Continental J.Social Sciences 3: 1 - 6, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com THE EFFECT OF COMPANY INCOME TAX ON DIVIDEND POLICY OF FINANCIAL INSTITUTIONS IN NIGERIA S.E. Samuel and S.J. Inyada Department of Accounting, Kogi State University, Anyigba- Nigeria. ABSTRACT This study appraised the effect of company income tax on dividend policy of financial institutions in Nigeria. In doing this, the researcher attempted to examine the nature and history of taxation in Nigeria; explain the meaning and types of dividend policy and examine the relationship between corporate income tax and dividend policy of financial institutions in Nigeria. To enable an empirical comparison of the findings, a critical review of related literature was carried out. A survey research method was used in the study. The analytical tools used in analyzing the data collected for the study was regression analytical techniques. Data was obtained from the published accounts of fifteen financial institutions in Nigeria. It was discovered that there is significant relationship between corporate income tax and dividend policy of the financial institutions in Nigeria. KEYWORDS: Company Income Tax, Dividend Policy, Nigeria Stock Exchange, Dividend Payout, Financial Institutions, Retained Earnings INTRODUCTION Dividend policy is the core component of a firm’s overall financial policy. It is comprised of a series of decisions regarding how the firms distribute profits to their shareholders and it mostly includes basic contents about the selection of dividend policy, dividend payout ratio and payout channel etc. Since the dividend policy determines whether distribute the earnings to shareholders or self-finance through retained earnings, so it is an important issue that receives more attention these days from both academics and practitioners (Li et al., 2006). Corporate income tax is one of the major sources of revenue to all governments. In Nigeria, it is a factor to be reckoned with in Federal Government’s budget. The taxes so collected come back to the taxpayers in form of services and to either encouraged or discouraged some activities in the private sector; though, this depends on whether the policy of the government is towards discouraging or encouraging such companies (Ola, 1999). A lot of controversies regarding taxes and dividend policy have attracted many academic interests. The debate over the importance of dividend policy was first sparked in Miller and Modigliani (1961), which suggested that both firm financing and dividend policy was irrelevant for firm investment decisions and independent of the value of the firm (Elston, 1999). Financial theorists such as Brennan (1970), Masulis and Trueman (1988) have stipulated that taxes affect organisational corporate dividend policy. If this speculation were true, changes in corporate dividend payout would be expected whenever the government changes its income tax policy (Wu, 1996). However, this does not always apply especially in the banking business. Lintner (1956) had asserted that the major determinants of dividend policy are the anticipated level of future earnings and the pattern of past dividend. This discrepancy may have underpinned Modigliani and Miller (1961) theory, which provided a platform for the enormous debates and researches on dividend policy. The financial sector is of interest in this research because of the structure of its dividend as revealed in the study. Dividends are usually paid to owners or shareholders of business at specific periods. This is apparently based on the declared earning of the company and the recommendations made by its directors. Thus, if there are no profits made, dividends are not declared. But when profits are made, the company is obligated to pay corporate tax including other statutory taxes to the government. This is an essential corporate responsibility particularly profit making companies. The taxes no doubt reduce the profits available at the disposal of the organisations, either to be retained or distributed as a dividend to shareholders of the company. Dividend policy is the trade-off between retaining earning and paying out cash or issuing new shares to shareholders. Some firms may have low dividend payout because management is optimistic about the firm’s future and therefore wishes to retain their earnings for further expansion. Frankfurter and Wood (1997) indicate, dividend pattern of a firm is a cultural phenomenon that changes continuously in relation to environment and time. It is hard to deny that taxes are important to investors. Although, 1 S.E. Samuel and S.J. Inyada: Continental J. Social Sciences 3: 1 - 6, 2010 dividend affects the shareholders tax liability, it does not in general alter the taxes that must be paid regardless of whether the company distributes or retains its profit (Brealey, Myers and Marcus, 1991). Taxation is not a new word in Nigeria or the world as a whole. In Nigeria, taxation has been in existence even before the coming of the colonial men or the British. Taxation can be defined as the system of imposing a compulsory levy on all income, goods, services and properties of individuals, partnership, trustees, executorships and companies by the government (Yunusa, 2003). Anyafo (1996) defined taxation as a compulsory payment made by individuals and organization to relevant Inland Revenue authorities at the federal, state or local government level. Tobansi-Ochiogu (1994) sees taxation as a levy imposed by the government against the income, profit or wealth of the individual, partnership, corporate organization. Ola (1999) defined taxation as compulsory levy imposed on a subject or upon his property by the government to provide security, social amenities and create conditions for the economic wellbeing of the society. Tax is not an assessment of benefits. It is a means of distributing the burden of the cost of government (Jones, 1998). This study shall be directed at evaluating the effects of company income taxes on the dividend policy of financial institutions in Nigeria. The main objective of this study is to appraise the effect of corporate income tax on dividend policy of financial institutions in Nigeria. Specifically, this study intended to: I. Explain the nature and history of taxation in Nigeria. II. Explain the meaning and types of dividend policy. III. Examine the relationship between corporate income tax and dividend policy of financial institutions in Nigeria. To examine the impact of corporate income tax on dividend policy of financial institution in Nigeria critically and objectively, the following null hypothesis was formulated and tested: Ho: There is no significant relationship between company income tax and dividend of financial institutions in Nigeria. Company Income Tax in Nigeria: Nature and history Income tax is one of the major sources of revenue to all government. In Nigeria, it is a factor to be reckoned with in Federal Government’s budget the taxes so collected come back to the tax has over the years encouraged or discouraged some activities in the private sector; though, this depends on whether the policy of the government is towards discouraging or encouraging such companies (Ola,1999). According to Azubike (2007), the history of taxation in Nigeria can be dated back to the era of Sahara trade and the introduction of Islamic religion in Nigeria between 800AD and 1400AD. The rulers in the Northern Nigeria were known as “Safawa”, Kings, who grew rich due to gifts and levies paid to them by their subordinates as taxes on cattle and agricultural crops. The Islamic religion later introduced various forms of taxes namely: Zakat, Kurdin Kasa, Shukka Shukka, Jangalia, Kharant etc. The Zakat was imposed on educational and charitable purposes. In the south, the Obas and Ezes relied on tributes, arbitrary levies, special contributions at special festivals or events, fees, present, all collected through the head of families as it system of taxation. The first legal backing of taxation was in 1904 when Sir Frederick Lugard introduced the Native Revenue Proclamation. This proclamation was further enhanced in 1906. After independence in 1960, the government enacted three major tax laws, namely: Federal Income Tax Act (FITA), 1961; Income Tax Management Act (ITMA), 1961 and Companies Income Tax Act (CITA), 1961. The companies Income Tax Act (CITA) 1961 was applied to companies in Nigeria. It was later repealed and replaced with the companies Income Tax Act (CITA) 1979 with amendment in 1993 up to 1999. The Act is contained in chapter 60, Laws of the Federation of Nigeria (LFN) 1990. It is the sole responsibility of the Federal government to administer corporate Income taxes in Nigeria. Meaning and Types of Dividend Policy In discussing the meaning of dividend policy, it is important to highlight what a dividend is. A dividend is simply the money that a company pays out to its shareholders from the profits it has made (Droughty, 2000). Such payments can be made in cash or by issuing of additional shares as in script dividend. Davies and Pain (2002) however defined it as the amount payable to shareholders from profit or distributable reserves. Companies that are listed in the stock exchange are usually obligated to pay out dividends on a quarterly or semi annual basis. The semi 2 S.E. Samuel and S.J. Inyada: Continental J. Social Sciences 3: 1 - 6, 2010 annual or quarterly payment is referred to as the interim dividend. The final payment, which is usually paid at the end of the financial year of the company, is known as the final dividend. Dividends are normally paid after the corporate tax has been deducted. Dividend policy is primarily concerned with the decisions regarding dividend payout and retention. It is a decision that considers the amount of profits to be retained by the company and that to be distributed to the shareholders of the company (Watson and Head, 2004). Theoretically, there are different types of dividend policies. These include constant payout, progressive policy, residual policy, and zero policy and non-cash policy. Investors are seen to belong to a particular group or clientele. This is because they tend to pitch their tent with a particular policy that might suite them. This is the clientele effect of dividend policy (Hutchinson, 1995; Kolb and Rodriguez, 1996). (i) Constant or fixed policy: The Company pays out a fixed amount of its profit after tax as dividend. Thus, the company maintains a fixed payout ratio of dividend. Pandey (2005) define payout as the ratio of dividend to earnings. A company may as a matter of policy, decide to constantly payout sixty percent of its after tax profit as dividend to its shareholders and retaining the remaining fraction. This type of policy allows the shareholders the opportunity to clearly know the amount of dividend to expect from their investments in the company. However as noted by Watson and Head (2004), the policy could be traumatic to companies experiencing a volatile or fluctuating profit earning. This is because of the uncertainty of its profit. If capital projects are to viable capital projects, the policy can be chaotic. (ii) Progressive policy: Payments on dividend is on a steady increase usually in line with inflation. This could result in increasing dividend in money terms. The firm uses the policy as a ratchet. Every effort is made to sustain the increase even though marginal. Seldom, the company may be constrained to cut down on dividend payout. This is to enable it sustain its operations. This though not a frequent action as it sends a wrong signal to investors. Firms operating this policy will opt to avoid paying dividends during the period rather than consistently cut down on the dividend (Kolb and Rodriguez, 1996). (iii) Residual policy: Dividends are just what is left after the company determines the retained profits required for the future investment. This policy gives preference to its positive NPV (Net Present Value) projects and paying out dividends if there are still left over funds available. Dividend becomes a circumstantial payment only paid when the investment policy is satisfied. There is a tendency therefore that this type of policy could give rise to a zero dividend structure. Firms may need to modify this policy to ensure that investors of the different clienteles are not chased out by a strict application of the policy (Kolb and Rodriguez, 1996). (iv) Zero dividend policy: Some firms may decide not to pay dividend. This is especially common in newly formed companies that rather require capital to execute its projects. All the profit is thus retained for expansion of the business. Investors who prefer capital gains to dividends because of taxation will naturally be lured by this kind of policy. This type of policy is quite easy to operate and avoids all the costs associated with payment of dividends (Watson and Head, 2004). (v) Alternative policies: In order to give shareholders a choice between dividends or new shares, the company might choose to buy back shares. This is share or stock repurchase. This has a significant advantage in terms of tax to the shareholder. While the dividend is fully taxed just as ordinary income, the stock repurchase or buyback is not taxed until the shares are sold and the shareholder makes a profit or capital gain (Ross, Westerfield and Jordan, 2001). There is also the policy of stock dividends and split. Shareholders are given additional shares in lieu of cash to the shareholders (Brealey, Myers and Marcus, 1999). MATERIALS AND METHODS A survey research method was used for the study. The major source of data shall be through the published accounts of financial institutions in Nigeria. Though, relevant literatures including periodicals and journal articles giving clues on the investment decision/policy, taxation etc also provide veritable data for the analysis. The research was both qualitative and quantitative in its approach. The qualitative approach includes detail description explanation of a phenomenon under study while the quantitative approach involves the use of numbers (Encarta Dictionaries, 2009). The methodology was empirical as it will implore statistical tools in analysing data obtained for the study. The analytical tools used in analyzing the data collected for the study was regression analytical techniques. It has the 3 S.E. Samuel and S.J. Inyada: Continental J. Social Sciences 3: 1 - 6, 2010 potential of predicting the values of the dependent variable given values of the independent variable (Martin and Firth, 1983). The study population consists of all staff of financial institutions in Nigeria quoted on the Nigeria Stock Exchange (NSE). A systematic sampling technique was used to select fifteen financial institutions in Nigeria. The choice of the systematic Sampling technique was in order to get convenient samples that will be an adequate representation of the study. This has the advantage of eliminating possible bias particularly in a survey (Smith, 1991). RESULTS AND DISCUSSION Table 1 and Table 2 show the Regression Summary and Coefficient of the dependent and independent variables used to determine the relationship that exists between corporate income tax and dividend policy of financial institutions in Nigeria via SPSS package (version 17.0). Table 1: Regression Summary Model 1 R .552 R Square .305 Std Error of the Estimate 2779.540 Sig. F Change .033 Source: SPSS Output File Table 2: Coefficients Unstandardized Coefficients Model B Constant Tax 494.657 .884 Std. Error 1283.841 .370 Standardized Coefficient Beta .552 t .385 2.388 Sig. .706 .033 Source: SPSS Output File Tables 1 and 2 show the Correlation between tax and dividend of fifteen financial institutions used in the study. The correlation shows a perfect positive correlation between the tax and dividend. This indicates that tax weigh heavily on the determination of dividend policy of financial institutions in Nigeria. In table 1 the value of R, coefficient of correlation, is 0.552 which indicates a positive but moderate relationship between tax and dividend while the coefficient of determination (r2) is 0.305 which mean that about 31% of the dependent variable is accounted for by the independent variable and the remaining 79% is accounted for by other variables. The positive relationship implies that as dividend increases, corporate tax increases. In table 2, the regression coefficient is 0.884 and the tstatistics is 2.388. The level of significance/p-value is 0.033; this is 3.3% level of significance. That mean 96.7% confidence interval which mean it is significant because its more than 95% confidence level and less than 5% significant level. The significant level shows that the independent variable (tax) may necessarily be contributing to the variation in the dependent variable (dividend). Therefore, the null hypothesis is not true, as the simple regression analysis shows a significant effect of corporate income tax on dividend. This implies therefore that a change in tax will significantly affect the dividend policy of the financial institutions in Nigeria. The discussion of the findings of the study is based entirely on the research hypothesis, which is in line with the research objectives. Dividends are taxed at shareholders marginal tax rate, while capital gains first are only taxed when realized, and second, have a lower tax rate than the highest marginal personal tax rate. A high dividend policy is justified if a firm does not have any good investment uses for its cash. It is better to return money to the shareholders rather than invest in negative net present value projects, such as holding cash. Ross, Westerfield and Jordan (2001) highlight that effective tax rates on dividend income are higher than the tax rates on capital gains. The dividends are taxed as ordinary income while the capital gains are taxed at a relatively lower rate and are taxed when the shares are sold. Thus, these options of accepting a cash dividend or differing it for a capital gain explains the significant effect of the tax on the dividend as obtained in the study. A low dividend policy is justified to minimize shareholders’ personal taxes. A high dividend policy could hypothetically make sense in a tax system with higher 4 S.E. Samuel and S.J. Inyada: Continental J. Social Sciences 3: 1 - 6, 2010 rates on capital gains than on dividends. Similarly, if a firm’s shareholders are exempt from taxation, then the rationale for paying low dividends would be reduced. The low dividend and extra policy is not appropriate for firms in all industries. It is best for companies in industries where firms infrequently experience large but temporary increases in earnings. It is not appropriate for firms with high, steady earnings. Mature, low growth firms are more likely to follow a constant nominal payment, increasing the dividend regularly as earnings increase. CONCLUSION Based on the results and discussions above, the following conclusions can be deduced: The result of the study is consistent with the findings of scholars and researchers with similar interest such as Jensen and Johnson (1995); Miller and Scholes (1978, 1982). This study provides additional evidence that corporate income tax affect the dividend policy of corporate organizations. There is a significant relationship between corporate income tax and dividend policy of financial institutions in Nigeria. Therefore, a change in corporate income tax rate will significantly affect the dividend policy of financial institutions in Nigeria. ACKNOWLEDGMENT A number of individuals have contributed immensely in bringing this article to its present state. We are thankful to all of them for their criticisms, help and encouragement. Even though time and space constraint would not permit us to list their names, we must specifically express our gratitude to professor Akpa Abimaje Dr, Achua of Benue State University, Makurdi, Nigeria; Dr. Ajachukwu, Mr. Rufai, Mr. Obinna, Mr. Audu, and Mr. Simon, and Gbegi all of Kogi State University, Anyigba, Nigeria. REFERENCES Anyafo, A.M.O. (1996). Public Finance in Developing Economy: The Nigeria Case. Enugu: B&F Publication Azubike, J.B.U. (2007). “An Evaluation of the Relevance of the Pioneer Income Tax Relief as an Alternative Investment Incentive to Companies in Nigeria”. ICAN Students’ Journal, July/ September, 15-19 Brealey, R.A., Myers, S.C. and Marcus, A.J. (1991). Principles of Corporate Finance (4th Ed.).London: McGrawHill. Brennan, M. (1970). “Taxes, Market Valuation & Corporate Financial Policy” National Tax Journal, 23, 417-427. Company Income Tax Act (1994). Federal Republic of Nigeria, Lagos: Federal Government Printer Davies, T. and Pain, B. (2002). Business Accounting & Finance. Berkshire: McGraw-Hill. Droughty, M. (2000). The Joy of Money. London: Simon & Schuster Ltd. Elston, J. A. (1999). “Dividend Policy, Liquidity Constraints and Firm Investment In Germany”. Retrieved from: www.bus.ucf.edu/wp/working%20papers/1999/9944_p.pdf Encarta Dictionaries (2009). Redmond, WA: Microsoft Corporation Frankfurter, G.M. and Wood, B.G. (1997). “The Evolution of Corporate Dividend Policy” Journal of Financial Education, 23, 16-32. Jensen, G. and Johnson, J. (1995).The Dynamics of Corporate Dividend Reductions. Financial Management, 24(4), 31-51 Jones, S.A. (1998). Principles of Taxation for Business and Investment Planning. United States: Irwin/McGraw-Hill Kolb, R.W. and Rodriguez, R.J. (1996). Financial Management (2nd Ed.). Cambridge: Blackwell Publishers. 5 S.E. Samuel and S.J. Inyada: Continental J. Social Sciences 3: 1 - 6, 2010 Hutchinson, R. (1995). Corporate Finance. Cheltenham: Stanley Thorne Ltd. Lintner, J. (1956). “Distribution of Income of Corporations among Dividends, Retained Earnings and Taxes”. The American Economic Review, 46(2), 97-113. Li, L, Yin-feng, Q, Song, L and Man-shu, W. (2006). “Who Makes the Dividend Policy Decision and their Motives for doing so?: Analysis based on a Questionnaire Survey of Non-state-Owned listed Companies in China”. Retrieved from: www.ccfr.org.cn/cicf2006/cicf2006paper/20060128200110.pdf Martin, E.T and Firth, J.R. (1983). Core Business Studies Statistics. London: Mitchell Beazley Publishers Masulis, R.W. and Trueman, B. (1988). “Corporate Investment & Dividend Decisions Under Differential Personal Taxation”. Journal of Finance and Quantitative Analysis, 23, 369-386. Miller, M.H. and Modigliani, F. (1961). “Dividend Policy, Growth, and the Valuation of Shares” Journal of Business, 34, 411-433. Miller, M.H. and Scholes, M.S. (1978). “Dividend & Taxes”. Journal of Financial Economics, 6(4), 333-64 Miller, M.H. and Scholes, M.S. (1982). “Dividend & Taxes: Some Empirical Evidence”.Journal of Political Economy, 90(6), 1118-1141. Ola, S.C. (1999). Income Tax Law and Practice in Nigeria. Ibadan: Heinemann Educational Books (Nig) Plc. Pandey, I.M. (2005). Financial management (9th Ed.).Delhi: Vikas Publishing House Pvt Ltd. Ross, S.A.; Westerfield, R.W. and Jordan, B.D. (2001). Essentials of Corporate Finance (3rd Ed). Singapore: McGraw-Hill. Tobansi-Ochiogu, A.C. (1994). Nigerian Taxation for Students with Worked Examples. Enugu: A.C. Ochiogu Publishers Ltd Smith, C.B. (1991). A Guide to Business Research (2nd Ed.) Chicago: Nelson-Hall. Watson, D. and Head, A. (2004). Corporate Finance: Principles & Practice (3rdEd.) Essex: Pearson Education Ltd. Wu, C. (1996) Taxes & Dividend Policy. International Journal of Economics and Finance, 5, 110-122. Yunusa, A.A. (2003). Understanding the Principles and Practice of Taxation in Nigeria. Lokoja: Jimsy Color print. Received for Publication: 12/04 /2010 Accepted for Publication: 02/05 /2010 Corresponding Author: S.E. Samuel Department of Accounting, Kogi State University, Anyigba- Nigeria. E-mail:
[email protected] 6 Continental J. Social Sciences 3: 7 - 17, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com INFORMAL SAVINGS MOBILIZATION AND INVESTMENT: A CASE STUDY OF ROTATING SAVINGS AND CREDIT ASSOCIATIONS (ROSCA) IN KOGI STATE, NIGERIA Adofu, I , 2Antai, E., And 3Alabi,O. Department of Economics, Kogi state university, Anyigba, Nigeria, 2Business Development / Research Unit. Baantai Farms (Nig) Ltd, Oron, Akwa Ibom, Nigeria, 3Department of Agricultural Economics, Kogi state university, Anyigba, Nigeria 1 1 ABSTRACT The rural economy of Nigeria despite the vortex of informal financial institutions lacks the vital resource desperately needed for economic growth as a result of the poor rate of capital accumulation. This paper examined the impact of informal savings mobilization on investment in Kogi State, Nigeria using rotating savings and credits association in Kogi State as case study, it specifically examines the purpose of loans/credits obtained, the nature of ROSCA in the informal financial sector of Kogi State, the average savings and credits obtained by members of ROSCAS. It also gathers opinion on whether grass root governmental intervention in the activities of rural saving mobilization is necessary for effectiveness and also examined the constraints/ perceived problems of members of ROSCAS. One hundred and eighty seven (187) respondents was randomly selected from six (6) local government area of Kogi State with the aid of well structured questionnaire, and analyzed using tabular analysis, percentage rating and chi-square tool. The study revealed that 39.03% saved an average monthly sum of between N 5000 – N10,000, 23.51%, 8.02% and 4.31% saved between N1000-N5000, N10,000-N100,000 and above N100,000 respectively. Majority (71.12%) obtained credits ranging between N10,000 – N100,000 the perceived problems/constraints identified includes lack of trust/fear of default (26.20%), method of savings mobilization (23.52%), leadership structure (13.36%), death of member (20.32%) lack of participation in decision making (16.60%) as their major constraints. The study further revealed that informal savings mobilization had no significant impact on investment in the rural sector of Kogi State while government intervention at the grassroots level had significant impact on the promotion of ethical savings mobilization to drive investment projects. Based on the findings of the study, it is recommended inter alia that sustainable ROSCAs should be inaugurated per village unit to broaden rural savings channels and also the proactive participation of the grassroots’ apparatus of state in the disbursement of credits facilities, monitoring of project execution and performance to be used as indicator for further credit grants for expansion. KEYWORDS: informal, Saving, Mobilization, investment. Intervention, grassroots. INTRODUCTION Contemporary studies of developing economy have acknowledged the informal financial institutions as a major player in the financial institutions. These derived from two school of thought viz the financial repression school (McKinnon and Shaw 1973) and the structuralist school of thought (Hugon:1990). The former sees the emergence of informal financial institution to be a result of the excessive regulation of the formal financial sector, while the later argues that the informal financial sector exists to serve other social goals than, making higher profits. The structuralist, therefore, considered the existence of informal financial institution to be a consequence of social rather than pure economic motives (Hugon: 1990). Though the size of the informal financial market is not easily determinable due to its complex nature and institutions, it has been variously claimed that the informal financial sector in many developing countries, particularly in Africa is as large as or even larger than the formal sector (Wai: 1980, Chandarvarkar: 1985, and Christenseen: 1993). In some African countries, the quantum of loans transacted through informal financial institutions exceeds the formal volume of resources intermediated through the formal financial institutions showing an indicator that holds huge investment potentials. (Anyeetey and Hyuha: 1991). In Taiwan, the ratio of financial loans to private enterprise from the informal financial institution averaged 30 percent during the period 1971-1988 There are two basic problems arising from the presence of a large informal 7 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 financial institution. The first is its implication for financial intermediation. The second is its impact on monetary policy and investment especially when a large amount of money is outside the banking system. The first case is an indication that investment and savings potentials are high