FINANCIAL PLANNING AND CONTROL: A KEY TO MANAGEMENT EFFICIENCY
(A CASE STUDY OF ENUGU STATE AGRICULTURAL DEVELOPMENT PROGRAMME ENADEP)
financial planning and control have become the major part and parcel of our daily lives, although we may not like it in most case yet we have come to realize that it is an integral factor in the national and business building. Therefore this research work, “financial planning and control: A key to management efficiency” aims at finding how our financial planning and control has helped management of small and large scale organization like Enugu State Agricultural Development Programme (ENADEP)to achieve their set objectives, target efficiency and increase product. How ever, for easy comprehension of this research work, the research activities had been arranged in chapter system: And for proper understanding of ideas, each chapter further has sub-headings as well as sub-sections.
TABLE OF CONTENTS
Title page. . . . . . . . . i
Approval page. . . . . . . . ii
Dedication . . . . . . . . iii
Acknowledgement . . . . . . . iv
Abstract. . . . . . . . . v
Table of contents . . . . . . . vii
1.1 Background of the Study . . . . . 1
1.2 Statement of problems . . . . . 9
1.3 Objectives of the study .. . . . . 11
1.4 Research questions. . . . . . 12
1.5 Significance of the study. . . . . 13
1.6 Scope of the study . . . . . . 14
1.7 Limitation of the study . . . . . 15
1.8 Definition of terms . . . . . . 19
Review of Related Literature
2.1 Literature Review . . . . . . 23
2.2 Review of the Nigerian Economy within
Various Years . . . . . . 23
2.3 Financial Planning . . . . . 32
2.4 Procedure for Financial Planning . . . . 38
2.5 Financial Planning and Control . . . . 39
2.6 Financial Methods Used in Nigeria . . . 43
2.7 Uses of Financial Planning . . . . 44
2.8 Forms of Financial Control . . . . 48
2.9 Tools of Financial Management . . . 57
2.10 Factors to be Considered when
Planning Finance Cost . . . . . 62
Research Design and Method
3.1 Research Design . . . . . . 69
3.2 Area of Study . . . . . . . 70
3.3 Population of Study. . . . . . 70
3.4 Sampling Method . . . . . . 70
3.5 Research Instrumentation . . . . 75
3.6 Validity and Reliability of Research Instrument 76
3.7 Sources of Data . . . . . . 76
3.8 Method of Investigation/Analytical Technique. 77
Presentation and Analysis of Data
4.1 Presentation and Analysis of Result . . . 80
Summary of Findings/Conclusions and Recommendations
5.1 Summary of Findings . . . . . 93
5.2 Conclusions . . . . . . . 96
5.3 Recommendation . . . . . . 97
Bibliography . . . . . . . 100
Appendix I . . . . . . . 102
Appendix II . . . . . . . 103
1.9 Background of the Study:
In fact, this word is so dynamic in nature and only thing that is permanent on earth is change. Therefore, people have to put in an adequate financial planning and control in other to withstand the challenges of the future. A business cannot be statistic. It has already been noted that business has to be changing which requires an adequate balance and cash flow for it to go forward or backward but not to be stagnate. Thus, for the business to expand, there must be adequate financial resources.
More so, no business can grow unless proper accounting, marketing, personal, financial and so on are fully staffed with good spirited individuals. The efficiency and effectiveness of any organization be it small, medium or large scale enterprise, depends on their finance, planning, control, and management financial planning and control therefore, enables a firm to monitor its financial environment including attitudes of investors so that it can optimize the benefit of planning from the environment. Systematic and adequate planning will therefore ensure the availability of the amount desired of the business time.
It may be very pertinent to note that financial capital is the major resources of any organization. The financial managers function are as follows:
i. Raising of funds to finance projects.
ii. Employment of their funds in a liable projects.
iii. Management of the cash flow arising from more projects.
iv. Return of funds to their funding.
In a nut shell, the duty of a financial manager is to implement the acquisition, allocation and management of these resources. Moreover, planning and control are the essence of project planning and act as a device that enables management to anticipate change and adapts to it. No business can thrive without some terms of this outstanding twin concepts and success in business is proportional to its planning and the skill with which it is controlled. Accounting to Lemka and Edward (1977), “financial planning and control can therefore be said to be said to be the name given to a system which is being used to increase overall management efficiency”. It is concerned with planning for the allocation of resources to assist in achieving the objectives of efficiency of both large and small scale organizations.
