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3 From the Editorial Desk

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From the Editorial Desk......................................3

From the President’s suite......................... 4

In this Issue...

ISSN 0189-0662 VOLUME 18 NO. 4, OCTOBER - DECEMBER, 2010

Celebrating 50 Years of AccountancyProfession in Nigeria

Nigeria at 50 and After:A Matter of Governance

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23

37

Nigeria at 50: Search for anAlternative Paradigm

41 Ensuring Public Accountabilityof Oil Proceeds

Environmental Accounting andDegradation

55

45 Exploring Sustainable Economic Transformation in Nigeria Without Oil: Challenges Prospects and Policy Framework

In this issue, the editor summarises the published articles as presented by the authors for a clear understanding of the target readers - the students and the members of the Association.

ANAN President, Chief (Mrs) Iyamide F. Gafar happily welcomed all the guests and members of the Association to the Association’s 2010 Annual Conference held in Abuja. She specially thanked the President and Commander-in-Chief of the Armed Forces of Nigeria, Dr. Goodluck Jonathan for his support to the Accounting profession towards ensuring accountability, probity and good governance in Nigerian polity. She remarked that Nigerian’s golden jubilee celebrations that coincided with the conference made the topic of the conference meaningful. She suggested that there was need to abolish corruption, reduce poverty and improve the state of our infrastructures. She urged every participant to show interest, zeal and commitment to every activity lined up for the conference.

The paper examines the theme of the Association’s Annual Conference. It x-rays Nigeria at 50 years, while searching for an alternative paradigm. It explains the need for an alternative paradigm because there is something about the old or existing paradigm that calls and provides justification for a change. It analyses the crisis of development in Nigeria, in which many people pass the bulk. It states that Nigeria’s problems are connected with a leadership that stinks and docile followership. It frowns at the gross negligence of not accounting for oil proceeds and its impact on the economy. It concludes by advising our leaders to be serious with the task of nation building.

Nigeria at 50: Search for an Alternative Paradigm........................................7

The write-up x-rays accounting profession in Nigeria in the last 50 years. It states that accountancy is the foundation of accountability in public and corporate governance, adding that the history of accounting is as old as civilization. It emphasises that the functions of accounting are performed by accountants. The Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN) are the only government’s recognised bodies that represent accountants in Nigeria. It notes that the first Nigerian to qualify as a Professional Accountant in 1949 was Mr. Akintola Williams. By 1960 there were only 40 Nigerians who qualifed as professional accountants in the UK. It divides the last five decades of accounting in Nigeria into three epochs - the early, reform and millennium era. It asserts that ANAN and ICAN have more than 43,000 members today.

Celebrating 50 Years of Accounting Profession in Nigeria.................................23

This paper begins with a brief review of Nigeria’s development experience, in which the key issues in governance are examined. It addresses the issue of the nation’s development vision and the role of Accountants in realizing it. It recalls that Nigeria became independent in 1960 at the crest of a global wave of decolonization. Economically, independent countries, Nigeria started out on a strong base. It explains that the changes in government did affect the state of the economy coupled with governance challenges. It states that the travails of our economy are attributable, most fundamentally, to failures in governance.

Nigeria at 50 and After: A Matter of Governance.......................................................37

The paper states that professionals are the engine of development in any society that has embraced knowledge and innovation as the way of life. It asserts that the accounting profession promotes the virtues of prudence and accountability, even as its practitioners help private and public institutions balance their books. It notes that Nigeria is estimated to have earned about 400 billion dollars from oil since oil was produced in commercial and exportable quality in 1958, but about 70% of Nigerian citizens lives in poverty. Its analyses show that oil resources instead of being a blessing, is a curse because of the failure of accountability. It hopes that we can change Nigeria, if only every professional can demand accountability from one another and give accountability to one another.

Ensuring Public Accountability of Oil Proceeds.....41

The paper confirms that the Nigerian economy is characterised by intersectoral dualism, with a relatively underdeveloped rural sector, with low productivity and an urban economy, featuring higher productivity. It asserts that the economy is also dominated by the petroleum industry, particularly since 1970s. The sector, it states, has replaced agriculture as the cornerstone of the economy. It advises that if Nigeria’s aspiration to become a middle income economy ranked among the twenty largest in the world by 2020 is to be realized, concerted efforts are required to re-vitalise agriculture, industry and solid minerals development as a necessity to replace the nation’s oil and gas sector.

Exploring Sustainable Economic Transformation In Nigeria Without Oil: Challenges, Prospects and Policy Framework.............................................45

This write-up presents environmental accounting as an alternative paradigm to solving environmental degradation. It examines the various disciplines of environmental accounting and its applications, and asserts that depletion of natural capital should be accounted for in the same way as other productive assets. It notes the low level of compliance with existing regulations and the need for enlightenment to improve environmental responsibility. It suggests the need for accounting professionals to be trained in environmental accounting methods. It advises the National Environmental Standards and Regulation’s Enforcement Agency (NESREA) and other regulatory organisations to step up enlightenment programmes on policies and laws on environmental protection to enable Nigeria develop sustainably.

Environmental Accounting and Degradation......55

1

Council Members

Francess Iyamide Gafar (Mrs), B.Sc. (Hons), FCNA - PresidentHajia Maryam Ladi Ibrahim, B.Sc. (Hons), FCNA - 1st Vice PresidentAlhaji Sakirudeen Tunji Labode, FCNA - 2nd Vice PresidentAnthony Chukwuemeka Nzom, MBA, FCNA - TreasurerAlhaji Shehu Usman Ladan, FCNA - Membership SecretarySamuel Okwuchukwu Nzekwe, MBF, FCNA - Immediate Past PresidentAlhaji Ibrahim Habu Sule, MBA, Ph.D, FCNA - MemberAlhaji Mohammed Abatch Geidam, B.Sc, FCNA - MemberAlhaji Sa’ad M. Wuro-Chekke, FCNA - MemberJames Ekerare Neminebor, FCNA - MemberProfessor Mohammad Akaro Mainoma, Ph.D, FCNA - MemberNapoleon Waibibia Adda (JP), B.A., MBA, FCNA - Member

Past PresidentsJohnson Kolawole Odumeru, FCNASunday Babalola Aloba, FCNAAlhaji Umar Hamid, FCNAProf. Edet Robinson Iwok, FCNA

AdministrationTerkaa Iyorhyer Gemade, B.Sc (Hons), MBA, FCNA - Registrar / Chief ExecutiveSunday Aniogor Ekune, B.Sc. (Hons), M.Sc, CNA - Assistant RegistrarAnthony Adebeso Shodiya, MBF, MNIM, ACTI, FCNA - Assistant Chief AccountantMusiliu Kola Sulaimon, MBA, CNA - Head, Internal AuditAyoola Idowu, B.A. (Hons) - Head, Public RelationsJohn O. T. Amah, Esq. LLB (Hons) B.L - Legal Officer

Nigerian College of AccountancyProf. Ambrose A. Okwoli, B.Sc. (Hons), MBA, Ph.D, ACTI, FCNA - Director-GeneralMuhammad S. Sanusi, B.Sc. (Hons), MBA, M.Sc. ACTI, CNA - Director of Studies

Editorial BoardChairman/Editor-in-Chief: Prof. W. E. Herbert ( B.Sc. (Hons), MAcc, Ph.D, ACTI, CFE, FCNADeputy Editor-in-Chief: Terkaa Iyorhyer Gemade, B.Sc (Hons), MBA, FCNAMembers: Dr. Vincent N. Ezeabasili, B.Sc. (Hons), MBA, Ph.D, CNAEditor: Obafemi Olusanya

The views expressed in this journal are not necessarily those of the Association. The Association reserves the right to edit, amend, cancel or refuse to publish any article or advertisement without prior notification. Authors should note that they are fully responsible for their papers and claims thereof. The Editorial Board and/or the Association cannot be held

liable for any acts of plagiarism or misleading/misrepresentation of facts.

All correspondence should be addressed to the Secretariat of the Association,250, Herbert Macaulay Street, P.M.B. 1011, Yaba, Lagos. Tel: 01-7900926

E-mail: [email protected] Web Address: www.anan.org.ng

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Certified National Accountant OCTOBER - DECEMBER, 2010

PRACTITIONERS FORUM

ENVIRONMENTAL ACCOUNTING

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Certified National Accountant

Volume 18 Number 4 October - December, 2010

From the Editorial Desk

From the President’s Suite

ArticlesNigeria at 50: Search for anAlternative Paradigm

Celebrating 50 Years of Accounting Profession in Nigeria

Nigeria at 50 and After: A Matter of Governance

Ensuring Public Accountability of Oil Proceeds

Exploring Sustainable Economic Transformation in Nigeria Without Oil: Challenges; Prospects and Policy Framework

Environmental Accounting and Degradation

Obafemi Olusanya

Francess I. Gafar

Olanrewaju Fagbohun

Nuruddeen Abba Abdullahi

Ukwu I. Ukwu

Sam Amadi

Samuel A. Igbatayo

Emmanuel E. Daferighe

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37

41

45

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Contents

Certified National Accountant OCTOBER - DECEMBER, 2010 3Certified National Accountant OCTOBER - DECEMBER, 2010

This Special Edition consists of six articles on Nigeria’s independence at 50, beginning with Nigeria at 50: Search for an Alternative Paradigm to Environmental Accounting and Degradation. Each article dwells on different aspects of the country’s achievements, failures and the way forward. The Editorial suite presents a brief summary of each of these seriatim.

Nigeria at 50: Search for an Alternative ParadigmOne does not change a winning formula, if one is doing well. A look at the events that occurred in Nigeria in the last 50 years calls for an alternative paradigm. The World Development Indicators and World Governance Index reveal that while the global life expectancy in 2007 averaged 69 years, in Nigeria it was 47 years, while the average Gross National Income per capita for the whole world was US$7,990, the figure for Nigeria was US$690. The tragedy of modern Nigeria is that the leaders are sick, worse still they are unaware of their ailment. The rot in the various sectors of our economy after more than five decades of funding, makes it obvious that Nigeria’s economic problems and challenges go beyond funding. It is high time our leaders got serious with the task of nation building. To guarantee social harmony, we must place strong and real emphasis on equitable distributions of development benefits and good governance.

Celebrating 50 Years of Accountancy Profession in NigeriaAccountancy is the foundation of accountability in public and corporate goverannce. Accounting entails capturing financial activities, summarises and interprets them for its various users The profession strives to protect its core values of integrity, competence and objectivity which remains the time tested building blocks for what has been a truly successful and honoured profession. For the study of accountancy in Africa. Nigeria is important for several reasons. Nigeria, the most populous country in Africa, has crude oil as her main export and she has remained a rentier state in terms of revenue generation. The need for legal regulations for exercising accounting profession came to reality on September 1, 1965 by the enactment of the Institute of Chartered Accountants of Nigeria Act (ICAN). Some decades later the Association of National Accountants of Nigeria was established by law. The profession is facing some major challenges which include corruption, professional rivalry, and socio-economic environment. For the accountants to truly play a leadership role in their field, they must be proactive participants in the development process.

Nigeria At 50 and After: A Matter of GovernanceNigeria became independent in 1960 at the crest of a global wave of decolonization. Nigeria was born a giant. Economically it started out on a strong base, when its per capita income was higher than those of India, Pakistan and the Congo. She could feed her people and was a leading exporter of palm produce, cocoa, groundnuts, cotton and tin ore. Then came the oil boom, the explosion of international oil prices transformed the macroeconomic situation drastically, expanding government revenues and enabling government to become the key investor in the economy. One of the major distortions wrought on the economy by our handling of the oil boom was

From The Editorial Desk the neglect of agriculture. By 1980 Nigeria had become a net importer of food. The travails of our economy are attributable most fundamentally to failure in governance. It is the sad fact that over the decades both during the military and civilian rules, the tradition of accountability was seriously eroded. Most critically, accountants now need to develop and use the adequate information and communication technology to handle the mass and complexity of financial information generated by the system.

Ensuring Public Accountability of Oil ProceedsProfessionals are the engine of development in any society that has embraced knowledge and innovation as the way of life. The accountancy profession promotes the virtues of excellence in a society. Nigeria is estimated to have earned about 400 billion dollars from oil since oil was produced in commercial and exportable quality in 1958. Nigeria has not justified such huge oil receipts, about 70% of Nigerian citizens lives in poverty. With all its endownments, Nigeria should easily be one of the leading economies in the world, but the country becomes a beggar nation. A visiting secretary of state once remarked that with all the oil revenue Nigeria has earned since independence, she has no reason being poor except that its leaders have stolen much of the money. Our public accountability rules are not well designed to constrain public officials to utilize public revenue for the common good. We can still change, but this change will begin with every professional demanding accountability from one another and giving accountability to one another.

Exploring Sustainable Economic Transformation in Nigeria without Oil: Challenges, Prospects and Policy FrameworkThe Nigerian economy is characterised by intersectorial dualism with a relatively underdeveloped rural sector featuring low productivity and urban economy, featuring higher productivity and driven by modern technologies. With the discovery of oil and the windfall of the revenue that accompanied it, the policy-makers became distracted, marginalising both agriculture and solid mineral development that previously provided the foundation’s economy. To replace oil at its dearth there should be a dynamic and balanced structure, to revive agriculture, industry and solid minerals.

Environmental Accounting and DegradationEnvironmental accounting is an alternative paradigm to solving environmental degradation. Environmental problems are international problems and it is not an easy matter to identify their characteristic feature. Environmental degradation is a result of the dynamic interplay of socioeconomic, institutional and technological activities. Environmental accounting is an important tool for understanding the role played by the natural environment in the economy. Environmental accounts provide data which highlight both the contribution of natural resources to economic well being and the costs imposed by pollution. The issues of environmental degradation should be of concern to governments and organisations. Accounting professionals should be trained in environmental accounting methods and have appropriate guidelines to follow. Appropriate legislations and standards should be used to provide a regulatory framework for environmental accounting.

4Certified National Accountant OCTOBER - DECEMBER, 2010

It is indeed a great honour and privilege to welcome you all on behalf of the Council of the Association to the 2010 Annual Conference of our great and dynamic Association.

May I here welcome and thank the President and Commander-in-Chief of the Armed Forces of Nigeria, His Excellency Goodluck Ebele Jonathan for his support to the Accounting profession towards ensuring accountability, probity and good governance in the Nigerian polity.

Interestingly, this year’s Annual National Conference is coinciding with the Golden Jubilee celebrations of our beloved and great country, Nigeria. Being mindful of this, the Council of the Association has carefully chosen the Theme and sub-themes of the fifteenth (15th) Annual Conference. This is “Nigeria at 50: A Search for Alternative Paradigm,” the sub-themes are also very relevant. These Sub-themes are:

1) Accounting for Oil Proceeds and its impact2) Environmental Accounting and Degradation3) Human Management and Globalization4) Nigeria Without OilAs this is a period of stock-taking and performance

appraisal, these topics have been specifically chosen to enable us access the performance of Nigeria in the last 50 years and come out with suggestions and recommendations for the next journey.

As a nation there is no doubt that we have made tremendous efforts towards good governance since independence, but we realize that more need to be done as we are yet to get it right. We still need to abolish corruption, tackle mismanagement of our resources in every sphere; reduce poverty; improve the state of our infrastructures and fully entrench the rule of law.

We, in the Association of National Accountants of Nigeria, are ready to play our part to ensure that we build a good society where no man is oppressed; a society with the highest standard of public accountability, probity, transparency, efficiency and good governance. As accountants and economy managers of resources we will continue to play our roles by exhibiting integrity and honesty in the discharge of our professional duties.

In the celebration of 50 years of Nigeria’s

independence a paper titled ‘Celebrating 50 years of

Accountancy profession in Nigeria” will be presented.

Let me at this point salute the founding fathers of this

great country, who through their sweat and blood laid a

Needs To Abolish Corruption, Reduce Poverty Suggested

solid foundation for this nation. We have all in one way or

the other continue to rely on, admire and always refer to

their visions, foresight and hard work. This I believe has

kept us together as a people. As we continue to sing that

“the labours of our Heroes past shall never be in vain” let

us pray that we believe this in our hearts and continue to

keep the flag of green, white and green flying.In the Bible in the Jubilee year you are required to

sound a loud trumpet and proclaim liberty throughout the land for all its inhabitants. Let us therefore use this occasion to proclaim liberty from corruption, oppression and all other forms of vices from this land.

For me as a Certified National Accountant, I have always looked forward to the Annual National Conference of this great and dynamic Association. The Annual National Conference of our Association is not merely a yearly ritual. I have found it a great moment and privilege to associate with groups of people of integirty to brainstorm and proffer solutions to burning national issues. Yes, it has always been a time of meeting old colleagues and friends, socialization, meeting new people, and making new friends. But beyond these, the period of the Annual National Conference has always been a great rewarding time to my intellect and knowledge. I believe this is true for all members. It should not be a period for finding reason to stay away from work, and abdicate responsibilities in our various places of work. It should be a period of enriched and enhanced experience to make us effective, meaningful and make fruitful contribution to improve and better our working environment in particular, and the society at large. I therefore, use this opportunity to urge every participant in this Conference to show interest, zeal and commitment to every activity lined up for this Conference, as they have been so chosen for the benefit of all.

On this note I wish everyone fruitful deliberation.God bless you!God bless ANAN!!God bless Nigeria!!!

Chief (Mrs) Francess I. Gafar, FCNAPresident, Chairman of Council andChairman of Board of Governors,Nigerian College of Accountancy

FROM THE PRESIDENT’S SUITE


COMMUNIQUE

COMMUNIQUE ISSUED AT THE END OF THE15TH ANNUAL CERTIFIED ACCOUNTANTS’ CONFERENCE

HELD AT THE INTERNATIONAL CONFERENCE CENTRE, ABUJA,4TH - 7TH OCTOBER, 2010.

(Founded in 1979 and Chartered by Act No. 76 of 1993 (CAP A26 LFN. 2004)

PreambleCognizant of Nigeria’s crisis of

development and appreciating the need to reflect upon the trajectory of our social, economic and political developments since gaining independence in 1960, and as we celebrate our country’s golden jub i lee , the Cer t i f ied Nat iona l Accountants, in convening their 15th Nat ional Conference sought to appropriately capture and contextualize the national mood within the theme: Nigeria @ 50: A Search for Alternative Paradigm. The four-day conference was held from 4th to 7th October, 2010, at the International Conference Centre, Abuja.

The essence of the theme was not just to x-ray Nigeria at 50 but to seriously search for an alternative development paradigm. The search for an alternative paradigm automatically presupposes that there is something about the old or present model of development that putatively calls and provides justification for a change. What then is it about Nigeria at 50 that warrants a search for an alternative paradigm? After all it is unusual to change a winning formula.

Opening: The Conference was declared open by the Special Guest of Honour. His Excellency, Dr. Goodluck Ebele Jonathan, GCFR, who was ably represented by the Honourable Minister of State for Finance, Hajia Yabawa Lawan Wabi, mni, FCNA. Among the participants were: the chief launcher of Auditing Standards, Honourable Usman B. Nafada, Deputy Speaker, Federal House of Representat ives ably represented by Honourable Tunde Akogun, mni, Leader of the House; Chairman of the opening ceremony, Professor Ukwu I. Ukwu, the President and Past Presidents of the Association and Council members and eminent resource persons. The keynote address was powerfully delivered by Professor Olanrewaju Fagbohun of the Nigerian Institute of Advanced Legal Studies.

While declaring the conference open, the President congratulated the Association in the choice of this year’s conference theme which coincidentally was in tandem with Government’s desire for new and better ways of doing things. The President observed that the theme of the conference was in line with his Administration’s determination to infuse greater transparency, accountability and probity in the business of governance and economic management. In this regard, he noted that government has in recent years put in place a number of instruments and institutions that are intended to guarantee these noble ideals in order to achieve the objectives of prudent fiscal behaviour and financial probity. He further noted that the accounting profession had a cardinal role t o p lay i n t he p romot ion and institutionalization of these principles of good governance. He enjoined ANAN to uphold the ethics of the accounting profession consistently and to partner with Government in fostering a system-wide performance focused accounting models, especially in the area of b u d g e t i n g , r e v e n u e m a p p i n g , expenditure profiling, financial records management and fiscal discipline. Mr. President also expressed appreciation on the Association’s visionary contribution and support to government, especially the Association’s publication on Vision 20:2020. He posed a challenge to the accounting profession by noting that the majority of the fraud and corruption that bedeviled the use and management of public funds at various levels bore the imprint of financial records manipulation and creative accounting.

Proceedings: The conference’s theme was: Nigeria @ 50: A Search for an A l t e r n a t i v e P a r a d i g m , P a p e r presentations were made on, the following five sub-themes:

* Environmental Accounting and Degradation

* H u m a n M a n a g e m e n t a n d Globalization

* Accounting for Oil Proceeds and its impact

* Nigeria without Oil* Celebrating 50 years of Accounting

Profession in Nigeria.After plenary presentations and

extensive discussions and interactions on the sub-themes, participants noted as follows:

1. While the average gross national

income per capita for the whole world in

2007 was US$7,990, that of Nigeria was

US$690.

2. Nigeria lacks integrity and the will

power to follow the due process. There is

l ow comp l i ance i n r espec t o f

accountability, probity and transparency.

These constitute the basic challenges

that have dogged the path of Nigeria to

greatness in the past 50 years.

3. The non-oil sector of the Nigerian

economy has not received the needed

support to contribute substantially to the

gross national product.

4. Nigeria is over-dependent on oil for

its foreign exchange.

5. Oil is a depleting asset and Nigeria’s

reserve has been estimated to last for

another 30 years only.

6. Nigeria has lost her core values and

so there is now a need for the citizens to

constructively engage in value re-

orientation before any hope of national

development could be realized.

7. Shifting paradigms takes courageous

leadership and would require an

assessment of the gaps in our current

trajectories of development to enable us

reduce our resistance to the change we

need as a nation.8. Social infrastructure, especially

education, power, transportation and hea l t h se r v i ces , have g ross l y deteriorated through many years of neglect with the result that Nigeria’s once high global competitiveness has been

ASSOCIATION OF NATIONAL ACCOUNTANTS OF NIGERIA

6 OCTOBER - DECEMBER, 2010Certified National Accountant

COMMUNIQUE

severely eroded.

9. The challenge of poor infrastructure

must be addressed in order to minimize

the burden on human capital and

productivity.

10. The financial services sector is in

serious trouble through ill-conceived, un-

coordinated reform policies that lack

human face.

11. Unemployment rate has taken a

w o r s e d i m e n s i o n w i t h d i r e

consequences of insecurity of lives and

property, kidnapping, armed robbery,

and other social vices.

12. The proportion of the population in

poverty remains unacceptably high with

the result that there’s little prospect of

meeting the Millennium Development

Goals (MDGs) and Education For All

(EFA) even by the year 2020.

13. Oil and gas sector has failed to

make its full contribution to the

development of the national economy.

Unlike its Brazilian and Malaysian

counterparts (Petrobas and Petronas),

NNPC’s contribution to the growth of the

economy is not appreciable in

comparative terms.

14. The film industry has been vibrant

and almost entirely home-grown despite

l itt le or no direct support from

government.

15. Some of the biggest challenges

within our environment are cultural and

the attitude of the people to work and the

state, has a false and corrupt notion that

the state exists for the purpose of

providing a proverbial cake to be shared.