in relation to the size of formal finance. There is thus a prevalence of substantial financial gap in the population, which is not yet serviced through the banking system. Consequently, owing to the failure of the financial system to allocate resource efficiently to a segment of the market, or the population, there is the tendency to patronize the informal financial channel for investment funds. In the second case, the central banks, ability to influence financial and monetary condition through manipulation of deposit money banks’ (DMBs) reserve balance using indirect monetary policy instrument is impaired. Nnanna (2001) identified the existence of dualistic financial market as a serious constraint to good money management and investment in Nigeria. In addition, government polices (fiscal and monetary) are normally formulated on the platform of the formal sector in mind and it is as a result of policy failures that the searchlight is being beamed on the informal financial institution. Given the inter-relationship between the formal and informal financial sector, policy measures directed at regulating the formal financial systems, without addressing the factor which have given rise to the countervailing influence of the latter. Nigeria is a cash based economy whose financial institutions are relatively shallow vis-à-vis the size of the countries gross domestic product (GDP). For instance broad money as a share of (GDP) has hovered around 13.0 to 28.7 percent, compared to 58.30, 43.0 and 45.0 percent in South Africa, Kenya, and Namibia respectively between 1996 and 2000. Currency outside bank as a percentage of broad money supply averaged 47.2 percent between 1991 and 2000 in Nigeria. Indicating that there are enormous resource outside the ambit of the regulating authorities (the formal financial institution) that can be pooled for investment in infrastructural facilities, social amenities, industrial development etc with a total of 23 deposit money banks in Nigeria, having a branch network of 4827 (3920 urban and 907 rural) and the bank-customer ratio of 1:47589 (47589 persons per bank), the country is grossly under banked. On the contrary, the informal financial associations, in various forms with an average membership of 10 persons per association are found in all the rural communities. Thus, it becomes imperative to understand the informal financial institution in Nigeria, especially with respect to issues relating to it size, nature, structure, loan administration, and cost of funds, investment potentials and the role of information in order to aid fashioning out appropriate policy options. Such an investigation would also help in evolving a more pragmatic relationship with the rural monetary authorities, towards proactive rural monetary management and its impact on investment in the economy. Informal financial markets have been identified as a highly heterogeneous group, incorporating all financial transactions consummated outside the functional scope of formal financial regulations (Anyeetey and Hyula, 1991). Informal network of financial markets participants include money lenders, rotating savings and credit association (ROSCAs) mobile saving collectors, mutual assistance groups, landlords, neighbours friends and family members (Meier 1970). Informal financial intermediation in savings mobilization are easily identifiable in Nigeria because of the contiguity of shared forms and characteristic, there is however, no identifiable distraction between informal financial institutions operating in urban and those in rural areas. Also the volume of resources mobilized does not exhibit any meaningful difference base on location. The informal financial markets operates mostly on the principles of Rotating Saving and Credit Associations (ROSCAs), which have a long history in developing countries, and they continue to be a major source of credit in African countries. Typically, a small group is formed from a village or family group where enforcement costs are low because of powerful social sanctions. Each member agrees to contribute periodically, certain amount into a common pool, so that each in rotation can receive one large sum. It is built on trust and membership is often drawn from homogenous groups e.g. from the same ethnic background, same work place or same neighbourhood. If a member defaults in repaying the loan, the community bans him and if a member is banned from one group, he is rejected by the community. 8 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 ROSCAs is a group of individuals who agree to meet for a defined periods of time in order to save and borrow together, “ROSCAs are the poor man’s bank, where money is not idle for long but changes hands rapidly, satisfying both consumption and production needs”. These groups of individuals come together and make regular cyclical contributions to a common fund, which is then given as a lump sum to one member in each cycle. Participation is based on trust and social forces, and the desire to continue to be a member. It can be considered as a form of informal microfinance. The details vary as membership may be restricted by gender (often women only), ethnic group or place of residence the contribution amount varies according to a number of factors, and especially the ability to reliably contribute a certain amount. Socio-economic level is also an important criterion of membership. The cycle period and method of selecting a winner also vary. Meetings can be regular or tied to seasonal cash flow cycles in the rural communities where each member contributes the same amount at each meetings and one member takes the whole sum of money during the life of the ROSCAs, and use it for whatever purpose she or he wishes. This method of savings is a popular alternative to the risks of saving at home where family and relative may demand access to savings. Every transaction is seen by every member during the meetings. Since no money has to be retained inside the group, no record has to be kept unless otherwise stated. These characteristics make the system a model of transparency and simplicity that is well adapted to communities with LOW LEVEL of LITERACY and weak systems for protecting collective property rights. The system further reduces the risk to members because it is time limited typically lasting no more than one year. This reduces the size of loss should someone take funds early and not pay back. Variously called Esusu in West Africa and the Caribbean, tontines in Cambodia, etibi in Oron nation, wichingye in Korea, arisan in Indonesia, xitique in Mozambique and djanggis in Cameroon, ROSCA are informal or pre-cooperative microfinance groups that have been documented around the developing world. A famous early study by anthropologist Clifford Geertz documented the arisans of Modjokuto in eastern Java. He described them as intermediate institution forming up within peasant social structure, to harmonize Agrarian economic patterns with commercial ones, to act as a bridge between peasants and trader attitudes towards money and its uses”. The individuals in the ROSCA select each other, which ensure that participation is based on trust and social force, and a genuine commitment to participate. The multiplicity and spread of membership among different forms of institutions is equally common both amongst the rural and urban clients, sanctions and loans recovery methods are broadly similar, between urban and rural dwellers, across peoples, societies, communities and countries in almost all forms of informal financial institutions, peer group pressure and cohesion provide the most potent tool for loan recovery, an attribute that is conspicuously missing in the formal financial institutions, the membership pattern in usually widespread, but largely contiguous. Thus, people who do not reside within a contiguous geographical location are not admitted. ROSCAs are not registered with the government and efforts are made to keep government from intervening in the management of their affairs, thus their activities are not regulated by government laws and edicts. Basically, most savings among the relatively poor are held in the form of real assets. This equilibrium portfolio allocation results from the poor performance of financial assets and from the strong demand for owning real assets which are used directly in production. The poor performance of financial savings among the poor should not be surprising, because financial savings is subject to precisely the same information and enforcement difficulties as lending. Consequently, financial savings in the informal sector is held within close social groups in order to contain the moral hazard and adverse selection problems associated with enlisting assets to strangers (Anyeetey and Udry: 1994) group savings schemes of one sort or another are known to operate in about half of all African countries (Anyeetey and Udry: 1994). The group tends to be socially homogenous as a means of avoiding information and enforcements difficulties. The group also tends to build social collateral (Besky and Coate, 1994) by increasing information flows, providing benefits (which can be cut off) to members and serving as a focal point for social interaction. Informal group savings, therefore, in addition to its direct role of mobilizing savings may serve to ameliorate the information and enforcement difficulties associated with other financial transactions (Anyeetey and Udry: 1994). The major problem with domestic savings mobilization in Kogi state of Nigeria is that inadequate savings are being mobilized to facilitate the required investment needed for economic growth. Also, the type of savings available that 9 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 is shrouding in principles based on uninformed and exoteric foreign economic models do not make indigenous financial intermediations possible, Kogi states as well as Nigeria’s low and stagnant savings rates have not compared well with regions and countries of Asia, given Nigeria the lowest savings rates among the developing regions. The Gross Domestic Savings being the most available measure of saving performance re-enforce this claims as shown below, 17% GDS in 2006, compared with 26.0% in south Asia, 24.0% in Latin America and the Caribbean’s and really 42.9% in east Asia and pacific countries (world bank 2007). The much lower level of savings in Kogi state and Nigeria may explain much of the lower of economic activity in the region and the slower pace of growth. Aside from savings rates, stability over time is crucial for smooth predictable investment and Nigeria again fares worse than other developing countries, due mainly to exogenous shocks to primary commodity dependence; and not taking the ‘Nigerian project’ as a national pride to defend. Research had shown that savings potentials are relatively large and widely un-mobilized in the rural economy, creating a lag in the capital accumulation potentials of the rural dwellers; it is against this background that the following questions are posed in the study. - What are the socioeconomic/demographic characteristics of the respondents (age, marital status, religion, educational level, occupation). - What is the average amount mobilized and granted as credits. - What purposes are the credits utilized on - What are the constraints of the respondents? - Does the savings been mobilized encourage investment in sustainable projects. - What is the grassroots government’s role in monitoring saving mobilization and disbursements in the rural economy? Objective of the Study: The general objective of the study is to assess the impact of informal savings mobilization on investment in Kogi State, Nigeria. The Specific Objective Include: - Identify the socioeconomic/demographic characteristics (such as age, marital status, religion, educational level, occupation) of the respondents. - Observe the savings and credit pattern. - Examine the purpose of credits obtained - Identify the constraints of the respondent in mobilizing rural savings and the role of government. - Ascertain if the mobilization of rural savings has any impact on the expansion of investment opportunities and based on the findings; make appropriate distortions of informal financial institutions activities in savings mobilization and its adverse effect on investment in Kogi State, Nigeria. MATERIALS AND METHOD. Area of study: The study was carried out in Kogi state of Nigeria. The state has twenty one (21) local government areas and is located in the middle belt, North Central area of Nigeria, lies between latitude 7o, 15 minutes North and longitude 7o, 32 minutes East on an altitude of four hundred and twenty meters above sea level. The state experiences two major seasons, dry and wet seasons which favours the growth of varieties of food and cash crops. The major economic activities of the people are farming; fishing, services and government employees and the major crops grown are yam, cassava, and rice while the cash crops include cashew, oil palm, and Neem tree. Kogi State is abundantly endowed with Iron Ore, Limestone and coal. Population and sampling procedure: - The populations for the study are traders, farmers, catering and food seller, tailors e.t.c in Kogi State, Nigeria who are members of ROSCAs group. Multi stage sampling was employed for the study. The state was divided into three geographical zones with twenty one local government areas. The first stage of the sampling involves selection of local government areas from each zone. Each of the geographical zones has an average of seven local government areas which Two Local government was randomly selected in each local government area. 10 ROSCA members were selected for the study from organized informal financial institutions (ROSCAs) representing 15% of the population, making one hundred and eighty seven respondents as shown in Table 1. 10 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 Data Collection: Data were sourced from primary sources. Data’s from primary sources were collected with the aid of well structure questionnaire and oral interview/observation. The following were collected from the well structured questionnaires: 1) Age measured in years. 2) Level of education measured in years 3) Family size the measured by number of heads per household. 4) Annual loan/income obtained and size of contribution measured in Naira. Other information collected includes. 1) Purpose for which loan is collected. 2) Sex, mental status, religion. 3) Occupation of the respondents and based on this primary source of data collection, he analysis of the research shall be done. Analytical Technique: The data obtained from interview schedule was subject to descriptive and inferential statistical analysis. Descriptive statistics for this study include frequency, percentages and means and a hypothesis was tested using chi-square(Adofu,2007). RESULTS AND DESCUSSION Table 1: Analysis of sample selection Selected local No of No. government area programme program selected Dekina Local 8 2 Government Idah Local 5 1 Government Lokoja Local 10 3 Government Kabba local 5 1 government Okene local 4 1 government Ajaokuta local 5 2 government Total 37 10 * Source: Field survey, 2009. The respondents were requested to describe their socioeconomic characteristics, such as age, marital status, sex, religion, level of education and occupation as presented in table 2. Table 2 showed that 21 to 25 years were 12.3 %, 26-35 years were 28.0 %, and 36-45 years old respondents were 25.1 %, 46-55 were 18.7 % while those above 55 % were 13.5 %. This shows that majority of the respondents are neither too young or too old as they constitute the active populations as such savings from ROSCA would be used for beneficial projects. Majority of the sampled respondents are male (66.8 %) while female 33.2 %, on marital status, the results indicates that 30.4 percent of the respondents are single, 55.2 % Married while 14.4 % are widowed/divorced. On religion, 47.06 % of the respondents are Christians, 32.09 percents are Muslims while 20.85 % are traditional worshipers. The educational level of the respondents showed that 36.36 % of the ROSCA participants had no formal education 23 % had adult literacy education, 29.94 % had primary education while 10.7 %had higher education. On the occupation of the respondents, the result showed that 10.16 % of the rural women were engaged mainly in of No. respondent local govt. 120 80 170 70 85 108 633 of in No. of sample respondent. 35 25 45 25 22 35 187 11 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 Table 2:requency distribution of respondents according to demographic characteristic (such as age, sex, marital status, religion, level of education and occupation). Variables Frequency Percentage (a) Sex Male Female Total (b) Age (yrs) 21-25 26-35 36-45 46-55 Above 55 Total (c) Religion Christianity Islam Traditional Total (d) Marital Status Single Married Widowed /divorced Total (e) Level of education No formal education Primary education Higher education Adult literacy education Total (f) Occupation Farming Trading Catering and food selling Tailoring Okada rider Others Total 88 60 39 187 56 104 27 187 68 56 20 43 187 19 29 28 20 31 60 18 7 47.06 32.09 20.85 100 30.4 55.2 14.2 100 36.36 29.94 00.70 23.00 100 10.16 15.57 14.97 10.69 16.58 32.09 100 125 62 187 23 53 47 35 29 187 66.8 33.2 100 12.3 28.0 25.1 18.7 15.5 100 farming, 15.51 % in trading, 14.91 % engaged in catering and food selling, 10.69 % are into tailoring, 16.58 % in okada riding business while 32.09 % represent the other category (Those in other unspecified occupation such as civil servant, shoe repairers, tax collection, mechanic operators etc.) Table further shows that respondents were mainly self employed. 12 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 Table 3: Frequency distribution of purpose loan/credit obtained Purpose Frequency Percentage (a) human capital development 85 45 (b) business expansion 50 27 (c) others 52 28 Total 187 100 Table 4: Frequency distribution of respondents by mean Level of income Level of income Frequency Percentage (a) Below N 1000 12 6.42 (b) N 1000-N5000 36 19.25 (c) N5000-N10,000 70 37.43 (d) N10,000-N100,000 52 27.81 (e) Above N100-000 17 9.09 Total 187 100 Table 5: Frequency distribution of respondents by the nature of ROSCAs in the informal financial sector of Kogi state, Variables (membership by type Frequency Percentage of ROSCAs) (a) common ROSCAs 173 92.51 (b) commissioned ROSCAs (c) promotional ROSCAs 14 7.49 Total 187 100 Table 6: Frequency distribution of respondents according to their average monthly savings with ROSCAs Level of income saved Frequency Percentage (a) Below N1000 44 23.51 (b) N1000-N5000 47 25.13 (c) N5,000-N10,000 73 39.03 (d) N10,000-N100,000 15 8.02 (e) Above N100,000 8 4.31 Total 187 100 Table 7: Frequency distribution of the respondents on the average monthly credit collected by members of ROSCAs Variables Frequency Percentage (a) below N100 (b) N1000- N5000 11 5.88 (c) N5000- N10,000 39 20.86 (d)N10,000-N100,000 133 71.12 (e) above N100,000 4 2.14 Total 187 100 Condition for Giving Loan to Rural Dwellers by ROSCAs The following are the pre-requisite loans to rural drivellers by ROSCAs • You must be a registered member of ROSCA • Intending borrowers must be a bonafide contributing members of ROSCA for a period not less than six month. • Members must attend meeting regularly and subscribe fully their daily, weekly or monthly share of the common wealth and must well known in the soup • Repayment of the loan is usually the time frame of the ROSCA season which is usually one year. 13 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 Purpose of Loan/Credit Obtained As shown in table 3, the result revealed that majority of the respondents (45 %) used their loans obtained from the scheme mainly for consumption purposes (Human capital development like self knowledge acquisition, education of children, demonstration effect. Etc 27% used theirs to finance investment projects while 28% used theirs on others on other unspecified purposes) implying that since majority of the respondents fall into the active adult life where the marginal propensity to consume is relatively high due to low income, most of the rural credits are geared towards ameliorating the consumption difficulties thereby crowding out investment opportunities THE INCOME LEVEL OF RESPONDENTS The mean income levels of respondents are depicted in Table 4. it showed that 6.42% the respondents earn a monthly income of less than N1000, 19.25% earned between N1000-N5000,27.81% between N10,000N1000\,000,909% earned above N100,000 while 37.43% earned between N5000-N10,000 The nature of ROSCA in Kogi State, Nigeria In the course of this study, certain features were identified as typical of ROSCAs in mobilizing savings in the informal financial sector of Kogi State, Nigeria. Some of these features are the membership and types of ROSCAs involved in by the respondents, the average monthly contributions by members, the average monthly credits obtained by members and the most severe problems mitigating against members of ROSCAs in Kogi State. This are depicted in Table 5, 6,7and 8. From Table 5, 92.57 % of the respondents belonged to the common (ROSCAs) which is limited to a particular field of specialty and size, as this is evident because the common ROSCAs due to the various constraints of fear of default etc are limited to between 10 and 40 members, the commissioned ROSCAs had no member among the various sampled respondents studied, while the promotional (ROSCAs) had 7.49% as members, indicating that the country wide introduction of a community based savings scheme by fin bank nig plc called naira wise where daily savings are mobilized from the respondents and micro credits advanced. From Table 6, 23.57% saved below N1000, 25.13% saved between N1000-N5000, 39.03% saved between N5000N10,000, 8.02 % saved between N10,000-N100,000 while only 4.31 % of the respondents saved above N100,000 averagely per month, re-enforcing the abysmally low rate of capital formation which inhibits investment opportunities in sustainable rural projects. From Table 7, it was observed that only 2.14% of the respondents obtained credits above N100, 000 averagely per month, 71.12 % borrowed between N 10,000-N100, 000, 20.86% borrowed between N5000-N10, 000, and 5.88% between N1000-N5000 etc. Table 8: Frequency distribution on the perceived Problem of ROSCAs in Kogi state, Nigeria Constraints Frequency Percentage Commutative Rank Per Problem (a) lack of trust/fear of default 49 26.20 1st (b) method of saving mobilization 44 23.52 2nd (c) leadership structure 25 13.36 5th (d) death of a member 38 20.32 3rd (e) lack of participation in decision 31 16.60 4th making TOTAL 187 100 Based on the questionnaire, some potential constraint of the members of ROSCAs in the informed financial sector of Kogi State were identified from table 8, the results obtained by the use of percentage rating which provides a measure of the relative seventy of some of the problems confronting the members. As revealed on the table above, lack of trust and year of default is the most difficult problem of the members having been rated the first with 26.20 percentage score the, second most difficult problem is the methods of savings mobilization with 23.52 %, followed by the death of a member with 20.32%, lack of participation of members in the decision making process of most 14 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 ROSCAs rated fourth with 16.60 percent while the less difficult problem faced by the respondents is the style of leadership structure rated fifth with 13.36 %. Table 9: Chi-square tests of relationship between the mobilization of rural savings by ROSCAs and investment in the rural economy of Kogi State. Fo fe Fo-fe (fo-fe)2 (fo-fe)2 /fe 16 16.58 -0.58 0.3364 0.0203 9 8.42 0.58 0.3364 0.0400 43 43.10 -0.1 0.01 0.0002 22 21.90 0.1 0.01 0.0005 27 26.52 0.48 0.2304 0.0087 13 13.48 -0.48 0.2304 0.0171 38 37.80 0.2 0.04 0.0011 19 19.20 -0.2 0.04 0.0021 Σ0.09 Dr=(r-1) (-1), (4-1) (2-1) = 3, ∝ =0.05 x2 t=7.815 chi-square calculated = 0,09 chi-square tabulated = 7.815, since the calculated chi-square is less than the tabulated chi-square i.e x2c(0.09)<x2t (7.815), we accept the null hypothesis Ho and reject the alternative hypothesis H1. Hence we conclude that the mobilization of rural savings by ROSCAs (a form of informal financial institution) had no significant impact on investment in the economy of Kogi state, Nigeria Table 10: Chi-square tests of relationship between the local government’s apparatus of state and activities of informal financial institutions in mobilizing rural savings Fo Fe Fo-fe (fo-fe)2 (fo-fe)2/fe 46 38.77 7.23 52.27 1.3482 12 19.23 -7.23 52.27 2.7183 35 337.43 -2.43 5.90 0.1576 21 18.57 2.43 5.980 0.3180 19 25.40 -6.4 40.96 1.6126 19 12.60 6.4 40.96 3.2508 25 23.40 1.6 2.56 0.1094 10 11.60 -1.6 2.56 0.2207 Σ 9.515 Df=3, ∝=0.05, x2t=7.815, x2c=9.515 The calculated chi-square (x2c) is greater than the tabulated chi-squaare (x2t).i.e x2c(9.515) > x2t (7.815). Hence, we accept the alternative hypothesis (H1) and reject null hypothesis (HO), implying that the government either directly or through a public private initiatives has to intervene in the operations of informal financial institution to ensure effective management of rural resource mobilization POLICY IMPLICATION A general look at these results thus conformed with the views of steel and Anyeetey (1997) that observed that ROSCAs can help in mobilizing the people’s daily collection of deposits, which can in turn be used as working capital to restock supplies enabling them expand their output and earn a stream of profits, thereby providing a significant source of income to household for increased standard of living. We also observed that credit provided by ROSCAs can increase income and build assets. But unfortunately the lack luster attitudes of the informal financial players which calls for excessive exploitation of the rural participants through the high interest rate inherent in the informal sector impedes these good intention thus making investment of the said credit facilities impossible. As such a pragmatic grassroots approach should be taken in active collection with a profit maximizing financial partner (public/private owned) that would take advantage of the low cost of information dissemination inherent in the 15 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 peculiar rural settings of the participants for the purpose of tapping into the enormous pool of idle rural finance needed for investment. Quoting Senator Barack Obama, President of the united state of America; “…the financial market is a force for good and evil, its power to generate wealth and ensure freedom is largely unmatched, but also… without the watchful eye of the people and state, the market can spiral out of control”. As such this alliance between the local apparatus of state and the informal financial players is needed to forge a lasting solution to the cyclical low level of capital formation, which is an impediment to economic growth through investment. CONCLUSION AND RECOMMENDATION This study assessed the impact of informal savings mobilization on investment in Kogi State, Nigeria. Questionnaire was used to collect data from the respondents. For the purpose of the study, 187 respondents representing six local government areas in Kogi State were selected, using the members of ROSCAs as sampling frame. The respondents attitude towards saving majority (87.67%) saved between the point of dis-savings and N10, 000, indicating the low level of monthly savings while 12.33 % saved above N10, 000-N100, 000. On the respondents benefits derived from the rural credits obtained, majority (73%) of the respondent obtained credits to finance human capital development and other unspecified consumption while only (27%) of the respondents used credits obtained to finance investment/expansion of existing business. On the constraints/perceived problems faced by ROSCAs member, 26.20% of the respondent perceived lack of trust/fear of default as their major constraints, 23.52% identified the method of savings mobilization as constraining factor, 13.36% said leadership structure was the inhibiting determinant to effective rural finance administration, 20.32% and 16.60 identified death of a member and lack of participation in decision making respectively as a detrimental factor in effective rural finance management. Based on the finding in this study, one can realize that although the efforts of ROSCAs in efficiently mobilizing and allocating rural finance, it brings improvement to the living conditions of the rural dwellers who are members of ROSCAs, as such to achieve greater effectiveness, more awareness /a state wide re-orientation is necessary to sensitize the rural dwellers on the need to be more entrepreneurial minded to break through from the Rat Race of Poverty. REFERENCES Adofu, I. (2007), Telecommication Sector Reforms in Nigeria, Issues, Outcome and Economy and Society. 