Recovery of Cost of Electricity Supply in the Nigerian Power Sector

The poor performance of Power Holding Company of Nigeria (PHCN) was attributed to   low tariffs and inadequate revenue generation. The Federal Government of Nigeria is in the process of handing it over to private organizations to be involved in generation, transmission and distribution of electricity in the country under public-private partnership (PPP) arrangement. Private investors are in business to make profit and cannot afford to lose their investment. This study analyzed revenue generation in the power sector to determine the extent to which it covers the operational cost of electricity supply in the Nigerian power sector. The study also examined whether increase in tariff has significantly increased revenue, and the impact of the increase in power generated during the study period. We discovered that even though operational cost is not fully recovered in some years but the level of recovery is significant.  Also revenue has significantly changed after the application of MYTO in 2008. However, the revenue generation did not have any significant impact on power generation. The major recommendations of the paper are that tariffs set should be such that would enable the private operators who may take over the sector to recover their cost and make gains. Effort should be made to block all illegal connections and avoid high transmission and distribution losses. Good quality service which includes regular supply of electricity should be ensured to motivate consumers and increase demand for electricity. Keywords: Cost Recovery, Power Sector, Tariffs, Public-private partnership, Power generation

Product Cost Management in Developing Countries: Activity - Based Costing

This Article examines the challenges of Product cost management in relation to Activity – Based Costing (ABC) by manufacturing companies in a developing country like Nigeria. This study is distinct and peculiar to Nigerian environment and examines the challenges of product cost management as it affects ABC/ Traditional costing system and considers whether it merits adoption in a developing country like Nigeria despite its little statistical difference. In order to effectively determine the effect of these challenges, questionnaire was issued to 58 sampled companies in the South East of Nigeria and Test of Hypotheses was done based on production cost data collected from the companies using Student’s t-test and Multivariate Analysis of variance (MANOVA). Findings:  there is no statistically significant difference in cost reduction attained by ABC over Traditional costing, though ABC tended to have higher effect. Profits realized in Industrial and brewery sectors of the Manufacturing companies surveyed were higher in ABC than in Traditional costing. Recommendations: ABC should be applied by manufacturing companies in Nigeria since any little difference in cost – savings can influence managers’ decisions. ABC should be adopted because it provides more accurate cost information to management which ordinarily is not visible in Traditional costing system. The challenges of the initial high cost of implementation of ABC should not deter these companies from adoption of ABC since its long run benefits surpasses its costs.  Since product costs are lower in ABC, its adoption will help manufacturing companies’ products in developing countries to compete favourably in the international market especially in this era of International financial reporting standards. Keywords: Activity-Based Costing, Traditional Costing, Effectiveness, Competition,Cost Reduction, Product, Cost, Management, Overhead, Decision – Making

The Effect of M-Commerce on Nigeria’s Economic Growth

This paper seeks to assess the implications of mobile commerce on the economy of Nigeria. Ordinary least square technique, correlation matrix test and Granger –causality test were employed to measure the extent to which the gross domestic product was influenced. The result showed that internet penetration and telecommunication contribution impacted positively on gross domestic product of Nigeria; mobile penetration had negative and statistically insignificant effect on gross domestic product; while mobile penetration aids m-commerce in Nigeria, it negatively affects Nigeria’s trade balance and economic growth due to huge imports of mobile phones. It is therefore recommended that government should encourage local production of mobile phones and where she lacks the technology to do so, encourage foreign direct investment inflow of foreign mobile phone producers in Nigeria. Keywords: economic growth; internet penetration; m-commerce (mobile commerce); mobile penetration

Attaining Inclusive Growth in a Developing Economy on the Wings of Micro, Small and Medium Scale Enterprises

A typical disturbing feature of most developing countries is a sprawling disparity between economic growth as measured by increase in gross domestic product and concrete progress in real welfare of the citizenry measured by standard of living, access to employment and poverty reduction. Contrary to natural logic, available evidence suggests that both variables are inversely related.  There is equally a consensus among scholars of inherent potential of micro, small and medium enterprises (MSMEs) as a veritable agency for income and prosperity spread and thus a vehicle for inclusive growth. This paper empirically investigates the nexus between MSMEs and inclusive economic growth. With data ranging from 1980 to 2016, it specifically built econometric model to capture the link between Gini coefficients (proxy for inequality gap) and identified key determinants of viable MSMEs sub-sector: volume of credit to MSMEs, MSMEs’ contribution to national output, lending cost, cost of doing business, and infrastructural financing. With error correction model technique of analysis, findings revealed that MSMEs has the potential to provide growth that will spread prosperity to the majority of citizenry thereby narrowing inequality gap and reducing poverty. The paper recommends policy shift in favour of creating environment to promote the growth of MSMEs

International financial reporting standards (IFRS) disclosure and performance of Nigeria listed companies