16. Environmental degradation and

other negative impacts of development

act iv i t ies have become serious

challenges in Nigeria and other

developing countries.

17. The emergence of ANAN has

reenergized the growth and development

of the accounting profession in Nigeria.

R e s o l u t i o n s : C o n f e r e n c e

consequently resolved that:

1) Good governance and good

leadership become a sine qua non in the

fight against corruption, tribalism and

mutual suspicion, disparity in wealth

distribution, poverty, and under-

development.2) Good governance and good

leadership would unleash the country’s potentials for positive development of infrastructure, education, provision of h e a l t h s e r v i c e s a n d c i t i z e n empowerment.

3) The public service should be modernized and appropriate training provided for the staff to build and enhance capacity.

4) Infrastructure is basic to economic

development: the collapse of the

country’s infrastructure system places a

heavy burden on human capital and

productivity, affecting the nature of work

and the level of productivity in both private

and public sectors, therefore, the need for

a total overhaul.

5) Government at all levels must invest

in human capital from a more strategic

perspective than merely funding

education.

6) There should be a rethinking of the

school curriculum to realign it with the

needs of a modern knowledge society.7 ) To e n h a n c e o u r g l o b a l

competitiveness, we need to build the capacity to speak more than one language in our education curriculum.

8) Because of the importance of culture in the life and attitude of a people, a general re-orientation is called for to help mitigate the growing patterns and tendency of social tension and angst based on the antithesis of development that the public service and public procurement are windows of opportunity to share national cake.

9) Government must take urgent and bold steps to re-engineer the economy through a multi-sector market-driven economy powered by manufactured exports and value added agricultural products and non-oil minerals.

10) ANAN, as an important stakeholder in our drive for national development, must be prepared to synergize with other relevant stakeholders to canvass for effective and efficient governance.

11) The search for an alternative

paradigm to strengthen Nigeria’s global competitiveness warrants an urgent need to develop her human capital, reorganize and reform the Public Service. Policies and plans must be well articulated, relevant and properly implemented, monitored and evaluated for efficiency and value for money.

12) Government as well as corporate bodies should pay special attention to the increasing challenge of environmental degradation and other negative environmental impacts on the economy.

13) The need to develop guidelines and practices of environmental accounting calls for a Conceptual Framework of Environmental Accounting. the Nigerian Accounting Standards Board (NASB) is enjoined, as a matter of national importance, to initiate the necessary exposure draft. Government should suppor t the implementa t ion o f env i ronmen ta l accoun t i ng and associated disclosures.

14) Accounting professionals must

uphold the ideals o f in tegr i ty,

transparency, hard work and best

p rac t i ces towards acce le ra ted

development.

15) Government should, as a matter of

urgency, beef up national security to

curtail the increasing proclivity of

terrorism in the country.

16) ANAN supports Government’s

resolve to conduct credible elections at

all levels with the mantra of one adult one

vote, and where every vote must count.

17) The Accounting profession must

strive to protect its core values of

integrity, objectivity, professional

competence, professionalism and

technical standards as the minimum

standards in the delivery of services,

whether in business or public practice.

18) Nigeria’s golden jubilee reflects

remarkab le m i l es tones i n he r

accountancy profession compared to her

sub-Sahara African neighbours.

SignedChief (Mrs) Iyamide F. Gafar, FCNA

President/Chairman of Council

SignedProf. Ukwu I. Ukwu

Chairman of the Conference

SignedChief Terkaa I. Gemade, FCNA

Registrar/Chief Executive


SEARCH FOR AN ALTERNATIVE PARADIGM

The theme of this year’s conference which has been

selected so appropriately and timely is one that I consider

of great importance to this country, both for the present

and future generations. On this premise, I commend the

wisdom and vision of the Association of National

Accountants of Nigeria (ANAN) for bringing this forum

to reflect upon the life and events of our dear nation.

The knowledge that most, if not all of this

distinguished audience, are those who delight in figures

further scares me, particularly when I recall that it was a

task before I could make the last grade of credit in

mathematics at the school certificate level. I will,

however, not head for the door because the organizers

have been kind enough to articulate the theme of my

keynote address on the broad issues of our collective

enterprise.

At the risk of a charge of being unnecessarily

pedantic, I am aware that the vision of ANAN is to

advance the science of Accounting in Nigeria -

pioneering a multi-disciplinary emphasis in the

production of well-rounded and well blended

professionals - vast in knowledge, skilled and

experienced in practice, and committed to the highest

ideals of ethical conduct. I also do know as a fact that one

of the functions that the enabling law of this great body

authorizes it to perform is doing such things as may

promote the advancement of the profession of

accountancy in both the public and private sectors of the

economy in the context of time being a fixed income to

the Accountant, it is no surprise, therefore, that ANAN’s

quest for year 2010 which is the 50th year of Nigeria’s

independence, is to review the profit and loss account of

Nigeria; to see whether the account is balanced taking

into account social, economic and political

developments and, if not, qualify the account on what

should be the way forward.

The subject of this paper is to x-ray Nigeria at 50

years while searching for an alternative paradigm. To

want to search for an alternative paradigm pre-supposes

that there is something about the old or existing

paradigm that calls and provides justification for a

change. What then is it about Nigeria at 50 years that

warrants a search for an alternative paradigm? You

Nigeria At 50: Search For An Alternative Paradigm

Olanrewaju Fagbohun

certainly do not change a winning formula if you are

doing well. It is only when you are doing otherwise that

you run from the hospital to the herbalist, the church, the

mosque, the magician and elsewhere for a winning

formula or a cure. So, the questons are: Is Nigeria doing

well? Has Nigeria done well? Does Nigeria have a plan

to do well?

If I am to leave the reader in no doubt as to the answer

to the above questions, I do have a task to answer the

questions in such a graphic manner for all to clearly see

Nigeria’s score card or in the language of the accountant,

Nigeria’s balance sheet. We can start by bench marking

Nigeria against other parts of the world in terms of

quality of its institutions and the results of its governance

systems.

The World Development Indicators and World

Governance Index reveal that while global life

expectancy in 2007 averaged 69 years, in Nigeria it was

47 years; while the average Gross National income per

capita for the whole world was US$7,990, the figure for

Nigeria was US$690; Nigeria has a high infant mortality

rate of 95.52 deaths per 1,000 live births; maternal

mortality rate of 800 deaths per 1,000, 12 million

Nigerian children are out of school with one million

others dying of preventable diseases annually according

to UNICEF; while 70 per cent of Nigerians live below $1

per day. A human Development Report released by the

United Nations Development Programme in Abuja

recently, revealed that the number of poor Nigerians

doubled in the last 30 years, while Oxfam International

estimates that out of about 140 million Nigerians, over

53 million wake up every morning not knowing where

their next meal will come from, yet, between the years

1999 and 2009 alone, Nigeria is reported to have

generated US$200 billion from the sales of crude oil.

Since it is often said that international organizations

are often biased or given to exaggeration in their reports

about Nigeria, it is only appropriate, therefore, that we

balance the above reports with snippets of comments and

views from Nigeria. In the words of Levi Objiofor,

“Nigeria is certainly an embarrassment to its founding

fathers. No one is willing to take responsibility for the

confusion in the land. The tragedy of modern Nigeria is



that the leaders are sick; worse still, they are unaware of

their ailment and they are unwilling to listen or respond

to public requests for basic needs. Surely, these are not

the qualities of a true continental giant” (Land of the

Sick and the Deaf, THE GUARDIAN, January 29, 2010

pg. 51). To Casmir Igbokwe, “Nigeria today is

characterized by a systematic decay in almost all the

facets of her national life... instead of making progress

like other nations, Nigeria is restrogressing. At 50, what

we have to show the world are dilapidated infrastructure,

dwindling electric power supply and inability to rule

ourselves” (Yar’Adua and the Underdevelopment of a

Nation, SUNDAY PUNCH, March 7, 2010, pg. 80).

Tunde Fagbenle in a very graphic exposition

describes the pathetic situation in Nigeria this way:

“Hunger is on the face of the people, The taps, where they

exist, have run dry. The electricity supply is at its lowest

ebb. The roads are death traps. Robbers run the fields,

day and night with reckless abandon. Parents leave home

in search of food for their offspring, unsure where they

will find it or if they will be back home. Home is where is

home? Home is the street for many, or under bridges, and

for the luckier ones in the inch space of a room shared

with ten other bodies in a rodent-like existence.” (In this

time of want and despair, I cry for Nigeria, SUNDAY

PUNCH, February 28, 2010).

In the words of a distinguished elder statesman who is

in a position to know, Chief Eddie Aderinokun, “When

Nigeria gained inedependence from Britain, I was barely

19. We saw a bigger Nigeria in the horizon.

Unfortunately, we have failed to see this vision

materialize. There was nothing like crude oil in those

days. All we had were pyramids of groundnut in the

northern part of the country, cocoa and cotton. Apart

from this, tin and coal were both mined in the Middle -

Belt and eastern part of the country. Rubber was

introduced after the old Western Region. Even at that time

we were better than countries like Malaysia, Indonesia

and Brazil, in terms of the earnings from our agricultural

produce. Today, these countries have left us behind...

when I think of the past I see no reason to celebrate

Nigeria’s 50th independence anniversary. What is there

to celebrate? The appropriate thing for us to do as a

people is to put on rags and to rub ashes on our faces.

This is the time to mourn our failures as a nation, not

celebrate.” (No Reason to Celebrate Nigeria at 50 but to

Rub Ashes on our Faces, SATURDAY PUNCH,

September 11, 2010).

To a home boy of ANAN in the person of Dr. Samuel

Nzekwe,” ... the tempo of management of the country

and its economy smacked of a trend without any

direction... as a result of the gloomy picture of the

economy, unemployment and other negative indices had

become the order of the day in the country ... the

unemployment situation has resulted in mayhem, crisis,

armed robbery and kidnapping. With this situation, how

do we expect investors to come into the country... No

investor would come into a country without functional

infrastructure, electricty and an environment devoid of

safety and security to life and property” (Nigeria’s

Economy is Adrift, SUNDAY PUNCH, February 7,

2010, pg. 28). Reuben Abati, in a satirical piece titled

“Ban the Country, not football teams,” he noted that

nothing works in Nigeria. Thus, rather than just banning

the country’s football teams aftermath of the dismal

performance of the Super Eagles at the last World Cup in

South Africa, the President should have banned the

National Assembly, PHCN, the Police and all other

institutions. (THE GUARDIAN, July 2, 2010, pg. 51).

In a most powerful way, Femi Anikulapo Kuti, a two

time grammy award nominee, captured the above

concerns in one of his lyrics, thus, “if my eyes no deceive

me, and na true be dis man ear dey ear, politicians and

soldiers make meeting; our country dey want repair,

dem dey take life say, dem no no, na dem spoil our

country so, as dem dabaru am dey go, so my people dey

follow o, I sorry sorry o, I sorry for Nigeria, I sorry sorry

o, I sorry for Africa...” (From the Album, Black man

know Yourself).

Looking at the development indicators and reading

through the kind of comments above which daily

inundate local and international tabloids, one comes to

the sad but incontrovertible conclusion that Nigeria is

far from healthy. As noted by Karl Maier in his book.

This House Has Fallen, “Nigeria, like so many

countries in Africa, is patently not a developing nation,

it is under-developing. Its people are worse off now than

they were at independence ... In Nigeria, the blame for

its lost generation falls squarely on the shoulders of its

people’s leaders - corrupt military dictators and their

civilian accomplices - who over the past quarter of a

century have humbled a once proud nation through

outright incompetence and greed.”

I have had cause to ask myself; was it not this same



Nigeria that its Finance Minister in the person of late

Chief Obafemi Awolowo, chided the British Prime

Minister, Mr. Harold Wilson, in 1971 for devaluing the

British pound sterling without forewarning Nigeria?

Nigeria refused to devalue her currency at that time

notwithstanding that it was tied to the sterling standard

with the result that the Nigeria pound became stronger

than the British pound. I ask myself again, what went

wrong? In fact, do we care? Are we facing the realities of

the moment? Is it of any interest to us where we are, and

how we got to where we are?

Brushing aside the answers to these questions for the

time being, permit me to take us back to my earlier

statement where I used the phrase “dear nation” as

opposed to “great nation.” Nigeria’s Anniversary Theme

for this year is “50 years of Celebrating Greatness.” In

the context of the above realities, can we truly, honestly

and in good conscience assert that we are celebrating

“greatness”? The word “great” connotes high degree,

beyond the ordinary, memorable, remarkable,

distinguished, high rank or fully deserving. Can Nigeria

at 50 years answer to any of the above synonyms of

“greatness”? May be yes, in the negative context. But,

certainly no, in the positive context.

Motivational speakers and positive thinkers will urge

us to think positively and give recognition to only what

we desire. In this regard, they will urge that

notwithstanding our numerous problems, we should

focus on the good and not the bad and the ugly. Perhaps, it

was this kind of thinking that informed the theme for the

50th independence anniversary. But then, in the words of

Socrates, the unexamined life is not worth living. It is

when we focus on our crisis that our attention will be

forced on the disorder in our thinking, and we are thus

able to save ourselves as we teeter on the brink of even

greater disaster. What the Nigerian situation calls for at

this point in time is not celebration of greatness, rather, it

demands a sober reflection and self-examination of the

Nigerian nation. As is often said, there is a time to see a

cup as half empty and there is a time to see it as half full.

Nigeria’s Crisis of Development - Passing the Buck

For Nigeria, one excuse is as good as another for her

multitude of woes and crisis of development.

Unfortunately, not every excuse is foolproof. I must

admit from the onset that the exercise of making excuses

is not new to Nigeria or even to our generation. This

popular diversionary technique can be traced back to the

Old Testament, particularly the Book of Leviticus, where

we find a sacred custom called “escaped goat”. When the

problems and trials of the people became overwhelming,

a healthy male goat was brought to the temple. In a formal

ceremony, the high priest of the tribe placed his hands on

the head of the goat and read the list of problems. This

process transferred the agonies and anxieties onto the

goat and the goat was set free, taking the troubles with

him out to pasture. More than 4,000 years after, the

scapegoat syndrome is very much alive in Nigeria. Often

times when the woes of Nigeria are being discussed,

some of our leaders quickly cite the slave trade,

colonialism and neo-colonialism as the bane of Nigeria’s

problem. Others cite the nebulous concept of the

“Nigerian Factor.” Not too long ago, news made the

round about the alleged confession of one Harold Smith,

an Oxford University Graduate who is now in his eighties

and who was one of those that midwife Nigeria’s

independence in 1960. He was alleged to have confessed

to how the colonialists’ hidden agenda contributed to the

lingering problem in Africa, especially Nigeria.

According to the report, the legendary Harold Smith

noted that Nigeria, a great nation was crippled not

because of military juntas or corrupt leaders alone, but by

the British and American fear of Nigeria’s great future.

I guess we must respect the ingenuity of excusiologists.

I am not concerned with the truth or otherwise of Mr.

Smith’s confession. I also concede that slave trade and

colonialism impacted negatively on Africa. The truth of

the matter, however, is for as long as Nigeria and

Nigerians continue to make excuses for our failures; for

as long as we fail to take responsibility for developing a

winning lifestyle; for as long as we fail to take proactive

steps to caution and correct our own mistakes, life will

continue to seem unfair while the things we continue to

excuse will return to haunt us over and over again. Slave

trade ended over 200 years ago; Nigerians have been in

control of Nigeria in the last fifty years; there are other

countries that went through colonial rule, yet, they have

re-discovered themselves. Taking responsibility for our

own ineptitude is the beginning of our search for an

alternative paradigm.

To further put this issue in its proper context, it will be

useful that we do a bit of comparative analysis. Singapore

attained self-government from the British in 1959. It went

into a merger with the Federation of Malaysia, Sarawak

*Continued on page 12

NEWS FROM THE SECRETARIAT

10

Have you paid your Annual Subscription? According to our regulation, payment of annual

subscription is due on January 1, please pay up all your outstanding dues.

Have you changed youraddress or just relocated? Then,

please communicate your new address/location to

our Secretariatimmediately.

OCTOBER - DECEMBER, 2010Certified National Accountant

ANAN Members Attend WorldCongresses

The Association has received the following notification which is reproduced below for the members’ information.

NAN President, Chief (Mrs) Iyamide Gafar led a high powered Adelegation to the 11th World

Congress of Accounting Educators and Researchers (IAAER) at Singapore Management University Campus, Singapore and 18th World Congress of Accountants (WCOA) at Kuala Lumpo, Malaysia, recently.

The IAAER Congress was a two-day event comprising every plenary sessions, concurrent paper sessions and poster sessions.

The mission of the IAAER is to promote excellence in accounting education and research on a worldwide basis and to maximise the contribution of accounting academics to the development and maintenance of high quality, globally recognized standard of accounting practice. More than 70 ANAN members

attended the congresses.The World Congress addressed

issues related to important areas that affect the Accountant’s role in Sustainable Development and Continued Relevance in the coming years.

Group Life Assurance For ANAN Membershe members of the Association of National Accountants of Nigeria T(ANAN) have been implored to

partake in the optional Group Life Assurance planned by the Association with a reputable Life Assurance Company.

According to the Registrar/Chief Executive, Chief Terkaa Iyorhyer Gemade, the sum to be assured under the scheme would be N500,000 and funeral expenses of N100,000. Each contributor to the scheme would pay a yearly premium of N3,000.00

*Chief (Mrs) Iyamide F. Gafar

11

NEWS FROM THE SECRETARIAT


ANAN Tasks UniAbuja StudentsOn Professionalism

ANAN President Bags ‘Woman’ Award Group, Centre for Policy Development and Political AStudies (CEPODEPS), has

awarded the President, Association of National Accountants of Nigeria (ANAN), Chief (Mrs) Iyamide Francess Gafar, Woman of the Year (Runner-up).

Speaking during the presentation, recently at ANAN Secretariat, Lagos, CEPODEPS’ Director General, Dr. Aderemi Ifaolepin Aderemi said the award was a reward for outstanding personal achievements, excellent performances, and selfless service in career, success and patriotism.

He explained that the award also signifies the zeal, commitment and dedication the ANAN President enthroned in enduring values of excellence in public accounting in Lagos State public service, as well as the accounting profession in the country.

he Association of National Accountants of Nigeria (ANAN) Thas been charged to teach students

of other Nigerian institutions the rudiments of their profession.

“Give it to her, Iyamide Gafar has succeeded in her chosen field of which she does not seem to be relenting in her pursuit for excellence. The Accountants’ Accountant, Iyamide Gafar is the quintessential professional whose eyes for details, doggedness, and conscientiousness have singled her out in a densely populated profession”, he said.

ANAN Chief Executive, Chief Terkaa Gemade while responding, said that it is good to be humble in what one is doing in life and pointed out that no matter what one does, there are those who are watching and would make it public either positively or negatively.

While dedicating the award to her family, friends, ANAN management and staff for their support and encouragement, Chief (Mrs) Gafar noted that the laudable feat was made possible because they have always stood by her.

The National President of the Association, Iyamide Francess Gafar,

gave the charge while inaugurating the FCT branch of the association at the University of Abuja, Gwagwalada, Abuja.

According to her, students across the nation need to be taught the basic principle of the profession to enable them compete with their colleagues in other countries.

Gafar further encouraged members across the country to make themselves accountable to the people in all their dealings.

Also speaking at the inaugural ceremony, Head, Department of Accountancy of the Institution, Musa Inuwa Fodio, said the association was on its way to expose young accountants to the ethics of the profession early, so as to make them internationally acceptable.

“The issue of integrity is of paramount i m p o r t a n c e , n o i n t e g r i t y n o professionalism. It should be seen practically in the conduct of accountants at every endeavour of our lives.

“I think some of us have been doing our best to really show some level of integrity, and this will continue by God’s grace,” said Fodiyo.

Seven executive members were sworn in to pilot the affairs of the association in the area council for the next two years.

*ANAN President, Chief (Mrs) Iyamide Gafar being presented with an Award Certificate by the Director-General of Centre for Policy Development and Political Studies (CEPODEPS), Dr. Aderemi Ifaolepin Aderemi .

Taraba Hosts December MCPD programme

his year’s last session of ANAN’s M a n d a t o r y C o n t i n u i n g TProfessional Development

(MCPD) programme will be hosted by Taraba State, starting from December 6 to December 9. The participants are expected to come from Adamawa, Yobe, Borno, Taraba, Gombe and Bauchi states. It is also the last opportunity for any member who has not attended any of the other sessions held in other zones. The venue of the programme is Taraba Motel Barde Way, Jalingo, Taraba State. The Registrar/Chief Executive, Chief Terkaa Iyorhyer Gemade reminded members that it is compulsory for every member of the Association to attend the programme at least once a year, adding that the Certificate issued at the end of the course revalidates the membership of the Association.



and North Bomeso (now Sabah) in September, 1963.

The merger collapsed and Singapore became a

sovereign, democratic and independent nation in

August, 1965. Today, Singapore is one of the world’s

most prosperous countries with strong international

trading links and with per capital GDP equal to that of

the leading nations of Western Europe. The country

enjoys a remarkably open and corruption-free

environment characterized by stable prices.

Singapore’s economy depends heavily on exports,

particularly of consumer electronics, information

technology products, pharmaceuticals and on a

growing financial services industry.

It is instructive that just 40 years ago, Singapore faced

the problems of overcrowding in the city, poor living

conditions and a severe lack of infrastructure.

Infrastructure development (hardware) combined with

public administration development (software) has been

the key to Singapore’s economic transformation from a

Third World to a First World country within 30 years.

In the case of Malaysia, a federation of 13 states and

three federal territories, the country attained

independence in 1957. Life expectancy is 72 years for

men and 77 years for women. Its GNI per capital is

US$6,970. Malaysia boasts of one of South East Asia’s

most vibrant economies, the fruit of decades of

industrial growth and political stability. The country is

among the world’s biggest producers of computer disk

drivers, palm oil, rubber and timber. Other main exports

are electronic equipment, petroleum and liquefied

natural gas, chemicals, textiles, wood and wood

products.

One of the unique things about Malaysia is the way it

has achieved substantial success in its rural

development, and in reducing the incidence of rural and

urban poverty. The categories of infrastructure that

were rapidly expanded, and which have in turn

contributed to the growth and modernization of the

country are road, rural electricity supply, rural water

supply, social amenities, health, education and

telecommunication. The underlying philosophy of

Malaysia’s development initiatives is that growth

should not be pursued as an end in itself. Rather, it must

be accompanied by equitable distribution in all

segments of society.

Standing in sharp contrast to the Singapore and

Malaysia experience is the Nigerian situation. Take the

roads for instance, in almost every state, federal

highways are in a deplorable condition while the state

roads are no better. Nigeria has approximately 195,200

kilometres of roads out of which only about 15.3 per cent

are paved. More than 28 per cent of these paved roads are

impassable. A recent report of the Senate Committee on

the investigation of the transportation sector from 1999-

2009 revealed that the country has been robbed of huge

sums of money as a result of collusion between the

officials of the Ministry of Works and contractors.

Among others, the committee identified that the bidding

and awards of contracts were characterized by

incompetence ,absence of design ,over invoicing , double

payment, inflation of contract cost and outright stealing.