7(2 Challenges. African J. Aryeetey E. and M. Hyuha (1991) “The informed financial sector in Africa: An empirical study” In A. Chhibber and S Fischers (Eds). Economic reforms in Sub-Saharan Africa A World Bank Symposium 1) Aryeetey E. and C. Udry (1994) “The characteristic of informal financial markets in Africa” paper presented at the plenary sessions of the workshop of Africa economic research consortuion, Nairobi, Kenya. 2) Aryeetey E. (1997) Rural finance in Africa: institutional development and access for the poor. In Bruno, M. and Pleskovic B(Eds) Annual world bank conference in development economics 1996 Washington D.C. The World Bank. 3) Besky and coate 1994. Regiorial industrialization in Nigeria. Africa economic reseach consortium, Nairobi Kenya. 4) Chandarvarkar, A.G (1985) “The Non-institutional sector in development countries: Macroeconomics Implications for savings policies” Savings and Development, No.2. Christenseen(1993). Cited in Akiri, E.S.and Adofu, I. (2007). Interest Rate Deregul-Ation and Investment in Nigeria. J. Economics and Management Studies. Hugon (1990). Cited in Clifford, G. (1996), The Rotating Savings and Credit Association: A middle rung in 16 Adofu, I et al.,: Continental J. Social Sciences 3: 7 - 17, 2010 development. Cambridge/Ma/USA. Massachusetts Institute of Technology, Centre for Internal Studies. . Meier, R.L (1990) “Reducing the transaction cost of Financial Inter Mediation: theory and Innovations” Paper Presented at the International conference on savings and credits for Development, Copenhagen, May 25-31. 5) McKinnon, R.I and Shaw, E (1973) Money and Capital Markets in economic development Washington DC. The Brookings Institution. Nnanna 2001. “Forging collaboration between formal and informal financial markets: some thoughts”. Journal of Savings and development No.3, XVIII Wai, U. T. (1980), The Role of Unorganised Financial Markets in Economic Devel- Opment and the Formulation of Monetary and Fiscal policy. Savings and Investment, No. 4 World Bank (2007), Attacking Poverty, a three pronged strategy. World Bank policy And Research Bulletin vol. 40 N O 1. Received for Publication: 12/04 /2010 Accepted for Publication: 15/05 /2010 Corresponding Author: Adofu, I , Department of Economics, Kogi state university, Anyigba, Nigeria 17 Continental J. Social Sciences 3: 18 - 23, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com HOUSEHOLD WATER SECURITY: A CASE STUDY OF IBADAN SOUTH WEST LOCAL GOVERNMENT 1 Amao, I.O and 2Omonona, B.T. National Horticultural Research Institute, Ibadan, Nigeria, Department of Agricultural Economics, University of Ibadan, Ibadan, Nigeria, ABSTRACT Household water security is a relatively new concept in water demand management literature for both developed and developing countries. The study examined household water security in Ibadan Southwest Local Government Area of Oyo State. A random sampling technique was used to select 40 households from the study area. Well structured questionnaires were used to obtain information from the households. Descriptive as well as inferential statistics were used to analyze the results of the study. Most of the respondents were male (65.0%), married (87.5%) and within 41-50 years (42.5%). A large percentage of these respondents have average household size of 5-10 members (60%), have a maximum of 4 children in the household (80.0%) and have attained Senior School Certificate (SSC) or Ordinary National Diploma (OND) (45%) level of education. The study further revealed that number of children in the household was found to significantly affect household water consumption, while number of males was negatively significant. Rainwater (26.2%) was the most common source of water available to households. Drinking water was mostly sourced from borehole (32.8%) and water keg (70.0%) was the mostly used storage facility. Also, households collected water from less than 1km distance (57.5%); 60% use a maximum of 4 children and 85.5% involve at most 4 females to collect water for household consumption. Thus, more improved sources of water such as piped water in-house should be made available to households in the study area to improve access to water for all household uses. KEYWORDS: household water security, water availability, water access, water storage. 1 INTRODUCTION Water is literally the source of life on earth. The human body is 70% water. People begin to feel thirsty after a loss of only 1% of bodily fluids and risk death if fluid loss nears 10% % (Park, 2002). Water is a basic human right. Without it societies wither and people die (Joanne, 2000). Man needs water for drinking, cooking, bathing, sewage disposal, irrigation for agriculture, industrial uses and for recreational purposes amongst many other uses (Aderibigbe et al, 2008). Household water security envisages availability of water as the central focus. However, this does not mean that mere availability of water is sufficient to meet the household water security. The idea of water security allows water to be considered as a natural resource commodity and entitlement. These are all complementary perspectives that go to establish household water security. There are three critical factors that determine household water securityavailability, accessibility and usage. The degree of combination of these factors will determine the Household Water Security (HWS) at a given point of time. (Ariyabandu, 2001). Particularly, in Ibadan Nigeria, there has been inadequate provision and management of environmental infrastructure - Unrepaired water pipes, inability to generate sufficient funds, erratic power supply, and poor management which has prevented over half of Ibadan's residents from having access to potable water, with its attendant health and economic problems (UN-HABITAT, 2010). Thus, the purpose of the study was to examine household water security in Ibadan city and specifically, the Ibadan South West Local Government Area, one of the local governments in the metropolis. Specifically, the following objectives were addressed: To examine the socio-economic characteristics of households in the study area. To examine the influence of socio-economic and demographic factors on household water consumption. To identify the sources of water, its usage pattern, storage and access in the study area. 18 Amao, I.O and Omonona, B.T: Continental J. Social Sciences 3: 18 - 23, 2010 METHODOLOGY The Study Area Ibadan South West Local Government Area was carved out of the defunct Ibadan Municipal Government (IMG) in 1991. The Administrative Headquarter is located at Oluyole Estate. It covers a landmass of 133.5 square kilometers with a population density of 2,401 persons per square kilometer. The 2010 estimated population for the area was projected 320,536 people, using a growth rate of 3.2% from 2006 census. The Local Government Area is bounded by Ibadan North West and Ido Local Government Areas to the north, Oluyole Local Government in the south, Ido Local Government Area in west and Ibadan North and South East in the east (Oyo State Government, 2010). The local government was purposively selected for the study based on the investigator’s experience in the study area. 40 households were randomly selected and structured questionnaires were administered to them based on the specific objectives of the study. Frequencies, percentages and a linear regression model were used to analyze the data. The linear regression model used in the analysis is specified as follows: Y = f ( Xi, U i ) Where, Y is the quantity of water consumed by the household, Xi includes, age, marital status, level of education, religion, household size, number of children in household, number of males in household, number of females in household, occupation of household head, average monthly expenditure, household water expenditure and Ui is the error term. RESULTS AND DISCUSSION Socio-economic characteristics of respondents In the study area as indicated in Table 1, most of the respondents were male (65.0%), married (87.5%) and within 41-50 years (42.5%). A large percentage of these respondents were also Christians (72.5%), have average household size of 5-10 members (60%), have a maximum of 4 children per household (80.0%) and have attained Senior School Certificate (SSC) or Ordinary National Diploma (OND) (45%) level of education. In addition, most sampled household heads in the study area are civil servants (40%), 52.5% of respondents indicated an average monthly expenditure (₦20,000 - ₦50,000) and household water expenditure of less than ₦500 (30%). Table 1: Socio-economic characteristics of households Variable Frequency Age of respondent 30-40 13 41-50 17 8 51-60 >60 2 Gender of respondent Female 14 Male 26 Marital Status Single 2 Married 35 Divorced 1 Widowed 2 Level of Education No formal education 1 Primary Education 5 SSC/OND 18 HND/B Sc 14 M Sc/PhD 2 Percentage 32.5 42.5 20.0 5.0 35.0 65.0 5.0 87.5 2.5 5.0 2.5 12.5 45.0 35.0 5.0 19 Table 1 ..... Cont Religion Christianity Islam Household size 1-4 5-10 Number of children in household 1–4 5 – 10 Occupation of household head Civil service Trading Artisan Others Average monthly expenditure <₦10,000 ₦10,000 – ₦20,000 ₦20,000 –₦50, 000 > ₦50,000 Household water expenditure None <₦500 ₦500 - ₦1,000 ₦1,000 - ₦2,000 ₦2,000 - ₦3,000 >₦3,000 Source: Field survey data, 2010. Influence of socio-economic and demographic factors on household water consumption From Table 2, both number of children and males in the household have significant effect on household water consumption. However, as the number of males in the household increases, household water consumption reduces. This is because female household members are more involved in sourcing for water than the males as seen in the gender composition of carriers. Studies have shown that children and women are the key players involved in sourcing for water in the household (UNICEF Nigeria, 2010). Table 2: Influence of socio-economic and demographic characteristics on household water consumption Variable Co-efficient t-value Constant 223.247 0.846 Age -1.592 -0.681 Marital status -31.563 1.096 Level of education -33.418 -0.633 Religion -23.371 -1.188 Household size -23.057 -0.422 Number of children in household 87.133 1.793* Number of males in household -42.173 -2.127** Number of females in household 1.750 0.085 Occupation of household head 7.994 0.477 Average monthly expenditure 0.003 1.298 Household water expenditure 0.000 -0.034 Source: Field survey data, 2010. * - significant at 10%, ** - significant at 5%. 29 11 16 24 72.5 27.5 40.0 60.0 32 8 80.0 20.0 16 3 13 8 1 16 21 2 8 12 7 4 5 5 40.0 7.5 32.5 20.0 2.5 40.0 52.5 5.0 20.0 30.0 17.5 10.0 12.5 12.5 20 Amao, I.O and Omonona, B.T: Continental J. Social Sciences 3: 18 - 23, 2010 Water Sources The survey found that households use water from multiple sources (Table 3). The sources of domestic water supply in the household ranges from rainwater to public tap. The most commonly used source is rainwater (26.2%) followed by hand dug well (24.3%), borehole (19.6%), piped water in-house (10.3%), water from neighbors (10.3%), water from private vendor (6.5%) and public tap (2.8%). No household indicated the use of water from rivers, streams and ponds; this might be due to their location which is urban. Table 3: Sources of water in Ibadan South West Local Government Sources of water Frequency Percentage Piped water in-house 11 10.3 Public tap 3 2.8 Private water vendor 7 6.5 Water from neighbors 11 10.3 Hand dug well 26 24.3 Borehole 21 19.6 Rivers, streams and ponds Rainwater 28 26.2 Source: Field survey data, 2010. Multiple responses Water usage pattern As shown in Table 4, households in the study area use water from different sources for more than one activity; hand dug well, borehole and rainwater are important sources for households. For drinking, most households use borehole (32.8%), piped water in-house (16.4%) as well as rainwater (16.4%). Cooking, bathing, washing and other domestic activities, hand dug well is prominently used (50%) as indicated in Table 4. Table 4: Water sources by pattern of usage in Ibadan South west Local Government Water source Drinking Cooking Bathing Washing and usage pattern Piped water in- 11(16.4%) 6 (11.5%) 5 (9.3%) 6 (9.8%) house Public tap 1(1.5%) 1(1.9%) 1(1.9%) 1(1.6%) Private water 5(7.5%) 6 (11.5%) 4(7.4%) 6(9.8%) vendor Hand dug well 6(9.0%) 16(30.8%) 26(48.1%) 27(44.3%) Borehole 22(32.8%) 15(28.8%) 5(9.3%) 4(6.6%) Rivers, streams and ponds Rainwater 11(16.4%) 8(11.5%) 13(24.1%) 17(27.9%) Source: Field survey data, 2010. Other domestic uses 2 (8.3%) 2(8.3%) 12(50%) 2(8.3%) 8(33.3%) Water storage facilities Water storage is a coping strategy to enhance continuous availability and reliability (Osei-Asare, 2004). Table 5 shows that keg was the most commonly used storage facility (70.0%) followed by storage tank (34.1%) however; some households use more than one storage facility. Table 5: Water storage facilities Storage facility Frequency Keg 25 Storage tank 14 Water trough 12 Earthen pot Source: Field survey data, 2010. Multiple responses Percentage 70.0 34.1 29.3 - 21 Amao, I.O and Omonona, B.T: Continental J. Social Sciences 3: 18 - 23, 2010 Water access Time allocated to water collection would differ among households depending on its location (distance to source), ease of accessibility and household characteristics such as number of water carriers and their gender (Osei-Asare, 2004). Thus, water accessibility was examined considering distance to source of water, and household characteristics such as number of children, males and females involved in collecting water for household use. Distance to source From Table 6, it was observed that 37.5% of respondents collected water from within their residential area while about 57.5% get theirs from a distance of 1km or less; the remaining 5% collect water from over 1km distance. This might be due to the fact that rainwater, borehole and hand dug well are the most common sources of water available to the households. Table 6: Distance to source of water Distance to source Frequency None 15 < 1km 23 >1km 2 Total 40 Source: Field survey data, 2010. Percentage 37.5 57.5 5.0 100 Household characteristics and water access About 60% of the households use a maximum of 4 children to collect water, 25% do not involve children at all and 15% use more than 4 children (Table 7). This is as shown in the maximum number of children found within the households which is 4 (from Table 1). Table 7: Number of children involved in water collection Number of children Frequency None 10 1-4 24 5-8 6 Total 40 Source: Field survey data, 2010. Percentage 25.0 60.0 15.0 100.0 Gender composition of water carriers Table 8 shows that 77.5% and 85.5% of households involve a maximum of 4 male and 4 female household members respectively for water collection. Studies have shown that females (girls and women) are more involved in water collection in the household (UNICEF Nigeria, 2010, Osei-Asare, 2004). Table 8: Gender composition of water carriers Number of male Frequency Percentage water carriers None 8 1–4 31 >4 1 Total 40 Source: Field survey data, 2010. 20.0 77.5 2.5 100.0 Number female carriers None 1–4 >4 Total of water Frequency Percentage 4 33 3 40 10.0 85.5 7.5 100.0 SUMMARY AND CONCLUSION Most respondents are male (65.0%), married (87.5%), of 41-50 years of age (42.5%), Christians (72.5%), have SSC/OND as their highest level of education, are civil servants (45.0%), have household size of 5-10 (60.0%), have N16,000 - N20,000 as their maximum average monthly expenditure (22.5%) and spend N100 - N500 monthly on water. Number of children and males in the household significantly influence household water consumption but, number of males in household has a negative effect on household water consumption. The main sources of water 22 Amao, I.O and Omonona, B.T: Continental J. Social Sciences 3: 18 - 23, 2010 available in the locality include rainwater, borehole and hand dug well. Borehole is the most common drinking water source while keg is the most frequently used storage facility. A large percentage of households spend about 10minutes to collect water from a distance of less than 1km. It was also observed that 60% of households use maximum of 4 children to collect water while 85.5% involve at most 4 female household members. Thus, more improved sources of water such as piped water in-house should be made available to households in the study area so that they will be able to get better access to water for all household uses. The Oyo State Government should resolve the issues of un-repaired water pipes, inability to generate sufficient funds, erratic power supply, and poor management which has prevented over half of Ibadan's residents from having access to potable water. REFERENCES Aderibigbe, S.A., Awoyemi, A. O.and Osagbemi, G.K. (2008); Availability, Adequacy and Quality of Water Supply in Ilorin Metropolis, Nigeria. EuroJournals Publishing, Inc. 2008, European Journal of Scientific Research, ISSN 1450-216X Vol.23 No.4 (2008), pp.528-536, http://www.eurojournals.com/ejsr.htm. Ariyabandu, R. De. S. (2001); Household water security using rainwater harvesting; retrieved from http//www.lankarainwater.org/pubs/hwsurwh2001.pdf on 9th April 2010. Joanne G. (2000); Global Environment Outlook. 2000. UNEP. Osei- Asare, Y. B. (2004); Household Water Security and Water demand in the Volta Basin of Ghana; PhD thesis, 2004, pp 3, pp51-55., retrieved from http://www.glowa-volta.de/fileadmin/template/Glowa/Downloads/thesis_osei on 9th April, 2010. Oyo State Government (2010): Ibadan South west local http://www.oyostate.gov.ng/government/Ibadan-south-west on 19 May, 2010. Government retrieved from Park K. (2002) Environment and Health In: Park’s Textbook of Preventive and Social Medicine. Eds. 2002 (17). UN-HABITAT (2010); Ibadan – Mobilizing Resources through a Technical Coordinating committee retrieved from http://ww2.unhabitat.org/programmes/uef/cities/summary/ibadan.htm on 20 May, 2010. UNICEF (2009); Water, Sanitation and Hygiene: Water http://www.unicef.org/wash/index_watersecurity.html on 9th April, 2010. Supply; retrieved from UNICEF Nigeria (2010): Safe water saves children's lives, says UNICEF as it celebrates World Water Day with Nigeria retrieved from http://www.unicef.org/nigeria/media_4122.html on 19 April, 2010. Received for Publication: 12/04 /2010 Accepted for Publication: 15/05 /2010 Corresponding Author: Amao, I.O National Horticultural Research Institute, Ibadan, Nigeria Email:
[email protected] 23 Continental J. Social Sciences 3: 24 - 30, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com REHABILITATION OF JUVENILE DELINQUENTS: IMPLICATIONS FOR COMMUNITY DEVELOPMENT Mary Olufunke Adedokun, Eunice Olufunmilayo Osakinle and Bernard Akinlabi Falana Faculty of Education, University of Ado Ekiti, Ado Ekiti, Ekiti State ABSTRACT The study examined the issue of rehabilitating the juvenile delinquents in order to bring peace and development to the various communities. The study employed a surveys study design. The population consisted of young male and female members of Akinyele Local Government Area of Oyo state. A sample of 90 subjects was used for the study. Data collected were subjected to simple frequency count and percentages Chi-square statistical tool was used for the analysis of the hypotheses.The study revealed that juvenile delinquency is a social menace that could lead to social disorder and which does not augur well for the development of communities. Based on the findings, it is recommended that parents, government, non-governmental organizations should make efforts at rehabilitating the deviant youth so that they would be useful to themselves as well as help build a formidable community. KEYWORDS: social menace, social disorder, correction, and participation INTRODUCTION The term juvenile delinquency is a common term in every society. It is a term that deals with deviant behaviour of the young ones in the society, deviant behaviour means when the young ones are not conforming to the law or normal behaviour of the society. These young ones in question are supposed to be the leaders of tomorrow and so care must be taken to tame them and lead them in the right direction for where adequate and proper care is lacking, they tend to constitute social menace to the community and its development. The concept of delinquency was first developed in the 19th century before which there was little distinction between adult and juvenile offenders. Children were almost subjected to the same form of punishment as adults. This situation led a group of reformers called “child savers” to think of separating adult delinquents from juvenile delinquents and so in 1899, Juvenile court was established in Chicago to handle the cases of minors who committed criminal offences (Adetoro, 2009). Adetoro also revealed that the juvenile courts and codes defined child’s behaviour as a status offence emanating from child abuse and neglect and as such would allow the courts to intervene to save a child from harm and therefore classify a child as a delinquent. An attempt to protect and transform the lives of these children and reform them led to the establishment of reform homes (Adetoro, 2009). Juvenile delinquency is a term that refers to children who act against the law. (http://en.wikipedia.org). Juvenile delinquency to Sanni et al (2010) refers to delinquent and criminal behaviour among young people as they negotiate the transition from childhood to adulthood in on increasingly complex and confusing world. A juvenile delinquent therefore is that person who repeatedly commits crime. It has also been proved that a delinquent will do to someone else what has been done to him. This may be due to mental disorders/behavioural issues and such are usually diagnosed with conduct disorder Holmes et al (2001), . Some of the theoretical causes of juvenile delinquency include the following: (a) Rational Choice: This theory explains that the causes of crime lie within the individual offender rather than in their external environment. The classicists, who propounded this theory, believe that offenders are motivated by rational self-interest. To prevent delinquency, therefore, worthwhile values must be instilled in these young children, helping them to choose things that are of value against invaluable things. (b) Theory of social disorganization as propounded by the posivists attributed delinquency to the breakdown of communal institutions and communal relationships that traditionally encouraged relationships among people. If the family, school, church and social group play their roles well as agents of socialization, children would be taught to eschew unacceptable behaviour and respect the rights of others thereby reducing antisocial and violent behaviour to the barest minimum (Walkate, 2003). 24 Mary Olufunke Adedokun et al.,: Continental J. Social Sciences 3: 24 - 30, 2010 (c) Strain theory states that crime is caused by the difficulty those in poverty have in achieving socially valued goals by legitimate means (Eadie and Mortley, 2003). Since it may be difficult for them to achieve valued goals through legitimate means, they may decide to use criminal means to achieve the goals. The theory of differential association suggests that young people are motivated to commit crimes by delinquent peers and learn criminal skills from them. Labeling theory as stated by Eadie andMortley, 2003) states that once young people have been labeled as criminal they are more likely to offend and that once labeled as deviant a young person may accept that role and be more likely to associate with others who have been similarly labeled. Family environment, Graham and Bawling (1991), Walkate (2003), and Farrinton (2002) all believe that low level of parental supervision, parental conflict or separation, criminal parents or siblings, parents who do not pay attention to their children are likely to become delinquents exhibiting deviant offending behaviours. (d) (e) (f) The above are some of the causative theories of juvenile delinquency. The important thing is for all hands to be on deck to curb children from becoming maladjusted children for rehabilitation can be very expensive. Expensive, in the sense that it may take years for delinquent children to be brought back on course. The common saying is that prevention is better than cure. Prevention should be a watchword for all and sundry in the community. Delinquency prevention is the broad term for every effort aimed at preventing youth from becoming involved in criminal, or any other anti social behaviour. There are various manifestations of juvenile delinquencies in the community today. These include, drinking, smoking, drug taking, bad mode of dressing, absconding from homes and living on the streets where they begin to learn to pick-pocket, (Oloruntimilehin, 1998). Other manifestations include cruelty, bullying, fighting, vandalism, use of foul language, drug abuse etc. Edelman (1995), reveals that about 1, 2 3 4 youths run away from home and 2, 255 teenagers dropout of school each day. Every five minutes a juvenile is arrested for some kind of violent crime and every two hours a child is armed with a weapon. All these manifestations of juvenile should be taken care of by rehabilitating those children that are already caught in the web of delinquencies so that they would be useful not only to themselves but also contribute to the process of the development of communities and the nation at large. It should be noted that destitution, poor living conditions, inadequate education, malnutrition, illiteracy, unemployment and lack of leisure time activities are factors that marginalize young people which make some of them vulnerable to exploitations as well as involvement in criminal and other deviant behaviours, rehabilitation programmes should be put in place for these children so that they are gainfully employed. When they are gainfully employed, they are likely to desist from these deviant tendencies. World Youth Report (2005) reveals that young people constitute the most criminally active segment of the population and that eventually most young people will desist from criminal and deviant activity; (Youth at the United Nations: http://www.un.org/esa/ socdev/unyin/wpayjuvenile/htm). It is to this end that preventive measures must be taken to prevent youth from deviant behaviours as well as planning for active rehabilitation progammes to redeem those who had become delinquents or even criminals. In thinking of preventive measures, youth at the United Nations, World programme of action for Youth (Accessed 19/5/2010), views that the development of social organization, particularly through youth organizations and community involvement should be fostered by a supportive social policy and within a legal framework. The document further states that government assistance should focus on facilitating the ability of community and youth organizations to express and evaluate their needs concerning the prevention of violence and crime, to formulate and implement actions for themselves and to cooperate with each other. Rehabilitating delinquents presupposes corrections being imposed on these youth. The common historical form of correction have always been to offer punishment both corporal and capital as panacea to anti-social behaviour but people were against these forms of punishment and recommended the penitentiary system’ which was a system by which offenders would be given a chance to think and have a change of heart and mend their ways (Skidmore, 25 Mary Olufunke Adedokun et al.,: Continental J. Social Sciences 3: 24 - 30, 2010 1991). This goes to show that these delinquents should be corrected in a way that they would be useful to themselves and also serve as correctional vessels to others in the community. Defining correction, Allen and Simonsen (1989) see correction as a professional service that applies a criminology knowledge base to the control and rehabilitation of the criminal offender. Correction to them occurs when the delinquent or criminal behaviour of an offender changed for good through various intervention programmes that will enable the offender to live a good, responsible and law abiding life again. With various correctional services put in place, juvenile delinquents will be restored to a condition of constructive, productive, mental, physical and social functioning level, which is considered normal, this eventually will have positive effect on the development of communities and the nation at large. It should also be noted that delinquent behaviour spans both the rural and urban communities and so when planning for rehabilitation and correctional services, both communities should be put into consideration. For these deviant young people to be corrected and virtually rehabilitated to participate as active members of their community various homes had been established like Remand homes, approved institutions (where they can stay not exceeding a period of 3 years) for corrective training, both occupational and psycho social and the Borstal Institution. The emphasis in all these institutions is corrective training geared towards rehabilitation of these dented character (Okunola 2002). This study therefore attempts to discover if rehabilitating the juvenile delinquents will contribute to the process of development in community. The study attempts to answer the question, is rehabilitation of juvenile delinquents of any use to the development of the community? In other words, the essence of this study is to find out how rehabilitation of delinquents can bring improvements to the community in which we all live while specifically, the study aims at finding out the relationship between rehabilitation of juvenile delinquents and community development. The following research questions were raised 1. Will rehabilitation of juvenile delinquents make for active participation in community development? 