The study investigated disclosure practices under IFRS on the performance of firms listed on the Nigerian Stock Exchange for a period of six years, from 2012 to 2017. Data were pooled from 384 firm-year observations across 64 sampled companies listed in the Nigeria Stock Exchange (NSE). We developed disclosure index of both IFRSs mandatory and voluntary by applying content analysis and multiple regression techniques and analyze the association of disclosure and performance of the firms expressed return on capital employed (ROCE) as a performance index. The study also examined the relationship between market-based performance, company attributes, and overall disclosure. The result indicates that the extent of overall disclosure does not associate with the financial performance of the listed Nigerian firms. The result suggests that share price, size, and audit firm size significantly and positively related to the overall disclosure of firms. The association between leverage, company age and overall disclosure index negative and insignificant. In the Nigeria context, audit firm size proved to be an important determinant of the extent of IFRSs disclosure

Corporate board characteristics and environmental disclosure quantity: Evidence from South Africa (integrated reporting) and Nigeria (traditional reporting)

The study examined the influence of corporate board characteristics on environmental disclosure quantity of listed firms in two leading emerging economies: South Africa and Nigeria which practice integrated reporting framework and traditional reporting framework, respectively. Two issues motivate the study: First, calls by researchers for integrated reporting regulation in Nigeria. Second, the challenge facing regulatory bodies and companies boards in Nigeria in ensuring commitment to the protection of the environment and the society. Many studies have examined the influence of corporate governance on environmental disclosure at the cross-country level, documenting evidence that corporate governance mechanisms are essential for corporate ecological reporting. However, these studies examined settings based on the legal framework and mostly focused on companies quoted on common and civil law countries. They neglected the weak and robust reporting framework and difference within either common or civil law countries. Our study provides evidence on corporate board characteristics influence on environmental disclosure of quoted firms in South Africa and Nigeria. Data obtained from annual reports of 303 environmentally sensitive companies selected from South Africa (213) and Nigeria (90) was investigated using descriptive, multivariate, and regression model. Major findings indicate a significant positive association between board independence and environmental disclosure in Nigeria. In South Africa, 45% of environmentally sensitive industries significantly influence environmental disclosure, while 51% of environmentally polluting industries in Nigeria show insignificant association with environmental disclosure. Our findings are helpful to policymakers and other regulators for an impactful framework on environmental reporting

Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms

In this study, we examine the effect of IFRS adoption on the earnings value relevance of quoted Nigerian firms. Using a sample of 101 firms (1212 firms-year observation) that are quoted on or before 2006, and have adopted IFRS from 2006 to 2017, we can investigate earnings value relevance. As the principal objective of the inquiry, we introduce a cross-product term, equal to the product of earnings per share (EPS) and IFRS dummy variable, into the basic Ohlson model. The paper uses the Fixed Effect Model as the appropriate estimator for analysis of the data. The estimated coefficient on the cross-product term is statistically significant and positive. The results suggest that the adoption of IFRS in Nigeria leads to higher earnings value relevance. IFRS, as a principle-based, allows managers to use their discretion in the specific treatment of financial items. In doing so, they may bias earnings. Further, the results revealed that estimated coefficient of the cross product of book value and IFRS dummy variable is statistically insignificant and negative. Surprisingly, the simultaneous addition of earnings, the book value of equity, and firm-specific variables in a modified basic Ohlson model show enhanced earning incremental value relevance, while other variables were insignificant, except the interaction of earnings and audit firm size. Overall, results suggest that earnings under IFRS are valued relevance about economic growth conditions, with the nature of such relevance explaining variations on the share price. The findings of this study are utmost important to economic policymakers, investors, and Standard Setters

The effectiveness of monetary policy in tackling inflation in emerging economy

This study decided to investigate the success and failure of monetary policy in tackling inflation in order to achieve desired economic objectives by making use of the econometric procedure in estimating the relationship between the variables. The method of data analysis is the ordinary least square1 multiple regression. The results of our analyses showed that the instruments of monetary policy would have had a greater impact on inflation if inflation were not of structural nature. As a conclusion, the financial system needs to be strong, sound, viable, and shock-resilience in order to achieve the standard of a sustainable economy.Este estudio decidió investigar el éxito y el fracaso de la política monetaria para hacer frente a la inflación con el fin de lograr los objetivos económicos deseados mediante el uso del procedimiento econométrico en la estimación de la relación entre las variables. El método de análisis de datos es la regresión múltiple por mínimos cuadrados ordinarios. Los resultados de nuestros análisis mostraron que los instrumentos de política monetaria habrían tenido un mayor impacto en la inflación si la inflación no fuera de naturaleza estructural. Como conclusión, el sistema financiero debe ser fuerte, sólido, viable y resistente a los impactos para alcanzar el estándar de una economía sostenibl