The situation is no different in the Energy sector. As

noted by the European Union in a prefeasibility study for

the EU - Nigeria Dialogue on Energy, the problems

facing the energy sector in Nigeria are systemic. The

report identified that Nigeria could be said to be in a

series of downward spirals. Areas of concern that have

negatively impacted on the system include inadequate

refining capacity, gas flaring, oil bunkering, poor

confusing implementation of the Gas Master Plan,

widespread use of generators, coal mining, uncompleted

reforms, poor quality of power sector data, employee

concerns, corruption, weak nuclear aspirations,

environmental challenges, erratic pricing policy, lack of

maintenance, tension between private and public

participants, large number of redundancies and poor

transmission and distribution of infrastructure.

In the education sector, it is the same story of decayed

teaching facilities and neglect at all levels of the

educational system; poorly reviewed educational

curricula which renders skills acquired irrelevant to the

needs of industries; inadequate funding and

politicization of education boards. All of these have

resulted in incessant strikes aimed at forcing the

government to remedy the situation, but, with attendant

serious negative consequences on the students and the

nation. Similar stories of decayed infrastructure and

neglect of personnel abound in the health, agriculture and

other sectors, yet, huge funds are allocated to these

different sectors yearly.

The rot in the various sectors of our economy after more

than five decades of funding, makes it obvious that

Nigeria’s economic problems and challenges go beyond

*Continue from page 9



funding. Not too long ago at a workshop on budget

implementation, the Director-General of the Due

Process Office, Emeka Eze, noted that Nigeria’s

inability to implement the budget goes beyond lack of

capacity. What is lacking is integrity to follow due

process and accountability, the ability to stand up and

say “No” when one is under pressure to do what is

wrong. Needless to say that I not only share these views,

I equally believe that they constitute the basic challenge

that has dogged the path of Nigeria to greatness in the

past 50 years. I will briefly expouse on these views in the

context of Leadership, and Ethics and Values.

A Leadership that Stinks vs. Docile Followership

The ultimate responsibility of a leader is to facilitate

other people’s development as well as his own. His task

is to create an environment that is conducive to sell

motivation. Leadership is a sacrifice - it is self denial - it

is love, it is humility and it is in the perfect disciplined

will. Regrettably, majority of those who have found

themselves in position of leadership in Nigeria have

betrayed the confidence reposed in them. What we have

witnessed of these so called leaders are traits of

insensitivity, aloofness, arrogance, inability to control

inordinate ambition, inability to think strategically and

over dependence on godfathers.

It is ironic that beginning from 1999, the emerging

crop of leaders presented themselves as messiahs and

revolutionaries who were out to establish a new order

that will place the interests of the society above that of

the individual, and heal the trespasses of the different

military juntas in the way they oppressed and

impoverished the nation. Sadly, one does not need to

speak with a student of history to quickly identify the

similarities between the period of military rule in

Nigeria and our recent history in democratic

governance. It is a tragedy, and a serious defeat for

democracy. Our so called leaders have continued in

delusional ego-awareness as opposed to enlightenment-

beyond-ego which is what can set them free and trigger

in them the ability to function optimally in the best

interest of Nigeria and Nigerians, and act compactibly

with the requirements of our dynamic world.

Informed by what we have seen so far of

representative democracy in Nigeria, I pointed out in a

paper titled: “Legal Argument for the Non-

Justificiability of Chapter 2 of the 1999 Constitution,”

that the assumption that elected public officers will truly

represent the people have proved to be a mistake. The

further assumption that where they fail to perform the

electorate will vote them out has also proved to be

misplaced. There is a serious concern with our

assumption of a self correcting democracy. The reality on

ground is that we do not have a representative democracy

where parliament truly represents the people. Votes have

consistently failed to count, with the awkward and

unfortunate result that members of Parliament are no

longer duly elected on the extended franchise and

authoritative expression of the will of the nation - the

electorate. Invariably, public power is being channeled,

controlled and entrusted to a legislature and executive

whose wishes differ from that of the people. These

Representatives have become so powerful through the

use of violence and corrupt means that they have

succeeded from time to time in exercising powers

disproportionate to their numbers resulting in fraudulent

representation of the majority.

Nigerians have patiently awaited the dividends of

democracy in terms of critical infrastructure,

uninterrupted power supply, qualitative education and

healthcare, physical and food security, job creation and

wealth generation. What they got in return from these so

called leaders are myriads of billboards and newspaper

advertorials proclaiming “dividends of democracy” or

their supposed “great works and achievements.” A public

affairs analyst, Jide Ojo, called it Governance by Deceit

(THE PUNCH, January 28, 2010) while the Nobel

Laureate Professor Wole Soyinka labeled it Governance

by Billboards. As the lawyers would say, good

governnace should be “res ipsa loquitor” meaning that it

should speak for itself.

I do not intend to over-flog my discussion of Nigeria’s

leadership problems. My intent is to emphasise that we

have had problems of timid and docile followership.

Addressing this point to Nigerians on a general level

might sound like a lame cliche because it has been

sounded over and over without much difference. Yet, we

must continue to harp on it and seek to educate our people

on why they must be ready to stand up and say no to

irresponsible leadership. God has done his bit in giving

Nigeria natural resources and human resources in

abundance, and it will be naive to pray to God to come

down and change our leaders. We as citizens must

*Continued on page 16

PHOTOSPEAK


*(L-r) ANAN 1st Vice-President, Hajia Maryam Ladi Ibrahim; Lagos State Head of Service, Prince Adesegun Ogunlewe representing the State

Governor, His Excellency Babatunde Fashola and ANAN President, Chief

(Mrs) Iyamide F. Gafar at one event of the Mandatory Continuing Professional Development (MCPD) programme held

in Lagos, recently.

*ANAN Treasurer, Mr. Anthony C. Nzom and Past President, Mr. Sunday

Babalola Aloba and Chief Tunde Gafar at the MCPD programme in Lagos

recently.

*(L-r) Member Secretary, Alhaji Shehu Usman Ladan, 2nd Vice-

President, Alhaji Sakiruddeen Tunji Labode and 1st Vice-President,

Hajia Maryam Ladi Ibrahim at the same occasion in Lagos, recently.

PHOTOSPEAK


*A cross-section of participants at the National Conference.

*(Sitting l-r) Dr. Aderemi, CEPODEPS’s Director-General, ANAN

Registrar, Chief T. Gemade, ANAN President, Chief (Mrs) Iyamide F.

Gafar, her husband Chief Tunde Gafar and Member Secretary, Alhaji Shehu

Usman Ladan with ANAN female staff in a group photograph with the ANAN

President during the Woman of the Year Award (WOYA) conferment ceremony held at ANAN National Secretariat,

recently.

*Hon. Minister of State of Finance, Hajia Yabawa Lawan Wabi,

representing Mr. President, His Excellency Goodluck Jonathan, in a

group photograph with ANAN President, Chief (Mrs) Iyamide F. Gafar and her Council Members after the just concluded National Conference held in

Abuja, recently.



outrightly reject leadership that stinks. More

importantly, however, ANAN and its members must

begin to see themselves as veritable catalyst for Nigeria’s

redemption. Just like media practitioners and bodies like

the Nigerian Bar Association, ANAN and its members

occupy a sensitive position within the Nigerian economy

and are appropriately placed to typify exemplary

leadership and followership. I must hasten to add that

you will be able to do this if and only if you are able to

answer yes to the integrity, honesty, responsibility in

service, and credibility test. When the call is sounded on

standards, you must not be found wanting. Where you

have compromised on the above qualities, then, you will

be constrained to accept the potential dangers and

detrimental consequences of unquestioning conformity.

Our Ethics, Our Values - Our Poverty of Values

What Nigeria has witnessed since independence has

been a drifting away from a progressive and just

economic society. Many, if not all those who have had to

carry the mantle of administration have proclaimed,

some seriously, others not so seriously, their intention to

create a progressive and just economic society. Each and

every one of them has touted and made bold assertions to

follow the rule of law, so much so that one is no longer

sure whether the rule of law has a different interpretation

to Nigerian leaders from what was deduced by Bracton

in the Middle Ages and expounded upon by A.V. Dicey in

1885. From time to time, we push that our leaders should

have the political will to do what is right, without

bothering to ask ourselves whether indeed these leaders

possess the inner will to act right. In the language of the

law, “Nemo dat qui non habet” meaning a person cannot

give what he himself does not have.

Permit me at this stage to put forward some posers?

*What drives the actions and desires of the average

Nigerian?

*Why do patterns appear to repeat themselves in our

50 years history?

*Why are Nigerians leaders so rich in worldly assets,

yet, the Nigerian nation is at the brink of collapse as it

continues in its reckless slumber?

*Why do our leaders tout transparency to describe

government performance, yet, for 11 years of democracy

they have consistently and actively frustrated every

move to allow ordinary Nigerians freedom of

information?

*Why do we boast of Nigerians who are international

think-tanks, yet, the Nigerian nation is dwarfed in a

system that is apparently co-ordinated to malfunction?

*Why are Nigerians faced with emptiness and so

much of helplessness and hopelessness in the midst of

plenty?

*Why do we end up being harassed with the

disruptive security of our leaders when their sing-song

at election time is modesty and simplicity?

*Why is it that public office holders in Nigeria are

never compelled to resign by force of public opinion

aftermath of a disgraceful conduct?

*Why is it that we write the best of report and

formulate the most brilliant of blue-print, but, they are

never implemented?

*Why have we continued to delude ourselves as the

giant of Africa when it is obvious to each and everyone

of us that the place of our nation is the intensive care

unit of an A-rated specialist hospital?

*How come we have the greatest number of religious

institutions, yet, we remain unrepresentative of

humanity while we continue unabated in our savage

relationship with one another?

*How do you explain a situation where you steal a

goat you get a two-year jail term, but you steal billions

of Naira of state money and you get 6 months jail term?

*Why do we have a system that allows proven felons

and convicted criminals in public offices?

*Why is it that only our leaders and their cronies in

the corridor of power have continued to prosper, while

over 90 million Nigerians are living on a dollar per day?

*Why has Nigeria remained a fool at 50, but rather

than berate and seriously chastise ourselves, our leaders

are more desirous of rolling out the drums?

*Why does it appear that Nigerians hate and detest

Nigeria?

*Tell me, is there a blue-print laid out in some cosmic

instruction manual that we have failed to follow?

All these posers boil down to one major issue; our

value as a nation and as individuals. The

intergenerational poverty that troubles us so much

today is predominantly a poverty of values. Values

determine our needs, while needs determine our goals.

Values are the foundation of our character and of our

confidence. A person who does not know what he

stands for or what value he should stand for lacks the

*Continue from page 13



critical guiding device that will enhance his ability to

achieve his purpose. Values are not contrived on the spur

of the moment, given to vacillating, or negotiable

principles that come and go with each passing day.

Rather, they are ingrained in the fiber of a person’s heart

and soul.

In an article titled “In this time of want and despair, I

cry for Nigeria.” Tunde Fagbenle brilliantly underscored

the Nigerian situation, thus, “...But the country is made

up of people to whom bread and butter are all that matter.

No one ever resigns from his job on account of being

spited or insulted, his authority being ignominiously

challenged. No one resigns on account of being made

useless or stupid. No one risks limb and life on the altar of

truth and justice. Money is never enough for the

Nigerian, no matter how highly placed, no matter how

rich. Pride takes backstage.” (SUNDAY PUNCH,

February 28, 2010).

What then is the nexus between Leadership and Ethics

and Values? The failure of successive leaders to make

Nigeria achieve its developmental height and potentials

is traceable to the face that both the leaders and the led

have failed to stand up for meaningful values. The reason

why our national life has reflected so much of colossal

loss is not because the gods have abandoned us, but, more

because our ethical values have been eroded. Leaders

have failed to keep faith with the values that personal,

corporate and national greatness demand, while the led

have failed to actualize that value which requires us to be

bold in our convictions and whatever we stand for.

It is not the case that we do not know the right values.

Certainly, we do. Recently, at a public presentation of a

book, Survey of Nigerian Core Values by the National

Orientation Agency in collaboration with the National

Institute for Policy and Strategic Studies, Kuru,

stakeholders agreed that Nigerians must engage in value

orientation before any hope of national development can

materialize. At that event, Governor Jonah Jang of

Plateau State regretted that part of our cherished African

heritage, which includes peace, cooperation, unity,

growth and development had been lost. Further, he stated

that “Nigeria’s enriched value system has been greatly

deliberately set-aside ... The practice today where some

politicians (with apologies to His Excellency, I say most)

perceive politics as an avenue to fraudulently enrich

themselves instead of advancing the lives of the masses

who brought them to power is a corruption of our

traditional values ... They do not share in core political

values of accountability transparency and the rule of

law.”

In the same strong language, the Minister of Culture,

Tourism and National Orientation, Senator Jibril Gada,

noted that “the culture of unearned income which gives

primacy to money rather than productive effort and net

consideration to overall output is a key factor hindering

the attainment of the production potential of the country.”

Again, I ask myself, is anybody listening? Are we

learning any lesson? Are the above comments falling on

fertile lands in the minds of those who administer Nigeria?

Do we care? If you want to know why I have asked these

questions, I will urge you to pick the list of those who were

recently conferred with National Honours by the Federal

Government of Nigeria. It is a list of some bit of the good,

but, a large dose of the bad, the ugly, the beast and the

horrible.

Underscoring this position Kemi Obasola in an article

titled “Honour for Thieves” writes “Of course, there are

some deserving recipient... What I frown on is the

inclusion of certain people among the awardees,

politicians whose character can’t be vouched for - you

can’t but wonder how they ever made the list. For such

people to make the list and still be conferred with an

award as prestigious as the Commander of the Federal

Republic leaves a bitter taste in the mouth. Their

antecedents do not show that they are being rewarded for

their gallant efforts in the task of nation building or that

they’ve done enough to make our society better than it was

before they hit the limelight. It is rather unfortunate that

public opinion does not count where issues like the

national awards are concerned; once nominated, even

people with a sordid past are rest assured that the award is

theirs; background and character checks no longer seem

to matter” (SUNDAY PUNCH, July 25, 2010).

How can we successfully rebrand Nigeria when we

have continued in the macabre dance of dignifying with

national honours those who have actively participated in

looting our treasury? Why would decent and genuine

Nigerians be respected in international circles when our

national honour is more for kinsmen, colleagues, and

political party compatriots than for those who dedicated

their lives to Nigeria and have lived a life of humility,

honesty, integrity, discipline and selflessness. The story

was not different when one of the Nigerian Dailies also

recently decided to honour the landmark achievement of



prominent Nigerian citizens. Some of those, who were

honoured will certainly not pass the public opinion test.

I am persuaded to think that nothing will ever change

the aimless drift of Nigeria until we stop eulogizing

corrupt public office holders. Inside of us, we know that

many of those that we label as ‘worthy achiever,’ ‘great

leader,’ achiever of enviable feat,’ ‘great visionary,’ ‘man

of honour’ among others are the antithesis of excellence.

To continue to decorate them will merely encourage

impunity. For awards and honours to be of significance,

they must always reflect that many are called, but few,

very few, by way of emphasis, are chosen. This is another

phase where we must have a shift in paradigm.

Let me leave the issue of Leadership and Poverty of

Values as related to Nigeria at 50, and go further with our

search for an alternative paradigm. In this regard, I shall

therefore crave your indulgence to move on and say a few

words on the sub-themes of his well thought out

Conference.

Accounting for Oil Proceeds and Its Impact

Oil and gas undeniably remain two of the most

important fuels driving the engine of global prosperity.

Oil and gas account for more than 63 per cent of the

world’s primary energy needs. In the case of Nigeria, the

oil sector has since the “oil boom” remained the core

revenue earner and sustainer of her economy, accounting

for over 80 per cent of the nation’s total export earnings

and about 70 per cent of total government revenue.

As recent as 2003, World Bank figures revealed that

annual oil and gas income accruing to Nigeria is about

US$22 billion. In terms of impact, this amount can

bestow enormous potential good where it is put to

appropriate use. Specifically, it can be used by a nation to

develop her critical infrastructure, create employment

for millions of people and develop her technology. Sadly,

as is the case with Nigeria, it also offers immense

temptations for abuse. In terms of impact (social and

economic) what makes the difference between countries

that have benefited from oil and gas resources and those

that have not is how these countries have accounted for

their oil proceeds.

In what has been termed the shame of a nation, it was

revealed in 2009 that between 1999 and 2007, there was

no audit of the Nigerian National Petroleum Corporation

(NNPC) account. The question to ask is how was this

made possible? By the provisions of section 6(1) of the

NNPC Act, 1977, “The Corporation shall keep proper

accounts and proper records in relation thereto in a form

which shall conform to the best commercial standard.”

Subsection (2) further provides that, “The Corporaton

shall as soon as may be after the end of the financial year

to which the accounts relate cause its accounts to be

audited by auditors appointed by the Corporation with

the approval of the Federal Executive Council.” By Sub-

section (3), “The auditors shall, on the completion of the

audit of the accounts of the Corporation for each

financial year, prepare and submit to the Corporation

reports setting out - (a) general observations and

recommendations of the auditors on the financial affairs

of the Corporation for the year... and (b) detailed

observations and recommendations of the auditors on all

aspects of the operations of the Corporation for that

year.”

When it can be said that the Federal Executive Council,

as well as the States and Local Governments who are

only interested in sharing revenues from excess crude oil

are guilty of recklessness, I shudder to think that critical

stakeholders like ANAN may also not be able to wholly

absolve themselves of contributory negligence in

allowing such sordid state of affairs to go on for so long.

ANAN is empowered to ensure high ethical standards in

the practice of the profession. How well has its members

lived up to expectation? ANAN must be ready to stand at

the forefront of the struggle in areas where the leadership

of the society is theirs by learning and training. If ANAN

fails to do so, it will also be at its own peril in that it is only

when the larger society is flourishing that ANAN as a

group and its members can flourish.

Environmental Accounting and Degradation

Economic development generally contributes to

economic, social and environmental gains. Not

surprisingly, unintended adverse effects do occur in

many cases when such economic growth are embarked

upon while neglecting other policy, market or

institutional imperfections. One of such unintended

consequences is environmental degradation. We can use

as our example the oil industry and the challenges of

pollution.

The impact of oil pollution include deforestation;

ecosystem destruction and loss of pristine habitats;

degradation and chemical contamination of land, air and

water; long-term harm to flora and fauna; acute and



chronic health problems for human beings; safety risks

for host communities and oil industry workers and

immediate to medium - term threat to indigenous

communities. Oil pollution not only disrupts the fragile

ecosystems of indigenous communities, its negative

impacts and the associated human rights abuses also

threaten the very survival of these communities.

Of course, it will be naive and out of tune with reality to

urge that economic growth and development be stopped

or that economic reforms be reversed. Consequently, the

issues turns on what steps can be taken to achieve ex-ante

implementation of additional complementary measures

that are capable of removing the imperfections. How do

we restructure growth and development such that we

would avoid going through the same stages of

development that involve relatively high and sometimes

irreversible levels of environmental harm? How do we

environmentally adjust our national income in a way that

would significantly change the shape of the development

- environment relationship? In other words, how do we

achieve “win-win” policies that simultaneously yield

both economic and environmental gains?

No longer can we continue to perceive environmental

services such as clean water and air as abundant and

treated as free goods. Increasingly, mankind is being

made to realize that environmental assets are neither

non-scarce nor indestructible. Imprudent action by the

society can worsen the severity of these resource

constraints, thus, environmental information on

exploitation opportunities and the trade-offs imposed by

scarcity and renewal rates, becomes crucial for any

vision of development.

For the above reason, efforts are being made all around

the world to develop data sets and analytical tools that

will assist in decision-making to support sustainable

development initiatives. This integration implies a shift

in emphasis away from expansion of the vector of

produced commodties alone (as measured in aggregate

by GPD growth), towards a view of qualitative

improvements in life conditions based on the

reproduction and resiliency of our biosphere as a

collective habitat and life support systems. It is in this

context that Environmental Degradation Accounting

(EDA) has become an imperative. EDA teaches us a

number of inter-related things: how to review activities

which affect the envronment by continuously gathering

relevant data and information about an activity’s

environment related assets and liabilities; the necessity of

keeping environmental capital intact by making

provisions for its depreciation; and, how to integrate

capital conservation concerns and ascertainable

environmental degradation into national accounting.

EDA gained popularity at the Earth Summit of 1992 in

Rio de Janeiro where the United Nations Framework

Convention on Climate Change (UNFCCC) was opened

for signature. By the time the follow-up document which

is the Kyoto Protocol was adopted in Kyoto, Japan, on

December 11, 1997, the signatory countries were willing

to accept EDA as a mandate for action. EDA is what is

reflected in the now globalized concept of greening

national accounts which refers to national accounting

system extended to include information on the state of the

environment and on interactions between economy and

environment.

A key challenge to EDA is how to adequately embed

sustainability principles into organizational decision-

making at appropriate scales. How for instance do you

impute monetary values to loss of welfare associated with

pollution of air, water, soil or sunlight? The challenge,

however, is not sufficient reason to deter us from

amortizing the benefits of EDA.

I am aware that since the 1970s, a country like Norway

has been collecting data on energy sources, fisheries,

forest, mineral, and over time data on air pollutant

emissions to address resource scarcity and build her

environmental accounts. The accounts feed into a model

of the national economy, which policy-makers use to

asess the energy implications of alternative growth

strategies. The inclusion of this data also allows Norway

to anticipate the impacts of different growth patterns on

compliance with international conventions on pollutants

emissions. More recently, a number of resources-

dependent countries have become interested in

measuring depreciation in their natural assets and

adjusting their GDP’s environmentally. Philippines

began work on environmental assets in 1990, Namibia

started in 1994, and so several other developing

countries.

Some of the methods currently in use include:

(a) Natural Resource Accounts;

(b) Emissions Accounting;

(c) Disaggregation of Conventional National Accounts;

(d) Value of Non-marketed Environmental Goods and

Services; and



(e) Green GDP

In a bid to achieve international consensus on

methods, the United Nations Statistics Department has

been coordinating several efforts. One of these

culminated in the publication of the System for

Integrated Economic and Environmental Accounting

(SEEA) in 1993 as an annex to the 1993 revisions of the

Systems of National Account (SNA). SEEA seeks to

modify SNAs beyond the domains of economic assets

and priced transactions of goods and services to include

environmental assets, environmental damages and the

flows across the economy - environment interface that

are concomitant with economic activity, but, which

may alter the quality and quantity of environmental

assets, and hence, present and future levels of human

well-being. The SEEA is structured as a series of

methodological options, which include most of the

different accounting activities earlier mentioned. Users

choose the options most appropriate to their needs.

Nigeria cannot afford to be left behind in the EDA

process. ANAN has a huge role to play not only by

virtue of being a member of the Nigerian Accounting

Standards Board, but, also in the development of the

capacity of its members to be able to meet the

challenges of EDA.

Human Management and Globalization

It is a matter of common knowledge that

“globalization” is the intensification of worldwide

social relations which link distant realities in such a

way that local happenings are shaped by events

occurring many miles away and vice-versa.

Globalization denotes a shift in the spatial form and

extent of human organization and interaction to a

transcontinental or interregional level. It is the

stretching of social relation across time and space, such

that day to day activities are increasingly influence by

events happening on the other side of the globe, while

decisions of highly localized groups and institutions

end up having significant global reverberations.

Globalization is neither a singular condition nor a linear

process: It is also not a final end point of social change.