Also with reference to Compsey and Brigham (1985), “financial management involves planning for, acquiring and utilizing funds in a way that minimizes, the efficiency and value of the firm”. Therefore, Enugu State Agricultural Development program (ENADEP) being my case study is not left out in the financial planning and control which constitute the following:
- Cash management
- Project execution
- Effective costing and control of all inputs used by Agriculture Extension Agent.
- Acquiring of necessary items for official use, to ensure improved performance of the organization.
Furthermore, as the term Agriculture implies the cultivation of croups for food to man and animal, rearing of animal and other livestock, and production of raw materials for our industries, ENADEP as an organization acts as an extension agents that creates out step by step method of impacting on the farmers to cultivate good seeds on a good land in other to have a bumper harvest. ENADEP also teach the farmers how to sell their crops in other to make profit and how to store their crops to avoid wastage of the scarce resources using the available storage facilities. Thus, all this line of actions are archived using financial planning and control involves ensuring that there are always enough fund available to avoid default on payment of depts.
Consequently, financial planning and control also entails the normal checks and balances carried out by management to ensure security of asset to protect against theft, manipulation and fraud. Hence, from my reasoning, I deducted that financial planning is a process of protecting all foreseeable future events, verifying the consequences of present decisions, analyzing the intentions and interactions of the financing and investment choices open to the firms and understanding the link between the present and future decisions and thus, helps ENADEP as an organization to achieve and allocate resources in other to attain its objectives in a predetermined way fulfill its organizational policies.
The organization measures its efficiency through project implementation by utilizing budgeting as its main financial planning tool. With reference to ENADEP News letter Magazine (December 2008), captioned Rising prices of food items in the country and the need to Corp them written by pat Chibuoke Onyia, he noted that the nation can feel secure in the faced of a threat of famine arising from serious food insecurity. Although Nigeria is still far from famine but the current food satiation is bad enough to give everyone some concern. Therefore, the government has to finance well, plan well and control well in other to inject money into agriculture and equally train the farmers using the Agriculture extension agents to improve food production in Nigeria and equally raise the standard of living of the farmers and masses at large.
Figure 1.1 shows the attachment of a test of the price situation using the market price survey (mps in Enugu State for 2007).
The price situation using the market price survey (mps in Enugu State for 2007).
ENADEP MARKET PRICE (NARIA/KG/LT) AS AT JANUARY TO DECEMBER 2007
From table/figure 1.1 above, it could be deducted that unless everybody toins hand to produce enough food that is to say if all the table bodies young men and women no matter his or her status should adopt a self help method of “operation feed yourself” to the sustain the vast population, the price of the product will just be so much high and the government’s good plan towards agricultural will run into a serious witch.
1.10 Statement of problems
It is generally agreed that every one business organization, government and sole-proprietors should employ the principles of financial planning and control as a tool in other to achieve a set goals. To ensure that this goal is achieved, there should be a good budgeting and adequate control system. This is because when budgeting is properly controlled, it leads to good financial planning and control which expected to be a key to management efficiency which is of cause what the researcher bears in mind as part of factors that motivated him. For instant, the Enugu State Agricultural development programme (ENADEP) is one of the principle organization and also to increase the income of small scale farmers and moreover to improve their living standard but in most cases, such organization do not live up to expectation as a result of poor and in efficient financial planning and control adopted and applied by the management of these organizations.
Therefore, the problems of financial planners, ranges from lack sufficient fund, inadequate raw materials, inadequate raw materials, inadequate spear parts etc. consequently, for this research work, the following are the problems which this study hope to provide solution to:
a. Are the financial managers allowed to manage the funds available unnecessary external interference?
b. Are the financial managers always provided with adequate funds required for the execution of the organizational project?
c. To what extent had the ENADEP succeeded in achieving the set up objectives of the organization?
d. To what extent had the political instability in the country contributed towards the development of ENADEP?
e. Does the State government’s interference in the activities and management of ENADEP constitution part of the problems faced by financial managers of ENADEP?
f. In what ways does the state government’s inability to provide counter parts fund affect the activities of ENADEP?
1.11 Objectives of the study
This tries to show the extent to which financial planning and control enables management to achieve its set goals efficiently. This objectives includes:
a. To determine to what extent the management of ENADEP are not exercising prudency in the management of funds available to it.
b. To discover how the state government’s inability in providing counterpart funds affects the financial planning and control of ENADEP?
c. To identify the problems and the causes of the already existing problems of financial managers in ENADEP.
d. To find out the extend, the state government interference affects the financial planning and control of ENADEP?
e. To find out how the financial planning and control of ENADEP is being affected by the present political and economic situations.
1.12 Research questions
The following research question were formulated by the researcher for the conduct of this project.