2. Is there a relationship between juvenile delinquency and community peace? Hypotheses Two hypotheses were generated. 1. There is no relationship between rehabilitation of juvenile delinquents and active participation in community development. 2. There is no relationship between juvenile delinquency and community peace. METHOD The study was conducted in Akinyele Local Government Area of Oyo state. The population for the study consisted of youth in both the rural and urban areas of the local government, a total of 100 boys and girls were randomly selected for the study. Instrument The instrument used for the study consisted of a set of questionnaire items titled Juvenile Delinquent Rehabilitation Questionnaire (JDRQ) and the instrument examined various issues related to the subject of study. Validation and Reliability Instrument To ensure face and content validities of the instrument, copies were given to experts in the Department of Guidance and Counseling, University of Ado Ekiti and the raised suggestions were made use of in the final draft of the questionnaire. The items were tested on youth in Ona-Ara Local Government at two weeks internal before testing it on the actual subjects of study. The result yielded a test retest Pearson Correlation Coefficient of 0.72. Design and Statistics design. The data collected were analyzed using simple percentages and Chi Square statistical analysis. RESULTS : The findings for all the hypotheses are presented here using the descriptive and chi-square analysis. 26 Mary Olufunke Adedokun et al.,: Continental J. Social Sciences 3: 24 - 30, 2010 Presentation of Results Research Hypothesis 1: There is no relationship between rehabilitation of juvenile delinquencies and active participation in the process of community development Table 1: Responses Indicating Percentages and Frequencies on Rehabilitation of Juvenile delinquents for active participation in Community Development S/N 1. 2. Items Juvenile delinquency is a social problem Juvenile delinquency refers to children who act against the law and children who commit crime repeatedly 23 25.6% 3. Causes of social delinquency include social disorganization, peer association and family factor Delinquency prevention is important for anti social behaviour Juvenile delinquents constitute social menace to the society Juvenile delinquency ranges from violations of legal and social norms to serve crimes committed by minors There is a preference for the social rather than judicial approaches to dealing with young offenders Living with other people rather than one’s parents encourage delinquent behaviour Rehabilitation of juvenile delinquents involves separating the delinquent from the negative influence Orderliness in the community is a sign of growth Community should provide specific educational, employment and leisure programmes that would distract the attention of youth from violent behaviour Parent-child integration would lead to peace in the community 24 26.7% 30 33.3% 24 26.7% 16 17.8% 19 21.1% 23 25.6% 14 15.6% 34 37.8% 55 61.1% 55 61.1% 44 48.9% 56 62.2% 64 71.1% 52 57.8% 50 55.6% 61 67.8% 40 53.3% 10 11.1% 10 11.1% 15 16.7% 9 10.0% 7 7.8% 18 20.0% 13 14.4% 14 15.6% 8 8.9% 2 2.2% 1 1.1% 1 1.1% 1 1.1 3 3.3% 1 1.1% 4 4.4% 1 1.1% SA 28 31.1% A 54 60.% D 7 7.8% SD 1 1.1% 4. 5. 6. 7. 8. 9. 10. 11. 12. 26 28.9% 31 34.4% 58 64.4% 55 61.1% 6 6.7% 3 3.3% 1 1.1% From Table 1, it could be deduced that juvenile delinquency is a social menace as seen in the 91.1% responses that agreed to this statement. The table also revealed that social disorganization, peer association and family factor cause delinquent behaviour. This is evident in the 88.8% agreement to the factor from the respondents. The table on the whole revealed that preventing delinquent behaviour would enable them to participate actively in the process of community development (83.4% agreed to this fact). It was revealed that when there is parent child integration there would be peace in the community (95.5%). The table reveals that orderliness is a sign of growth in the community (91.3%). 27 Mary Olufunke Adedokun et al.,: Continental J. Social Sciences 3: 24 - 30, 2010 Hypothesis 1: There is no relationship between rehabilitation of juvenile delinquents and active participation in the process of community development. Table 2: Chi-square analysis of relationship between rehabilitation of juvenile delinquents and active participation in community development df P S/N Items SD D A SA X2 cal X2 tab 1. Rehabilitation of juvenile delinquents involves separating the delinquent from the negative influence 6 58 26 2. Orderliness in the community is 330.88 7.815 3 0.000 a sign of growth 8 48 34 3. Community should provide specific educational employment and leisure programmes that would distract 1 3 55 31 the attention of youth from violent behaviour 3. Parent-child integration would lead to peace in the community 6 58 26 Total 23 219 117 As shown above X2cal = 330.889. This is greater than X2 tab = 7.815 at 0.05 level of significance. Therefore, the null hypothesis is rejected. This shows that there is a strong relationship between rehabilitation of juvenile delinquents and active participation in community development process. Table 3: Frequency/ Percentage responses of subjects to relationship between juvenile peace S/N Items SA A 1. Rehabilitation programmes help delinquents to be involved in useful community activities 28 55 31.1% 61.1% 2. Institutions, communities should be involved in rehabilitation programmes 34 53 37.8% 58.9% 3. The family which is the smallest unit in the community should be involved in preventing violent behaviour 47 36 52.2% 40.0% 4. Rehabilitating delinquents will bring improvement to communities 34 49 37.8% 54.4% delinquency and community D 7 7.8% 3 3.3% SD - 5 5.6% 7 7.8% 2 2.2% - Table 3 reveals that 92.2% was recorded as agreeing with the fact that rehabilitation programmes help delinquents to be involved in useful community activities while 96.7% respondents believed that all hands should be on deck for rehabilitating the delinquents. 92.2% is of the opinion that family, which is the smallest unit, should play active role in preventing delinquent behaviours and violence in the community and 92.2% believed that rehabilitating delinquents would bring improvement to the community. 28 Mary Olufunke Adedokun et al.,: Continental J. Social Sciences 3: 24 - 30, 2010 Hypothesis 2: There is no significant relationship between juvenile delinquency and community peace Table 4: Relationship between juvenile delinquency and community peace S/N Items SD D A SA 1. Rehabilitation programmes help delinquents to be involved in useful community activities Institutions, communities should be involved in rehabilitation programme The family which is the smallest unit in the community should be involved in preventing violent behaviour Rehabilitating delinquents will bring improvement to communities Total X2 cal X2 tab df P 28 55 7 - 2. 34 53 3 - 286.51 7.815 3 0.000 3. 47 36 5 2 4. 34 130 49 206 7 19 5 From the table above X2 cal > X2 tab = 7.815 at 0.05 level of significance. The null hypothesis, which states there is no relationship between juvenile delinquency and community peace is rejected and so the alternative hypothesis, which establishes relationship between the two variables, is upheld. DISCUSSION The study, which assesses the implication of rehabilitation of juvenile delinquency on the process of community development, comes up with the following findings. (a) That Juvenile delinquency is a social menace that should be prevented and curbed (b) That parental care is highly important in the prevention of juvenile delinquency (c) That various rehabilitation programmes should be put in place to correct these deviant youth (d) That when delinquency is reduced there would be active participation in the progress of community development and this would lead to community peace and this will lead to better living as Lowelt (1976) sees community development as a movement to promote better living for the whole community with the active participation and on the initiative of the community. Based on the above findings the following recommendations are made: That law enforcement agents should be trained, equipped and encouraged by the government towards effective control of criminal acts in the society. Parents should try to take good care of their children, supervise them as much as possible not abandoning them to a game of chance. They should monitor them properly to prevent them from mixing with bad gang that can influence their lives negatively. For those who are already marked delinquents, government, non-governmental organizations and communities should embark on rehabilitation programmes that would make them useful elements and thereby contributing to the process of growth in the community. Efforts should be made in engaging these students in useful activities that would make them desist from negative tendencies that would lead to chaos instead of peace in the community. REFERENCES Adetoro, A.O. (2009). The Impact of Remand Homes, Correctional Service on the Rehabilitation of Juvenile Delinquents in Ibadan, Oyo State. Unpublished, M.Ed Social Work Project, Ladoke Akintola University of Technology.(LAUTECH) Ogbomosho. Allen, H.I. and Simonsen, C.E. (1989) Corrections in America, New York, Macmillan Eadie, T. and Mortley, R. (2003): Crime Justice and Punishment in Baldock et al, (Eds) Social Policy (3rd edition) Oxford, Oxford University Press. 29 Mary Olufunke Adedokun et al.,: Continental J. Social Sciences 3: 24 - 30, 2010 Edelman, M.W. (1995). United we Stand. A Common Vision Claiming Children 1:6-12. Farrington, D.P. (2002): Developmental Criminology and Risk focused prevention in M. Maguire et al. (eds.). The Oxford Handbook of Criminology (3rd ed.) Oxford, Oxford University Press. Graham, J. and Bawling, B. (1991). Young People and Crime, Home Office Research Study No. 145, London Home Office. Holmes, S.E. James, R.S & Javad, K. (2001): “Risk Factors in Childhood that lead to the Development of Conduct Disorder and Antisocial Personality Disorder”. Child Psychiatry and Human Development, vol. 31 (3) Spring 2001. Juvenile delinquency (http://en.wikipedia.org/wiki.juvenile_delinguency.) (Assessed 22/05/2010) Lowelt, T. (1976). Community Development: A Network Approval in Adult Education Vol. 6 No. 3.(pp83-88) Okunola, M.I. (2002): A Handbook for Nigerian Social Works Ibadan, Daybis Ltd. Oloruntimilehin, O. (1998): The Problems and Needs of Juvenile Delinquents in Nigeria, Ibadan, Ibadan University Press. Sanni, K.B.; Udoh, N.A.; Okediji, A.A. Modo, N.F. and Ezen L.N, (2010) FamilyTypes and Juvenile Delinquency Issues among Secondary School Students in Akwa Ibom State, Nigeria: Counselling Implication in Journal of Social Science, 23(1), 21-28 (2010). Siegel, L. J.; Welsh, B.C. and Senna, J.J. (2003): Juvenile Delinquency: Theory, Practice and Law. Skidmore, R.A. (1991). Introduction to Social Work Practice. England, Cliffs, New Jersey Prentice Hall Inc. Walkate, S. (2003): Understanding Criminology – Current Theoretical Debates, Maidenhead, Open University Press. Youth at the United Nations (http://www.un.org/esa/socdev/unyin.juvenile) (Accessed 19/5/2010) Received for Publication: 12/06 /2010 Accepted for Publication: 25/07 /2010 Corresponding Author: Mary Olufunke Adedokun, Faculty of Education, University of Ado Ekiti, Ado Ekiti E-mail:
[email protected] 30 Continental J. Social Sciences 3: 31 - 37, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com THE ROLE OF RENEWABLE ENERGY RESOURCES IN POVERTY ALLEVIATION AND SUSTAINABLE DEVELOPMENT IN NIGERIA. 1 Nnaji, C.E., 1Uzoma, C.C. and 2Chukwu, J.O. National Centre for Energy R & D, University of Nigeria, Nsukka, 2Department of Economics, University of Nigeria, Nsukka ABSTRACT The estimated amount of renewable energy resources (such as hydropower, biomass, wind power, biogas, solar energy and geothermal power) in Nigeria is enormous and abundantly available. Consequently, the energy industry in Nigeria faces numerous challenges ranging from political, cultural and socio-economic problems etc., which hamper the full development and utilization of these resources for poverty alleviation and sustainable development. This paper reviews the prospects and challenges of integrating the mature and emerging renewable energy resources for poverty reduction and sustainable development in Nigeria and therefore calls for an improved energy conservation and development policy. This should be supported by effective implementation resulting in visible industrialization, employment creation, income generation even in the rural communities and drastic reduction of poverty in the country. KEYWORDS: renewable energy, energy, poverty, sustainable development, Nigeria 1 INTRODUCTION Poverty is the most crucial problem facing developing countries because of its effect on livelihoods. Poverty refers to an individual’s (or family’s) lack of access associated primarily with inadequate income to basic human needs such as food, shelter, fuel, clothing, safe water, sanitation, health care and education. Poverty is manifested as the inability to achieve a minimum standard of what is needed for material well-being. Human poverty also entails the denial of opportunities and choices most vital to human development-including a long, healthy, creative life, knowledge (access to reading and communication) and a decent standard of living. The number of Nigerians living under poverty is staggering- over 70 million (NBS, 2009).Thus, poverty reduction is undoubtedly one of the highest ranking issues in the national strategies of many less developed countries and the most potent issue in the current international development agenda. The energy crisis, which has engulfed Nigeria for almost two decades, has been enormous and largely contributed to the incidence of poverty by paralyzing industrial and commercial activities during this period. The Council for Renewable Energy, Nigeria (CREN) estimates that power outages brought about a loss of 126 billion naira (US$ 984.38 million) annually (CREN, 2009) Apart from the huge income loss, it has also resulted in health hazards due to exposure to carbon emissions caused by constant use of ‘backyard generators’ by different households and business enterprises, unemployment and high cost of living leading to deteriorating living conditions. Moreover, according to the Central Bank estimate in 1985, Nigeria consumed 8,771, 863 tones equivalent of oil (CBN, 1985). This is equal to about 180,000 barrels of oil per day. Since then, oil consumption in Nigeria has drastically increased. The effect of this on the economy relying solely on revenue from oil is tremendous. Also Department for Petroleum Resources, DPR (2007) states that petroleum supply more than 78% of total energy consumption in Nigeria. In the present predicament as a nation, it is obvious that depending mainly on fossil fuel (petroleum) is not enough to meet the energy needs of the country. Since Nigeria is blessed with abundant renewable energy resources such as hydroelectric, solar, wind, tidal and biomass, there is need to harness these resources and chart a new energy future for Nigeria. In this regard, the government has a responsibility to make renewable energy available and affordable to all. Nigeria’s dependence on oil for energy is deepening deprivation in the development of her abundant renewable energy resources, which are environmentally friendly in terms of global warming, air and water pollution, clean and safe, more accessible and affordable energy that will engender sustainable development and also be a source of opportunity rather than oppression for the poor or less privileged and therefore a key step towards poverty reduction in Nigeria. 31 Nnaji, C.E et al.,: Continental J. Social Sciences 3: 31 - 37, 2010 THE ENERGY-POVERTY NEXUS. Energy services are paramount to the basic development challenge of providing adequate food, shelter, clothing, water, sanitation, medical care, schooling, and access to information. Although energy is one dimension or determinant of poverty and development, it is very vital. Energy supports the provision of basic needs such as cooked food, a comfortable living temperature, lighting, the use of appliances, piped water or sewerage, essential health care (refrigerated vaccines, emergency and intensive care), educational aids, communication (radio, television, electronic mail, the world wide web) and transport. Energy also fuels productive activities including agriculture, commerce, manufacturing, industry and mining. Conversely, lack of access to energy contributes to poverty and deprivation and can contribute to economic decline. Energy and poverty reduction link is strong and mainly operate through socio-economic development, which involve productivity, income growth, education, health and gender. These issues are explicitly examined below:(i) Productivity Millions of poor people in Nigeria and other developing countries currently consume, on a per capita basis, just 5 percent of the modern energy services consumed by people in high income countries (UNDP,2004) Such inadequacy in energy services has condemned the poor to walk or use animal power instead of travelling by motorized transport. It also means that they must live in poorly lighted and badly heated or cooled homes, and labour without the benefit of powered machines, while also cooking with polluting fuels such as wood and animal dung. Due to their subsistent existence, the poor might regard any cash payments for modern energy services as “luxury”. Yet, expanding access to modern energy services can alleviate drudgery in the lives of the poor who need energy for basic services such as cooking, lighting, heating, refrigeration, communication, and information. Besides, the poor also need energy to power productivity-boosting equipment that improves their income-earning capabilities. In particular, enhanced access to energy services is important for improving agricultural productivity, not just in terms of volume of crops grown, but also in post-harvest value-added activities such as drying, processing, conservation and timely transportation to markets, all of which require energy. (ii) Income Growth Energy consumption shows a strong correlation with national income, so that countries with higher income are also those with higher energy consumption. Economic growth creates employment and raises incomes. Essentially, most economic activity would not be possible without energy as a critical input, and these include the small and mediumscale enterprises (SMEs) that constitute the primary source of new jobs for the poor. Hence, the type of economic growth that creates jobs and raises incomes depends on greater and more efficient use of energy. (iii) Health and education Modern energy services enhance the delivery of key social services. For example: (a) electricity makes it possible to refrigerate vaccines, operate medical equipment, and provide lighting after sunset in health clinics; (b) in homes, electricity helps to improve children’s educational attainment, even where its use is limited to a single light bulb; c) energy for pumping and treating raw water makes it possible to provide clean water in Communities; and d) for poor people everywhere, access to modern energy services frees time for productive ventures, education, and leisure-time that would otherwise be spent collecting traditional fuels or in much less productive manual labor. (iv) Gender Dimension Health access, education attainment, and productive activities of women and children are very sensitive to the availability of modern energy services. Modern cooking fuels free women and children from the burden of collecting and carrying large bundles of firewood over long distances and from exposure to harmful fumes from primitive cooking stoves. Improved lighting makes it possible for adults and children to relax and have entertainment after the end of their daytime activities; it also provides a better learning atmosphere for children beyond the hours of sunset. Moreover, electricity enables both women and men in poor households to engage in activities that generate income—by providing lighting that extends the workday and powering machines that increase output beyond subsistence levels. 32 Nnaji, C.E et al.,: Continental J. Social Sciences 3: 31 - 37, 2010 The lack of modern fuels and electricity also reinforces gender inequalities. Many of the poorest households are headed by women — due mainly to the loss of a male bread winner. Women and girls who are responsible for fuel gathering and cooking are in such situation disproportionately burdened by lack of access to modern fuels and electricity. In addition to the time spent gathering fuels, most traditional staple foods involve a large amount of threshing, de-husking or grinding, which is mostly done through female labour in the poorest households and regions due to lack of access to mechanical power. Many girls are withdrawn from school to attend to such domestic chores, which have significant negative effects on their educational and economic chances. Energy services such as heat for cooking and power for food processing are, therefore, particularly important for women and girls. ENERGY POVERTY The energy dimension of poverty-energy poverty may be defined as the absence of sufficient choice in accessing adequate affordable, reliable, high quality and environmentally benign energy services to support economic and human development. The number is staggering: in Nigeria about 70 million people (54.4% of Nigerians) are without clean, safe cooking fuels and electricity and must depend on traditional biomass sources (NBS, 2009) Increased access to such energy services will not, in itself, result in economic or social development; but lack of adequate energy inputs can be a severe constrain on development. Universally accessible energy services in the form of renewable energy resources that are adequate, affordable, reliable, of good quality, safe and environmentally benign are therefore a necessary condition for sustainable development and poverty reduction. ENERGY AND SUSTAINABLE DEVELOPMENT Sustainable development entails the adoption of production and consumption patterns that meet the needs of the present without jeopardizing the goals of future generations. Every country’s economy can be described as an integrated energy system that consists of streams of energy-producing and energy-using activities. Energy is central to practically all aspects of sustainable development. Energy is central to the economy because it drives all economic activities. This characterization of energy directs our attention to its sources in nature, to activities that convert and re-convert this energy, and finally to activities that use the energy to produce goods and services and household consumption. Traditionally, energy is treated as an intermediate input in the production process. This treatment of energy’s role understates its importance and contribution to development. All economic activities and processes require some form of energy. This effectively makes energy a critical primary factor of production. Given the state of technological advancement in the economy, capital and labor perform supporting roles in converting, directing and amplifying energy to produce goods and services needed for growth and poverty reduction. Energy thus plays a critical role in social and economic transformation. Lack of access to energy places severe constraints on national development resulting in sub-optimal outcomes where poor people are often the greatest losers. Energy services are essential ingredients of all three pillars of sustainable development — economic, social and environmental. And economies that have replaced human and animal labor with more convenient and efficient sources of energy and technology are also the ones that have grown the fastest. No country in modern times has succeeded in reducing poverty substantially without adequately increasing the provision and use of energy to make material progress. Indeed, by not ensuring a minimum access to energy services for a broad segment of the population, economic development of developing countries such as Nigeria beyond the level of subsistence has proven to be a real challenge. Emphasis on productive uses of energy services is important in helping people out of poverty. At the national level, energy propels economic development by serving as the launch pad for industrial growth and, via transport and communications, providing access to international markets and trade. Reliable, efficient and competitively priced energy supplies also attract foreign direct investment — a very important factor in boosting economic growth in recent times. At the local level, energy facilitates economic development by improving productivity and enabling local income generation through improved agricultural development (irrigation, crop processing, storage and transport to market) and through non-farm employment, including micro-enterprise development. As an indicator of local recognition of the importance of energy for businesses, Nigerian manufacturers, who were asked to rank the constraints on their 33 Nnaji, C.E et al.,: Continental J. Social Sciences 3: 31 - 37, 2010 firms’ activities, identified power breakdown and voltage fluctuations as their top two problems (ECN 2008).Recent developments in Ghana’s energy sector buttress this point (Ashong, 2001). Energy also has strong and important links to the environment. Many energy sources are drawn directly from the environment, requiring sound management for these sources to be sustainable. Furthermore, energy use affects the environment. Emissions from fossil fuels, for example, reach beyond the local and national levels to affect the global environment and contribute to climate change. The poorest people often live in the most ecologically sensitive and vulnerable physical locations. These areas may be the most affected by the predictable effects of climate change such as increased frequency of extreme events— such as floods, drought, rising sea levels, and melting ice caps. The risks facing poor people are often increased by the unsustainable use of biomass resources by themselves or others — although more often by the latter group who exploit these resources for commercial purposes. Use of renewable natural resources combined with efficient supply and use of fossil fuels with cleaner technologies, can help