Rather, it is a multidimensional phenomenon

applicable to a variety of form of social action -

economic, political, cultural or sites of social activity.

What then are the consequences of globalization for

human resource management? The answer lies in the

fact that globalization makes national culture an

increasingly strategic issue that has to be faced and

properly managed. Every serious naton must be able to

meet the challenge of balancing the global trends in

human resources management with the influence of

national culture, since many aspects of human resources

managed are affected by differences in national culture. I

recognize that this is a keynote address, consequently,

while refraining from going into the technical details

involved in the balancing of opposing dualities that

present managerial challenge in the conduct of business

across national borders, I will identify the practical

consequences of globalization for human resources

management.

What has happened is that human resource

management is now more than ever dedicated to the

necessity of productivity within both the human resource

function and the organization as a whole. In order to make

an impact, add value, and create a compettive advantage

for the organization, Human Resource Professionals and

line managers can no longer overlook the differing values

of the employees. Gradually fading away is the

traditional practice of employment being based on the

lifetime system; pay rises and promotions are no longer

automatic; while wage system (spiced with various

incentive schemes such as variable pay, bonuses, gain

sharing, plans, profit sharing and stock based plans) is

looking more at job duties and merits rather than length of

service. Competition and skills that give competitive

advantage are becoming more and more the name of the

game.

The task for a body like ANAN in all of these is that it

will be required to strategically position its members

through robust, well focused and appropriately

structured capacity development, continuing education

and retraining programs. It is only then that they will be

able to compete in the dynamic global brain terrain of free

flow of technology and human resources, and also be in

position to reap the benefits of balancing legislation such

as the Nigerian Oil and Gas Industry Content

Development Act 2010. The Act generally mandates that

consideration be given, first to Nigerian Contractors,

Goods and Services in all projects for which contract is to

be awarded in Nigerian oil and gas industry. Section 53 of

that Act specifically mandates operators, contractors and

sub-contractors requiring financial services to retain only

Nigerian financial institutions or organizations. They can



only seek financial services from foreign organizations

where they are able to satisfy the Board that it is

impracticable to engage the services of Nigerian

Financial organizations. ANAN must also be prepared to

synergize with other relevant stakeholders to ensure the

due and effective implementation of the law.

Nigeria Without Oil

The economy is the backbone of any nation. The

performance of the economy dictates achievements in

the social services sector, the respect a nation commands

at the international level, the pattern and direction of

government and public policy. The impact of oil on the

Nigerian economy was such that Nigeria changed from

earning over 90 per cent of its export proceeds from

agricultural products to earning same from oil. Non-oil

revenues shrank while oil revenues grew, providing the

much needed foreign exchange to finance the foreign

element of Nigeria’s growing imports of both consumer

and capital goods.

At the early stages of the boom, it was actually

proclaimed that the constraint to Nigeria’s development

was not funds but the executive capacity to spend. It was

not long before financial prudence was abandoned both

in the selection of projects and programmes and their

implementation. The rapid growth of the oil revenues not

only generated inflation aftermath of the implementation

of the Udoji Report in 1974, it was such that other vital

sectors of the economy were abandoned. Sadly, 52 years

after the discovery of oil in Nigeria, the inefficient

investment of the oil revenues coupled with the waste

and corruption of successive Nigerian governments have

denied the country the potential and lasting benefits of

the oil and gas sector.

To the possibility of a Nigeria without oil, the

response today of the ordinary Nigerian will be that it is

good riddance to a bad curse. Afterall, the society has

never had much benefit from it as for its lack to make

much difference to the ordinary citizen. A non-oil regime

may even re-orientate our leaders to act right if there is

nothing to steal. The only regret is that the country would

have missed a great opportunity to soar in development.

As underscored by a report of the World Bank, about 80

per cent of Nigeria’s oil revenue is enjoyed by 1 per cent

of the population. It is estimated that since 1960,

between 300 to 400 billion dollars have been stolen by

corrupt government officials. The question therefore of a

Nigeria without oil is more relevant to the future of

Nigeria if we are able to get our acts together now.

Current estimates of proven reserves are put at 30 to 35

billion barrels. At the current production rate of 2.3

million barrels per day, Nigeria’s proven oil reserve

would last some 25 years. Assuming with new

discoveries the proven reserves is increased to 60 to 80

billion barrels, production would last 40 to 50 years at the

most. What this implies is that the era of revenue from oil

even where it is put to good use will one day come to an

end. For clarity, it is not the case that there will be no oil in

the Nigerian environment, rather, the cost to recover

what remains will be beyond the value of the oil.

How prepared is Nigeria for the above eventually? At

around 2.5 per cent growth rate, it is estimated that the

population of Nigeria could rise to 200 million in 25

years and 300 million by the year 2050. With increase in

population, there will expectedly be increase in demand

for energy. Consequently, in the context of energy use,

where should we focus our search for an alternative in the

absence of oil? Let me state in clear terms that while there

is the need to pursue whatever alternative energy sources

that are available to replace oil, (both because oil is finite

and unsustainable) the truth is none of these various

alternatives have the attributes that completely equal oil.

For instance, it has been said that we can run our cars and

aeroplanes on solar energy. This is easier said than done.

The transition to alternative fuels will not be simple nor

as convenient s is the use of oil today, and it will involve

much time and financial investment. Energy carriers in

terms of varied end uses and ease of handling and

storage, are not easily interchangeable, and would have

to be properly visioned and planned.

We can look at energy sources in terms of non-

renewable and renewable. The former comprises of

heavy oil/oil sands, shale oil, natural gas, coal, nuclear

fission, geothermal and gas hydrates. The latter consists

of hydro-electric power, solar energy, wood and other

biomass, wind energy, fusion, tidal power and ocean

thermal energy conversion. Compared with oil, they all

have their limitations in the combination of the versatility

of end uses, energy density, ease of handling and storage,

and ability to produce it relatively inexpensively and in

great volume.It is obvious that we have done little to reduce our

dependence on fossil fuel which clearly is a limited resource and for which there is no comprehensive substitute in prospect. Renewable energy which must be



*This paper, presented by Prof. Olanrewaju Fagbohun of the Nigerian Institute of Advanced Legal Studies, University of Lagos was adapted from the keynote address of the author at the 2010 Annual Conference of the Association of National Accountants of Nigeria, Oct. 5-7, 2010.

the sole source in a sustainable society will certainly not be able to sustain present affluent lifestyles. A sustainable world order must be based on acceptance of much lower per capita levels of energy use, and adjustment of economies and lifestyles. It is only then that the mix of renewable energy sources can be optimally utilized.

If we consider Nigeria without oil in the context of an alternative source of foreign exchange, then, what our government must urgently do is go back to the drawing board and sincerely take steps to revitalize the other vital sectors of our economy such as agriculture and other non-oil mining and quarrying that have been abandoned. In particular, if Nigeria is to insulate herself from the vagaries of incessant price fluctuation in the world market, what we must seek in the long-term is a multi-sector market economy driven by manufactured exports and value added products. Thus, the challenge for the Nigerian government is how to properly prepare for the impending cataclysm of a post-petroleum era. Any delay in dealing with this challenge will surely result in unpleasant surprises.

Conclusion and suggestionsIn this paper, I have endeavoured to throw-up for our

consideration a few issues on the State of the Nigerian nation as it marks its 50th independence anniversary. Unfortunately, I have been able to do this rather superficially because of reasons which I believe are quite obvious to the discerning reader. Each of the points raised deserves a full lecture by itself, but the mandate of this paper is rather restrictive.

In conclusion, I like to emphasise that it is high time our leaders got serious with the task of nation building. Nigerians have had enough of mediocre and irresponsible leadership. Talk is not action. What Nigeria and Nigerians deserve and look forward to is strong and successful actions in the coming years. Among other points earlier made, Nigeria needs to urgently tackle the problem of power supply and development the critical infrastructure that would create an enabling environment for sustainable growth. Further, to strengthen Nigeria for global competitiveness, there is an urgent need to develop her human capi ta l , reorganize and reform the government/public service institutional framework and work procedures to make them really capable of concretizing the development philosophy. Also, for policies and plans to meet the efficiency criterion, be meaningful and sustained, they must be well thought out, relevant and suitable. They must also be properly implemented, monitored and evaluated from time to time.

We have had enough of government being run in

secrecy. If transparency and accountability are to take firm root in support of implementation, monitoring an evaluation of public policies and projects, then, all citizens must be involved in governance. Access to information is an order while the ability of citizens to challenge and question irresponsible behaviour must be strengthened. We must continue to encourage the involvement of the private sector in that they often set the standards of efficiency and benchmarking of quality and competitiveness. Finally, to guarantee social harmony, we must place strong and real emphasis on equitable distribution of development benefits. It is only then that Nigeria will be on track to achieve its Vision 20:2020 and the United Nations’ Millennium Development Goals.

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(Longmans Seventh Edition).

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Olanrewaju Fagbohun (2010) The Law of Oil Pollution

and Environmental Restoration: A Comparative Review,

(Lagos Odade Publishers).

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(Eugene Oregon).


ACCOUNTANCY PROFESSION IN NIGERIA

1.0 Introduction October 1, 2010 marks the 50 years of Nigeria’s political independence from Britain. The Association of National Accountants of Nigeria (ANAN) is proud to celebrate this Golden Jubilee of the Nigerian nation by chronicling Fifty Years development of accountancy profession in the country. The celebration also commemorates the 31st anniversary of ANAN.

Accountancy is the foundation of accountability in public and corporate governance. The history of accounting is as old as civilization. From its origins more than 5,000 years B.C. in the Middle East, accounting evolved and developed over the years as business activities advanced through the creation of private property rights, the growth of commerce, and the development of trading on credit. According to Tudor and Mutiu (2007):

Accountants participated in the development of cities, trade, and the concepts of wealth and numbers. Accountants invented wri t ing, participated in the development of money and banking, invented double entry bookkeeping that fuelled the Italian Renaissance, saved many Industrial Revolution inventors and entrepreneurs for survival, helped develop the capital markets necessary for big business so essential for capitalism, turned into a profession that brought credibility for complex business practices that sparked the economic boom of the 20th century, and are central to the information revolution that is now transforming the global economy.

Accounting is defined as “a body of rules, conventions and general standards established for uniformity in presentation and reporting of financial information to make them more relevant and informative. These norms and standards gain their authority from general acceptance of the accounting profession and the public”. It is a function that gives financial information to operating segments and divisions of the company.

Celebrating 50 Years Of Accountancy Profession In Nigeria

Nuruddeen Abba Abdullahi

Therefore, Accounting entails capturing financial activities, summarize and interpret them for its various users, because financial information is necessary for informed decision to the management, employees, regulatory bodies, potential investors and other stakeholders. Accordingly, accounting is often referred to as the language and soul of business for the fact that it produces and keeps pertinent financial information of business entities.

The Accountancy Profession is well described by the South African Chartered Accountancy Profession Charter (2007):

The accountancy profession comprises numerous organized membership bodies with members employed throughout the economy, including commerce and industry, the public sector, academia and those in public practice, either as owners or employees. Those non-members of organized accountancy membership bodies, but performing similar functions or offering similar services, are deemed to be part of the accountancy profession.

This description broadly encompasses any persons whether or not affiliated to organized professional accountancy bodies, but performing the functions of accountants as part of the accountancy or accounting profession.

The Accountancy Profession strives to protect its core values of integrity, competence and objectivity which remains the time tested building blocks for what has been a truly successful and honoured profession (Voynich, 2005). These are the basis on which stakeholders (e.g. individual clients and employers) put trust on the members of the noble profession, and of course, the basis of any opportunities the profession has had to expand beyond its traditional frontiers of auditing and tax compliance work. According to Ricol (2004) all the work of professional accountants is designed “to contribute to the development of financial systems and economies, to assist nations in developing frameworks that support high quality accountancy practices, and to build a



profession, nation by nation, accountant by accountant, that places a priority on those core values of the profession”. From the quality and enthusiasm of the members of the great profession, it is evidently clear that the impact of the profession will percolate throughout the national economy and worldwide.

In Nigeria, the Accountancy Profession has reached a remarkable milestone in the last five decades when compared with other countries in the ECOWAS sub-region. This celebration is a time to look back and take stock, not just with a sense of reminiscence, but actually the contributions of the profession to the nation building. In Nigeria, the Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN) are the only Government’s recognized professional accountancy bodies. As professional accountants, members of these bodies are in practice, business, government, industry and the academia.

Accounting as a social and cultural practice, and despite its powerful influence on people’s lives, has so far been given scant attention by scholars of African studies (Annisette, 2006). The accounting history literature indicates preponderance of studies of accounting professions in the UK, US, and Australia with recent studies in other developed and developing countries. In fact this is attributed to the stage of the development of the profession in the developing countries which still is at infancy level. It is however obvious that there is a tendency for accounting practices in these countries to reflect those of developed countries, particularly the UK and the US (Uche, 2007).

This paper is expected to generate research interests on the noble profession in Nigeria. For the study of accounting profession in Africa, Nigeria is important for several reasons. Today, Nigeria is one of the largest economies in Africa and is becoming increasingly important politically and economically. With a population of over 150 million people, Nigeria is the most populous country in Africa and indeed black nations in the globe. Nigeria’s main export is crude oil and has remained a rentier state in terms of revenue generation. The oil revenues account for almost 95% of the country’s export revenue and about a third of its GDP. Nigeria is endowed with huge natural resources and human capital. The oil sector and the political economy of oil have played a key role in the transformation of the economy from agricultural to a modern economy. Oil and gas production will continue to play a major role in the Nigerian economy.

2.0 Accountancy As A ProfessionProfession is defined as an occupation that requires considerable education and specialized training, such as accounting, engineering, law, and medicine. However, many use the term more loosely to encompass any coherent occupation class. There is a clear distinction between professional associations and scientific or academic societies, especially in certain fields, such as the applied sciences or education. Academic societies aim exclusively at advancement of the discipline, rather than being concerned with the methods of practice and economic well-being of the members. Whereas, the differentiation between professional associations and trade unions can be blurred, as some unions claim the added distinction of being professional associations.

It has been argued that ‘professional associations are, at least in some respects, political organizations, which aim to advance the interest of their members’, and for them to be successful they often need the support of the Government (Uche 2007). Professional associations have the additional objectives of expanding the knowledge or skills of its members and providing professional standards. No profession could self-regulate without the agreement of the Federal Government, or due compliance with the law (Wallace, 1992).

A key difference between professional and academic qualification according to Claude Balthazard (Registrar Human Resources Professionals Association) is that:

Professional credentials are ‘warrants of competence’ or ‘warrant of e xper t i s e ’ whereas academic credentials are not. With professional designations, the certifying body is warranting that the certified worker (tradesperson or professional) has the essential knowledge and skills of a specified domain necessary for safe and appropriate practice of the trade or profession. With academic credentials, there is no such ‘warrant of competence,’ an academic credential means that someone has successfully completed a particular course of study not that one is competent to practise a trade or profession.

The advent of the professional accounting bodies in the late nineteenth and early twentieth centuries provided for minimum standards of professional competence, and


EFFECTIVE FINANCIAL REPORTING

indeed best practices. The professional bodies of accountants establish and regulate training, entry standards and professional examinations, as well as ethical and technical rules and guidelines. These bodies are organized on national and international levels.

Professional accountant is a person, whether in public practice, industry, commerce, the public sector or education, who is member of a recognized professional accounting body. Professional accounting services can be described as any service requiring accountancy or related skills performed by a professional accountant including accounting, auditing, taxation, management consulting and financial management services. Therefore, accountants are business professionals serving the role of contributing to the health of businesses. Accountancy or accounting as a profession has been highly marketable because of the persistent demand in both public and private sectors of the economy.

Accounting evolved as a profession in response to the social and economic needs of society. It is about financial information needs of people comprising internal and external users. The internal users are the management of the entity, whereas the external users include investors, creditors, employees, and governments. The accounting systems that provide information to the two financial information constituencies are distinguished as managerial accounting to the management or internal users, and financial accounting to external users. In real world, there is thin difference between the two accounting systems, because they are both generated by management and are financial in nature as they are stated in monetary terms.

The functions of accounting are performed by accountants and are essentially classified into Government Accounting, Company or Corporate Accounting, Management Accounting, Tax accounting and Accounting in education. The practitioners in these five fields form many organizations towards fostering the accounting profession. Such as Association of Chartered Certified Accountants (ACCA) in the UK, American Institute of Certified Public Accountants (AICPA) in the US, National Institute of Accountants (NIA) in Australia, Chartered Institute of Management Accountants (CIMA) in South Africa, and Chartered Institute of Taxation of Nigeria (CITN) and Nigerian Accounting Association (NAA), and Association of Government Accountants in the US.

In accordance with the need for the performance of accounting services to be of the highest quality, the law

provides for the establishment of self regulatory accounting bodies which develop competency and skills of their various members, licensing professional members to practice and offer consulting services to the public. Membership is normally achieved through attainment of minimum academic qualification and systematic professional training.

How do professional accountants discharge their roles effectively and deliver on their responsibility to protect the public interest? The answer revolves around the following four vital areas, which are discussed elsewhere in this Paper:

· Professional Ethics;

· Convergence to high quality professional standards;

· Regulatory structures for high quality performance

in financial reporting; and

· Development of strong alliances.

Today, the Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN) are the only Government’s recognized professional bodies that represent Accountants in Nigeria. These professional bodies are complemented by the Chartered Institute of Taxation of Nigeria (CITN) and the Nigerian Accounting Association (NAA). The NAA is an Academic society aimed at advancement of the accounting discipline and accounting profession in Nigeria.

3.0 Role Of The Profession In Economic

DevelopmentModern professions had a substantial impact on economic development. According to Alfred D. Chandler, “professional managers, scientists, and engineers made crucial contributions to the expansion of large enterprises in the late nineteenth and twentieth centuries. They were the most important drivers of economic growth in America and the other developed economies” (OJICC, 2010). The significance of professionals or professional bodies in nation building and indeed in economic development can be determined by the role they play in providing support and solutions to the society.

The success of professional bodies in fostering professionalism and contributing to national development is predicated on their ability to nurture and maintain high quality membership with strong leadership and management of the bodies. The professional members must uphold “the ideals of integrity, transparency, hard work and best practices”



towards accelerated development. They should enthrone dynamic and purposeful leadership on their professional bodies, with great sense of forging alliances and partnerships both horizontally and vertically, as well as beyond national borders.

René Ricol (IFAC President) observed that “whether we are accounting professionals, government ministers, university leaders, academics, regulators or standard setters – we are fundamentally engaged in the business of “people.” It is indeed the avowed objective of every government to improve the general welfare of its citizenry. A key element in protecting the public interest is “ensuring that people have accurate and consistent information on which to base their investment decisions”. However, in the wider perspective, “protecting the public interest” is about making a commitment to finding solutions that are in the best interests of the citizenry and that will lead to improvements in the quality of their lives.

Accountancy is a critical component of the infrastructure for a market economy. Apart from the information it provides on the financial position and profitability of operations, it is the foundation of fiscal systems and it plays a key role in corporate governance. Accountancy is a major instrument for enforcing prudential management requirements for banks, insurance companies, securities dealers, and other market participants. As a result, the accountancy sector is among the most regulated in the developed economies in terms of its liabilities toward the society. Appropriate accountancy can ensure accountability for finances, fairness, and performances and prescribe way to guarantee good governance by institutionalizing a powerful accountability structure that holds every public and private sector official answerable for his or her actions as public or corporate official (Ahmed, 2006).

Following the attainment of independence in 1960, the government of Nigeria immediately recognized the need for accountants in nation building. This is very obvious from the development efforts to transform the structure of the Nigerian economy from a traditional society characterized by agricultural production to one with modern manufacturing, commercial, financing, and agricultural enterprises and schemes. As the economic structure becomes more complex, the pressure to maximize the effectiveness of the utilization of national resources becomes high on business manager for public accountability. Reliable financial information is a necessary input for ascertaining efficiency and effectiveness in the allocation and utilization of national resources for the achievement of socioeconomic objectives.

Professional accountants are “Partners in Nation Building” and they deserve special mention in celebrating Nigeria’s development, because the task of the accountancy profession and the accountancy professionals is at the heart of collaboration with each other, with other professionals, and with the communities to build a stronger and better society.

Nigeria, like most developing countries has taken the road to economic liberalization and global integration, and no doubt the accountancy profession has played and will continue to play a key role in the economic transformation of our nation. The role of the professional accountants is beyond economic growth and stability to driving social and cultural development. The accountancy profession in Nigeria has strong influence at a sub-regional level and Africa generally, as it is leading the development of the accounting profession in ECOWAS member countries through the promotion of the Association of Accountancy Bodies in West Africa (ABWA), and participation in international accounting activities, including the World Congress of Accountants (WCOA), the International Federation of Accountants (IFAC), and the International Accounting Standards Board (IASB).

4.0 Origins Of The Accounting Profession In NigeriaPrior to the Nigerian independence in 1960, there was little professional accounting activity in the country, which was mainly in the multinational enterprises sector under the tutelage of British accounting system. Nigeria, like most of British colonies, inherited accountancy and company law based on the British model. Disclosure requirements and reporting requirement were based on the British system. Along with multinational enterprises, large international accounting firms also influence the accounting systems in Nigeria. As a matter of fact, international accounting firms dominated the accounting and auditing practices in the country. The old link between multinational enterprises and international accounting firms is the primary reason for their presence in Nigeria, although the lack of indigenous accounting firms is another reason. So, there has been a significant amount of influence of foreign enterprises on the development of accounting system in Nigeria.

Nigeria quickly adopted colonial heritage of professional development from Britain, which manifested in the establishment of some indigenous professional bodies such as the Nigerian Institution of Surveyors (NIS), and immediately after its independence in 1960, Nigeria began the process of professionalization by organizing professionals into various professional groups. These include the Nigerian



Medical Association (NMA), the Association of Accountants in Nigeria (AAN) now the Institute of Chartered Accountants of Nigeria (ICAN), the Nigerian Institute of Management (NIM), and the Nigerian Institute of Estate Surveyors and Valuers (NIESV), the Nigerian Institute of Architects (NIA), and the Nigerian Society of Engineers (NSE).

The emergence of indigenous professional bodies in Nigeria was significantly as a result of political independence. The professional bodies and their members because of their training and origins have become replacements of the expatriate personnel. The celebration of the accounting profession in Nigeria thus presents a good opportunity to examine the origins of the profession and how it has evolved from an appendage of colonial administration to an independent indigenous practice. The development of accountancy profession in Nigeria had been predicated on the British accounting practices, indeed the promoters of the formation of the first accounting body in the country were mainly members of recognized accounting bodies in the United Kingdom such as the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants of Scotland (ICAS) and the Association of Chartered Certified Accountants (ACCA).

The first Nigerian to qualify as a Professional Accountant in 1949 was Mr Akintola Williams, who was subsequently admitted into the Institute of Chartered Accountants in England and Wales. By 1960, there were only 40 Nigerians who qualified as professional accountants in the UK.

The journey to professional accountancy in Nigeria dates to 1957, when members of the ACCA took the initiative to form a branch in Nigeria which was approved by the ACCA in London in 1960. However, the members of the ACCA in Nigeria later considered the need to form a local professional accounting body that will absorb all accountants in practice and those admitted into foreign accounting bodies. Significantly, this decision was based on the fact that the then status of their professional qualification ACCA was perceived as inferior to three UK chartered accountancy bodies (Wallace, 1992). Therefore, the ACCA members resolved to form a central accounting association in Nigeria largely to wither the stigma of inferiority of their original qualification (Uche, 2007).