1. Is the financial planning and control of ENADEP being affected by the present political and economical situation in the country?
2. Does the state government’s interference affect the financial planning and control of ENADEP?
3. Do you agree that the financial manager of ENADEP are not exercising prudency in the management of fund available to the establishment?
4. To what extent has the frequent interference of state government and activities of ENADEP constituted part of the problem faced by the financial managers of the establishment in relation to financial planning and control?
5. Have their been any case of fraud or misappropriation of fund in ENADEP?
6. Does the organization operate budget and work plan system?
7. How can you assess the performance of your staff in discharging there duties?
1.13 Significance of the study
The pertinent of this study lies in the development of financial planning and control approach which will help Enugu State Agricultural Development Program (ENADEP) as an organization to bring out an opportunity to achieve a bumper and massive food production that will be of benefit to both the rural and urban dwellers, the staff as well as future project writers and society at large.
Consequently, this study is of great significant to our Nigerian leaders who makes implement and interprete polices and also to our financial staff of all levels, because it will contribute highly in the development of skills and knowledge as well as leads to the improvement in the growth of the nation’s economy.
1.14 Scope of the study
The study covers the activities and the management of Enugu State Agricultural Program (ENADEP) which is located at No 1 Garden Avenue Enugu near subway opposite power holding company of Nigeria Enugu.
1.15 Limitation of the study
Out of the various limitations compounded by this study, the major one automatically listed out by the researcher includes:
1. Insufficient material:- Due to the fact that the material from the library from which secondary data is to be gotten is insufficient, it posed a major limitation of this study. However, the researcher was forced to go out to other book houses and also meet top management officers whom he had oral interview with so as to obtain materials required for the completion of this study.
2. Time:- A researcher has a very limited time available to him to complete a more detailed work. Therefore, due to this fact, he must resultantly contend himself with the available time to conduct the study in order to produce a wonderful result after the study.
3. Resource:- In the addition to the above, the researcher has to manage properly the little resources at his disposal since he is being faced with the problem of insufficient resources meant for the proper implementation of his project work as urgently demanded. This is because insufficient resources that will enable him to carry out the study will prove the work irresearchable.
Organizational structure of ENADEP
ENADEP as an organization is headed by a governing council know as the agricultural development projects executive committee (ADPEC) which is the highest administrative body at the state level and chairman is known as the state governor with so many sub committee member such as the commissioner for Agriculture, the commissioner of local government, rural development and chief-tency matters, the commissioner for works, lands and transport, the commissioner of commerce and industry etc. who have individual works assigned to them under ADPEC, is the program management unit (PUM) headed by the programme manager who is in changing of the day to day administrative control of the project.
Furthermore, in the regional head, it is made up of the Federal Agricultural Co-ordinating Unit (FACU) which is the body that is responsible for the co-ordination of the other Agricultural Development projects nation wide. Thus, the activities of the commercial services are being done by the Enugu State Fertilizer Procurement and Distribution Agency. Then, the overall activities and objectives of ENADEP is to assist the small scale farmers so as to improve their standard of living and this is done in other to help the farmers to increase food production, generate income and to make profit.
Consequently, as ENADEP is rendering these services, if a filed problem is observed, solutions are usually produced and recommendation made practically in farms located at the value of the Monthly Technology Review Meeting (MTRM). Those recommendations which are proved, will be handed to the filed officers at Formatting Training (FNT) at zonal level and group meetings at block and cell levels. The attendance at this meetings is manly by technical services and Rural infrastructural Development Service (RID) staff with Extension Agents and contact farmers featuring prominently.
Therefore figure 1.2 shows the organization chart of ENADEP described above which is depicted schematically below.
1.16 Definition of terms
1.ADPEC- Agricultural Development Executive Committee in charge of agricultural activities at state levels.
2.FACU- Federal Agricultural Coordinating Unit in charge of controlling activities of ADPs through the federation.
3.PMU- Program management unit in charge of the day to day administration of ENADEP. It is composed of all the sub-program heads and the zonal managers.
4.FNT- Fort-night Training. It is organized in favor of the extension agents at zonal levels.
5.Extension Agent- they are agricultural extension workers that advise the rural farmers on the new agricultural techniques.
6.Procurement- This simply means the act of buying or purchasing.
7.Financial Manager- They are manager’s in charge of the financial management of an organization.
8.IFAD- this simply means Infrastructural Fund for
9.Prudency- this simply means the careful management of fund to ensure that it is not misappropriated, and to achieve the financial objectives of the establishment.
10. Counter Part Fund- This is the type of fund that is expected from the state government as part of her financial contribution for the promotion of ENADEP’S activities.