reduce the environmental effects of energy use and help Nigeria and other developing countries grow their economies while also replacing existing, inefficient polluting fossil fuel technologies that pollute the environment. Much as this may seem enticing, the issue of affordability particularly in respect of the poor cannot be taken for granted. As a complementary measure, careful management of energy resources is important to promote economic growth, protect ecosystems and provide sustainable natural resources. POTENTIALS OF RENEWABLE ENERGY RESOURCES IN NIGERIA. Nigeria is endowed with large amount of renewable natural resources of which when fully developed and utilized will lead to poverty reduction and sustainable development. HYDRO POWER Aliyu and Elegba (1990) indicated that the country is at least; reasonably endowed with large rivers and some few natural falls. The Rivers, Niger and Benue with several tributaries constitute the Nigerian river system which offers some potential renewable source of energy for economically viable large hydropower development. In addition, several scores of small rivers and streams also exist within the present split of the country into eleven River Basin Authorities, some of which maintain minimum discharge all the year round. Although construction costs of hydropower are high, the zero fuel cost and low maintenance cost make hydro generation of any size generally a competitive investment in the mix generation of an electric power system (Cassedy and Meier 1988). SOLAR ENERGY RESOURCES According to Bala et al (2000), Nigeria is endowed with an annual Average daily sunshine of 6.25 hours ranging between about 3.5 hours at the coastal areas and 9.0 hours at the far northern boundary. According to him, Nigeria receives about 4.851x1012 kWh of energy per day from the Sun. These huge energy resources from the sun already have a range of applications with various degrees of technical and economic feasibility. This will find application as power supplies to the village and decentralized single dwelling for lighting, refrigeration, direct drive, water pumping systems, and communication equipment. With health care being extended to remote rural dwellings solar power supplies for remote clinics and hospitals will be of increasing importance. WIND ENERGY. Globally, Nigeria is located within low to moderate wind energy zone. Ojosu and Salawu (1990) on their comprehensive nation wide study on wind energy availability and potential in Nigeria appraised the wind energy potential and utilization in Nigeria. For suitable geographical regions and landscape, wind power generation readily finds application for stand alone operational mode. This is most applicable to remote sites, where costs of transmission and distribution from the grid 34 Nnaji, C.E et al.,: Continental J. Social Sciences 3: 31 - 37, 2010 are prohibitively high. Such remote sites in Nigeria are often agricultural, wilderness and small village locations with needs for electricity, even if supplied intermittently. In hybrid pumped storage scheme, feasible wind power generation will find further useful application for water pumping and agricultural purposes. BIOMASS/BIOGAS The biomass resources of Nigeria can be identified as wood, forage grasses and shrubs, animal waste arising from forestry, agricultural, municipal and industrial activities as well as aquatic biomass. Plant biomass can be utilized as fuel for small scale industries. It could also be fermented by anaerobic bacteria to produce a very versatile and cheap fuel Gas, i.e. biogas. With fair cost of implementation, the specific units have good prospects for house holds, farms and livestock. Akinbami et al (2001)’s assessment indicated that in Nigeria, identified feedstock substrate for an economically feasible biogas programme includes water lettuce, water hyacinth, dung, cassava leave, urban refuse, solid (including industrial) waste, agricultural residues and sewages. With increasing urbanization and industrialization, the annual Municipal solid waste (MSW) generated will continue to increase. Biogas production may therefore be a profitable means of reducing or even eliminating the menace and nuisance of urban wastes in many cities by recycling them. GEOTHERMAL POWER The useful conversion of natural heat from the interior of the earth to heat building and generate electricity is an application of geologic knowledge and engineering technology. The idea of harnessing the earth’s internal heat is not new. As early as 1904, geothermal power was developed in Italy utilizing dry steam and natural internal heat. Geothermal energy is now being used to generate electricity in Russia, Japan, New Zealand Mexico, Iceland and USA (Loftness, 1979). Development of geothermal energy resource is yet to commence in Nigeria. (Adegbuyi et al, 1990). It is however noted that potentials for Geo-pressured systems and hydrothermal systems, may be available in some of the Nigeria Basins e.g. Benue through the Niger Delta (Adegbuyi, 1989, Adegbuyi et al 1996) OTHER RESOURCES Presently, the potentials of some of the resources like waves, tidal and ocean thermal gradients still remain unqualified (Garba and Bashir, 2002) LIMITATIONS TO THE DEVELOPMENT OF RENEWABLE ALTERNATIVE ENERGY RESOURCES IN NIGERIA The development of renewable/alternative energy resources in Nigeria has been limited by a number of factors, which include: A. Cultural Religious and Traditional Issues: - Rejection of new energy may sometimes arise from cultural taboos. Certain new energy involves known taboos in certain part of the World e.g. the use of human excreta in Biogas production in some parts of Africa. Technology: - Apart from solar thermal and Biogas technology, the required technology to develop and tap other forms of renewable energy technologies is lacking in Nigeria. Most of the technologies are being imported thereby escalating the already high investment cost. Inadequate Funds: - Lack of funds thwarts the development of new energy resources. Public funds are limited and the absence of any serious private sector participation in the development and dissemination of the technology poses a serious barrier to renewable energy technologies. High Cost of Energy Infrastructure: - Small scale hydropower, central and residential solar photovoltaic technologies, etc have not penetrated Nigeria’s energy supply systems, because of their relatively high investment cost. Political Factor: - Centralization is a problem, for new fuels are usually scattered and produced on a relatively small scale. There is also the preference for advanced technology in developing countries. Also political zeal to implement desirable energy options is a major limitation, because of political interest. B. C. D. E. 35 Nnaji, C.E et al.,: Continental J. Social Sciences 3: 31 - 37, 2010 F. Low Level of Public Awareness: - Public awareness of renewable energy resources and technologies in Nigeria and their benefits, both economically and environmentally are generally low; thus, hampering the development, application and dissemination of renewable energy resources and technologies in the national energy market. RECOMMENDATION i. There is need for private sector participation and funding of renewable energy research and development in Nigeria. ii. Development partners such as DFID, UNDP, UNICEF, WORLDBANK etc. should be involved in the sponsorship and provision of loan for sustainable development and utilization of renewable natural resources. Developing countries such as India, Tunisia, Morocco, Indonesia and Mexico have benefited immensely from these partners in their solar energy projects. iii. Since the lack of access to affordable, clean and convenient energy is strongly linked to poverty, it is recommended that a comprehensive resource survey and assessment be carried out to determine the total renewable energy potential in the country as well as identify local conditions and priorities in various ecological zones. iv. Government at all levels should make adequate provision for research grants in renewable energy resources to make production cheaper and generation more efficient. v. The development of renewable energy technologies is linked to many other sectors such as agriculture, small scale industrial enterprises and poverty alleviation, it is recommended that, renewable energy related projects have a greater likelihood of success if implemented in accordance with activities in these sectors to ensure sufficient demand for the energy services providers. vi. Recognizing that current flow on renewable energy technologies is inadequate, it is recommended that demonstration projects on various renewable energy forms be widely established; so that the performance and efficiency with which services are delivered can be sensitized. vii. Entrepreneurship and managerial skills development training programme and technical courses in renewable energy technologies with a view of creating self employment and developing Energy Service Companies (ESCOs), providing services to rural areas be introduced. CONCLUSION Renewable energy resources if fully developed and utilized can be a veritable tool for poverty reduction and sustainable development in Nigeria. Poverty reduction is undoubtedly one of the highest ranking issues in the policy strategy of the Nigerian government. For this objective to be actualized, government must harness the potentials of renewable energy resources that are abundant in various geographical zones of the country. Given due consideration to both the technical, political and economic viability of its application, renewable energy can be utilized to meet the challenges posed by the present energy crisis. Therefore, measures must be taken by the government at all levels to make adequate policies in effective exploitation, management and utilization of our renewable energy resources in order to reduce dependence on fossil fuel. This will go a long way in providing opportunities for the less privileged and result in income generation and improved standard of living. REFERENCES Adegbuyi, O., A.A. Fadipe and M.A. Rahaman,(1990) Hot Dry Rock (HDR) Geothermal Energy Resource Potentials in Nigeria. J. Geothermal Sci. Technology, 1, 1-9 Adegbuyi, O (1989) Geothermal Energy Resource Potentials of the Nigeria-Cameroon Region. West Africa, Proc. Of 11th Geothermal Energy Workshop of New Zealand, Auckland University. Pp. 134-146. Adegbuyi, O., O.S. Ajayi and I.B. Odeyemi (1996) Radionuclide Contents and Hot Dry Rock Geothermal Resources Potential of the Crystalline Rocks in Ikogosi Warm Spring Area of Southwestern Nig. J. Agric. Sci. Tech., 3, 14-21 Akinbami, J.F.K., Ilori, M.O., Oyebisi, T.O., Akinwumi, I.O. and Adeoti, O.(2001), ‘Biogas Energy use in Nigeria: Current status, future prospects and policy implications’, Renewable and Sustainable Energy Review, 5, 97–112. 36 Nnaji, C.E et al.,: Continental J. Social Sciences 3: 31 - 37, 2010 Aliyu, U.O. and Elegba, S. B. (1990). Prospects for Small Hydropower Development for Rural Applications in Nigeria. Nigerian Journal of Renewable Energy, 1,74-86. Ashong, Samuel N. (2001), Macroeconomic Framework for Poverty Reduction Within the Context of Debt Relief: The Case of Ghana, Paper Presented at WIDER Development Conference on Debt Relief Helsinki, Finland. Bala, E.J., Ojosu, J.O. and Umar, I. H. (2000). Government Policies and Programmes on the Development of SolarPV sub-sector in Nigeria. Nigerian Journal of Renewable Energy, Vol. 8, No. 1&2, pp. 1-6. Cassedy, E.S. and P.M. Meier, (1988)Planning for Electric Power in Developing Countries in the Face of Change, Planning for Changing Energy Condition, Energy Policy Studies, University of Delaware, Newark, DL, Transaction Books. Central Bank of Nigeria Annual Reports and Statement of Account, 1985 Council for Renewable Energy, Nigeria, “Nigeria’s Electricity Crunch” available at www.renewablenigeria.org Department of Petroleum Resources, (2007) Nigeria, available at www. DPR. gov. ng. Energy Commission of Nigeria, Report of survey of energy utilization in the informal sector: A case study of the FCT, Federal Ministry of Power Technical Report No.ECN/EIS/001/08,September,2008 Garba, B and Bashir, A.M. (2002). Managing Energy Resources in Nigeria: Studies on Energy Consumption Pattern in Selected Rural Areas in Sokoto State. Nigerian Journal of Renewable Energy, Vol. 10 Nos. 1&2, pp. 97-107. Loftness, R.L. (1979), Energy Handbook, VRN Publication USA, pp. 622National Bureau of Statistics (2009), Poverty-Nigerians, (Current Evidence) National Policy Dissemination Workshop on Poverty and Inequality in Nigeria, 30th August, Lagos. Ojosu, J.O. and Salawu, R. I (1990). Wind Energy Development in Nigeria. Nigerian J. Solar Energy, Vol. 9, pp. 209-222. UNDP (2004), Human Development Report, United Nations, Geneva, Switzerland Received for Publication: 29/06 /2010 Accepted for Publication: 15/08 /2010 Corresponding Author: Nnaji, C.E., National Centre for Energy R & D, University of Nigeria, Nsukka, E-mail:
[email protected] 37 Continental J. Social Sciences 3: 38 - 43, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com NIGERIA AT 50: THE SEARCH FOR POLITICAL LEADERSHIP. S.M. OMODIA Department of Political Science and Public Administration, Adekunle Ajasin University, Akungba- Akoko, Ondo State, Nigeria E-mail:
[email protected] ABSTRACT This paper through the unobtrusive method discusses political leadership in the Nigerian State in her five decades of political independence .The argument of the paper is that the Nigerian State has manifested more of political rulership as a result of the governmental processes that have to a great extent been exclusive of the people. The paper further unfolds that the effect of rulership has been political instability, institutional fragility and poor democratic culture in the Nigerian body-politic. The paper therefore concludes that the Nigerian State is in need of integrative political leadership for the consolidation of the present democratic process through a functional linkage between the politicians and the governed in order for the people to serve as vanguard of democracy. KEYWORDS: democratic experiment, democratic norm, ethnicization, Integrative leadership, political instability, political party. INTRODUCTION The pattern of political leadership to a great extent determines the political stability of a state. History no doubt has witnessed the emergence of political thoughts and philosophies designed towards altering political systems and governance as a result of political leadership. Examples abound in theoretical postulations of John Locke and Jean Jacque Rousseau among others (Mukherjee andRamaswamy,2007).While John Locke’s argument against absolute monarchism serve as the justification of the removal of or dethronement of King James 2 based on his despotic and obnoxious governance, Rousseau’s social contract theory on the other hand, served as the propelling force for the entrenchment of the 1789 Rights of man in France (Appadorai,1975). In the Nigerian State, political leadership has manifested itself in various forms and pattern depending on the era .In the pre-colonial days, political leadership was based on the cultural orientation of the different ethnic nationalities that later emerged as the State .For instance, the centralized political\administrative pattern was visible in the Hausa- Fulani section of the North with enormous powers exercised by the traditional rulers .In the west, the system though centralized the power of the traditional ruler was restricted because of institutional checks, while in the larger section of the East it was mostly a segmentary pattern in which political leadership was exercised by the leadership of the different classes and structure of the society(Azelama,2010). From this basic background, it is important to emphasize that unlike the western states of France and England in which political leadership witnessed a social change and transformation designed towards empowering the people as the focus of governance(Omodia 2006;Omodia 2007), in Nigeria, alterations in political governance during colonialism and after attainment of political independence were designed to achieve selfish ends either by the colonialist, the indigenous politicians and military dictators that tasted political power(Omodia,2004). Thus, successive administrations in Nigeria have continued to embark on political reforms aimed at entrenching responsible and responsive political leadership vis-a-vis lasting democratic governance in Nigeria. As a matter of fact, the experiment has witnessed the adoption of zoning system in the sharing of sensitive political offices, enlarging the political space to accommodate the active participation of retired military officers in Partisan politics, reforming the electoral system among others. It is however important to state that unfolding events especially in the political scene have shown that political experiments in Nigeria over the decades have been cosmetical because: (1) no meaningful political transformation can take place with the exclusion of the people in the process. (11)The same elites designing the change for the empowerment of the people are the ones resisting the same process and change. 38 S.M. OMODIA: Continental J. Social Sciences 3: 38 - 43, 2010 To be able to vividly understand the above stated assertions, this paper in addition to the introduction is sectionalized into; the nature of political leadership under colonialism, the civilian administration up to the aborted third republic, the military and political leadership in the present democratic dispensation. Political Leadership under Colonialism Colonialism is the political domination of a state by another. It involves the total control of a state machinery of the power which include determining wealth creation and allocation of resources. The political domination of Africa states by colonialists after a long presence was basically propelled by the factor of resource exploitation (Rodney,1972). As a result, the pattern of governance was fashioned towards the realization of this objective and not principally for providing political leadership. However in the Nigerian state, colonialism could be viewed from two active phases of political governance. The first phase is the phase of political governance by the British colonialist through the traditional institution (Crowder 1968; Oronsaye 2009). This was characterized by rulership because the British officials controlled and determined public policies and such policies were cosmetically foisted on the people by traditional elites .Thus, the people including the traditional elites were excluded basically from the process of rule making and this affected the level of political maturity and the imbibing of democratic norms needed for a functional democracy that was later introduced through constitutional concessions by the British. The second phase is the phase of the involvement of the educated elites in nationalist activities(Adigwe,1979) .In this phase, the British colonialist although comfortable with traditional political arrangement in that the system was conforming to resource exploitation, though with little resistance from sections where traditional political institutions were altered to be compatible with the centralized form; the trend in world politics especially after the second world war favoured the principle of self determination. As a result, the educated elites where accommodated in the governmental process, first through the adoption of the elective principle in the 1922 Clifford constitution and later the 1951 Macpherson Constitution which led to the formation of more political parties: the Action Group(AG) and Northern people’s Congress(NPC) in 1951.(Azelama,2010). The implication of the above is that party Politics became ethnicized as AG was to the west, NPC to the North and the Nigerian National Democratic Party (NNDP) that was created in 1923 and which later transformed into the National Council of Nigeria Citizens (NCNC) in 1944 was to the East. However, it is important to emphasize that unlike what was obtainable in the first phase, the educated elites provided some form of political leadership because the political parties though ethnic based, served as a tool for political socialization and recruitment, interest articulation, interest aggregation, political communication as well as getting the people involved in the process of rule making, implementation and adjudication. This phase witnessed the widening of the political space for political participation though under the direction and dictates of British colonialists. From this perspective, one could vividly argue that although some form of political leadership were provided by the educated elites but such leadership no doubt fell short of functional democratic norms as a result of sectionalism in politicking for the control of political power, poor political culture as a result of political distortions by British political domination, politics associated with spontaneous reactions on the part of the people with the attendant problem of social disorder rather than reactions emanating from informed ideas. Political Leadership under Civilian Regimes The First and Second Republic In the first republic, sectional party politics, poor political leadership, chaotic situations arising from spontaneous reactions became more manifest. This is because the above stated attributes were made to be submissive to the shared interest of acquiring political independence by the politicians under colonialism. After the attainment of political independence, politics and political leadership became characterized by sectional interest, thuggery, bitterness, suspicion, political disorder among others (Omodia 2003; Aper 2008). In other words, the mutual suspicion between the North-South and intra South-East and West became more manifest and thus, political leadership though provided, but it was regionally based. This above fuelled the termination of the republic with chaotic situation witnessed in the western region which led to the declaration of a state of emergency 39 S.M. OMODIA: Continental J. Social Sciences 3: 38 - 43, 2010 in the region. This is coupled with the crisis associated with the 1963 census, the 1964 and 1965 elections which culminated into the 1966 abortion of the republic (Ademoyega 1981; Nwosu, Olaniyi and Oladele 1998). As regard the Second Republic attempt was made to register political parties that were nationally based in terms of spread. As a result, five political parties were registered to contest for political offices in the general elections of 1979.These were: the National Party of Nigeria (NPN), the Unity Party of Nigeria (UPN), the Nigeria People’s Party (NPP), the Great Nigeria people’s Party (GNPP) and the Peoples Redemption Party (PRP). It is however important to state that, of all the five political parties, the NPN turned out to be an elitist cadre based national party based on spread and achievements in polls, while other parties manifested ethnic spread ( Kurfi, 1983; Yamma, 2008). The above scenario was an improvement on what was obtainable in the First Republic in terms of party politics and political leadership in that political leadership in the republic was regionally determined and felt by the people. However, the sharp difference between the First and Second Republic could be attributed to the balkanization of federal regional structure by the military in favour of multiple State structures (19) that were economically and administratively weak and depended on the centre. Conversely, the growing influence of the NPN in areas considered to be the stronghold of the parties that were viewed by indigenous politicians as synonymous to the stronghold of other party leaders which date back to regional politics of the first republic no doubt served as impediment to the nationalization of the party system. For instance, the so called ‘landslide’ victory of the NPN in capturing the States of Bendel and Oyo which were formally of the UPN, Anambra State formally of the NPP- the home state of the leader of the party Dr. Nnamdi Azikiwe and Gongola, formally of the GNPP in the 1983 Gubernatorial elections snowballed into political pandemonium and state of anomie as a result of accusations of electoral rigging by the opposition parties against the ruling NPN as the victories occurred in the stronghold of opposition Parties which date back to the colonial days(Yamma,2008). The Aborted Third Republic. However, in the aborted third republic, the objective of providing a functional national party leadership rather than the ethnicization of the process, led the military administration of Ibrahim Babangida to adopt a two party system in the Social Democratic Party and the National Republican Convention (NRC) (Opara, 2007). This experiment was successful in the sense that ethnic party politics was checked especially with the defeat of the NRC Presidential Candidate- Alhaji Bashir Tofa in his home State Kano and some other Northern States by Chief M.K.O Abiola, the SDP Presidential candidate (Opara , 2007), a feat that changed the political orientation of the Nigerian state up to date. On the other hand, the fragile nature of the political institution became manifest especially with the annulment of the Presidential election by the military administration of Babangida and the acceptance by the political parties of their willingness to re-contest the presidential seat. This was believed to be a function of the emerged structure of the parties in that they were created by the government and thus not deeply rooted in the people. Military Rule Military administration in the political governance of Nigeria has been characterized with the militarization of the political process based on the following attributes: -Suspension of the constitution. -The governance through decrees and edicts. -Curtailment of civil liberties and fundamental human rights. -Exclusion of the people in the political process of policy initiation and implementation which is often limited to the prime movers of coups. -The seizure of power through force- Coup d’état. -Appointment of civilians into political offices for the purpose of legitimizing the government. -Seizure of power based on custodian factor or as corrective regimes. The above attributes had characterized military administrations in Nigeria and by implication negates the principle of political leadership in that the political process excludes the people. In other words, system or governmental survival under military dictatorship in Nigeria was never anchored on the political power of the people but basically on the concept of ‘custodian theory’ and ‘corrective regime’ which often fade with time and therefore leading to 40 S.M. OMODIA: Continental J. Social Sciences 3: 38 - 43, 2010 political instability in form of counter coup d’état. Examples could be cited with the regimes of Yakubu Gowon which utilized the custodian theory first for power acquisition by emphasizing on the indispensability of federalism in the Nigerian state, which the lronsi government undermined in favour of unitarism and which the Gowon’s government felt propelled its intervention for the purpose of sustenance (Adigwe,1979). The second was the utilization of the same theory for power consolidation especially as regard the need to maintain an indivisible Nigerian geopolitical entity that was threatened by the Eastern region. Example of the use of the concept of ‘corrective regime’ was also associated with military regimes of Buhari and Babangida. While the Buhari government purported to have taken over power from Shagari’s government in the second republic as a result of economic mismanagement, corruption, misappropriation of funds to mention but few, the Babangida’s government was said to have been propelled by the deviation from the mission that necessitated the birth of Buhari’s government(Olagunju,Jinadu and Oyovbaire 1993). . The import however of the above scenario is that military government especially in the Nigerian Sate was characterized by a high level of political fragility or instability because successive regimes tend to be destroyed by the same ills they claim necessitated their intervention especially with the lack of moderating capacity of the people. The Fourth Republic. The background of political leadership in the Nigerian State both under civilian regimes and military dictatorship indicate a scenario where political instability persisted in the Nigerian body-politic as a result of the utilization of ethnic politics as a tool for corruption, poor political leadership, instituting fragile political institutions, the manifestation of political norms that were antithetical to democratic survival (Omodia,2009). Thus, the challenge of the present republic vis-à-vis democratic survival is the injection of functional democratic orientation and norms into the Nigerian people in order to serve as vanguard of democracy and good governance. This based on past observation could only be achieved in an atmosphere of party centred nationalism rather than ethnicization. The Nigerian state therefore of the Fourth Republic, especially with the registration of more than fifty political parties is an indication that party politics is so weak. In addition, the existence of a dominant political party, the People’s Democratic Party (PDP), a truly national party is also an expectation that: (I) the party should be able to provide a truly national political leadership for the Nigerian state. (2) The party representatives both in its emergence and policies should be guided by national sentiments and democratic tenets. However, unfolding events in the Nigerian body-politic between 1999 and date shows the manifestation of intra ethnic party politics in the Nigerian polity, especially through the zoning system. For instance, the two parties that fielded candidates in the presidential election of 1999, the PDP and the All People’s Party (APP) zoned the presidential seat to the South; this witnessed the emergence of southern presidential candidates-Chief Olusegun Obasanjo of the PDP and Chief Olu Falaye of the APP( Egwemi,2007). This could be seen as simply a device of ethnicizing party politics both at the intra and inter party level, unlike in previous republics where it was majorly at inter party level .On observational basis what accounted for the above scenario is that, while the formation of political parties especially in the First and Second Republic were associated with charismatic leadership of the leaders, in the Fourth Republic such charismatism does not exist as parties were either formed by group or association without clear cut influence. It is indeed needful to state that the lack of clear-cut influence among politicians and the emergence of the zoning system may have worked thus far because the present democratic experiment could be said to have survived more than other experiments of the other republics. However, unfolding events in the Nigerian polity shows that the present system is so fragile because of the personalization of leadership especially by the political representatives. In other words, charismatic leadership of the past republic was important in ensuring party discipline and supremacy especially in terms of carrying-out party manifestoes. For instance, the implementation of the party programme of free education in UPN controlled States under the political leadership of Chief Obafemi Awolowo (Bello,2008). In the present situation, party representatives in government especially the President and Governors are automatically the leaders of the party in their states and the nation. The implication therefore is that, the party system is characterized by indiscipline, the seizure of the party structure by the political leaders and blind loyalty to persons rather than the party. 