The first step in the development of an indigenous accounting profession post-independence was the formation of the Association of Accountants in Nigeria

(AAN) on September 1, 1960. The AAN was registered as a body corporate under the then Companies Ordinance with the main objectives:

· To provide a central organization for accountants and

auditors in Nigeria and generally to do such things as

may from time to time, be necessary to maintain a

strict standards of professional ethics amongst its

members and to advance the interest of accountancy

in Nigeria;

· To promote generally, a higher sense of importance

of systematic and modern accounting and to

encourage greater efficiency therein.

Only historians, who have the advantage of hindsight, should try to characterize historical periods by giving them labels. Nonetheless, we shall attempt to compartmentalize the last five decades of accounting in Nigeria into three epochs primarily for convenience in order to chronicle the milestones achieved so far. These are the Early Era, Reform Era and Millennium Era.

5.0 The Early Era (1960 – 1979) The Early Era can also be described as The Road to Professionalism because it represents the birth and infancy of the accountancy in Nigeria. By 1960, the Nigerian universities began to offer accounting degree courses in the country, which was followed by the polytechnics. The development of tertiary institutions stimulated the growth of accounting courses in the country. Although according to Uche (2007), there is a weak nexus between instruction, practice and research, lack of balance of theory and practice in curriculum without dedicated effort for doctoral research. The lack of collaboration between the academia, the private sector and professional bodies has no doubt retarded the relevance of accounting graduates at their places of work. Unlike accounting, other professions like law and medicine have maintained close liaison with the universities, which makes their professional bodies to have direct input in the accreditation of relevant departments or colleges in the universities and polytechnics. For example, the Nigerian Medical and Dental Council monitors the quality of training of doctors and dentists in the country. The Council can even withdraw accreditation of departments or colleges that fail to live up to its expectations. Whereas the professional accounting bodies can only make such input through the accreditation process of the National Universities Commission (NUC) and the National Board for Technical Education (NBTE) based on the contribution of individual members of the accounting



profession rather than the professional bodies on their merit.

Apart from the provision of education to the Nigerians at the universities and other educational institutions, the significance of the academia in the development of accounting profession in Nigeria is obvious from the role of the Nigerian Accounting Association (NAA), which was formed as the Nigerian Accounting Teachers Association (NATA) in 1972 with the main objective of “contributing through research and education, to the improvement of accounting profession and accounting education in Nigeria”. The impact of the NAA in the development of the profession has remained contentious with huge potentials. Another issue worthy of mention is the ‘brain drain’ which continued to be of serious concern, because the accounting discipline (or departments) is among the worst hit in terms of staff mobility for greener pastures elsewhere in the Nigerian economy and beyond. Astonishingly, this problem caused for denial of accreditation of even pioneer Accounting Departments in the Nigerian universities by the National Universities Commission

It was in the same independence year 1960 that the first indigenous accounting body, the Association of Accountants in Nigeria (AAN) was established by a small group of people who had obtained professional accounting qualifications in the UK and practicing in the country. The need for legal regulations for exercising the accounting profession precipitated the proposal to create the Institute of Chartered Accountants of Nigeria (ICAN) in accordance with the British model of accountancy bodies. The idea became a reality on September 1, 1965 by the enactment of the Institute of Chartered Accountants of Nigeria Act. The membership of the Institute was initially open to Accountants who attained foreign qualification (e.g. ICAEW, ICAS and ACCA) and Accountants who were, prior to the enactment of the ICAN Act, practicing accountancy in the country but were not affiliated to any recognized international accountancy body (Section 8 and 19 of ICAN Act 1965).

Since the formation of the Association of Accountants in Nigeria (AAN), there had been inherent internal and external conflicts within the Association and indeed the larger accountants in practice, including accountants and auditors. This is as a result of the fact that not all accountants who qualified under recognized foreign accounting bodies wanted to be members of the ICAN but were forced to join in order to practice auditing in the country. These accountants never liked the unwholesome monopoly enjoyed by ICAN under its enabling Act of 1965. Therefore, right from the

enactment of the Act, there had been serious agitations for ‘the Government to intervene to break the monopoly of ICAN’. The internal wrangling was accentuated by the resolution of members of the Institute at the first Annual General Meeting in 1966 for the exclusion of those with qualification of the Institute of Cost and Works Accountants (now CIMA) and the Institute of Municipal Treasurers and Accountants (now CIPFA) in the UK from auditing in Nigeria. It was not until 1973 that this was reversed in accordance with the Institute of Chartered Accountants of Nigeria (Amendment) Decree No 30 of 1972, which explanatory notes read thus:

A person with qualification granted outside Nigeria and for the time being acceptable to the Institute could enrol as a chartered accountant even though that person may not by law be entitled to practice accountancy in the country granting the qualification.

This was believed to be the most pragmatic means of checkmating external threats to the monopoly of the ICAN. The first formal petition to the Government for exclusion of practice of auditing in Nigeria was received in May 1972 from the members of the newly formed Nigerian Society of International Accountants (SIA), a body representing Nigerians who qualified and admitted into Association of International Accountants (AIA) of the UK (Uche, 2007) and members of other foreign recognized accounting bodies that were refused admittance into the ICAN. This petition became necessary due to the obvious fact that the accounting training and skills of these accountants were far greater than those absorbed into the AAN and later the ICAN, who had no affiliation to any professional accountancy body anywhere in the world. Although the Government decided against the decision, the agitation remained alive and culminated into the SIA’s request to the Government to excise the accounting regulatory function contained in the ICAN Act of 1965 and vest it in the superintending Federal Ministry of Education, as a gateway to break the ICAN monopoly (Uche, 2007).

The growth of the corporate sector was a major stimulus to the development of accounting profession in Nigeria. By 1961, the Lagos Stock Exchange was established which was renamed the Nigerian Stock Exchange in 1977, and also the Personal Income Tax Management Act 1961 and the Insurance Act 1961 were enacted. The Company Decree 1968 was promulgated to facilitate the development of indigenous corporate sector. The decade



of the 1970s was dominated by the ‘oil boom’ which enabled expansion of infrastructure and public sector investment in large scale manufacturing concerns such as textiles, cement, beverages and agro-allied largely based on import substitution strategy. The decade has also witnessed various development policies under the Second and Third National Plans, chief amongst which was the government Indigenization Policy.

During the two decades after independence, the various developments in the corporate sector vis-à-vis government nationalistic policies triggered the high demand for accountants in the Nigerian economy. Despite the existence of the Institute of Chartered Accountants of Nigeria (ICAN) since 1965, there had been a wide gap between the requirements of accountants in Nigeria and the rate of their development. The apparent monopoly of ICAN as the only accounting body indicated a handful of professional accountants atop the burgeoning economy. As at 1980, there were only 2,165 professional accountants listed in the membership of the ICAN of which more than 1,985 qualified abroad. In other words, between 1965 and 1980, there were only 180 persons that qualified through ICAN examination (only 1 person passed in 1972 and 25 in 1979). During the next two decades the ICAN members increased to more than 10,000, and currently the number exceeds 27,000 Chartered Accountants, among which approximately 12,000 qualified abroad.

The failure of the ICAN to move with the need of the burgeoning economy due mainly to its monopolistic tendencies, and indeed poor horizon precipitated serious agitations for opening the accounting profession in the country to competition aimed at nurturing a robust and virile profession capable of meeting the yearnings and aspirations of the Nigerian economy. The poor performance of the ICAN in producing professional accountants in Nigeria was observed during a Federal House of Representative Debate on ANAN Bill on September 2, 1981 where members expressed concern on “the inability of ICAN to satisfy the national need for accountants, where an annual average of only 12 Accountants qualified and enrolled into ICAN in spite of the large number of Accountants qualifying with BSc in Accounting from various Nigerian Universities”.

This was accentuated by Uche (2007) in that the failure of the Institute [ICAN] to provide the enough accountants at all levels to aid the Nation’s economic development has become the most compelling reason for the proliferation of the accounting bodies in the country. Indeed, a successful initiative to break the monstrous

monopoly of the ICAN was concretized at a meeting of four concerned members of the accounting profession on November 6, 1978, where they resolved that:

A virile home-grown accountancy body, which would provide a path to a recognized professional qualification which is of the highest international standard, and which would be open to all men and women solely on the basis of education and ability, should be formally launched on January 1, 1979.

The next significant chapter in the evolution of accounting profession in Nigeria was the establishment of the Association of National Accountants of Nigeria (ANAN) by certain concerned professional accountants on January 1, 1979.

6.0 Reform Era (1980 – 1999)The Reform Era can be described as Era of Professionalism and Competition since it covers the period of breaking the monopoly of ICAN and indeed the origin of the Association of National Accountants of Nigeria (ANAN) ushered by varied agitations and petitions to government against the dismal performance of ICAN and ominous development in the accounting profession in Nigeria.

It is on record that right from the enactment of the ICAN Act of 1965, there had been serious agitations for ‘the Government to intervene to break the monopoly of ICAN’. The concern was first raised in May 1972 by the members of the newly formed The Nigerian Society of International Accountants (SIA), a body representing Nigerians who qualified and admitted into Association of International Accountants of the UK, through a formal petition to the Government for exclusion of practice of auditing (Uche, 2007) and then from members of other foreign recognized accounting bodies that were refused admittance into the ICAN.

With the advent of civilian democracy and the genuine agitation for the democratization of the accounting profession in Nigeria, the monopolistic tendencies of the Institute of Chartered Accountants of Nigeria (ICAN) quickly ended by the final stamp of the certain concerned professional accountants that culminated into the formation of the Association of National Accountants of Nigeria (ANAN). The debut of the ANAN as the second professional accountancy body in Nigeria was publicized in an advertorial in the Daily Times of January 1, 1979.



Despite the unwarranted oppositions from the ICAN, the Nigerian Senate was at the final reading and adoption of the ANAN Bill in concurrence with the Federal House of Representatives when the military intervened on December 31, 1983. The agony of the ICAN continued to rage with unhealthy campaigns of calumny against ANAN in any slightest opportunity, indeed worst than what transpired between the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Chartered Certified Accountants (ACCA) in the UK during the foundations years of the ACCA. It was not until one and half decades of the formation of ANAN that the Federal Military Government of President Ibrahim Badamasi Babangida granted statutory recognition by the enactment of the Association of National Accountants of Nigeria Decree 76 of 1993. The Decree later became Act 76 of 1993 with effect from May 29, 1999, at the inception of democratic civilian government. In a nutshell the Act empowers members of ANAN to exercise their professional functions in all sectors of the economy including public practice in the field of accounting, taxation, auditing and financial management matters, etc.

ANAN is committed to understanding and promoting the role of the accounting profession in supporting the Nigerian economy and organizations. Accordingly, the Association believes that:

The economic future of Nigeria depends largely on the commercial and industrial efficiency of its productive capacity. Therefore, the education and training of professional accountants should reflect the economic, structural and ideological environment of Nigeria.

The decade of the 1980s was characterized by serious fiscal and macroeconomic imbalances which precipitated the introduction of the Economic Stabilization (Temporary Provisions) Act 1982 popularly known as Austerity Measures essentially designed to address the prevailing external deficits. In 1986, the Structural Adjustment Programme (SAP) was introduced as a medium-term strategic policy programmes aimed at national economic recovery from persistent recession towards sustainable growth. The SAP enunciated economic policy framework which provided for a policy shift from public sector dominance of the economy to private sector driven policies, including Privatization and Commercialization Decree. The privatization policy affected a wide range of

enterprises or assets. The success of the privatization policy relies mainly on the use of wide-ranging professional consultants who were actively involved in the financial restructuring and valuation, in the flotation and provision of economic analysis or prospectuses of the affected enterprises (Abdullahi, 1997). Professional accountants like many other professionals had played a key role in the accomplishment of the privatization and commercialization policy.

The decade of the 1990s was dominated with economic and political crisis in Nigeria, which marshalled government economic liberalization policies and the transition to democratic governance from the military regimes. There was relative stability in exchange rate market, fairly predictable macroeconomic environment and good prospect for growth. The 1990s witnessed an unprecedented banking crisis, which caused for the liquidation of many commercial and merchant banks operating in the country. This brought about an unwanted attention to the accounting profession, because of the apparent culpability of the professional accountants as auditors and financial managers, stockbrokers, investment analysts, corporate directors and executives, as well as the regulatory authorities in the financial markets such as the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation, the Securities and Exchange Commission, the Nigerian Stock Exchange, and the Federal Ministry of Finance.

ANAN, in an attempt to maintain internationally acceptable education and training standards resolved to follow the system of education and training similar to those of legal and medical professions. Consequently, holders of BSc and HND in Accounting from approved Universities and Polytechnics are required to attend the Nigerian College of Accountancy for one academic year and pass the prescribed professional examinations. The emphasis at Nigerian College of Accountancy is on practice and integrity, which in the broadest sense encapsulate knowledge, skill and competence, as well as judgment in the application of these factors to problems in real life situation. A graduate of the NCA is required to undergo a two-year period of supervised practical experience as Accountant-in-Training (AIT) in any sector of the economy. Thereafter, he or she satisfies the three year professional training for membership of the ANAN, and if admitted as a member, he or she will be entitled to describe him or herself as a Certified National Accountant (abbreviated with the designation “CNA”). The Nigerian College of Accountancy is the first of its kind to be established by a body of accountants in Africa. The quality and enthusiasm of graduates of the NCA is



very reassuring that the future leaders of this great profession will be more articulate, noble, accountable and competent with considerable knowledge and integrity. A member of ANAN, Certified National Accountant, who wants to be in public practice is further required to possess a practicing certificate as contained under Rule 1995 of ANAN published in the Federal Republic of Nigeria Official Gazette No 22, Vol 82, dated 15th September 1995.

Since its inception, ANAN has been proactively addressing the needs of high standards in the accounting profession. These accomplishments include the development of advanced academic institution of accountancy - the Nigerian College of Accountancy (NCA) in Jos, introduction of Mandatory Continuing Professional Development (MCPD) programme, collaboration with tertiary institutions offering accounting programmes at degree and higher national diploma levels, and government accounting and auditing departments for custom made training programmes, and national conferences to foster development of skills and the profession. These programmes draw resource professionals with an array of expertise in public accounting, private industry, and academia, as well as other disciplines.

ANAN which was established in 1979 had a total of 8,500 Certified Accountants in its first two decades of existence and currently the number exceeds 16,000. Between 1984 and 2009, more than 11,600 professional accountants qualified through the Nigerian College of Accountancy and were admitted into full ANAN membership after the completion of the prescribed accountant-in-training programme.

The contribution of ANAN in nation building has been huge. In 2009, for example, ANAN submitted its contributions to the government on the ongoing visioning process – Vision 20:2020, and had participated in various fora on nation building organized by the government and organized private sector, including NESG, NEPAD, and World Bank Group. It also remains a major contributor to the development of the accounting profession through the training and skills development under the Nigerian College of Accountancy (NCA) and Mandatory Continuing Professional Development (MCPD) Programme, setting accounting standards under the Nigerian Accounting Standards Board (NASB), research and other publications such as The Certified National Accountant, The Journal of Accountancy, ANAN Think-Tank and the like. The Certified National Accountant which is a quarterly publication of ANAN serves as a means of

communicating to its members the problems, proposed solutions, challenges and responsibilities faced by the profession. Two additional publications of general interest to accountants are The Journal of Accountancy published under the auspices of the Nigerian College of Accountancy (NCA) was introduced in 2007, and ANAN Quarterly Newsletter in 2010. It is on record that the Association has published four books in 2009 concerning professional practice and current development issues. These books are Agenda 20:2020: Redesigning Nigeria’s Future, Practical Guide to Business Entrepreneurship, Handbook on Fraud Management and Forensic Accounting, and Accounting Profession in Nigeria: The ANAN Story.

From its inception ANAN has been seriously advocating for the creation of a regulatory authority for accountancy bodies in Nigeria, Council of Accountants in Nigeria (CAIN) to regulate the recognized accounting bodies in the country as in the case of Council of Registered Engineers in Nigeria (COREN) is to the engineering profession. More so, ANAN has remained an advocate for rotation of external auditors of companies in Nigeria in order to enhance accountability and indeed, to redress complaisance of auditors for management activities.

The National Insurance Commission (NAICOM) had already issued guidelines to insurance companies pegging the tenure of external auditors to five years. Similarly, the Central Bank of Nigeria Code of Corporate Governance has pegged the tenure of the auditors of deposit money banks for a maximum period of 10 years, and the banks were directed to submit their status of compliance by December 31, 2010. The maximum tenure requirement for external auditors is expected to be embraced by the Corporate Affairs Commission for all registered companies in Nigeria.

ANAN has also proposed for the establishment of a joint body of financial service providers aimed at tackling major challenges facing the accounting profession in the country. The ANAN President, Mrs Gafar, in a visit to the Chartered Institute of Taxation of Nigeria, explained that:

There is need to restore public confidence in the professionals belonging to the accounting sector ….and the challenge demands a united effort of professional bodies at resolving both internal and external problems facing them.

This no doubt emphasizes the strong need for



collaboration among relevant professional bodies serving the accounting sector towards resolutions of continuing problems facing the sector.

The debut of the ANAN has no doubt reversed the hegemony of ICAN in the accounting profession in Nigeria, and in fact gingered the ICAN to adopt changes, especially in its training of accountants. The ICAN has continuously modified its training programme to cover diverse aspects of accountancy and also improved the minimum entry requirements for examination to BSc/HND in Accounting. Furthermore, the ICAN adapted the ANAN Mandatory Continuing Professional Development (MCPD) programme in the name of Mandatory Continuing Professional Education (MCPE) for the training and retraining of its members.

Another significant development during the Reform Era or Era of Professionalism and Competition has been the establishment of the Chartered Institute of Taxation of Nigeria (CITN). The CITN was recognized as professional body in 1992 by the enactment of the Chartered Institute of Taxation of Nigeria Decree 1992 with the main objective to regulate the practice of taxation in Nigeria. Its forerunner was the Association of Tax Administrators and Practitioners, which metamorphosed into Nigerian Institute of Taxation and formally launched on February 21, 1982, which was later chartered by the Decree 76 of 1992. The enabling law empowers CITN as the only body which has the authority to regulate Tax Practice and Administration in Nigeria, and only its members can practice taxation. Membership of the CITN comprises professionals such as accountants, lawyers and other professionals who have acquired the relevant tax experience. According to the Act no member of the Institute shall practice as Chartered Tax Practitioner unless he/she had applied for and been granted licence to practice by Council and had complied with rule 11. In addition, the member is required to acquire Tax experience continuously for a period of 36 months.

Although the CITN was largely promoted by members of the ICAN, since 1999 the Institute has been threatening to enforce provisions of its Act, which provides that only its members can be engaged in tax practice in Nigeria. This opened conflicts with the ICAN whose members dominated the practice of taxation in the country.

The Era of Professionalism and Competition witnessed the establishment of Association of Accountancy Bodies in West Africa (ABWA) in 1982 by Accountancy Bodies

and Professional accountants operating in the West Africa sub-region. It was inaugurated in Nigeria on August 10, 1982, and ABWA was registered in Nigeria as a body corporate in 1994. The main aim of ABWA is to strengthen the Accountancy Profession in West Africa by enhancing the technical competence and ethical standards of members for effective service delivery by adopting best practices in the public interest, as well as contributing to the development and sustainability of the regional economies. The Association could serve as a venue for the protection of the sub-regional interest in the development of accounting standards and techniques. But this is only possible if ABWA stand tall, neutral and as all encompassing association of accountancy bodies in the entire region with the necessary depth in harmonization of standards and ethics, as well as embracing International Financial Reporting Standards. The growth of ABWA has been seriously constrained by lack of vision, internal regional politics, lack of cooperation and rivalry among some members of the Association in the region, as well as lack of formalized accountancy bodies in the Francophone countries (Uche 2007).

7.0 Millennium Era (2000 – Date)The decade commencing from the year 2000 can be referred to as Millennium Era to reflect the true label of the period or Era of Consolidation and Globalization. For much of this decade accounting profession faces wide-ranging challenges of globalization, transparency and accountability, as well as technology. The failure of professional ethics worldwide percolates into the economic systems in both developed and developing countries with serious consequences, as manifested in the corporate failures in the developed nations and banking crises in developing countries like Nigeria. The Nigerian banking reform of 2004 – 2007 exposed the weaknesses of the accountancy profession in the country. The role of accountants whether as auditors, financial managers, corporate executives, or analysts was put to test, and the public confidence in the profession become somewhat eroded.

The global business climate of the 21st Century is “more complex, demanding and rapidly changing than ever before”. As the business climate changes, the rules of competitiveness are changing, and more significantly, the role of professional accountants changes too. In Nigeria, the present decade has witnessed great development in accounting profession than in the preceding four decades due largely to competition between the two recognized professional accounting bodies that regulate their individual memberships. The perceived competition is a driver to the development of



the accounting profession and a measure of quality assurances.

Today, the two recognized accounting bodies in Nigeria (ANAN and ICAN) between them boast of more than 43,000 qualified professional members. From the seeds sown 31 years ago, the Association of National Accountants of Nigeria (ANAN) has grown to more than 16,000 professional members with 38 chapters across the federation, whereas in its 45 years of existence, the Institute of Chartered Accountants of Nigeria (ICAN) has more than 27,000 members (of which approximately 12,000 qualified abroad) with 45 district societies.

The Millennium Era emphasizes the opportunities the profession provides and confirms its role and commitment to attracting a diverse pool of talent to a profession that is vital to the economy. The present decade also witnessed various institutional developments relevant to the accountancy profession. These include the creation of transparency agencies, the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC), as well as the reinforcement of the Code of Conduct Bureau activities. More so, the Nigerian Accounting Standards Board (NASB) Act of 2003 was passed by the National Assembly to support the financial reporting in the country. The Board is expected to transform into a Financial Reporting Council in line with the global changes.

8.0 Ethics In Accounting ProfessionThe word ‘Ethics’ originates from the Ancient Greek word ethikos, which means customs and habits. So ethics relates to “the study of values and customs of a person or group and covers the analysis and employment of concepts such as right and wrong, good and evil and do’s and don’ts”. Thus the word “ethics” connotes having to make the decision of doing what is right versus doing what is wrong, though what constitutes “right” to one person may be “wrong” to another. What some may look at as being unethical does not necessarily make it illegal. The opposite of behaving ethically, is behaving corruptly. It is a well known fact that corrupt behaviour or corruption impedes economic development and prosperity. According to the President of Institute for Global Ethic (Rushworth Kidder) ethics in its broader sense, deals with human conduct in relation to what is morally good and bad, right and wrong.

What does ethics have to do with accounting? The financial accounting scandals such as those of Xerox, WorldCom, Enron, and in Nigeria that of Lever Brothers and Cadbury which have generated much unwanted and

unfavourable publicity on professional accountants and the accountancy profession called for serious attention to the need for accounting ethics. The scandals have made some big implications on the profession as a whole. In the US, for example, the consequence of the decline in ethical behaviour of some key auditors and executives of public corporation’s financial reporting led to the enactment of the Sarbanes-Oxley Act (SOA) of 2002. The Act created the Public Company Accounting Oversight Board (PCAOB) in April 2003, which is empowered to provide rules in the following areas: ethics, independence, and quality control for any registered accounting firms, replacing the role of the AICPA for auditors of SEC registrants.

