportation company of Anambra state to meet debt repayment schedule of financers militate against its availability of funds.
3. To ascertain the effect of inadequate funding of transport company of Anambra state on its activities and performance.
4. To ascertain the effect of inability of TRACAS to provide adequate security on the obtaining of finance.
5. To determine the extent to which the high interest rate changed by commercial banks affect the loan seeking habit of transport company of Anambra state.
6. To highlight the importance of adequate funding of transport company of Anambra state to the improvement of services offered to its customers.


  1. To what extent do commercial banks finance the activities of Transport Company of Anambra state?
  2. Does the ability of Transport Company of Anambra state to meet debt repayment schedule of financers militate against its availability of funds?
  3. What effect does funding of Transport Company of Anambra state to provide adequate security affects the obtaining of finance?
  4. Does the inability of Transport Company of Anambra state to provide adequate security affects the obtaining of finance?
  5. What effect does inability of the government of Anambra state to fund TRACAS has on it?
  6. Does adequate financing of Transport Company of Anambra state have any significant importance on the improvement of its services to customers?


HO: The inability of the government of Anambra state to finance
TRACAS has no significant effect
HI: The inability of the government of Anambra state to finance
TRACAS has significant effect.
HO: Insufficient finance from commercial banks does not significantly
affect the activities of TRACAS.
HI: Insufficient finance from commercial banks has a significant effect
on the activities of TRACAS.
HO: Inadequate funding of TRACAS has no significant effect on its
activities and performances.
HI: Inadequate funding of TRACAS has a significant effect on its
activities and performances.
HO: The inability of transport company of Anambra state to meet debt
repayment schedule of financers does not militate against the
availability of fund to TRACAS.
HI: The inability of TRACAS to meet debt repayment schedule of
financers militate against the availability of funds to TRACAS.


The significant of this research study has to do with unraveling the funding problems of the corporation (TRACAS) in particular and other corporations in general. It is significant to study the aspect of commercial bank funding of TRACAS since lack of funding will militate against the operations of the corporation and hence the general public who are the beneficiaries of TRACAS will be left unsatisfied.financing government corporations
It is also of significant to study this aspect of research because lack of funding will ground operations in TRACAS. This will make members of the staff redundant.financing government corporations
Transport company of Anambra state we all know play an important function in providing means of transportation for the corporation to go out of operation due to lack of adequate funding will be a big blow to the state government.


The study covers the various sources of financing Anambra Broadcasting service and also their problems. The study will examine the corporations invested turnover, profitability and viability. It will determine if the funding of Anambra Broadcasting service has been adequate or not. Suggestions are to be made on means of improving on the corporation financing.


In the process of carrying out the study the researcher will encounter some problems which will limit his ability to come up with an up-to-date and comprehensive report.financing government corporations
Some of the limitations include; time constraint, financial problems and unavailability of data.
– Time constraint financing government corporations
The time given to write up and submit this work is two short. The researcher will not be able to carry out a comprehensive research due to time constraint.financing government corporations


Financial problem and economic hardship has effect on the citizen of Nigeria so much that parents cannot effort to support their children financially. Due to this problem, the research will not be able to travel as she intended.financing government corporations


Lack of adequate data with also affected this study. Same of the data’s are neither easily released nor not released at all by those who have them. The answers to the interviews might either be biased or neglected wholly.
These limitations not withstanding, the researcher will still be able to gather some information which she could put together to measles the solutions to the problems hampering the growth of the Nation through the ineffectiveness of the government to fiancé public corporation.financing government corporations


1. Public corporation

Public corporation is a body created by public authority with defined powers and functions and financially independent. It is administered by a board. Its capital structure and financial operations are similar to those of a public corporation, but the stockholders (if any) have no equity interests and no voting rights to appoint board members.financing government corporations

2. Subsides

Grants of money to particular industries or group of individuals by a state, the purpose may be to assist local authorities to provide homes below their economic cost, to keep the price of food below the market price or to promote exports of a particular commodity.financing government corporations

3. Inter-city services

This is transportation service operating between one city and another.

4. Intra-city services

Transportation service operating within a city.

5. Ticket

A piece of printed paper given to every passenger indicating that the passenger has paid his/her fare.

6. Subvention

Grant which government gives to corporations as a means of financing them.


Young C. Park, “Performance evaluation system can improve the productivity and efficiency of public enterprises”.
An examination of Korea’s expenses, France and development a quarterly publication of the IMF and World Bank Feb. 1989, page 15.financing government corporations.financing government corporations

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