41 S.M. OMODIA: Continental J. Social Sciences 3: 38 - 43, 2010 The above have characterized party politics and political leadership in the Nigerian state. The scenario no doubt is antithetical to democratic survival in Nigeria. It therefore shows that the emergence of very powerful party representatives at the expense of party control could lead to the demise of the zoning system for selfish and class interest. As a matter of fact, the present democratic experiment of the fourth republic has survived up to a decade not as a function of zoning but the resolve of Nigerians to perfect democracy in Nigeria through long lasting experience. This is because the so called zoning is not embedded in the people who are supposed to be drivers of democracy. Rather, it is designed by the elites for elitist interest in that the products of such system are often not accepted to the people but foisted on them through electoral rigging. CONCLUSION The position of this paper is that if the present democratic experiment of the Nigerian Fourth Republic is to stand the test of time, there is need for a transformed and integrative leadership that would serve as a drive for socio-economic and political development. In other words, the idea is that the development of the citizenry through political participation would snowball into maturity and self believe not only needed for democratic development, but also for socio-economic development. REFERENCE Ademoyega, A. (1981). Why We Struck. Ibadan: Evans Brothers Nigeria Limited. Adigwe, F. (1979). Essentials of Government for West Africa. Ibadan: University Press. Appadorai, A. (1975) The substance of Politics. London: Oxford University Press. Aper, J.O (2008). political attitudes, political manipulation and election in Nigeria: the role of politicians and security agents In: S.M Omodia (ed.) Managing Elections in Nigeria (P.29) Keffi: Onaivi publishing Azelama, J.U. (2010). Nigeria Constitutional development from the Nigeria Council to 1963 republican Constitution In: J.U. Azelama (ed.) Nigerian Government and Politics. (Pp.25-32) Benin City: Ever Blessed Publications. Bello, K. (2008) Ideological Bankruptcy in the Political Ppractice of Nigeria: Genesis Magnitude and Consequences. Keffi: AMD Designs and Communications. Crowder, M. (1968). West Africa Under Colonial Rule. Benin City: Ethiope Publishing Corporation. Egwemi, V. (2007). The people’s democratic party and the emergence of a dominant party system in Nigeria. NASHER (52): 90-97. Kurfi, A. (1983). The Nigerian General Elections 1959 and 1979 and the Aftermath. Ibadan: Macmillan. Mukherjee, S. and Ramaswamy, S. (2007). A History of Political Thought. New Delhi: Pretence-Hall. Nwosu, N.I., Olaniyi, J.O. and Oladele S.O. (1998). Introduction to Constitutional Development in Nigeria. Ibadan: Sunad Publishing Limited. Olagunju , T. Jinadu, A. and Oyovbaire, S. (1993). Transition to Democracy in Nigeria. Ibadan: Spectrum Books. Omodia, S.M. (2003). State and conflict managemnet in the Nigerian fourth republic: a. case democracy or for good governance. Nasarawa Journal of Humanities 1 (1): 170-175. Omodia, S.M. (2004). Elitist hedonism and democratic survival in Nigeria. The Nigerian Academic Forum. 7(3): 5256. Omodia, S.M. (2006). Political leadership and democratic survival in the Nigerian fourth republic. Indian Journal of Multidisciplineary Research. 2 (2): 282-288. 42 S.M. OMODIA: Continental J. Social Sciences 3: 38 - 43, 2010 Omodia, S.M. (2007). Governance and democratization in Africa. The Social Sciences 2(1): 124-138. Omodia S.M (2009). Elections and democratic survival in the fourth republic of Nigeria. Journal of Pan African Studies 3(3): 35-42. Opara, B.A. (2007). June 12 1993 Presidential Election. Abuja: Subavic International. Oronsaye, A.O.(2009) Tradition and trends in Nigeria public administration In: R.F. Ola and D.A Tonwe (eds.) Nigerian Public Administration (Pp 23-32) Lagos: Amfitop Books. Rodney, W. (1972). How Europe Underdeveloped Africa. London : Bogle - L’over ture Publication Yamma, Y.A. (2008). Elections in post colonial Civilian regimes in Nigerian In: S.M. Omodia (ed.) Managing Elections in Nigeria (Pp. 18-27) Keffi: Onaivi Publishing. Received for Publication: 29/07 /2010 Accepted for Publication: 20/08 /2010 43 Continental J. Social Sciences 3: 44 - 49, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com THE IMPACT OF POLITICAL SOCIALIZATION ON POLITICAL PARTICIPATION – A NIGERIAN VIEW POINT 1 Oko Ugwu1 and Oguud Felicia Mgbo2 Department of Public Administration, Akanu Ibiam Federal Polytechnic, Unwana, Afikpo – Ebonyi State and 2 Department of General Studies, Akanu Ibiam Federal Polytechnic, Unwana, Afikpo – Ebonyi State ABSTRACT Socialization is a complex process through which individuals learn, assimilate and internalize the customs, norms and culture of the society, and from values that are acceptable to the society. The paper will examine the role of political socialization in the formation of political opinion and participation in the political system. The paper further exposes the negative impact which the Nigerian kind of Political socialization has on the political culture and by extension, on the participation of the individual in the political system. The paper identifies also the various factors that affects political participation of the individuals in the country. KEYWORDS: Society, political system, culture, Nigeria, public opinion, socialization INTRODUCTION Public opinion is grounded on values. People acquire their values through socialization – a complex process through which individuals become aware of their environment, culture, and form values, every society seeks to be self sustaining, self preserving, and self developing. They do these by preserving those cultural values that make them unique. The process of socialization is one way by which the culture of a people is preserved because it involves the transmission of these culture from one generation to another. The process of socialization prepares the biological being to fit into the society and prepares him for the roles he is to play and providing him with the necessary foundation of behavioural patterns, beliefs and values that will make him suitable for integration into the society. This we must point out, ensures the continuity of the society and its values or culture. From the above, one will understand that socialization provides a being with the necessary ingredients needed to participated in the activities of the larger society. By including moral values, behavioural patterns, habits and culture, socialization prepares a person as “rite of passage” to face societal challenges and participatory mien within his environment. Thus, participation could be social, civic, religious or political. This paper is intended to show how political socialization can affect a person’s political participation using Nigerian insights. Using Nigeria as a point of departure, tells a story of the kind of political participation occasioned by the unfortunate political culture contrived by the ruling elite in Nigeria. Conceptual Clarification For ease of understanding, we consider it very important to clarify issues in this paper. This is by way of bringing out in clear relief the implications of the two major concepts central to the paper. The concepts are political socialization and political participation. Political Socialization Like we said earlier of socialization, public opinion is grounded on political socialization which itself is a complex process through which individuals become aware of politics, learn political facts, and form political values (Berry and Goldman 1989). Many scholars have defined political socialization variously but all seem to agree that the process of political socialization which is an endless thing involves the transmission of a people’s groups or society’s political culture from generation to generation. Thus Almond and Verba (1963) defines political culture as a people’s predominant beliefs, attitudes, values, ideals, sentiments and evaluation about the political system. It is this political culture that political socialization transmits. The world itself is a learning process. It is in a state of flux, therefore learning and by extension, socialization is a continuous process that terminates only in death. Easton and Denis (1969) have also defined the concept as those developmental processes through which persons acquire political orientations and patterns of behaviour. Some practical personal illustrations may be very pertinent here. Remember your earliest encounter with a political figure 44 Oko Ugwu and Oguud Felicia Mgbo: Continental J. Social Sciences 3: 44 - 49, 2010 say a commissioner or your earliest memory of a governor. Now consider your earliest knowledge of political party and party politics. What influenced you to identify with a political party if you did? What of the atomic bomb? How did you first learn about it? You may have probably remembered that it goes back to your childhood days. Political socialization and socialization in general starts from childhood. There are different patterns of political socialization. Thus, behaviouralists have attempted to distinguish by using four analytical categories which are related. These include: Agencies; Process; Time-span, and Change. Agencies refer to the medium via which socialization will germinate. Included here are both the primary and secondary agencies, etc. The family is regarded as the dominant agent of socialization. There is an extreme angle to the issue of socialization and this refers to the process. Process sis of two kinds, , latent and manifest processes. Latent aspect of socialization is always associated with the primary agency which the manifest is associated with the secondary agency. The time span of socialization refers to an individuals formative years . The concept of change refers to the structural consequences of socialization on the political system. Change here could either be systemic or nonsystemic. Political Participation Many people hold strongly albeit wrongly that political participation is all about voting in an election. Far from this because there are other forms of participation, and sometimes they are more effective than voting. There are conventional and unconventional participation ( Berry and Goldman 1989). Government ought to be run by the people. This is the democratic ideal in a nutshell. But how much and what kind of citizen’s participation are necessary for democratic governance? Champions of direct democracy believe that if citizens do not participate directly in government affairs, making government decisions among themselves, they should give up all pretence of democracy. Voting in an election is however central to the majoritan of government, but it is not the only means of political participation. Having said all these, we can now attempt a definition of political participation. Political participation refers to “those actions of private citizens by which they seek to influence or to support government and politics (Milbrath and Goel, 1977). This definition embraces the two types of participation – conventional and unconventional forms. Conventional behaviour is the behaviour that is acceptable to the dominant culture in a given situation. Thus plastering campaign posters on public buildings is conventional; writings slogans on walls is not. Voting, and membership of a political party are examples of conventional political participation; staging sit-down strikes in public buildings and thuggery are examples of unconventional political participation. Violent protest is unconventional. Political participation is a dependent variable as a result of variations in the socialization pattern of individuals. These include the extent or level of participation. The level or extent of participation has been classified by Milbrath and Goel (1977) to comprise the gladiatorial – involving public and party office holders, electoral candidates, and strategists. The transitional refers to contributors – monetary and attendees of patty meetings and infact party identification; and the spectatorial which are emblem carrying people, canvassers, etc. Impact of Political Socialization on Political Participation This paper is devoted to finding how the socialization process in the political system affects an individual’s participation in the political system. In other words, we would want to expose how this complex process impacts on the political participation of the individual do affect or impact on the individual’s nature and level of political participation. No two people are influenced in precisely the same way. Each individual experiences a unique process of political socialization and forms a unique set of political values. Since political socialization is the transmission of political culture, the later must be at issue here and must be central to this paper. We therefore need to investigate the place of political culture in political participation. The Impact of Political Culture Political socialization has been identified as the transmission of political culture from one generation to another. If one must investigate the interplay of politics and socialization in political participation, the best place to commence is from the ‘area’ of political culture. Political culture according to Almond and Verba (1963) is a people’s predominant beliefs, attitudes, values, ideals, sentiments and evaluations about the political system. Almond and Verba further classified political culture into the 45 Oko Ugwu and Oguud Felicia Mgbo: Continental J. Social Sciences 3: 44 - 49, 2010 broad categories using as a justification the level of participation and consciousness. The first category they called parochial political culture. People in this category do not have specialized knowledge, feelings and judgment about the system, structures, roles, personnel and output. They hardly make any input in the system and expect virtually no output from the political system. This kind of situation occurs in primitive traditional societies, suberu observed. The second category is the subject political culture. Here, members of the political system are aware of a specialized governmental or political authority and are affected by the output of this political authority. Inspite of this awareness, their relationship to the political system is essentially passive. The third and last category is the participant political culture. Here the members of a political system are explicitly and actively oriented to both the input and output aspects of the system and are affected by the output of the political system. The members also tend to be oriented towards the operation of the political system. One can find this in many of the established or consolidated liberal democratic countries. From the foregoing, one can deduce that one’s participation in the political system is conditioned or influenced by the inherent political culture in the system. Some countries no doubt have more participatory culture than others, in which case they are more enthusiastic and proud in their institutions and are more effective in the role they place (Jackman, 1987) Political culture per se does not account for political participation but when this culture is transmitted through the process of socialization, it can then impact on political participation. How does it do this. it is the ‘how’ that we are trying to address in this paper. In order to ascertain the impact of political socialization on political participation, we would direct our attention to certain variables while also bearing in mind the role of some socialization agents in the political participation of the individual. Age Dimension of Socialization As many scholars as a number of studies have established the various positive relationship that exist between age, political interest, and political participation. Crittenden (1963) has established this causal relationship between age and political interest which in turn lead to active political participation. Neuman (1986) has also observed the linkage of political sophistication to age-related increases in political participation and argued that political sophistication was the product of three stages of socialization, viz – early, adolescent, and adult. According to Neuman, in early socialization, the family is important; formal schooling and sex role is associated with adolescence socialization while in the adult phase, group participation, income and age play important roles. The underlying proposition here is that political participation tend to increase with age. Civi Competence This is knowledge and habits of knowledge acquisition relevant to politics. The assumptions here is that those who posses’ greater civic competences are more likely to participate in politics and as a result are able to make discriminatory judgment. John Strate (1989) argues that the acquisition of civic competence is partly an age-related process. Agents of Socialization Agents of socialization impinge on political participation because the family as a primary agent influences the child. It is not surprising that most people link their earliest memories of politics to their families. Moreover, when parents are interested in politics, they influence their children to become more politically interested and informed. This is perhaps why in Nigeria, children of the old politicians tend to continue making waves in politics even after their parents have passed on. The present issue of Dr. Bukola Saraki, Governor of Kwara State who is protégé of the second republic senate leader Dr. Olusola Saraki; Senator Udo Udoma, Mrs. Abiola Dosumu, who are children of Justice Udo Udoma and Chief M.K.O. Abiola respectively are valid examples of this type of participation occasioned by the family tradition. In Imo State, Barr. Tonny Anyanwu who was a member of the House of Representatives between 1999-2003 is the son of Senator Tonny Anyanwu. A Senator in the second republic. One of the most politically important things that many children learn from their parents is party identification. This is learned in much the same way as religion. School itself influences political participation. Students learn to get involved in politics by vying for offices in their various clubs. Moreover, education gives one the leverage in political participation. The media also play important roles in socialization, hence participation. Some people are motivated into party identification and membership an a result of the party’s manifesto and sweet jingles on radio and television 46 Oko Ugwu and Oguud Felicia Mgbo: Continental J. Social Sciences 3: 44 - 49, 2010 Parents’ Socio-Economic Status (SES) Political socialization starts in the family and infact all forms of socialization. This can only indicate that the status of a family will definitely affect the children’s socialization and by implication, their participation in politics. Participation, it has been established correlates closely with an individual’s socio-economic status (ESE). The higher one’s SES, the greater the likelihood of active participation in politics. Little wonder the Nigerian political scene has almost been over run by the nascent and emergency millionaires and fraudsters (a.k.a. 419 } For one, the motivation is there. politics anywhere but more especially in Nigeria involves a lot of stakes including monetary stakes, especially at the level of participation. This makes it more prone to participation by people with higher SES. Verba and Nie (1972) have included education, occupation and income and several civic attitudes which are bought to explain the association between SES and participation. In general terms, the high socio-economic status (SES) families participate more in politics than the lower ones and since the SES of the parents determine the SES of the children therefore the children’s orientation is influenced by using their parent’s SES to place them in the setting that forester’s civic involvement and competence. Sex Dimension to Political Socialization An important element in the relationship between political socialization and political participation is the different ways the political socialization of the sexes affect their participation. There are differences in the socialization of the sexes because the early socialization of children has long emphasized the public roles of males and the private roles of females (Jennings 1983). This goes a long way to explain why men have higher participation level in politics than women. In Northern Nigeria, and among core Moslems, it is almost a taboo for women to involve in politics at whatever level. The trend is gradually changing but complete participation of women in politics in the Northern Nigeria can never be realized given the predominant Islamic tenets in the north. Other Parental Factors There are factors associated with parents that can influence the political life of the children. These include: a. The parent’s civic orientation and knowledge. This influences the children’s interest in politics either way of negative or positive. b. Parents’ active participation in politics. This also influences the children. Politics is “infectious”, and the “virus” will definitely infect the children of parents that are actively involved in politics more than those with parochial or subject political orientations. Again, through the process of imitation, children of politically active parents adopt the stand of their parents. Children are here motivated to follow the footsteps of their parents. Such people like the Awolowo’s, Kuti’s, Nwodo’s, Mbadiwe’s in Nigeria, and the Ghandi in India, the Kennedy in the United States of America are valid examples. Children from such families are also motivated by the challenge to maintain the family reputation and political tradition. Political Climate and Political Participation The political climate and environment of a nation can produce either positive or negative effect on political participation. A child who is socialized in the climate of political thuggery, acrimonious rivalry, political assassinations and political contests fraught with election rigging and vituperations will tend to develop negatively or entirely discouraged participation. “Politics” is a dirty game” is a slogan people have come to identity with politics and politicking over time. This tends to discourage people from participation. Some are socialized with equating politics with lies – this tends to produce alienation. Generally, unhealthy political climate discourages political participation. In Nigerian, the June 12 psychotic melodrama has produced a lot of apathy to political activities in Nigeria. A lot of people still find it hard to believe in the sincerity of any transition programme in Nigeria. This has succeeded in reducing active political participation including voting in election. A valid case is the Nigeria political climate which has become a mirage by the actions of the hegemonic Peoples Democratic Party (PDP) in elections in Nigeria. Elections in Nigeria has turned to selection and electoral fraud perpetrated by the PDP has made people loose faith in elections. Presently, people do not have faith in elections any longer. The PDP has become satanically hegemonic and devilish in their approach to politics in Nigeria. This has created a climate of fear and understandable distaste for politics. Apathy is the principal estuary of that sea of socio-political maladjustment of which the PDP is the source. A situation where a state Governor elect polled 230,000 votes to win an election is deplorable. The point to be drawn here is that the political environment (climate) itself is a socializing agent and it is capable of impacting either negatively or positively on 47 Oko Ugwu and Oguud Felicia Mgbo: Continental J. Social Sciences 3: 44 - 49, 2010 political participation. Every human being is a product of his environment. This goes to show that one’s environment is important in building his person. Today, the PDP has succeeded in creating a legion of political thugs and criminals who now believe that elections must be hijacked and have been socialized in the act of intimidation of political opponents including possibly elimination of political opponents and perceived political threats. A charged atmosphere as in the case of Western Regional crisis of 1962 can dampen one’s interest in politics. The worst is the charade called the 2007 election which is comparable in intensity only to the criminal annulment of the June 12, 1993 Presidential election in Nigeria. CONCLUSION We have tried so far to identify the impact of political socialization on political participation. We have succeeded in establishing that the way a child is socialized, and the environment definitely impacts on his political participation. We identified certain factors which induce participation. They include political culture it is true that the political culture of a place or society is central to this process. It has no direct bearing on political participation. This is because political culture itself is latent as culture as a whole. It