Ethical issues have been brought to the fore in the great profession as a result of the demise of large corporations and the ripple effect of these catastrophes on the economy. Accounting ethics is essentially the study of moral values and judgments as they apply to accountancy.

Professional accountants developed code of conduct as found in other major professions (i.e. medicine and law) which all members of their professional bodies need to follow. The code of conduct or ethics entails a professional accountant to adhere to high degree of self discipline. Whenever a professional accountant becomes a member of accounting body he or she is required to follow the code of conduct and ethics. The essence of accounting ethics is in the maintenance of professional objectivity and integrity. The role of ethics in accounting is a guideline for the accountants to follow certain rules for conducting the job of accounting in a fair way. This builds public confidence in the professional services provided by professional accountants.

9.0 Financial Reporting In NigeriaAlthough accounting is often described as the language of business, financial reporting is the medium through which the language is communicated to users. Financial reporting in Nigeria is primarily based on the Generally Accepted Accounting Principles (GAAP), which is referred to as the standard framework of guidelines for financial accounting used in any given jurisdiction that are generally known as Accounting Standards.

The Nigerian Accounting Standards Board (NASB) was thestablished on 9 September 1982 with the responsibility

of promoting the use of the highest standards of financial reporting in Nigeria through the development and issuance of Statements of Accounting Standards for users and preparers of financial statements, investors,



commercial enterprises and regulatory agencies of government. The NASB is conceived as National Accounting Standard Setting bodies like the Financial Accounting Standards Board in the US, Accounting Standards Board in the UK, and Australian Accounting Research Foundation in Australia.

The operations of the NASB received legal backing from Section 335(1) of the Companies and Allied Matters Act 1990 which provides that the financial statements prepared under the Act shall comply:

With the accounting standards laid down in the Statements of Accounting Standards issued from time to time by the Nigerian Accounting Standards Board to be constituted by the Minister.

The membership of NASB comprises organisations drawn from the accounting professional bodies, banking, manufacturing, commercial, educational and regulatory sectors of the economy. The functions and powers of the NASB are set out in its Act of 2003. Essentially, the NASB makes accounting standards for the private, public and not-for-profit sectors. It is responsible for developing and issuing Statements of Accounting Standards (SASs) and the “care and maintenance” of the body of Standards. The two recognized accounting bodies in Nigeria, Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN) have a professional obligation to take all reasonable steps within their power to ensure that entities with which they are involved comply with NASBs in preparing their general-purpose financial reports.

The prime objective of the Board is to work in the best interest of the public and administer regulations that would be generally accepted by the majority with the ability to become compliant. The NASB also takes an active role in lobbying for legislation that serves in benefit of the Board.

Although the NASB exists for 28 years, it has remained a body in Nigeria without tooth. The NASB has evolved over the years and now is transforming to become a Financial Reporting Council. Already, a bill is under deliberations at the National Assembly towards the conversion of the NASB to Nigerian Financial Reporting Council. With a strong legal backing, the proposed Council is expected to be proactive or enforce breaches of accounting reporting in Nigeria.

The recent commitment to adopt International Financial Reporting Standards (IFRS), developed and adopted by the International Accounting Standards Board (IASB), in Nigeria will contribute significantly to the proper functioning of the financial market and the capital market, which will have positive impact in the promotion of economic growth and stability. The international convergence is desirable and, of course, investors and users of financial statements would benefit greatly from harmony in accounting standards across the globe. IFRS enables business entity to present its financial statements on a single set of high quality, global accounting standards with greater elements of transparent and comparable financial statements that are based on modern accounting principles and concepts that are being applied globally. The IFRS could act as a catalyst for development of the quality and transparency of financial reporting in the country.

Is Nigeria Prepared for International Financial Reporting Standards? The adopting IFRS by all the countries in the world will bring about standardization as well as comparability of financial reporting. No doubt the adoption of IFRS in Nigeria will “require significant re-training of local accountants and a change in the general financial reporting culture of businesses in the country”. Already, Nigeria is expected to commence the use of IFRS by January 2012. The implementation roadmap is in three phases: the 2012 reporting date for listed and significant public entities, 2013 for other public interest entities and 2014 for small and medium enterprises (SMEs). In Africa, countries like Ghana, Kenya, Sierra Leone, South Africa and Zambia have already adopted and are practising a harmonized IFRS.

10.0 Challenges Of The Accountancy Profession In

NigeriaThe great profession of accountancy in Nigeria like elsewhere is facing major challenges, which among others include:

Corruption: Despite the fact that the provision of accounting information and auditing are legally regulated, still large quoted or listed companies do misinform the markets, investors and analysts so badly without alarm signals from the auditors. This clearly points to lack of transparency and accountability, and of course, corruption in corporate governance and the collaboration of Accountants in misinformation about the financial position of affected companies. This is exemplified by the banking failures of the early 1990s in Nigeria, where unqualified audited financial reports were issued on failing banks without recourse to the disastrous



consequences that might occur. This trend was woefully repeated in the decade of the 2000s, particularly as an aftermath of the banking sector consolidation of 2004 – 2007, which exposed the deviant behaviour of the financial market regulators and indeed audit firms in the country. Hence, auditing firms were accused of cover-ups or connivance, which is a direct indictment on ethical compliances. They exacerbated the market failures through misrepresentation of market information and manipulations of share pricing in the stock exchange by relevant operators, stockbrokers, accountants, corporate directors and executives, as well as regulators themselves. The predominance of handful few audited firms in the auditing of the Nigerian banks and indeed major listed companies calls for serious consideration of the individual firm culpability in the unethical practices, and proper sanctions be exerted on erring firms and owners, including revocation of practicing licences of the owners and managers of penalized firms.

Fighting corruption remains a global challenge and never ending efforts for professional accountants. According to Walker (2001), to be successful in fighting corruption, there must be incentives to do the right thing, transparency to help assure that the right thing is done, and accountability if the right thing is not done. Therefore, Accountants as members of the great profession have a key role in society’s efforts to reduce corruption. First, as professionals with a duty to protect the public interest, they are bound by rigorous codes of professional and personal ethics calling for the highest levels of integrity and objectivity. Second, their key strategic positions within an enterprise or organisation - whether in an internal position or as an external auditor or adviser - mean that they very often have access to highly privileged and confidential information. Professional accountants must be at the forefront in the fight against domestic and international corruption.

Besides making a personal commitment to integrity, transparency and expertise, professional accountants must also encourage sound and transparent government operations and support government efforts to prevent corruption and money laundering.

Professional Rivalry: The rivalry between the two recognized accounting bodies (ICAN and ANAN) in Nigeria has continued unabated and has remained a serious obstacle to the development of the profession in the country. The lack of the needed cooperation between the two bodies in spite of various overtures by the ANAN to foster unity of purpose with the ICAN aimed at accelerated growth and development has continued to retard the accounting professionalism in Nigeria. The market should be open to healthy competition in the provision of quality and transparent professional accounting services capable of protecting public interests and indeed influencing informed

investment decisions.

Skills Development and training: There is the need for the professional accounting bodies in Nigeria to encourage and develop the competencies of their members in areas relevant to the economic development, including the micro, small and medium enterprises (MSME) sector of the economy. Being qualified as professional accountant is not enough because of the challenge for continuous learning to remain up to date. Without that the value of professionals diminishes significantly. Learning is achieved through continuing professional development and other training workshops and seminars. So, professional bodies have the challenge for capacity building through organised professional programmes.

Technology: There is the need to embrace new technology and innovation in discharging the role of the accountancy profession in Nigeria. The Information and communication Technology (ICT) is inevitable means of modernizing the delivery of accounting services. The adoption of the ICT in accountancy requires training and retraining of the members of the profession, because many of the new opportunities available to accountants will require increased sophistication in information technology.

Socio-economic environment: The professional accounting bodies face the need to positively impact on the Nigerian environment by promoting and developing expertise in areas very relevant to the domestic socio-economic environment, as well as keep pace to the global requirements in order to remain relevant and achieve global standards.

International Financial Reporting Standards (IFRS): The 2012 dateline for the adoption of the IFRS in Nigeria is shrouded with problems that the stakeholders lack a common understanding and have failed to adopt a collaborative approach that is required for the successful national transition to the IFRS. More so, the relevance of these standards to the Micro, Small and Medium Enterprises (MSME) is still debatable, and suggests the fact that the adoption of the IFRS should initially concentrate on large enterprises, especially the banks and other quoted companies, whereas the other smaller enterprises could follow gradually. In any case, no country can afford to operate in isolation, and thus the adoption of the IFRS is becoming a necessity given the global nature of doing business.

11.0 ConclusionA profession is analogous to an occupation that requires extensive training and the study and mastery of specialized knowledge, and usually has a professional association, ethical code and process of certification or licensing. The



function and responsibility of accountant are beyond preparing financial statements and recording business transactions. Other important responsibilities of accountant include computing costs, measuring the efficiency of new technology, and aiding in the process of business mergers and acquisitions. Accordingly, there are many options for accountants to pursue as career like general accounting, auditing, management policy, information systems, financial consulting and taxation.

The ICAN established in 1965 as the first indigenous professional accounting body in Nigeria had failed to train and develop sufficient accounting manpower relevant for the level of economic development in the country, a trend which precipitated agitations for the break of its monopoly and proliferation of accountancy bodies in Nigeria. The ANAN was established in 1979 and chartered in 1993 as one of the two recognized accountancy bodies in Nigeria. Other efforts at proliferation of the accountancy bodies are the Institute of Certified Public Accountants in Nigeria (ICPAN), The Chartered Institute of Cost and Management Accountants (CICMA), the Chartered Institute of Management Accountants (CIMA), etc.

The emergence of ANAN has no doubt reenergized the growth and development of the accountancy profession in Nigeria. Today, between the two recognized accounting bodies in Nigeria, ANAN and ICAN, there are more than 43,000 professional members. This explosive growth was as a result of the break of the monopoly of the ICAN in the last three decades. As Certified National Accountants (CNA), we are so proud that the profession has become more open to all qualified men and women solely on the basis of education and competence. Today, ANAN and ICAN members as professional accountants are in practice, business, government, industry and the academia.

The Accountancy Profession strives to protect its core values of integrity, objectivity, professional competence, confidentiality, professional behaviour and technical standards which must and should guide professional accountants in the delivery of services whether in business or in public practice. Indeed, professional accountants in business are in the front line in ensuring the fiscal and ethical soundness and accountability of commercial enterprises.

We should conclude by paraphrasing the statement of Vargas & Hanlon (2007) in that as we celebrate and reflect on our profession, we should remember that, in addition to our professional responsibilities to our clients and to other stakeholders, we have a far greater role as leaders in the development process. It is a role that we are tasked with by our profession, but one that works much better when it is earned by the value of our service to the nation. Therefore, to truly play a leadership role in our field we must be proactive participants in the development process.

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Nigeria”. Dirasat Ifriqiyya, No. 16 (January).

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Bangladesh, The Financial Express edition of Sun”, Feb 19.Annisette , M. (2006), “People and Periods Untouched by Accounting

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of Accounting Profession in Nigeria”, 1st International

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African Studies, University of Ghana, November 15.

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in Nigeria”. The Certified National Accountant, Vol. 11 No. 1

(Jan – March).

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Professional, Administrative and Religious Perspectives”,

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servant leadership perspective”, Journal of Research

Administration, Spring.

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18.

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*The author is from the Department of Accounting, Nasarawa State University, Keffi, Nasarawa State.


MATTER OF GOVERNANCE

This paper is situated within the ambit of the 2010 Annual Conference of Certified Accountants. The conference comes at a significant milestone in Nigeria’s development, in the celebration of its 50th year of Independence. The theme of the conference is not only fitting but characteristic as an appropriate theme. Nigeria at 50: A search for an Alternative Paradigm. In its 31 years of existence, the Association of National Accountants of Nigeria (ANAN) has been centrally involved through professional practice, research and training in the struggle for national development. The choice of the theme indicates quite clearly the Association’s perception, shared by many, that Nigeria’s approach to development has not worked optimally, and that a new thinking and new action are needed to fashion and operate a better approach. As I see it, the scope of such thinking and action is best captured in the concept of Governance. I have therefore chosen to discuss the challenges facing us as “A Matter of Governance.”

This paper begins with a brief review of Nigeria’s development experience, in the light of which I will examine the key issues in governance and conclude by addressing the issue of the nation’s development vision and the role of Accountants in realizing it.

Nigerian Development: The Journey So Far Nigeria became independent in 1960 at the crest of a

global wave of decolonization following the end of the Second World War. Nigeria was born a giant, checking in at a population of million or percent of the world population. Economically, by the standard of the newly independent countries, it started out on s strong base. Its per capital income was higher than those of India, Pakistan and the Congo. It could feed itself and was a leading exporter of palm produce, cocoa, groundnuts, cotton and tin ore. But its infrastructure was poorly developed except along the export corridors. Its industry, actively discouraged under colonialism in favour of imports from the metropolitan country, was vestigial. There were high hopes that independence would bring the country’s interest to the fore and unleash the great development potential of the country.

On a note of optimism, the governments of the First Republic planned to achieve a take-off into sustained growth through Nigerianisation, promotion of agriculture and heavy investment in infrastructure. The various regional governments also sought to kick-start industrialization by sponsoring state enterprises in

Nigeria At 50 And After: A Matter Of Governance

Ukwu I. Ukwu

strategic sub-sectors. However, much of the investment programme was unduly reliant on foreign investment, and when this failed to materialize many projects had to be abandoned. Still, progress was evidentially being made. But this progress was soon to be rudely interrupted by political crisis, leading to a military coup in 1966 and civil war from 1967 to 1970.

With the end of the civil war the military regime launched a new national development plan (1970-1974) focused on Reconciliation, Rehabilitation and Reconstruction. The plan reflected a new national mood of self-confidence and a determination of the government of ‘seize the commanding heights of the economy’ through economic activism. The explosion of international oil prices transformed the macroeconomic situation, dramatically expanding government revenues and enabling government to become the key investor in the economy. The public enterprise sector expanded to include enterprises spanning various sub-sectors and accounting for some of government expenditure. Unfortunately, through undue government interference, mismanagement and plain looting, most of the enterprises served to drain rather than feed the national economy. The continuing upsurge of oil prices in the period of the next plan (1975-1980) fed greater extravagance, with a proliferation of public enterprises at federal and state levels.

One of the major distortions wrought on the economy by our handling of the oil boom was the neglect of agriculture. As most of the youth drifted to the cities, only the middle aged and the old were left to do the farming without any significant improvement in technology. Attempts to improve output through World Bank sponsored large scale farming and irrigation projects proved very costly failures. By 1980 Nigeria had become a net importer of food. On the positive note, the introduction of Universal Primary Education dramatically raised primary school enrolment and reduced regional disparities in education. A primary Health Care programme was also launched but was not as adequately funded.

The Indigenisation Decrees of 1972 and 1977 obliged categories of foreign owned and controlled enterprises to sell shares to Nigerians, thereby creating a new class of Nigerian share holders. Although the policy was to be reversed some ten years later (under SAP), it irreversibly created a critical mass of Nigerian corporate entrepreneurs and investors able to take advantage of


new opportunities in an expanding economy. Another significant development in the period was the

creation of a new national capital, Abuja. It had been hoped that the development would stimulate the use of our human and physical resources in building, equipping and furnishing it. But, with the decision to fast-track the programme, the strategy shifted to heavy reliance on imports of materials, services, personnel and technology. The synergic effect on the economy was minimal. Thus a great unrepeatable opportunity for accelerated development and resources was lost. In spite of all the mismanagement, the period 1970 to 1980 saw remarkable growth and expansion in the Nigerian economy. By 1977 Nigeria had joined the ranks of middle-income countries.

In expectation of ever-soaring oil prices the Fourth National Development Plan (1981-1985) was even more euphoric than the Third, but the balloon was soon punctured by a sudden crash in oil prices in 1982. A period of austerity followed, leading to another military coup, more austerity and yet another coup. The new regime under Ibrahim Babangida sought a solution in the adoption of a new paradigm developed and promoted by the World Bank: The Structural Adjustment Programme. (SAP).

The SAP was introduced in order to improve fiscal and monetary management, minimize and rationalize administrative controls, and promote the development of a free market oriented economy that would encourage private enterprise and the more effective use of resources. The key instruments included demand management, liberalization, exchange rate reform, and the commercialization or privatization of public enterprises. In the event, the measures were inconsistently and ineffectively implemented and the results were mixed. Thus, while there was noticeable improvement the agricultural output, export of manufactures was held down by production costs constraints including high cost of imported raw materials, machinery and services – could not take advantage of the more favourable exchange rates. Reduction in government expenditure impinged on social welfare, giving SAP an inhuman face. By the end of the decade it was clear that SAP had failed, something new had to be tried.

What followed, however, was drift and decay. An attempt was made to develop a Perspective Plan but the political will was lacking and the attempt could not be seen through. In spite of this, government saw it fit to launch a series of Three-Year “Rolling Plans, destination unknown. In the event, the Rolling Plan became an empty ritual. For the ten years 1990-1999 there was no guiding framework for the budgets, while the proliferation of the funds, and extra-budgetary projects, made the financial management process arbitrary, opaque and chaotic.

On coming into office the democratic Obasanjo

Administration saw its first task as that of stabilizing the polity, consolidating the democratic governance structure and stimulating progress in the social and economic spheres. In the first three years of the Administration, emphasis was on fighting pervasive corruption and restoring due process and accountability. At both federal and state levels, governments undertook comprehensive reviews of the system and its operation. With the abysmal and deepening level of poverty in the nation, poverty reduction was identified as the main focus of development policy By 2003 the nation was ready with a new development paradigm and thrust articulated in the National Economic Empowerment and Development Strategy (NEEDS), with the states and local governments poised to complement it with SEEDS and LEEDS.

An economic reform programme was launched. The main goal of the reform programme is to restructure, right-size, re-professionalise and strengthen government and public institutions. It also aims to eliminate waste and inefficiency, fight corruption, promote due process, and ensure greater transparency and accountability. The focus of the Reform Programme was thus on how to do things. What was not so clear, however, was what things to do. Neither the declaration of the Seven-Point Agenda nor the launching of Vision 20:2020 has significantly improved matters. The current attempts at producing a medium term strategy and a medium term expenditure framework are still without an articulated and nationally determined long-term perspective framework.

The State Of The Economy Now let us look at the state of the economy. It is evident

that there has been a significant change in the quality and performance of governance. Most macroeconomic indicators are looking up. The real GDP has recorded impressive annual growth rates. Inflation has moderated and foreign debt, after hard-earned debt relief had been drastically reduced. However, the financial sector is in serious trouble. Unemployment remains high. The proportion of the population in poverty remains unacceptably high and we are far from reaching the Millennium Development Goals

Sectorally, performance has varied. Public infrastructure has deteriorated and decayed through years of neglect, most disastrously in power and transportation. Agricultural output has benefited from massive sensitization, extension and farmer support programmes over the past ten years, with significant increases in acreage and yield. But the young, modern, technologically efficient small-scale farmer is not yet created. Although its share of the GDP has risen in recent years, the manufacturing sector remains the weakest link in the Nigerian economy, small, disarticulated and externally dependent. Under liberalization, new investment is beginning to come in. Government is


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focusing on the promotion of small and medium scale enterprises, in partnership with the banking sector.

Thanks to the creation of an enabling environment and the in-rush of private sector enterprises, the services sector is today the most vibrant in the Nigerian economy. The leading sub sectors are banking and financial services, information and communications technology, the film industry and tourism. The film industry is the most remarkable in that it is almost entirely home-grown and has received little or no direct support from government.

Traditionally operating as an enclave economy, the oil and gas sector is yet to make its full contribution to the national economy. However, it is expected that the operation of the Cabotage Law will induce the domestication of many of the supply and service operations on shore and offshore in the oil producing areas. Government has also recently announced a determination to promote the development of the hitherto neglected solid minerals sector.

The problem of inequality and uneven development has many dimensions and continues to distort and constrain national progress. Inter-personal income inequality is great and growing, with the top 20% of the population controlling 55.7% of the national income and the bottom 20 percent only 4.4%. Discrimination against women reduces their income and hence their contribution to national wealth and productivity. The rural areas are much poorer and have much less access to public goods and facilities than the urban areas. There are also wide differences across states and geopolitical zones on all dimensions of human development, differences which continue to foster inter-regional discord and inhibit national integration.

All in all, although progress has been recorded in some areas, Nigeria is still far from realizing its full development potential. Our Vision 20:2020 will remain a pipe dream unless we can fundamentally review our entire strategy of development.

The Governance Challenge How do we move forward? The travails of our

economy are attributable, most fundamentally, to failures in governance, and it is mainly by getter governance that we can overcome them. Governance has been defined as “the traditions and institutions by which authority in a country is exercised for the common good.” These may be considered in three major dimensions:

1. the process by which those in authority are selected, monitored and replaced, as well as the level and quality of participation by the people in the decisions and actions affecting their welfare and progress;

2. the capacity of the government to effectively manage its resources and implement sound policies; and

3. the respect of citizens and the state for the institutions that govern economic and social interactions among them.

Governance deals with the national development system as a whole: how it is constituted and how it works, with the stakeholders, the actors, and the processes involved. It would therefore be instructive to examine our record on the critical performance indicators.

On the first dimension, the conventional indicators are: Voice and Accountability, Political Stability, and Security. On Voice, Nigeria was under military rule for 30 out of 50 years of nationhood. The last time we returned to civil rule, ten years ago, we chose as our President a former military ruler with an unreconstructed military mindset, instincts and behavior. Political debate has been cacophonous but vacuous: not about what is needed, what should be done and how it should be done; but about what segment gets what post or amenity.

The system still harbours undemocratic political parties operating under a flawed electoral system. The people are insufficiently sensitised to their rights, and inhibited by sectional affiliations from exercising due diligence. There is inadequate interaction between government and people, hence low level of responsiveness

On security, in addition to the endemic religious and ethnic conflict, as well as the festering crisis of the Niger Delta, we now have a rising wave of armed robbery and kidnapping in several parts of the country.

Regarding the second dimension, Government Effectiveness, there has been a crisis of adjustment to true federalism. Rushed to address perceived urgent concerns and short-term political interests, the constitutional amendments have not dealt with the fundamental problems of constitutional structure. These s h o u l d b e a d d r e s s e d s y s t e m a t i c a l l y a n d comprehensively. Emerging by the “Doctrine of Necessity”, the present geopolitical zonal structure has proved powerful mechanism for rationalizing regional development and should be given formal constitutional status. At the other end, there is need to recognize communities as the basic loci of local mobilization and development. There is also need for an operational framework for intergovernmental relations in both inter-level and intra-level dimensions. In this regard the National Economic Council remains an underutilized resource. The National Planning Commission should be given a new inter-governmental status and strengthened to anchor the operations of the Council., with adequate representation of the three tiers of government in its management and operations

Operationally, at federal and state levels the Executive Branch operates through a changing number of ministries agencies and parastatals, in a never-ending search for the

38 OCTOBER - DECEMBER, 2010



right mix. The changes have come about by hunch and fashion. There has never been a comprehensive management audit of the system, needs, operating structures, management practices, manning levels and all. There are altogether too many MDAs and too many political functionaries - ministers/commissioners, special advisers and special assistants. Yet the Chief Executives are overburdened with too many decisions to make, even on routine matters properly within the competence of their political aides or the civil service. Thus the elaborate system is not allowed to work. Often what gets done is what catches the eye or ear of the Chief Executive.