is through socialization process that these culture are generically transmitted to produced effect. Therefore, it is the transmission of culture (socialization) that enhances participation. While accepting culture and socialization as being central to our investigation, we also identified other factors that enhance political participation. They included: Age, Civic competence, Socio-economic status, Sex and other parental factors like parents’ civic orientation and active participation and involvement. We also identified the general political climate and environment of politics as having a bearing on political participation. We still conclude that the Nigerian political culture of fraud, violence, thuggery and irresponsible deceit has created an unfortunate political situation and a jaundiced system in the country. REFERENCES Almond, G. and S. Verba (1963) The Civic Culture Princeton: Princeton University Press. Crittenden, J. (1963) “Ageing and Political Participation” in Western Political Quarterly Vol. 16, pp 323 – 331 Easton, D. and J. Dennis (1969) Children in the Political System: Origins of Political Legitimacy. New York: McGraw-Hills Inc. Jackman, R.W. (1987) “Political Institution and Voter Turn Out in the Industrial Democracies” in Western Political Quarterly Janda, K. J. M. Berry and J. Goldman (1989) The Challenge of Democracy: (2nd edition) New Jersey: Houghton Mifflin Company Jennings, K.M. (1983) “Gender Roles and Inequalities in Political Participation: Results from an 8 – Nation Study” in Western Political Quarterly Vol. 36, pp. 346-385 Milbrath, L.W. and M.L. Goel (1977) Political Participation. Chicago: R. and McNally. Neuman, W.R. (1986) The Paradox of Mass Politics: Knowledge and Opinion in the America Electorate. Cambridge Mass: Harvard University Press. Strate, J.M. (1989) “Life-Span Civic Development and Voting Participation” in American Political Science Review. Vol. 83, No. 2 (June), pp. 443 Seberu, Rotmi (1999) Lecture, University of Ibadan. Verba, S. and N. Nie (1972) Participation in America New York: Herper and Row. 48 Oko Ugwu and Oguud Felicia Mgbo: Continental J. Social Sciences 3: 44 - 49, 2010 Received for Publication: 29/06 /2010 Accepted for Publication: 15/08 /2010 Corresponding Author: Oko Ugwu Department of Public Administration, Akanu Ibiam Federal Polytechnic, Unwana, Afikpo – Ebonyi State 49 Continental J. Social Sciences 3: 50 - 58, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com DEVELOPMENT OF A PSYCHOMETRIC INSTRUMENT TO MEASURE WORK LIFE BALANCE V.M. Rincy and N. Panchanatham Department of Business Administration, Annamalai University, Annamalainagar – 608 002, Tamil Nadu. ABSTRACT Contribution of the service sector to the national economy of India has been considered as an important factor in the determination of the national GDP and over the last few decades the issue of work-life balance (WLB) especially among the service sector employees has been receiving increased attention. Even though some scales are available for the measurement of WLB, they do not exactly fit into the societal and familial concepts existing in the Indian society. Therefore in the present work, a 42 items four factor instrument is developed for measuring the WLB of employees working in the service sector. The data needed for the development of the scale was collected from 375 employees working in the various categories of service sector. KaiserMeyer Olkin test and Bartlett’s test were conducted to check the sampling adequacy and sphericity of the data and the dimensions (factors) were resolved through factor analysis. The WLB measurement scale was found to be having high reliability and validity with dependable Cronbach alpha values. Attempts have also been made to discuss the implications of measuring the WLB of the employees in human resource management. KEYWORDS: Work life balance, WLB scale, Psychometric instrument, Service sector employees INTRODUCTION In the present scenario of globalization and economic liberalization accompanied by recession and layoff, two cardinal domains in the lives of an employee is work and personal/family life. Moreover, the present day society throughout the world has witnessed dramatic changes in the concepts about work and family life over the past few decades due to the technological advancements and improvements in living conditions. These changes and advancements quite often lead to interference, conflict and competing demands between the expectations of the work place and personal needs at home (Lambert et al., 2006). As a result, the subject of work life balance (WLB) has received wide spread publicity and has been subjected to an increasing number of investigations in different parts of the globe (Clark, 2000; Fisher, 2001; Greenhaus et al., 2003; Mathew and Panchanatham, 2009; 2010). Various workers have defined WLB in different terms. Kofodimos (1993) considered WLB as “finding the allocation of time and energy that fits your values, making conscious choices about how to structure your life and integrating inner needs and outer demands and involves honoring and living by your deepest personal qualities, values and goals”. Clark (2000) and Greenblatt (2002) presented comparatively simpler and practical approaches to WLB. While the former defined WLB as satisfaction and good functioning at work and at home with a minimum role conflict, the latter proffered WLB as the absence of unacceptable levels of conflict between work and non work demands. Greenhaus et al. (2003) have defined WLB as the extent to which an individual is equally engaged in and equally satisfied with his/her work and family role. Whatever be the context, balancing work and family domains is increasingly becoming a difficult task for various employees and they are concerned about the boundary between their work and non work lives (Hochschild, 1997; Mathew and Panchanatham, 2009). A critical analysis of the literature reveals a number of consequences and antecedents to WLB issues including health issues (Sparks et al., 1997; Tregaskis et al., 1998), dependent care issues (Zedeck, 1992; Kossek et al., 2001; Hardy and Adnett, 2002) and even positive spillover between the two domains (Pieterse and Mostert, 2005; Rost, 2006). Due to the increased importance of the topic, various instruments were developed to measure the WLB of different target groups in different contexts. These scales include those developed by Fisher (2001), Greenhaus et al. (2003), Hill et al. (2004), Huffman et al. (2004) and Hayman (2005). Majority of them were developed on the basis of the western societal and work concepts. Most of these instruments are having good validity and reliability in the societal contexts in which they were developed. However, as the etiquettes, customs, values of the society, nature and concepts of the family structure and organization in India are somewhat different from that of the western and European countries; there are some practical difficulties in directly applying these WLB instruments in Indian context. Further, to the best of our knowledge, no precise WLB measurement tool has been developed in the Indian context. Therefore, the present work is an attempt to develop a compact instrument to measure the WLB of employees in the service sector of India, which 50 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 contributes a major share to the national GDP (Shah and Agrawal, 2008). Further, based on the data available we propose the following hypotheses H1: Intrusion of personal life into work (IPLW) and intrusion of work into personal life (IWPL) are negatively related to WLB. H2: Work enhancement by personal life (WEPL) and personal life enhancement by work (PLEW) are positively related to WLB. METHODOLOGY Sampling and data collection The data needed for developing the WLB scale were collected from a sample population consisting of employees working in the service sector in India (Table 1). The various areas of service sector covered in the present study include education, healthcare, finance and insurance, civil administration, law and order, public transport and tourism and hospitality. A random (probabilistic) sampling method was adopted and a total of 610 employees were invited personally or by e-mail/letter to take part in the survey. Questionnaires were either given directly or sent by post/email to all the 610 employees. Out of 610 questionnaires distributed only 375 duly filled up questionnaires were returned and the response rate was 61.5%. The minimum sample size needed for the study was determined by following Hamburg (1985) and was found to be 229 (N = 375, margin of error = 5%, confidence level = 95%). Development of the measuring instrument (work-life balance scale) As a preliminary step, in-depth interviews were conducted among 40 employees belonging to the various areas (already mentioned) of service sector in India. Open ended questions and semi-structured interview formats were used to assess the various dimensions (factors) coming under the WLB of service sector employees. Empirical data generated from these exploratory analyses were coded and mind mapped in an iterative manner until four major dimensions were clustered using dendrogram method. Finally, 46 statements belonging to the four dimensions (factors) and addressing the issues of WLB were developed based on literature review and qualitative research. The content validity ratio of each item (statement) in the scale was calculated following Lawsche (1975) and was found to be more than 0.55. Further, in order to increase the validity and reliability of the instrument as well as to ensure its appropriateness, the statements were subjected to two phases of pilot tests conducted with 20 people each composed of human resources professionals, academic experts and the progressive employees of service sector industry. Table 1. Demographic profile of the respondents Category Below 25 25 – 35 Age 35 – 45 Above 45 Below 10,000 10,000 – 20,000 Income 20,000 – 30,000 Above 30,000 Below graduation Graduation Education Post graduation Above post graduation Male Gender Female Married Marital status Single % 22.2 30.4 32.3 15.1 11.1 28.1 31.5 29.3 20.2 25.8 27.6 26.4 53.6 46.4 69.3 30.7 Finally, the questionnaire used for this study consisted of two sections. White the former was designate to reveal the socio demographic details of the respondents (Table 1), the latter contained 46 statements (Table 2) designed to measures the WLB of the employees. The reliability of the instrument was estimated using Cronbach alpha 51 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 coefficient (Cronbach, 1951). Scoring was done on a seven point scale 1 = never, 4 = some times, 7 = always). The overall value of the instrument was considered as the WLB index and was taken as the dependent variable for determining the directions and magnitudes of the various dimensions in the WLB scale. Statistical analysis The 46 items pertaining to WLB of service sector employees (Table 2) were factor analyzed using principal components analysis with varimax rotation method (Table 3), to determine the underlying dimensions (factors) and their appropriateness. Kaiser-Meyer Olkin (K.M.O) measure of sampling adequacy and Bartlett’s test of sphericity of the instrument were conducted to test the fitness of the data. The relationship between dimensions and WLB was determined by Pearson’s correlation analysis (Table 4). The directions and magnitudes of associations between the factors and WLB were tested through regression analysis (Table 5). Findings and discussion Profile of the respondents All the respondents were service sector employees employed in India. A summary of the socio demographic profile of the respondents is presented in the Table 1. Table 2. Mean ratings of work life balance scale (N = 375) Item Items No. 1. I cannot concentrate in my work due to the dependent care issues at home 2. Due to the role overload at home, I am physically tired to discharge my work responsibilities 3. The stress originating from my personal/family life make me unable to concentrate on my work 4. Many a time I have to postpone things at work due to demands on my time at home 5. I could have concentrated more in my work, If I were free from the family burden 6. I find it too tired to perform my works after discharging all my personal/family responsibilities 7. My work suffers as I am mentally worried about my dependents issues at home 8. The needs and demands of my family members interfere with my work related activities 9. I cannot discharge my duties properly at the work place due to my personal/ family problems 10. Due to my pre-occupation with societal activities, I find it difficult to complete work in time 11. Due to increasing work demands, I have to postpone/neglect many of my personal/family needs 12. The stress originating at my work drastically diminishes the happiness of my family 13. As I am busy with my work, I cannot give proper care and attention to my children 14. As I have to spent more time in my work domain I often fail to fulfill my family responsibilities 15. The demands arising from my work make my personal life stressful 16. I face difficulties in personal life due to my profession/work 17. Due to the non-cooperative nature of the co-workers, I face difficulties in personal life 18. The rigid and non supportive nature of my supervisors make my family life a difficult one 19. My spouse feels uncomfortable due to my preoccupation with the work 20. Due to my work lead, I fail to give proper attention to my dependent at home 21. In view of the nature of my work, I find it increasingly difficult to take care of my older parents/in laws 22. I find it difficult to manage my personal and family life and work demands Mean 5.44a 5.43 5.42 5.41 5.40 5.40 5.38 5.39 5.38 5.38 5.31 5.28 5.28 5.28 5.27 5.26 5.26 5.25 5.25 5.24 5.23 SD 0.96 0.97 1.01 0.98 0.99 0.99 1.02 1.01 0.99 0.99 0.99 0.99 1.00 0.98 0.98 0.99 0.99 1.00 1.01 1.02 0.99 5.22 0.98 Table 2. Contd… 52 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 The tiresome demands of work do not allow me to lead to personal life that I like 5.22 0.99 I come home from work too late to look after the family roles 5.21 1.01 I have health issues arising due to the increasing work demands 5.20 1.01 I do not have proper sleep due to my busy work schedule 5.19 1.03 My work makes me too tired to look after my personal/family obligations 5.18 1.01 Quite often I have to miss out important family/social functions due to my pre5.18 1.00 occupation with the work 29. My job keeps my personal/family life enjoyable 1.83 1.00 30. My work provides me enthusiasm and happiness to pursue my personal/family roles 1.82 0.99 31. My work contribute to the positive development of my personality 1.81 0.99 32. My work gives me ample opportunities to get rid of the tensions arising from the 1.79 0.99 personal/family life 33. My exposure and interactions at work help me to provide proper care to my dependents 1.76 1.02 34. My work schedule helps me to plan and execute my family activities regularly 1.72 1.01 35. The culture and punctuality at work help me to do my personal/family role properly 1.62 1.01 36. My family life gives me energy and better mood to perform my duties at work 1.58 1.04 places 37. My family responsibilities and experience make me punctual and responsible at 1.58 1.04 work 38. The experience of managing my family provide me better skill at work 1.57 0.98 39. Due to the supportive nature of my family members, I am able to relieve tensions 1.56 1.05 originating at work 40. The family life increases my self esteem at work 1.53 0.98 41. The interaction and concepts prevailing in the family life makes my relationship 1.52 0.99 with my supervisions and coworkers more cordial 42. My personal/family life helps me to be more dedicative and sincere at work 1.52 0.94 43. My supervisors and co-workers have a difficult time in accommodating my work 1.21 1.00 schedule 44. The experience I gained at work makes me a better parent/spouse 1.18 1.02 45. My personal/family life has helped to improve my interpersonal skills in the work 1.17 1.01 place 46. My work/profession has no role in miseries I, suffer in my personal life 1.07b 1.01 Note: Seven-point scale was used for rating the WLB instrument ranging from 1 = never, 4 = some times to 7 = always; a = the highest mean among all items; b = lowest mean among all items. Mean ratings of the items in the work life balance scale Among all the items, “I cannot concentrate in my work due to dependent care issues at home” was rated highest with a mean score of 5.44 and the statement “my work/profession has no role in the miseries, I suffer in the personal life” scored the lowest mean of 1.07 (Table 2), which implies that employees have accepted that their work (profession) as well as personal (family) life have played important roles in their WLB. The result of the K.M.O. measure was 0.829 and that of Bartlett’s test of sphericity was 2507.01 at 0.000 significance level. These findings suggest the appropriateness of use of the factor analysis. Out of the 46 items (Table 2), three (item nos. 44, 45, 46) were extracted as their factor loadings were less than 0.5 and item no. 43 was deleted to increase the reliability of the construct and to improve the Cronbach alpha score (see foot note of Table 3). Finally the remaining 42 statements constitute the four dimensions of the scale are represented in the descending order of the factor means in Table 3. Ten statements were loaded in factor 1 (IPLW) with reliability alpha at 0.97 and an overall factor mean of 5.41 (Table 3). This factor was negatively pursued in the WLB scale. Majority of the respondents opined that they were experiencing intrusion of personal life into work very frequently or always. Eighteen statements were loaded into the factor 2 (IWPL). The Cronbach alpha was 0.98 and the factor mean was 3.47 (Table 3). This factor was also negatively pursued and the increased permeability of the work-family boundary was evident from the responses of the respondents. Interference from the work domain in the family life was reported as a common phenomenon by Item No. 23. 24. 25. 26. 27. 28. Items Mean SD 53 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 vast majority of the respondents and thereby causing work-family imbalance. Seven statements were loaded into the factor 3 (WEPL) with an alpha value of 0.81 and a factor mean of 1.76 (Table 3). Work enhancement by personal life is an ideal situation for service sector employees as it implies that the moral support given, experience gained from and affection expressed by the family/society could exert a bonding force to maintain a better quality at work in their organization. Factor 4 (PLEW) comprised of seven statements with reliability alpha of 0.97 and an overall factor mean of 1.55 (Table 3). This section emphasized the importance of positive vision and attitude at the work place, a good work culture and a better work environment. These initiatives could provide better inputs to the personal life of the employees. Table 3. Factor analysis with employees (N = 375) Item No. Factor (as given in loading Table 2) 1 0.95 2 0.93 3 0.93 4 0.93 5 0.92 6 0.91 7 0.89 8 0.88 9 0.86 10 0.79 11 0.98 12 0.98 13 0.97 14 0.96 15 0.87 16 0.81 17 0.74 18 0.73 19 0.73 20 0.73 21 0.68 22 0.68 23 0.68 24 0.67 25 0.66 26 0.65 27 0.65 28 0.64 varimax rotation and reliability test of work life balance among service sector Factor name& factor mean Cumulative variance % Cronbach alpha Eigen value Variance % Intrusion of personal life into work (IPLW) 5.41 18.19 41.34 41.34 0.97 Intrusion of work into personal life (IWPL) 4.99 11.60 26.36 67.7 0.98 Table contd… 54 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 Item No. Factor Factor Cumulative Cronbach (as given in name& factor Eigen value Variance % loading variance % alpha Table 2) mean 29 0.84 30 0.81 Work 31 0.78 enhancement 32 0.64 by personal 7.852 17.85 85.54 0.81 33 0.68 life (WEPL) 34 0.66 1.76 35 0.65 36 0.86 37 0.85 Personal life 38 0.85 enhancement 39 0.82 by work 2.46 5.61 91.16 0.97 40 0.79 (PLEW) 41 0.62 1.55 42 0.61 Note: Seven point scale was used for rating the indicators ranging from 1 = never,4 = sometimes to 7 = always. Statements “my work/profession has no role in the miseries I suffer in the personal life” (IWPL), “my supervisors and colleagues have a difficult time in accommodating my work schedule” (IPLW) and “my personal/ family life has helped to improve my interpersonal skills in the work place” (WEPL) were deleted as factor loadings were < 0.5. The statement “the experience I gained at work makes me a better parent/spouse” (PLEW) was deleted after internal reliability test get maximum Cronbach alpha for the factor PWE. Correlation and regression analysis Correlation analysis (Table 4) revealed significant negative correlations between IWPL and WLB as well as IPLW and WLB. On the contrary WEPL as well as PLEW were having significant positive correlations with WLB. Linear regression analysis (Table 5) was conducted using the total sum of the statement (WLB index) as the dependent variable and the four dimensions as dependent variables. The results indicated that IWPL (β = -0.149) and IPLW (β = -0.100) are significant negative predictors of WLB and thereby supporting H1 that IWPL and IPLW are negatively related to WLB. On the contrary, WEPL (β = 2.557) and PLWE (β = 1.938) are significant positive predictors of WLB. Therefore H2 received full support from the data as hypothesized indicating 50.8 percentage of variance (adjusted R2 = 0.508, F = 97.67, p < 0.001, Table 5). Table 4. Correlation matrix of various dimensions (factors) with the over all work-life balance WLB IWPL IPLW WEPL PLEW M ± SD WLB 1 81.19 ± 47.33 IWPL -.204** 1 8.91 ± 6.00 IPLW -0.334** 0.074 1 41.01 ± 15.38 0.656** -.105* -0.311** 1 WEPL 37.61 ± 18.20 PLEW 0.673** -0.98* -0.323** 0.996*** 1 36.93 ± 17.12 Note: IPLW = Intrusion of personal life into work; IWPL = intrusion of work into personal life; PLEW = personal life enhancement by work; WEPL = work enhancement by personal life; WLB = work life balance; * Significant at 0.05 level; ** Significant at 0.01 level; *** Significant at 0.001 level Various workers have developed different instruments to measure the WLB of employees in different contexts and Reiter (2007) has given a precise review on various available scales. Even though most of these scales are having sufficiently higher levels of alpha coefficients, there are some practical difficulties in adopting these scales in their original forms in measuring the WLB of service sector employees in India. The difficulties encountered range from the nature of sample population, their working situation, familial concepts, to the societal setup in which the scales developed. The situation becomes more complicated in view of the peculiarities of Indian society and familial life. Indian society still remains largely as a male dominated patriarchal one with close family bondages, where joint families and extended families are prevalent. Even though more and more women are taking up paid jobs outside the 55 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 family boundary, they are generally accorded household duties and the responsibility of looking after the family in addition to their paid work. Similarly, the trend of both husband and wife becoming earning members of the family are also becoming prevalent in the Indian society and thereby adding to the woes of work life balance. Irrespective of the various horizontal and vertical social developments, the Indian society basically remains the same by retaining and cultivating the age-old cultural and society etiquettes and strong family bandages, where altruism is rather considered as a duty within the family. Looking after the older members of the family along with the young ones, educating the children and catering to the needs of various members of the family; are rather considered as prime concerns and cardinal duties of the spouses/earning members in addition to their personal needs and paid work functions. Similarly the multifaceted developments and various advancements taking place in the industrial world, the new found concepts of work, work culture and work place (Khatri and Budhwar, 2000; OECD, 2004) in the context of the peculiar familial and societal responsibilities and personal needs of the service sector employees in India have resulted in the ever increasing phenomenon of work life issues and imbalances in their lives. Therefore it deemed fit to develop a concise instrument to measure the WLB of service sector employees in India. For developing the scale, the works of Fisher (2001), Greenhaus et al. (2003) and Hayman (2005) have been thoroughly consulted and many of the ideas are utilized. Table 5. Regression analysis of work-life balance with its dimensions B SEB β IWPL -1.177 0.289 -0.149 IPLW -0.307 0.119 -0.100 WEPL 2.08 0.346 2.557 PLEW 1.579 0.345 1.938 2 Significance 0.000 0.000 0.000 0.000 Note: R = 0.717; R2 = 0.514; R = 0.508; F = 97.67; p < 0.001; IPLW = Intrusion of personal life into work; IWPL = intrusion of work into personal life; PLEW = personal life enhancement by work; SEB = standard error beta; WEPL = work enhancement by personal life; WLB = work life balance; B = unstandardised beta value; β = standardized beta coefficient. In the present study the factor analysis procedure employed the principle components method for extraction with varimax option, which ultimately yielded four factors. All the retained four factors are having eigen values greater than one (>1) and factor loadings more than 0.5. This is in accordance with the report of Hair et al. (2005) that factors having eigen values higher than 1.0 and factor loadings greater than 0.5 can be retained in the instrument. After the verification of the dimensionality, the reliability of the constructs was assessed using Cronbach alpha coefficient and resulted in alpha scores more than the minimum threshold value of 0.7 (Cronbach, 1951). The final Cronbach alpha for the four factors are in the order IPLW = 0.97, IWPL = 0.98, WEPL = 0.81 and PLEW = 0.97. The reliability estimates and factor loading schedule of the items finally resulted in a four factor instrument for measuring the WLB of service sector employees with a total of 42 items. In order to critically assess the interface between work and personal/family life in the Indian context, more statements have been included in IWPL and IPLW sections of the present questionnaire than the other available scales. Similarly, the scale developed in the present study has provisions to extensively measure the positive spillover (enhancement) in both the directions namely toward work and personal life. Finally, the four factors, 42 items instrument developed in the present study is intended to measure the WLB status of service sector employees. The instrument possesses acceptable validity and reliability. The scale not only explores the WLB level of the employees but also could give insights about the employees’ perceptions and concepts about WLB. These insights could be utilized by the organizations to develop WLB provisions and programmes. It may also be utilized as an effective tool to monitor the impact and effectiveness of WLB programmes implemented by the organizations, which in turn could help the policy makers and human resource managers to take corrective measures if necessary. This study adds to the existing literature on WLB and provides an opportunity to more critically analyse and understand the crossover between the work and life domains of employees. 56 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 REFERENCES Clark, B.C. (2000). Work/family border theory: A new theory of work/family balance. Human Relations, 53, 747770. Cronbach, L.J. (1951). Coefficient alpha and internal structure tests. Psychometrika, 16, 297-334. Fisher, G. (2001). Work/personal life balance: A construct development study, Dissertation Abstracts International, 002119 August 2001. Greenblatt, E. (2002). Work/life balance: Wisdom or Whining. Organisational Dynamics, 31, 177-194. Greenhaus, J.H., Collins, K.M. and Shaw, J.D. (2003). The relation between work-family balance and quality of life. Journal of Vocational Behaviour, 63, 510-531. Hair, J., Anderson, R.E., Tatham, R.L. and Black, W.C. (1998). 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Mathew, R.V. and Panchanatham, N. (2009). Influencers and their role in determining the work-life balance of employees working in the information technology sector. Kegees Journal of Social Science, 1, 17-35. 57 V.M. Rincy and N. Panchanatham: Continental J. Social Sciences 3: 50 - 58, 2010 Mathew, R.V. and Panchanatham, N. (2010). An empirical analysis of the impact of various dimensions of work-life balance on organisational commitment among service sector employees in India. International Journal of Management Studies, 17, 129-147. OECD (2004). Babies and bosses: OECD recommendation to help families balance work and family life. http://www.oced.org. Pieterse, M. and Mostert, K. (2005). Measuring the work home interface: validation of the survey; work-home integrationNijmegen (SWING) instrument. Management Dynamics, 14, 2-15. Reiter, N. (2007). Work life balance: What do you mean of the ethical ideology underpinning appropriate application. The Journal of Applied Behavioural Science, 43, 273-294. Rost, K. (2006). Work wellness of employees in the earth moving equipment industry. Doctoral Dissertation, North West University, Potchefstroom, South Africa. Shah, H. and Agarawal, S.P. (2008). Educating India, education sector report, Mumbai, India Publisher, Angel Broking, p. 84. Sparks, K., Cooper, C., Fried, Y. and Shirom, A. (1997). The effects of hours of work on health-a meta analytic review. Journal of Occupational and Organisational Psychology, 70, 391-408. Tregaskis, O., Brewster, E., Mayne, L. and Hegewisch, A. (1998). Flexible working in Europe: The evidence and the implications. European Journal of Work and Organisational Psychology, 7, 61-78. Zedeck, K.S. (1992). Introduction. Exploring the domain of work and family concerns. In: Zedeck (Ed.), Work Families and Organisations, San Francisco. Received for Publication: 29/06 /2010 Accepted for Publication: 15/08 /2010 Corresponding Author: V.M. Rincy Department of Business Administration, Annamalai University, Annamalainagar – 608 002, Tamil Nadu. Email :