The Public Service exists to serve the public interest.. There is need to recreate the Nigerian public service as an efficient and effective instrument of Government, delivering rule-based service, transparently and accountably, without fear or favour, affection or ill will. As many reviews have shown at federal, state and local government levels, public financial management in Nigeria is very deficient. In the on-going reform process a critical role has been given to the Fiscal Responsibility Commission to regulate and monitor the system. But if the system is to work, the agencies need to build the capacity for record keeping, information management and full, accurate and timely reporting.

Another major factor in government effectiveness is the ability to create an enabling environment for, regulate and partner with the private sector in promoting development. As the recent BECANS study shows, Nigeria still scores very poorly on this dimension. The performance is very uneven across states and zones.

On the third dimension, Law and Order, governance is bedeviled by pervasive corruption and the obsolescence of the judicial systems and law enforcement agencies. With the cooperation of international agencies much is being done to re-organise and re-equip the system and retrain the operatives. But, if the effects are to be sustainable, the integrity factor must be tackled head-on. We may conclude this segment by highlighting the key success factors for meeting the governance challenges. The first is ensuring that we have governments freely elected by and fully responsible to the people and responsive to their needs. It is only such governments that can demand and obtain the commitment of the people to making the efforts and sacrifices needed for realising our common goals.

Effective partnership should be developed and nurtured between government and business, in order to work out and implement the best ways of moving forward The people should be fully involved in the formulation, implementation and review of policies and programmes affecting them. We are not alone. Many countries have experienced some of our problems and we can learn from both their successes and their failures. We

should also tap fully into the many resources of international organisations and the international community. Particular attention should be paid to collective self reliance and cooperation in Africa.

Epilogue I would like to end by relating this contribution more

closely to your role as accountants. As I have stressed, accountability is a critical ingredient of good governance. Good governance requires that Government is accountable to the people for its actions. The people need to know in time and in full what the government has done, is doing and will do; so that they can judge for themselves and respond appropriately in pursuit of their perceived interests and goals, so that they can approbate or reprobate, support or oppose, situations and actions as they wish.

We may distinguish four dimensions of accountability: political, legal, financial and public. In the context of the role of accountants, the most relevant dimension for this discussion is that of financial accountability. Financial accountability is about proper financial accounting. It is concerned with the measurement, disclosure or provision of financial information that helps governments, agencies, businesses, communities, civil society organizations and other stakeholders understand and take positions and decisions on the mobilization and use of resources.

The accountant is centrally involved in the production, interpretation and use of financial information. All stakeholders rely on their competence, integrity and transparency to enable them play their fully and effectively. The scope and size of official financial information range from the books of the various MDAs, to the reports of the Accountants-General and the Auditors-General and the oversight committees of the legislatures, as well as various other official reports.

It is the sad fact that over the decades of military rule the tradition of financial accountability was seriously eroded. Since the return to civil democratic rule much has been done to rebuild the system, but there is still a long way to go. Most critically, we need to develop and use the adequate information and communication technology to handle the mass and complexity of financial information generated by the system. The Accountancy Associations must face up to the challenge through research and training and through purposive interaction with the government agencies.

The author is a Professor at the National Open University of Nigeria, Enugu.


PUBLIC ACCOUNTABILITY

1. IntroductionProfessions, Professional Ethics and National

Development Professionals are the engine of development in any

society that has embraced knowledge and innovation as the way of life. Every profession should have a special role to play in the development of the country. The grievous error of the past is the failure to effectively enlist the services of the professions and professional groups in designing and implementing the development initiatives. This is not a matter of not employing enough professionals in the development. No. It is more about allowing the values and virtues of the professions shape national practices. The professions are virtuous cliques that ordinarily should promote excellence in the politics and culture of a country. Our misfortune is that the professions have often promoted vices rather than those virtues that will enable Nigeria realize her dream of greatness. The truth is that the professions have failed Nigeria.

We need to dwell a little bit on the professions and professional virtues before we launch deep into the discourse of public accountability. The professions have always been the modeler of excellence in the public sphere. The legal profession has played a key role in promoting the ideals of rule of law and justice. The medical profession has not just saved lives. It has also promoted the virtues of physical and emotional care. The profession of teaching has also promoted the values of knowledge and curiosity. The accounting profession promotes the virtues of prudence and accountability even as its practitioners help private and public institutions balance their books.

Collectively, the professions help to engender the culture of excellence in a society. They enthrone, through their professionalism, the values and virtues that define an open and free society. The relationship between professionalism and social, economic and political development is very obvious to merit comments. Lawrence Harrison, in his book “The Central Liberal Truth: How Politics Can Change a Culture and Save It from Itself”, provides evidence of how culture and cultural values affect the development and retardation of societies. He argues that societies that exhibit positive values and norms travel on the development curve faster.

Let me quote Harrison on the relationship between such values that are encoded in professionalism and development: “The rigor of the ethical code profoundly

Ensuring Public Accountability of Oil Proceeds

Sam Amadiinfluences several other factors including rule of law/corruption, radius of identification and trust, and association. While these latter three factors fall under “social behavior” the ethical code engenders behaviors that nurture trust and trust is central to economic efficiency”. The classical sociologist, Max Weber, has earlier articulated the relationship between the development of effective bureaucracy in Western Europe and what he called ‘protestant ethics’, those values and norms that define the Judeo Christian worldview. Incidentally, these values and norms are encoded in the ethics of the professions.

Focusing the virtues and values of professionalism on the legal profession, Professor Anthony T.Kronman, argued in the book, The Lost Lawyer: Failing Ideals of the Legal Profession, that the demise of the lawyer-statesman has led to the decline of the United States. He described the lawyer-statesman not on in terms of expertise and skills, but more so in terms of character and dispositions. He argues that the lawyer-statesman is “a paragon of judgment, and other look to him on account of his extraordinary deliberative power”. This power is not just about a clever knack or skill. It is a trait of character. He defines character as “an ensemble of settle disposition- of habitual feelings and desires. To have a character of a certain sort is to possess a set of such dispositions that are identifiable and distinct”. Kronman’s argument is that such dispositions improve the quality of the society. And where they are absent or undermined, society loses a great deal

We don’t need to look far to see what happens to a society that gives short shrift to the ethics of professionalism. The recent financial crisis that has engulfed the world derives its roots in the gradual erosion of the ethic of professionalism amongst some of the professional undertakers of what has become known as ‘Casino capitalism’. These ‘Professionals’ forgot the fundamental rules of their professions and cocked records that deceived investors and crashed the edifice of international finance. The ruins of such corporate giants like Worldcom, Enron, and Prudential Insurance. Their malfeasances reinforce the importance of professional virtues and values in reorienting society and keeping it in the right direction.

In Nigeria we have had our own experiences of the dangerous consequence of the erosion of professional virtues and values. We experienced it with the collapse of the finance houses during the military and the recent bank failure. In the recent bank failure we heard of



stories of bank CEOs who looted the funds of the banks while not creating values for shareholders and customer. Their CEOs’ reckless greed led to massive loss of savings and deposits of customers. This recklessness would have been avoided or controlled if the managers of other people’s fund exercised the duty of care enshrined in the banking profession.

From this valuable digression on the role of professions and professional virtues and values we can proceed to consider the failure of public accountability and what could be done about it.

2. Nigeria Has Fared BadlyIn October 1, 2010, Nigeria celebrated fifty years of

independence from colonial administration. The general opinion of Nigerians is that the beloved country has not done well enough considering its enormous human and natural endowment. Nigeria is estimated to have earned about 400 billion dollars from oil since oil was produced in commercial and exportable quantity in 1958. This is a back of the envelop calculation. The real figure might be much higher.

Has Nigeria justified such huge oil receipts? Do the harrowing statistics on poverty and underdevelopment justify such enormous revenue? The truth is that Nigeria has fared badly. No aspect of national life really evokes satisfaction and strong hope. About 70% of Nigerian citizens lives in poverty, measured as those who do not spend more than one dollar a day. If we go beyond the income or expenditure profile of poverty and focus on exposure to unmitigated social risks and the quality of social safety nets, I believe that Nigeria is poorer than the official statistics reveal. More Nigerian women die from child birth than women from other countries of the world including some of the poorest African countries. Nigeria is one of the only four countries in world repopulating the world with the polio virus. Infant mortality is extremely high and Nigeria accounts for about 50% malaria deaths in the world.

Nigeria is the most populous African country. It is the second largest economy in the continent after South Africa. It is the largest producer of oil and gas in Africa (except that it is fast losing its dominance to Angola due to the crisis in the Niger Delta). With all its endowments and symbolic importance in Africa, Nigeria should easily be one of the leading economies in the world. But the country remains a beggar nation of a sort, with international development assistance sustains few decent human development interventions. It is thoroughly embarrassing that we owe it to the philanthropy of the likes of Bill Gates and President Clinton to fight HIV-Aids, Malaria and Polio.

Our health infrastructure has collapsed completely. It is not just the prevalence of disease and the normality of

fatalities that are worrisome. The most distressing evidence of failure is the complete lack of access to qualitative preventative and curative healthcare to millions of naira. Nigeria does not boast of any world class health facilities, including the many teaching hospitals that have been reduced to consulting clinics (in the words of military coupists). Nigerians are major global health tourists. Our big and small men travelled all over the world in search of even basic treatment for the most rudimentary health problems.

As we celebrate 50 years of independence there is palpable evidence of frustration and despair amongst Nigerians. Many of us believe that as a nation we failed in the last 50 years to realize of the promise of greatness of a great black country. Many of us live with the reality of this unbelievable failure. But the more shocking truth is that we failed in spite of enormous financial resources that would have been utilized to make life better for ordinary Nigerians. If Nigeria was a very poor country, her failure to establish critical infrastructure, the collapse of her educational and health institutions would have been bearable. If Nigerians are not such hardworking and enterprising people we may not be so heartbroken at the failure staring us in the face. So our failure is more disheartening in the light of our endowments.

The US Secretary of States, Mrs. Hillary Clinton on a visit to Nigeria lambasted Nigerian leaders for the poverty in the country. With all the oil revenue Nigeria has earned since independence she has no reason being poor except that its leaders have stolen much of that revenue. She echoed President Obama’s statement that Nigeria reels from the crushing blows of corruption. Nigeria failed to utilize her potential and fulfill her promise of greatness mainly because she did not manage her oil receipts well. Nigeria’s problem is largely the problem of accountability.

3. Oil Resources, Oil Curse and the Failure of Accountability

Nigeria’s predicament begins with the story of oil. Oil, instead of being a blessing has become a curse. Before oil was discovered in commercial quantity in 1958, Nigeria’s prosperity was based on agriculture and the commerce and industry of its people. Many of us can still remember the stories of groundnut pyramids in the north, cocoa farms in the Southwest and palm kernel in the Eastern region. The wealth of the nation flowed from the industry of the people. The first lesson of political economy was evident here. As John Locke argued in his political philosophy wealth arose from the people mixing their human labor with the blessings of the earth. Each region produced its wealth and managed the same as carefully as it can to promote the welfare of



its citizens. It was under an economy without oil that the Western

Region set up the first television house in Africa and established a world-class university, the groundnut pyramids, the Ahmadu Bello University and many development projects in Northern Nigeria. Palm Kernel guaranteed the Eastern region the prime place as the fastest growing economy in the world in the 1960s. The momentum for transformation and development was reversed once oil became the nation’s money earner. The replacement of agriculture with oil production as the mainstay of the economy introduced what the economist called oil curse. A situation where instead of being a blessing oil wealth becomes a curse. This happens because oil wealth comes with other perverse incentives like rents-seeking which dispose the people to behaviors that are inefficient and ultimately leads to political disorder.

As long as people found themselves in wealth which is not mixed with their brine they are not likely to be prudent with it. If people can always come into abundance (lottery) they don’t bother conserving what they have. This mentality is the organizing logic of public governance in Nigeria. We have a natural windfall mentality; the mentality of gamblers and those who won a natural lottery. Our leaders spent as recklessly as possible. They also spent without strategy. Public expenditure did not reinforce the capacity to produce more wealth in the future. That is the reason Nigeria remains an extractive economy with no significant industrial capacity. It is for the reason of oil curse that we don’t have a private sector that has the entrepreneurial skills and managerial expertise to catalyze economic development. It is also the reason that we don’t have significant national savings that can finance infrastructural development in the scale we require.

Oil curse (better known as ‘Resource Curse’) does two major damages to a society. First, it replaces the productive disposition with the rent-seeking disposition such that those virtues of a properly functioning capitalist economy are distorted. The second damage is that it deprives the society the disposition to control how public officials expend public revenue. The first casualty of oil curse is taxation. Oil bonanza weakens the incentive to collect taxes from citizens. Since public officials can run the business of the state without depending on the citizens it means that they don’t need to bother much about the welfare of the citizens or their views about management of public affairs. Because citizens don’t pay taxation and the state does not run on their tax monies, they lack the disposition to inquire deeply and tenaciously on how public officials spend public revenue. This is the cause of massive corruption

in Nigeria. Who cares about the looting of public treasuries if no one asks us to pay into the public treasuries? Since it is only civil servants who consistently pay taxies they are the only ones who may have sufficient disposition to ask critical questions about public expenditure. But unfortunately, they don’t. So, we are left in the state of critical lack of accountability.

Lack of accountability is not fate. It is institutionally warranted and politically determined. It does not just happen. I need to clarify what I mean by institution. The discourse of institutions has become dominant in political economy since the proponents of New Institutional Economics like Robert Coase, Oliver Williamson and Douglas North. From their perspective ‘institution’ is defined as formal and informal rules that determine how people or systems conduct their affairs. Douglas North defined ‘institutions’ as the “rules of the game in a society or more formally the humanly devised constraints that shape human interactions” (Douglas North, Institution, Institutional Change and Economic Performance, Cambridge Press, 1990). By institutions here I mean those structures, norms, procedures and arrangements that determine how Nigeria receives and spends revenue derive from oil and gas.

The claim I make is that profligacy in Nigeria is institutionally warranted. By this I mean that our failure to make good use of the huge oil receipts accruing from oil and gas is partly the result of the failure to establish rules and processes that constrain public officials to better manage oil and gas receipts. Generally speaking, our institutions are very weak and ineffective. In many areas of national life we still manage institutions that were crafted during colonial administration. Colonial administration by nature denies accountability. It follows that its institutions will be based on the unaccountable discretion of colonial governors. Military administration reinforced profligacy and impunity.

Our financial rules are not strong enough to deter predatory behavior from public officials. Our public accountability rules are not well designed to constrain public officials to utilize public revenue for the common good. Our rule of law framework does not properly authorize external control of public management. The accountability framework of the larger political economy does not dispose to behaviors that redound to public accountability. So, here we are without the laws, rules and processes that optimize the proper use of public revenue.



4. Public Accountability: Between Institution and Culture

Recently government has begun to respond to weakness of institutions of public governance. Recently the National Assembly has enacted laws that attempt to rein in profligacy and encourage scrutiny of public revenue management. The Fiscal Responsibility Law was enacted to control public expenditure in a manner that does not threaten the country’s macroeconomic stability. Public Procurement Law was also enacted to mainstream due process in all public expenditures. The Nigerian Extractive Industry Transparency Initiative Law (NEITI) has been enacted to bring significant scrutiny to payments and expenditures of oil revenue. These laws constitute the reform of the institutions of public accountability in Nigeria. But have they led to significant change in outcome? Do we now have a better accountability of oil proceeds? Is corruption now drastically reduced on account of these laws?

This leads to the problem of culture. There are many perspectives to our underdevelopment. Some people focus on the deficiencies in our state institution and counsel reforms of laws and institutions to overcome the pathologies of underdevelopment. Others focus on the cultural deficiencies which manifest in the absence of values of accountability. These two narratives – the narrative of institutional failure and the narrative of cultural deficiency – must be brought together to have a workable understanding of the problem of accountability in public governance. Public governance is not accountable in Nigeria because our institutions are weak and ineffective to constrain exercise of discretion by public officials in a manner that produces optimal results for the public good. These institutions were designed without sophisticated understanding of human nature and its impact on public action. But apart from the failure of the institutions, lack of accountability in our systems derives also from the deficiencies in the public values of governance. Our public leaders are not good statesmen and the citizens are not conscientious citizens.

5. ConclusionBack to Professions, Professional Virtues and

AccountabilityThe last 50 years of Nigerian independence has

produced little to be celebrated. We largely wasted our enormous oil receipts. We did not use oil money to build basic infrastructure. After 50 years we can only generate less than 3,000 megawatts and distributes less than that to households and factories. Instead of industrializing like other countries of the world we are de-industrializing because we don’t have power to run factories. All these happened to us because we did not create good frameworks to better manage our oil revenues.

But the next 50 years can, and should, be vastly different. We can become the world’s most industrialized country. We can become the country with the finest and most rugged infrastructure in the world. We can exit the poverty bracket and enter into the category of aid givers and not receivers. We can build the best human capital and become the destination of choice for world class innovation companies. These and many more we can become if we restore public accountability so that our leaders will have the character and disposition of prudence and accountability.

This is where the professions, especially the accounting profession, come with their professional virtues and expertise to rebuild institutions and nurture public value. The future of Nigeria in the next 50 years will largely depend on the capacity of these professions to engage in institutional experimentalism. I don’t mean reckless experimentalism. No, I mean experiments that are pragmatic and not eclectic; social experiments that are creative and innovative; that address the pathologies that has blocked institutional reformation in Nigeria. The professionals must be people of character and civic disposition to make any positive impact on public institutions. Professional groups must also rediscover professional excellence and virtues to have any chance of making important contributions toward the new Nigeria of public accountability.

The professions must get back to professional excellence to become the drivers of virtue and excellence in public governance. The challenge of development is partly a challenge of restoring professional virtues in the professions in Nigeria. The accounting profession should be a frontrunner in this commitment to restoration of professional virtues and excellence in its practice. By modeling professionalism and being creative and civically engaged with its accounting expertise the accounting profession can help Nigeria to develop the institutions and values that underwrite accountability in public governance.

Yes, We Can:In this season of politics, the paper ends in the style of

politicians, especially a successful one like Barack Obama. We can change Nigeria. But this change begins with each of- every professional- demanding accountability from one another and giving accountability to one another. The demand and supply of accountability will establish a social equilibrium that will make Nigeria a country of our dream. That is, this will become the change we want.

*The author is the Executive Chairman-Designate of the Nigerian Electricity Regulatory Commission (NERC).


ECONOMIC TRANSFORMATION

1.0 An Overview Of The Nigerian Economy 1.1 The Structural Profile of the Nigerian Economy

The Nigerian economy, like many developing economies, is characterized by structural dualism, the stratification of the economy into two categories: a relatively under-developed rural sector, with low productivity and an urban economy with higher productivity and technology-driven production systems. The dualistic production systems also feature a traditional/informal sector existing alongside a modern or formal economy. While the former is relatively inefficient, producing basically for subsistence, the latter is more productive and efficient, utilizing modern production techniques to meet domestic demand for goods and services and also harness export opportunities. Therefore structural dualism transcends the various sectors of the Nigerian economy, from agriculture, industry and finance to the public sector and external trade (CBN, 2000. 18)

The Nigerian agricultural sector is structured along a mixed system of subsistence and modern farming. The emergent gap between the two production systems is huge, with subsistence farming accounting for more than 90 percent of staple foods produced for the nation’s teeming population. In general, traditional farming in Nigeria is characterized by production for subsistence; extensive use of land and the practice of shifting cultivation, with a land tenure system which largely grants access to each family, either on individual or

Exploring Sustainable Economic Transformation In Nigeria Without Oil: Challenges, Prospects And Policy Framework

Samuel A. Igbatayo

AbstractThe Nigerian economy is characterized by intersectoral dualism, with a relatively underdeveloped rural sector featuring low productivity and an urban economy, featuring higher productivity and driven by modern technologies. The nation’s economy is also dominated by the petroleum industry, particularly since the 1970s. The sector has replaced agriculture as the cornerstone of the economy, accounting for 80 percent of annual government revenue and 92 percent of the nation’s foreign exchange earnings. In contrast, agriculture, which led the nation in foreign exchange earnings and accounted for 80 percent of employment when the nation became a sovereign state in 1960, has been marginalized with serious consequences to the economy. Similarly, the industrial economy has become depressed since the 1970s, when oil began its dominance over the economy. Its annual contributions to GDP have remained below 10 percent, while capacity utilization for the sector has declined from 75 percent in 1980 to 39.6 percent in 2001. However, if the nation’s aspirations to become a middle income economy ranked among the twenty largest in the world by 2020 is to be realized, concerted efforts are required to re-vitalize agriculture, industry and solid minerals development, as an important substitute to replace the nation’s crisis prone and often volatile oil and gas sector. This scenario remains the best option for policy makers to transform Nigeria to a modern, technologically-driven economy that can emerge as a strong player in the global market place.

collective basis. The system therefore results in land fragmentation with very small acres of land planted by the farm family at a time, using crude implements, which lower productivity. A structural analysis of the nation’s agricultural sector in 1996 reveals that crops production was the dominant subsector, accounting for 78.4 percent of output, followed by livestock (15.4 percent); fishery (3.35 percent); and forestry (3.9 percent) as depicted in figure 1

Figure 1: The structure of Nigerian Agrarian Economy, 1996

Note: Crops livestock forestry fisherySource: CBN, 2000. 18

The structure of Nigeria’s industrial sector is also dualistic, characterized by a large number of informal

15.4%

3.90%

3.35%

78.4%



small enterprises and a few modern firms. According to FOS data in 1998, the size of Nigeria’s industrial sector was put at 61,289 establishments, with each employing more than five workers. Although data are scanty, indications are that small and medium scale enterprises account for about 70 percent of industrial employment and 10 to 15 percent of industrial output in Nigeria. While small scale enterprises (SSEs) tend to be based in rural areas, medium scale enterprises (MSEs) are usually located in urban areas where they are in competition with a variety of micro enterprises. The SSEs are noted for the production of traditional consumer goods, including weaving apparel, home and office furniture, footwear and leather products; food products and services; metal working; printing; vehicle repair works and tire retreading.

The Nigerian MSEs, on the other hand, are in a traditional state from the SSEs, with production techniques organized along side industrial type processing of complex goods. The MSEs dominate the textiles market and also produce metal products, foot wear, pharmaceuticals and similar goods. They are noted for the application of relatively modern technologies and production techniques and, unlike large scale enterprises (LSEs), are less capital intensive. FOS data also indicate that while SSEs account for 85 percent of industrial output, MSEs and LSEs account for 10 and 5 percent of industrial output, respectively.

The ownership structure in Nigeria’s industrial sector also reveals the following: sole proprietorship (74.5 percent); cooperatives and partnership (16.6 and 7.3 percent, respectively); others (1.6 percent). The others include Government corporations and incorporated companies. The ownership structure is depicted in Figure 2.