[email protected] 58 Continental J. Social Sciences 3: 59 - 64, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com DIVIDEND POLICY, LIQUIDITY CONSTRAINTS AND FIRM INVESTMENT IN NIGERIA: AN EMPIRICAL ANALYSIS S.E. Samuel and D.O. Gbegi Department of Accounting, Kogi State University, Anyigba ABSTRACT This study appraised the importance of dividend policy of firm investment and liquidity constraints in Nigeria. To enable an empirical comparison of the findings, a critical review of related literatures was carried out. A survey research method used for the study and the data employed was derived from the annual publications of financial institution in Nigeria. The analytical tool used in analysis data obtained for the study is regression analytical tool. The empirical results reveal that investment has a significant effect on the dividend policy of firms in Nigeria. More so, liquidity has effect on dividend policy firms in Nigeria but not significant. KEYWORDS: Dividend, Investment, Liquidity, Earnings per share, Cash ratio, Dividend per share INTRODUCTION The topic of dividend policy is one of the most enduring issues in modern corporate finance. This has led to the emergence of a number of competing theoretical explanations for dividend policy (Al-Malkawi, 2007). This has attracted a lot of controversies and many academic interests (Samuel and Inyada, 2010; Li et al., 2006; Gordon, 1959). Dividends are not just an outcome of a firm payout policy; they reflect a complicated combination of investment strategy, financial decision and private information (Miller and Rock, 1985). From managerial perspective, dividend can serve as a tool to mitigate agency problem by digesting extra free cash flows (Jensen, 1986), or to signal to the market that only good quality firms afford to pay dividends (Bhattacharya, 1979). On the other hand, from the investors’ prospective, dividends are beneficial since they represent a regular income stream which will enhance self-control by avoiding any irrational trades (Shefrin and Statman, 1984). Focusing on the implications for dividends, Higgins (1972) later found that dividends varied positively with earnings but negatively with investment. Dhrymes and Kurtz (1967) found that a firm’s desire to maintain stable dividends may hamper investment by reducing internal funds available for capital expenditure. Furthermore, their results suggest that investment needs have an influence on dividends, with greater investment reducing dividends payment as predicted by a residual policy (Elston, 1995; Alli et al., 1993; Keown et al., 2002). Devereux and Schiantarelli (1989) and Bhattacharya (1988) point out that without explicitly modeling the dividends policy of the firm, it is not possible to tell which firms constrained by their earnings. In line with the above findings, what then is the major determinant of dividends policy? Does working capital has any effect on dividend policy in Nigeria? The objective of this study is to appraise the importance of dividend policy on firm investment and liquidity constrains in Nigeria. Specifically, this study attempted to: i. Examine the effect of investment on dividend policy of firms in Nigeria. ii. Examine the effect of liquidity constraints on dividends policy of firms in Nigeria. The null hypothesis formulated and tested for the study are: i. Liquidity constrains has no significant effect on dividend policy of firms in Nigeria. ii. Investment has no significant effect on the dividend policy of firms in Nigeria. LITERATURE REVIEW Researchers on corporate dividend policy have over the years followed two divergent paths. Some researchers have followed a behavioral approach by survey the opinion of corporate managers in order to gain insight in to the factors they consider most important in determining their firms’ dividend policy (Musa, 2009). Studies in the category include the works of Baker et al. (1988), Farrelly et al. (1986), Baker and Farrelly (1988), Pruit and Gitman (1991), Baker and Powell (1999 and 2001) and Mainoma (2001). These studies found that different managers at different times attach varying importance to the factors that influence a firm’s dividend decision. 59 S.E. Samuel and D.O. Gbegi: Continental J. Social Sciences 3: 59 - 64, 2010 Some researchers on the other hand followed a normative approach and developed and empirically tested various mathematical models in order to explain the dividend policy of firms. Lintner [1956] was the first researcher to develop and test the partial adjustment model of dividend. His model suggests that change in dividends is a function of the target dividend payout multiplied by the speed of an adjustment factor. This is expressed mathematically as: DIVt = a + bpEPSt + (1-b) DIVt-1 + et Where DIVt is next year’s dividend, a is the intercept; b is the speed of adjustment of current dividends to the target (and lies between zero and one), p is the target payout ratio, EPS is earnings per share in the next year, DIVt-1 is the previous dividend, while e is the error term. Several other empirical works in both developed and emerging economies have tested the modified version of Lintner’s model after refining and restating the models or after extending it. These include the works of Darling (1957); Brittain (1964); Oyejide (1976); Dhameja (1978); Crum et al. (1988); Simons (1994) and Adelegan (2000). According to Black (1976); Dempsey, Laber and Rozeff (1993); Litzenberger and Ramaswamy (1982); Brigham and Gapenski (2002) and Van Horn (2001), the relationship between cash dividend announcements and share prices is not obvious. The announcement of cash dividends signals information to investors that include the company’s efficiency such as the profitability, liquidity and investment opportunity (Hansen, et al., 1994; Miller, 1999; Black, et al., 1995; DeAngelo and DeAngelo, 1990 and Alli et al., 1993). Dividends may also serve as a mechanism to reduce cash flow under management control, and thus help to mitigate the agency problems (Al-malkawi, 2007). Reducing funds under management discretion may result in forcing them into the capital markets more frequently, thus putting them under the scrutiny of capital suppliers (Rozeff, 1982; Easterbrook, 1984). MATERIALS AND METHODS A survey research method was used for the study. The data employed in this study was derived from the annual publications of financial institutions in Nigeria. Though, relevant literatures including periodicals and journal articles giving clues on dividend policy, investment and liquidity constraints also provide veritable data for the analysis. The methodology was empirical as it implores statistical tools in analyzing data obtained for the study. The analytical tools used in analyzing the data collected for the study is regression analytical technique. It has the potential of predicting the values of the dependent variable given values of the independent variables (Martin and Firth, 1983). The population of the study consists of all staff of financial institutions in Nigeria quoted on the Nigeria Stock Exchange (NSE). A systematic sampling technique was used to select twenty financial institutions in Nigeria. Model Specification The models built for the purpose of analysis for this study are as follows: (i) DPS = a + βCR + ε (ii) DPS = a + βEPS + ε Where DPS is dividend per share, an indicator representing dividend policy; CR is cash ratio, an indicator representing liquidity and EPS stands for earnings per share. This is an indicator representing investment. a is the intercept of the regression line; β is the partial coefficient associated with independent variable and ε is the stochastic error term. RESULTS AND DISCUSSION Table 1 and Table 2 show the model summary and coefficient of the dependent and independent variable used to determine the effect of liquidity constraint on dividend policy of firms in Nigeria via SPSS package (version 17.0). Table 1: Model Summary Model R 1 0.072 Source: SPSS Output File R Square 0.005 Adjusted R Square -0.071 Standard Error of Estimate 0.55065 Sig. 0.799 60 S.E. Samuel and D.O. Gbegi: Continental J. Social Sciences 3: 59 - 64, 2010 Table 2: Coefficients Unstandardized Coefficients Model B Std. Error 1 (Constant) 0.651 0.199 CR 0.033 0.126 Source: SPSS Output File Standard Coefficients Beta 0.072 t 3.275 0.260 Sig. 0.006 0.799 Table 1 and Table 2 above show the correlation between liquidity constraint and dividend policy. The correlation shows a positive relationship between the variables. In table 1, the value of R, coefficient of correlation, is 0.072. This indicate a positive but weak relationship between the dependent and independent variable while the coefficient of determination, R2 is 0.005 which mean that about 99.5% of the dependent variable is accounted for by the independent variable and the remaining 0.5% is accounted for by the other variable. In table 2 the regression coefficient is 0.033 and the t statistic is 0.260. The level of significance is 0.799; that is 79.9% significant level. That means 20.1% confidence interval which means that it not significant because it’s less than 95% confidence level and more than 5% significant level. Therefore, the null hypothesis which states that liquidity has no significant effect on dividend policy is hereby accepted. Though, there exist a positive relationship but it is not significant. Table 3 and Table 4 show the model summary and coefficient of the dependent and independent variable used to determine the effect of investment on dividend policy of firms in Nigeria via SPSS package (Version 17.0). Table 3: Model Summary Adjusted Standard Model R R Square R Square Error of Estimate Sig. 1 0.706 0.498 0.460 0.39103 0.003 Source: SPSS Output File Table 4: Coefficients Unstandardized Coefficients Model B Std.Error 1 (Constant) 0.60 0.202 EPS 0.317 0.088 Source: SPSS Output File Standard Coefficients Beta 0.706 t 0.298 3.594 Sig. 0.771 0.003 The result in Table 3 shows that the value of correlation coefficient 0.706. This is a positive but moderate correlation between the dividend policy and investment of firms in Nigeria. The coefficient of determination is 0.498, that is, 49.8% which mean about 50.2% of the dependent variable (dividend) is accounted for by the independent (investment) and the remaining 49.8% is accounted for by other variables. In table 4, the coefficient of correlation (beta) is 0.706 and regression coefficient is 0.317. The coefficient of correlation shows a positive relationship but moderate while the t statistics is 3.594. The significance level in Table 3 and 4 is 0.003 which is 0.3%. This mean 99.7% confidence level. This mean it is significant because it is less than 5% significant level and more than 95% confidence level. Therefore, the null hypothesis which states that investment has no significant effect on the dividend policy of firms in Nigeria is hereby rejected. CONCLUSION This study provides preliminary empirical evidence suggesting that financial decisions of Nigerian firms are not independent. It examined the effect of liquidity constraints and investment on dividend policy of firms in Nigeria specifically limited to financial institutions. Based on the results of the study, it can be deduced that the study is consistent with the findings of Mainoma (2001); Alli et al. (1993); Simons (1994); Crum et al. (1988) etc. This study provides additional evidence that investment, liquidity has effect on dividend policy of firms in Nigeria. 61 S.E. Samuel and D.O. Gbegi: Continental J. Social Sciences 3: 59 - 64, 2010 Secondly, there is a positive relationship between dividend policy and liquidity but it’s not significant. Investments have significant effect on dividend policy of firms in Nigeria. ACKNOWLEDGEMENT We are thankful to the following persons who have criticized, and encouraged us in bringing this paper to its present state. Even though time constraint would not permit us to list their names, we must express our gratitude to Mr. Abdullahi Sani Rufai, Dr. Achua, Dr. Ajachukwu, Dr. R.U. Oka, Mr. Olukontu, Mr. Audu, Mr. Inyada, Mr. Simon, Mr. Ezugwu, Mr. Edogbanya, Mr. M.M. Usman, Mr. Obinna Emmanuel, among others. God bless you all. REFERENCES Adelegan, O.J. (2000). “The Impact of Growth Prospect, Leverage and Firm Size On Dividend Behaviour of Corporate Firms in Nigeria”. Retrieved from: www.csae.ox.ac.uk/conference/2000OIA/pdfpapers/adelegan.PDF Alli, K.L., Khan, Q.A., Ramirez, G.G. (1993). “Determinants of Corporate Dividend Policy: A Factorial Analysis” The Financial Review, 28, 523-547. Al-Malkawi, H.N. (2007). Determinants of Corporate Dividend Policy in Jordan: An Application of the Tobit Model. Journal of Economics and Administrative Sciences, 23 (2): 44-70. Baker, H.K., Farrelly, G.E. and Edelman, R.B. (1985). “A Survey of Management Views on Dividend Policy” Financial management, 14 (3): 75-84. 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New York: Prentice Hall Received for Publication: 29/06 /2010 Accepted for Publication: 15/08 /2010 Corresponding Author: S.E. SAMUEL Department of Accounting, Kogi State University, Anyigba E-mail:
[email protected] 64 Continental J. Social Sciences 3: 65 - 70, 2010 © Wilolud Journals, 2010 ISSN: 2141 - 4165 http://www.wiloludjournal.com APPLICATION OF GOAL PROGRAMMING MODEL FOR BUDGETING IN RIVERS STATE UNIVERSITY OF SCIENCE AND TECHNOLOGY , PORT HARCOURT. Maxwell, Awoingo A. Department of Mathematics and Statistics, Rivers State College of Arts and Science, Rumuola, Port Harcourt. ABSTRACT: The purpose of this study is to apply goal programming model for budgeting in Rivers State University of Science and Technology, Port Harcourt. The aspiration of this work is to increase or decrease the amount budgeted to five(5) different objectives (goals), these are personnel cost, overhead cost, capital expenditure, revenue (internal generated) and total budget. The simplex method (Big M) was used to solve the weights goal programming model formulated for the collected data. The application of the simplex method by TORA package gives the following results in billion Naira as: the optimum solution is Z = 16 - .55, X1 = X2 = 0 , X3 = 4. 06, -d1 = 2.02, + d2 = 1.70, d3 + 0.25, d4 = 3.57 and d5 = 0 . = Based on the results obtained it was found that the optimum value ( Z = 16 .55) satisfied all the goals except goal 4 which is revenue goal. KEYWORDS: Annual budget; Aspiration level; Budget document, Multiple goals; Optimum result, Personnel cost. INTRODUCTION Budgeting is a complicated task that requires cooperation among functional units in any higher institution. It is an important area in the administrative setting of any university. It is a detailed plan indicating the activities which a unit, department or the entire university intended to carry out at a particular time in future. Budget document goes beyond mere plan, therefore, it could be said that all budgets are plans but plans are not budget. Budget is a financial tool used in gathering information Duncan (1996). According to Duncan (1996) a budget is a plan expressed in quantitative and money terms and it can include some or all income, expenditure, and the capital to be employed. The aim of this study is to increase or reduce the amount of money budgeted or allocated to five (5) different objectives (goals): Personal cost, overhead cost, capital expenditure, revenue and total budget in Rivers State University of Science and Technology , Port Harcourt. In order to formulate ( design) an effective budgeting model, a good understanding of the institution budgeting processes is a must. Although , such budgeting model exists in the university , it is not properly structured due to the presence of multiple objectives (goals). A formal decision analysis that is capable of handling multiple goals through the use of priorities is the goal programming model. Goal programming is an extension of linear programming (LP) which is a mathematical tool to handle multiple objectives. Ignizio (1978); affirmed that goal programming is a relatively new tool that has been proposed as a model and approach for the analysis of problem involving multiple objectives. The basic approach of goal programming (GP) is to establish a specific numeric goal for each of the objectives, formulate an objective function for each 1 objective and seek a solution that minimizes the (weighted) sum of deviation of the objective functions from their respective goals. Dade (1981), designed a goal programming model and used it for revenue budgeting. He pointed out that the concern with the process and of budgeting has regulated the revenue constraint to a position co-equal with variable . Taha (2003); said that goal programming technique is for solving multiple objective models and the aim is to convert the original objective into a single goal. 65 Maxwell, Awoingo A: Continental J. Social Sciences 3: 65 - 70, 2010 Chowdery and slomp (2002); considered goal programming as an appropriate, powerful and flexible technique for decision analysis of the troubled modern decision maker who is burdened with achieving multiple objectives under complex environmental constraints. Winston (1994); defined Goal programming as the technique used to choose among alternatives. Sundaram (1978); affirmed that goal programming combines the logic of optimization in Mathematical programming with the decision makers desire to satisfy several goals. Du, Acharya and Sahu (1982); developed a goal programming model and applied it for budgeting in the production area, they considered the following constraint as a mathematical programming model; ∑ aij xj ≤ bi , (i = 1,2,3, .. m. j = 1, 2, 3 .. n ) Xj are decision variables aij are the decision variable coefficients. bi are the right hand side elements. Brief History Of The Institution Rivers State University of Science and Technology. Port Harcourt, is the premier University of Science and Technology in Nigeria. The Institution was formerly known as Rivers State College of Science and Technology and was upgraded to University by the Rivers State Government in the year 1980. Currently, the University has seven Faculties, Forty-Three Departments. Four Institutes, a Post Graduate School, standard library and Medical Sciences Department. There are Administrative Blocks. Exams and Record Office. Admissions Office and the Bursary Department. The Bursary consist of Audit Unit, Student Accounts unit and Staff Salary and Emoluments Unit. The Institution is financed by the Rivers State Government. It is also funded from donations by Corporate bodies and individuals. This study is determine by the annual budget requirements that can help in planning for the future and development of the institution. MATERIALS AND METHODS The purpose of this study is to applied goal programming model for budgeting in Rivers State University of Science and Technology, Port Harcourt. The data for this study were previous budgets of the University from 2008 - 2010, collected from Rivers State Ministry of Finance, Port Harcourt. The weighted goal programming model is of the form: Minimize Z = Σ ( Wi d + Wi d- ). i i∈m Subject to : Σ (aij xj + di - di ) = bi j =1 66 n + 2.1 ++ - Maxwell, Awoingo A: Continental J. Social Sciences 3: 65 - 70, 2010 di, di, xj ≥ 0. ( i = 1,2,3….m j = 1, 2, 3 … n Where di and di = deviational Variables. Xj = decision variables. aij = decision variable coefficients. Wi and Wi = non-negative constraints representing relative weights. ) PRESENTATION AND ANALYSIS OF DATA. The data (previous budgets) collected in billion Naira are shown in Table 1 TABLE 1: The data (previous budgets) collected in billion Naira ITEM Amount Budgeted in Billion Naira / year 2008 2009 2010 Personnel cost 0.982 1.009 1.361 Overhead cost 0.065 0.068 0.073 Capital expenditure 0.025 0.614 0.432 Revenue (Internal 1.105 0.2 0.6 generated) Total Budget 1.178 1.891 2.465 Source: from Rivers State Ministry of Finance, Port Harcourt. Total 3.352 0.206 1.071 0.905 5.534 The budget of the University from 2008 - 2010 and the assigned weights are shown in Table 2. TABLE 2: The budget of the University from 2008 - 2010 ITEM Amount Budgeted in Billion Naira / year 2008 2009 2010 Personnel cost 0.982 1.009 1.361 Overhead cost 0.065 0.068 0.073 Capital 0.025 0.614 0.432 expenditure Revenue ( 1.105 0.2 0.6 Internal generated) Total Budget 1.178 1.891 2.465 Assigned weights Total 3.352 0.206 1.071 0.905 Wi 6 2 4 10 5.534 8 The Weights were chosen regarding the relative importance of each goal. The determination of the specific values of the weights is subjective. Aspiration Level ( Target value) of the Goals The goals statements of the budget of the institution are; Goal 1: Raise personnel cost (salary and allowances of staff) by at least N 3.5 billion per annum. Goal 2: Reduce overhead cost by at most N 2 billion per annum. Goal 3: Raise capital expenditure by at least N1.5 billion per annum. Goal 4: Raise revenue ( internal generated) by at least N6billion per annum Goal 5: Reduce the total budget by at most N10 billion per annum. The determination of the target values is subjective. Anyone can use values different from the above used values and obtains different solution. The Goal programming model formulation. Let X1 = amount budgeted for the period 2008. Let X2 = amount budgeted for the period 2009. Let X3 = amount budgeted for the period 2010. 67 Maxwell, Awoingo A: Continental J. Social Sciences 3: 65 - 70, 2010 The goals can be stated mathematical as follows: 0.982X1 + 1.009X2 + 1. 361X3 ≥ 3.5 ( personnel cost constraint). 0 . 0.65X1 + 0.068X2 + 0.073X3 ≤ 2 ( overhead cost constraint) 0.025X1 + 0.614X2 + 0.432X3 ≥ 1.5 ( capital expenditure constraint) 0.105X1 + 0. 2X2 + 0. 6 X3 ≥ 6 ( Revenue constraint) 1.178X1 + 1.891X2 + 2.465X3 ≤ 10 ( Budget Constraint) X1, X2, X3 ≥ 0 Conversion of Goal Programming Model to Linear Programming Model [ + Let di = amount by which we numerically exceed the goal. Let di = amount by which we numerically under the goal + di and di are referred to as deviational variables. Let Z be the-sum of deviation from the goals. Applying the weighted goal programming model, the goal programming formulation can be stated mathematically as follows: Minimize Z = 6d1 + 2d2 + 4d3 + 10d4 + 8d5 ( objective function) (1) Subject to : + 0.982x1 + 1.009X2 + 1.361X3 + d1 - d1 = 3.5 + 0.065X1 + 0. 068X2 + 0.073X3 + d2 - d2 = 2 + - + + - - (2) (3) (4) (5) (6) - 0 . 025X1 + 0.614X2 + 0.432X3 + d3 - d3 = 1.5 0.105X1 + 0 . 2X2 + 0 . 6X3 + d4 - d+ = 6 4 + 1.178X1 + 1.891X2 + 2.465X3 + d5 - d5 = 10 - + - + - + - + X1, X2, X3, d+ d1, d2, d2, d3, d3, d4, d4, d5, d5 ≥ 0. 1, - - + The application of the simplex Method ( M. Method) by Tora package in solving the linear programming model formulated gives the optimum solution below; 68 Maxwell, Awoingo A: Continental J. Social Sciences 3: 65 - 70, 2010 RESULTS AND DISCUSSION Title: goal programming . Final iteration No. 8 Objective Value = 16 . 55 Variable Value 0.00 x1: 0.00 x2: 4.06 x3: d1+ 2.02 d2 + 0.00 0.25 d3+ 0.00 d4+ 0.00 d5 + 0.00 d1 d21.70 0.00 d3 3.57 d4d5 0.00 - Obj Coeff 0.00 0.00 0.00 6.00 0.00 4.00 10.00 0.00 0.00 2.00 0.00 0.00 8.00 Obj Val Contrib 0.00 0.00 0.00 12.13 0.00 1.01 0.00 0.00 0.00 3.41 0.00 0.00 0.00 The optimum result ( value) is Z = 16. 55, since it is not equal to zero. This implies that at least one of the goal is not met. The optimum value satisfied all the goal except goal 4 which is the revenue goals. The deviational value from the personnel cost goal is d1 = 2.02, this means that the personnel cost goal target of + N3.5 billion is below the personnel cost goal by 2.02. that is the actual amount that should be budgeted for personnel cost is 5.07. The deviational value from the overhead cost goal is d2 = 1.70, this means that the overhead cost goal target of 2.00 exceeded the overhead cost goal by 1.70. That is , the actual amount that should be budgeted for overhead cost is, 0.3. The deviational value from the capital expenditure goal is d3 = 0.25, this implies that the capital + expenditure goal target of 1.5 is below the capital expenditure goal by 0.25. That is the actual amount that should be budgeted for capital expenditure is 1.75. The deviational value from the revenue (internal generated ) goal is d4 = 3.57, this implies that the revenue goal target of 6 is exceeded by 3.57. That is, the actual amount that should be budgeted for revenue is 2.43, conversely, the budget goal of the university of at most 10, billion naira target is not violated because d5 = 0. Therefore the minimum budget of the university is 16. 55 in 2011. CONCLUSION. In this study, the goal programming model formulated for the collected data from 2008 - 2010, was converted to linear programming model. The simplex method (Big M) was used to solve the linear programming model formulated The application of the simplex method (M Method) by Tora package gives the optimum result as Z = 16.55 billion Naira. Based on the result obtained, It was found that the optimum result satisfied all the goals except goal 4 which is the revenue goals. The deviational value from the revenue goal is 3.57 billion Naira. That is , the actual revenue 8 goal should be 2.43 billion Naira. Since the optimum result is Z = 16.55 billion Naira, therefore, the budget of the Institution should be 16.55 billion Naira and this amount should cover all their needs. RECOMMENDATIONS On the basis of the finding of this study, the following recommendations are made: 1. The state Government should fund the institution adequately. 2. Budgeting should base on -new technology. 3. The budget should be properly managed and utilized by the institution. 4. Timely and active budget monitoring team of the state Government should monitor the budget. 5. Further research on this study should be carried out. 69 Maxwell, Awoingo A: Continental J. Social Sciences 3: 65 - 70, 2010 ACKNOWLEDGEMENT. I am thankful to my student Mr. Festus Harry who is a staff of Rivers State Ministry of Finance, for his help in getting the data for this work. REFERENCES: Chowdery, B. V. and Slomp, J. (2002): Production Planning under Dynamic product Environment : A multiple Goal programming Approach. European Journal of Management and Organization, 1:1-12. Dade, C. (1981): Revenue Budgeting: A Decremental application, P.I. Jerry Mccaffery, Indiana University, Bloomington, pp 1-3. Duncan, W: (1996): Budgeting and budgetary control. Prentice Hall, pp 1-3 Du, P.K, Acharaya, D. and Sahu K.C. (1982): A chance constrained goal programming model for capital budgeting. Journal of Operational Research Society; 33 (7): 635. 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