Figure 2: Nigeria’s Industrial Structure by Ownership, 1996Note: Sole proprietorship Coops Partnership OthersSource: CBN, 2000. 20

1.2 Nigeria’s Macroeconomic Trends and DevelopmentsIn Nigeria’s fifty years of political independence, the economy has confronted various challenges that continue to task the ingenuity of policy makers and the nation’s development partners. While Nigeria is endowed with a huge stock of natural resources, particularly in the agricultural and mineral sectors; the economic profile of the country presents a paradox: on the one hand, Nigeria has abundant resources with a potential to become one of the wealthiest economies in the world; on the other, the nation’s economy has been constrained by poor policies and is ranked amongst the poorest countries in the world.

Nigeria’s economic performance has fluctuated widely in the past several decades, reflecting the poor state of the nation’s macroeconomic policy framework. While the nation’s economy was grounded on solid foundation at independence, with positive growth trending into the early 1970s, negative growth set in by the late 1970s, with stagnation becoming the reality in the 1980s and slow growth in the 1990s (United Nations, 2001.88).

As depicted in Figure 3, the average real GDP growth rates for the Nigerian economy during 1961-1970 was 5.1 percent; the rate was reduced to 5 percent between 1971 to 1980. The GDP rates reduced sharply to an average of 1 percent between 1981 and 1990, while the rates were turned around, increasing sharply to an average of 5 percent between 1991 and 2000. The rates also increased marginally to 6 percent between 2000 and 2007(UNDP, 2008.10). Despite the onslaught of the global economic downturn, which emerged in 2008, the nation’s GDP increased by 6.0 and 5.5 percent, respectively, in 2008 and 2009.

16.6%

7.3%

1.6%

74.5%

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.01961-1970 1971-1980 1981-1990 1991-2000 2001-07



Figure 3: Long-term GDP economic growth trends in NigeriaSource: CBN Statistical Bulletin: Volume 18, December 2007 and NBS, National Accounts, 1981-2008.

The Nigerian economy has shown an inconsistent growth trend since the nation’s independence in 1960. Indeed, there was an initial upswing in the GDP growth rates, rising consistently into the early 1970s. However, the initial success was outstripped by unsustainable government expansion of the public sector, which became unwieldy, inefficient and wasteful. The challenges were exacerbated by prolonged military rule, political instability and bad economic policies, which overwhelmed the real sectors. The inevitable long-term economic decline that set in was further complicated by the global economic recession of the early 1980s (Anyanwu et al, 1997:8).

In response to the myriads of challenges and to provide a durable long-term solution to the economic crisis, Nigeria adopted the Structural Adjustment Programme (SAP) in 1986, in a development aimed at fostering economic stability and adopting neo-liberal economic agenda. The initiative included less dependence on imported consumer goods, enhancing non-oil exports and propelling the economy to full recovery. Although the real GDP growth rates increased after the adoption of SAP, the momentum could not be sustained, prompting slow growth in the 1990s. However, the re-emergence of democratic governance in 1999 ushered prospects for better economic management. This development prompted further economic reforms that culminated in the National Economic Empowerment and Development Strategy (NEEDS)(NPC, 2004:21). Further reforms were also articulated in Vision 20:2020, including a national aspiration aimed at developing the economy to be ranked among the twenty largest economies in the world by 2020.

The emergent improvement in macroeconomic management resulted in relative stability with the GDP growth driven by the non-oil sector averaging about 6.0 percent, while per capita income rose steadily and crossing the US $1,000.00 mark in 2006. Table 1 shows the contributions of various sectors of the economy to GDP growth between 1981 and 2007

Table 1: Contributions by Sector to GDP Growth in Nigeria, 1981 – 2007

Sector 1981-90 1991-2000 2001-07Agriculture 4.5 3.4 5.6Agriculture (crops) 5.1 3.7 5.7Livestock 3.5 1.8 5.3Forestry 0.3 1.7 4.1Fishing 5.7 3.7 6.3Industry 1.4 1.6 2.0Crude Oil 1.5 2.8 1.0Mining & Quarrying 1.9 2.3 7.7Manufacturing 1.7 0.2 8.1Building & Construction 5.9 4.0 9.8Wholesale & Retail trade 2.7 1.9 9.2Services 4.3 3.6 9.8Transportation 3.6 3.3 7.4Communication 1.2 4.8 25.9Utilities 3.5 3.4 7.9Hotel & restaurants 4.4 2.2 8.9Finance & insurance 16.1 3.9 7.6Real estate 13.8 3.9 11.6Producers of Government Services 2.1 1.8 6.7Private non-profit Organizations 10.8 17.5 21.8Total GDP 3.2 2.1 5.6Non-Oil GDP 2.8 2.9 7.2Oil 4.2 0.8 0.6

Source: CBN Statistical Bulletin, 2007

2.1 The Rise Of The Petroleum Industry In Nigeria:

A Blessing Or A Curse?The Nigerian oil and gas industry has risen from relative obscurity in the past five decades, replacing agriculture as the cornerstone of the nation’s economy since the 1970s. Commercial operations commenced in the nation’s oil and gas industry, with the discovery of oil in commercial quantity at Oloibiri, in present day Bayelsa State in 1956. In 1958, Nigeria began producing oil for the export market, and is now ranked as the tenth largest producer, the sixth largest exporter of crude oil in the world. As at January 2009, Nigeria was credited with an estimated 36.2 billion barrels of crude oil reserves and 187 trillion standard cubit feet of natural gas reserves (EIA, 2007:2). Crude oil production has also expanded phenomenally, rising from an initial daily production output of about 5,100 barrels in 1956 to as high as 2.5 million barrels per day in the late 1970s, production fluctuating widely in the past decade, undermined by militant attacks on crude oil infrastructure, security agencies and oil workers in the region. The development deteriorated to a crisis proportion in 2006 in the wake of heightened agitation in the Niger Delta (HRW, 1999:15). However, a peaceful resolution of the crises since late 2009 has witnessed increased daily crude oil production, which is now put at 2.5 million barrels per day. This resurgence in production has reaffirmed Nigeria’s

Real

GDP

Gro

wth

rates

5.1 5 1 5 6



predominant position as the largest crude oil producer in Africa and the tenth largest in the world. Figure 4 shows the level of Nigeria’s crude oil production and consumption between 1990 and 2008.

Figure 4: Nigeria's Crude Oil Production and Consumption trends, 1990-2008

Nigeria is acknowledged as a major exporter of crude oil, with export level recorded at 2.17 million barrels per day in 2008; of this quantity, 900,000 barrels per day was exported to the United States, ranking Nigeria as the fifth largest supplier to the lucrative United States Market. Figure 5 shows the destination (as well as proportion of oil exports to each destination) of Nigeria's crude oil exports in 2008.

The rise of Nigeria’s oil and gas industry has profound implications for the nation’s economy. Since the early 1970s, the petroleum industry has gradually replaced agriculture as the nation’s predominant sector. With the rise of oil export in the mid-1970s, the nation’s foreign exchange earnings also increased, replacing agriculture as the nation’s foremost foreign exchange earner. Eventually, crude oil export earnings dominated annual GDP, accounting for about 50 percent in recent times. Also, oil revenue accounts for over 80 percent of Federal Government’s annual revenue and 92 percent of the nation’s annual foreign exchange earnings.

2.2 The Challenges of Nigeria’s Oil and Gas IndustryThe Nigerian oil and gas industry has emerged as an enclave economy, with little linkages to other sectors. Although the sector fetches a giant proportion of the nation’s annual foreign exchange earnings and accounts for most of government’s annual revenue, it employs only a small proportion of workers, estimated at about 100,000 employees in a nation with a population estimated at more than 150 million people. The sector’s engineering and construction works are mostly firmed out to foreign companies, which dominate the industry. Consequently, the Nigerian oil and gas industry has very little direct impact on the manufacturing sub-sector. Over the years, policy makers have become dependent on the revenue accruing from the nation’s oil industry, which grew from US $ 718 million in 1970 to US $ 9.4 billion in 1978. However, in line with the volatile nature of Nigeria’s oil revenue, which depends on global demand for crude oil, suffered a decline in the late 1970s in the wake of the global recession that undermined the world economy into the early 1980s. Consequently, the nation’s oil revenue declined from US $ 25 billion in 1980 to US $ 4.7 billion in 1986 (Iledare and Suberu, 2010:5). The development revealed the vulnerable state of the Nigerian economy, which is prone to macroeconomic shocks unleashed by incessant crude oil price collapse associated with the global economic downturn.

The Nigerian economy is particularly vulnerable to sudden and drastic movement in international crude oil prices, in which a few years of boom is usually followed by several years of price decline that undermines the fiscal integrity of some major oil producers. The Vulnerability of Nigeria’s economy to oil price instability has been very costly in terms of revenue fluctuation, income distortions and fiscal indiscipline. In 2008, total oil export receipts for Nigeria were about US $ 75 billion dollars, representing about 98.8 percent of total exports for the year; yet, the share of the oil and gas sector as a proportion of GDP in Nigeria declined from a high of about 47.7 percent in 2000 to just under 25 percent in

Source: APEX, EIA

Figure 5: Destination of Nigeria’s Crude Oil Exports, 2008.

49



2005 and 22 percent in 2006. The domination of the petroleum sector presents a phenomenal challenge of policy makers, a development that is obvious in the fiscal revenue profile of the Federal Government. The worrisome trend explains the extreme dependence of government on the oil and gas industry. For example, oil royalties, petroleum profit tax, domestic crude sales and other petroleum revenues were only 26 percent of federally collected revenues in 1970, when the oil sector was in its infancy in Nigeria; however, the oil revenue rose dramatically to 81 percent in 1980, but fluctuates to 73.3 percent, 83.5 percent and 79 percent in 1990, 2000 and 2007, respectively.

Undoubtedly, one of the most serious challenges associated with the Nigerian oil and gas industry in particular and the nation’s economy in general is the emergence of the “Dutch disease”. The phenomenon describes the negative consequences arising from the dramatic increase associated with a natural resource discovery. The condition arises when foreign currency inflows cause an increase in the affected country’s currency, triggering a reduction in price competitiveness and consequently the reduction in exports of the nation’s goods and services; as well as a heightened increase in imports. In the long run, the consequences can contribute to job losses in the affected country’s real sectors, as employment is moved to lower cost countries. In the end, non-resource industries in the affected economy are undermined by the increase in wealth generated by the resource-based industry. The term “Dutch disease” originates from the economic crises in the Netherlands in the wake of vast discoveries of natural gas deposits in the North Sea in the 1960s, which fuelled a dramatic increase in the Dutch government’s revenue profile and the consequent impact on the nation’s economy.

Beyond the ‘Dutch Disease’ the Nigerian oil and gas industry has been undermined by endemic corruption. The rent-seeking behavior of bureaucrats, politicians and policymakers associated with the sector has distorted product prices, as well as investment and other opportunities in the sector, with serious consequences for macro-economic stability. It is worthy to note that the petroleum industry has failed to live up to its initial promise as a source of windfall revenue to provide the resources that can transform the nation into a middle-income industrial economy. Instead, the oil sector has emerged as a force that derailed the relatively diversified agro-based economy, which flourished after the nation’s independence. The profile of the economy now reveals a mono-resource, petroleum based structure vulnerable to the vagaries of the global oil and gas industry.

While Nigeria has earned billions of dollars exporting oil and gas, the oil industry has failed to generate the multiplier effect necessary to transform Nigeria into a modern, diversified middle-income economy. The unenviable development has been compounded even further by the dependence of all tiers of government on the volatile oil revenue, to the detriment of internally-generated income. Therefore, the volatility of government revenue associated with the petroleum economy has undermined the fiscal integrity of government and distorted the political structure of Nigeria, which now appears as a unitary state than a federation that it is supposed to be, particularly in a fiscal sense. The dilemma associated with the nation’s petroleum economy therefore raises the inevitable question, whether the sector is a blessing or a curse.

3.0 T h e I m p e r a t i v e s O f E c o n o m i c

Transformation In Nigeria3.1 PreambleNigerian policy makers have struggled since the mid-1980s to transform the economy for better performance, particularly against the backdrop of low productivity and poor growth that characterize the nation’s economy in the last three decades. Various policy instruments have been created to promote economic stability, as well as sustainable growth and development. Such initiatives as the Structural Adjustment Programme (SAP), Vision 2010, National Economic Empowerment and Development Strategies (NEEDS) and Vision 20:2020 are all designed to transform the economy and set it on a path to sustainable growth and development. However, the results have failed to match the aim and objectives of policy makers. The nation’s economy continues to be dominated by the petroleum industry. The agricultural sector, which was the cornerstone of the economy during the nation’s political independence in 1960, remains marginalized and unable to provide food security and employment to the nation’s teeming population. Also, the nation’s industrial sector faces enormous constraints, particularly capacity underutilization, fuelled by lack of power and other critical infrastructures.

Section three examines issues in agriculture, industry and the solid mineral sub-sector necessary to diversify the nation’s economy and project it on a path of sustainable growth and dynamism critical to its emergence as a middle income, industrializing economy.



3.2 Spurring Nigeria’s Agricultural Sector for Economic DevelopmentNigeria’s agricultural sector has shown resilience despite several decades of marginalization, overexploitation and chronic under-investment. The capacity of the sector to fulfill its traditional roles in the Nigerian economy has been constrained by a variety of socio-economic and structural factors since independence. These include the civil war of the late 1960s; the severe drought of the early 1970s and 1980s and the emergence of the oil industry. The oil boom of the 1970s created disincentives for agriculture in relation to other sectors of the economy, a development that set the stage for the manifestation of the dreaded ‘Dutch disease’. However, the oil price slump in the then 1980s rekindled interest in the agricultural sector, culminating in macroeconomic reforms in the late 1980s and spurring growth in the sector.

Agricultural sector performance has been inconsistent since the nation’s independence in 1960, as it has witnessed a sustained decline until recently. Its contributions to the nation’s GDP declined from an average of 50.2 percent during the 1960-70 periods, and thereafter declined persistently to reach a level of 21.8 percent during the 1976-80 periods. Subsequently, the contribution of the sector to GDP increased to 39.6 percent in the 1981-85 periods and 41.2 percent in the 1986-90 periods. At constant 1984 factor cost, agriculture’s contribution to the GDP stabilized in the 1990s to an average of about 40 percent. The fortunes of the nation’s agricultural economy have turned for the better, particularly in the last decade. The share of agriculture in the nation’s GDP has risen, once again to about 40 percent in the past few years and accounts for about 50 percent of employment. The declining share of agriculture in GDP in the early and mid-1970s has been reversed from 1999. Indeed, agriculture’s share of GDP rose from 28 percent in 1981 to about 36 percent in 2000 and 42 percent in 2007.

Improved performance in the nation’s agricultural sector has been attributed to better policies underpinning the sector’s resurgence. Emergent agricultural policy objectives in Nigeria have given primacy to ensuring adequate food and raw materials supplies, farmers’ welfare, rural employment and increasing agricultural exports through increased budgetary allocations. Other key areas accorded priorities include concessionary taxes, agricultural loans at concessionary interest rates, credit guarantees and insurance schemes, as well as liberal importation rules for agricultural inputs and equipment.

Policymakers have also taken bold steps in recent years to enhance agricultural output and productivity. These

include the intensification of agricultural extension services, interest rate deregulation; agricultural protection via high tariffs; reduction of input subsides, as well as privatization and/or commercialization of public-owned agricultural enterprises. These developments have helped to reposition the sector for assuming its ascribed roles in the national economy: provision of food security; supply of raw materials to industry; provision of employment and livelihood opportunities and fetching of foreign exchange earnings. Repositioning agriculture to take its rightful place in the nation’s economy is a precondition for economic transformation. A robust agricultural sector is well placed to provide the foundation for the nation’s industrialization agenda. Sustained production of such primary commodities as cotton, cocoa, palm produce, coffee, cashew, rubber, cassava, maize, groundnuts, etc is critical for the survival of agro-based industries in the food and beverage industries, as well as such industries as textiles, chemicals and pharmaceutical firms.

From the foregoing, it is therefore conceivable that prospects for economic transformation in Nigeria are high, given the right policy framework and commitment by policymakers. An invigorated agricultural sector offers an opportunity to diversify the economy away from extreme reliance on the nation’s oil and gas industry, with the attendant consequences associated with the ‘Dutch disease’. Therefore, a revitalized agricultural economy can reverse the structural deficiencies associated with Nigeria’s mono cultural economy that is vulnerable to fluctuating global prices in the oil and gas industry.

3.3 Harnessing Solid Mineral Resources for Economic Diversification in Nigeria

Nigeria has a rich deposit of solid minerals distributed across the nation. However, most of these minerals remain unexploited, depriving the nation of the huge economic benefits associated with them. Nigeria’s profile of solid mineral resources include coal, cassiterite (tin, ore), columbite, marble, tantalite, wolfram, gold, lead, zinc, limestone, kaolin, clay, shale, radioactive compounds, such as monazite, zircon, molybdelite, and barites. Others include glass sands, bitumen sand, uranium, serpentine, phosphate, cupsite, granite, talc ore, gypsum, feldspar, betonies, soda ash, iron ore, dolomite etc. Although, most of the solid minerals are available in commercial quantity, they remain untapped. The capital intensive nature of investments necessary to exploit solid minerals has been blamed for the lack of sustained interest in developing the nation’s solid minerals. Other factors include lack of an enabling environment, the dearth of



modern technologies and high level manpower. Table 2 shows the geographical locations of selected solid mineral resources in Nigeria.

Table 2: Geographical Dispersion of Selected Solid Mineral Resources in NigeriaS/N MINERAL LOCATION1. Iron ore Itakpe, chakochoko, Ajabonoko, Obajana, Ebija and Okudu in Kogi State; Muro in Plateau

State; Buigi and Maraba in Maru District of N. Nigeria; Ajase in Osun State; Birni Kebbi; and Gusaka in Sokoto State.

2. Iron stone Dakingari in Sokoto State; Tajmi in Kaduna State; Rishi in Bauchi State; Lokoja and Akpanya in Kogi State; Batati and Sakpe in Niger State.

3. Cassiterite Jos in Plateau State; Bauchi4. Columbite Plateau, Kaduna, Kano, Bauchi, Ondo, Abuja and Kwara State5. Tantalite Plateau, Bauchi, Kaduna and Ondo State6. Coal Enugu, Benue, Kogi, Obi-Lafia in Nassarawa State Source: Onah, 2001:5

Solid minerals deposits have played a key role in the nation’s economy even before the nation’s political independence. Exploitation of solid minerals was critical to the sustenance of the British colonial administration in Nigeria as a source of revenue and the supply of raw materials to European industries. The sub-sector also played a key role in the economy

prior to the emergence of the petroleum industry, contributing 10 percent to the nation’s GDP in 1970, and ranking second behind agricultural as a source of foreign exchange earnings. As illustrated in Table 3, the sub-sector averaged an annual output of 130.8 thousand metric tons over the periods 1970-73. It also employed about 49,000 workers per annum during 1958-1970 periods (Onah, 2001.2).

Table 3: Nigeria’s Solid Mineral Production Trends, 1970-73 (Metric Tons).Mineral 1970 1971 1972 1973 AverageCassiterite 10,758.28 9,902.09 9,104.79 7,889.41 9,413.64Columbite 1,665.72 1.376.20 1.305.77 1,241.05 1,410.44Clay - 21,271.49 21,861.54 28,939.01 24,024.01Coal 54,254.04 194,603.64 340,183.75 327,133.24 229,043.67Gold (Grams) 3,764.75 1,599.80 468.37 648.08 1,620.25Kaolin 487.68 223.52 - - 355.60Lead ore - 449.78 575.82 633.17 552.92Limestone 700,704.72 967,328.52 1,513,665.64 1,828,772.82 1,252,468.18Marble 3,028.70 4,894.99 4,051.81 9,132.59 5,277.02Molybdenite 18.29 2.54 - - 10.02Monazite 12.70 89.74 10.32 5.02 27.45Tantalite 4.88 4.36 1.36 0.79 2.85Wolfamite - 0.03 1.07 2.26 1.12Shale 113,121.44 129,798.06 1,468,802.86 133,378.45 130,775.20Source: Kogbe and Obialo 1974: 425

Performance of the solid minerals sub-sector began to take a turn for the worse with the exit of multinational players and expatriate professionals in the wake of the 1972 indigenization decree. First, annual production began to dwindle, particularly with metallic minerals, which dropped from 13,000 metric tons over the periods 1970-73 to about to 0.34 thousand metric tons by 1991-98 periods. The solid mineral sub-sector has however received priority from

policy makers since the late 1990s, the Ministry of solid Minerals Development. A national policy on the sustainable exploitation of mineral deposits available in commercial quantity was also established, paving the way for the re-vitalization of the marginalized sub-sector. Although the nation’s earnings from solid minerals remains relatively low, accounting for less than 1.0 percent of annual GDP; the nation has considerable potential to develop the economy with sustainable exploitation of its solid mineral deposits. For example, the nation has one of the best grades of coal in the world, with low sulphur content. Coal is the second largest source of primary energy after

with the establishment of



crude oil and is in high demand in industrial and emerging economies, which Nigeria can also tap as an alternative market for foreign exchange earnings outside the oil sector (Igbatayo, 2008:52).

3.4 Deepening Capacity Utilization for sustainable Industrial Development in NigeriaIndustrial development is acknowledged as a key element for economic transformation and economic diversification that propels low income countries into middle-income emerging economies.

The industrial sector in Nigeria presents unique challenges that undermine its performance over the years, despite concerted efforts by policy makers to revive the ailing sector. Prior to political independence in 1960, the industrial sector was at low ebb, in contrast to agriculture and the solid mineral sub-sector. Colonial administrators had a deliberate policy of de-industrialization in Nigeria, anchored on a plan to make the colonies producers of primary raw materials for foreign industries and importers of manufactured goods. Consequently, early manufacturing activities predating independence were limited to semi-processing of primary agricultural commodities. The agro-based manufacturing entities established during the period included vegetable, oil extraction and refining plants, starch making, wood carving and saw milling. They were rapidly followed by textiles, breweries, cement, rubber processing, plastic products, bricks making and pre-stressed concrete products.

At independence, the Nigerian industrial sector was dominated by private indigenous entrepreneurs, who relied largely on low technologies for the production of light consumer goods in small and medium scale enterprises (SMEs) scattered across the country. At the outset, domestic entrepreneurs had little capital and lacked the technical know-how required in

manufacturing activities. This development accounted for the extremely low level of the share of manufacturing value-added in the GDP in 1960, which was at a paltry 3.2 percent. Therefore, policy makers in the early 1960s strived to re-orientate Nigerian entrepreneurs away from trading into manufacturing activities and at promoting industrial development across the nation. The general policies and strategies of the development plans included (CBN, 2000. 63):

· Adoption of Import Substitution Industrialization

(ISI) strategy;

· Expansion of indigenous equity participation in

foreign owned enterprises;

· Provision of industrial incentives to minimize

production cost and promote industrial investment;

· Prioritization of the intermediate and capital goods

and the agro-allied industries;

· Emphasis on self-sufficiency through increased

domestic resource content of industrial production;

· Encouragement and establishment of small and

medium-scale industries, industrial development

centers, as well as industrial estates ;and

· Public sector participation and control of large-scale

industrial projects, including the integrated iron and

steel plants, petro-chemical and petroleum refining

plants and motor assembly units.

The inability of indigenous entrepreneurs to access capital for industrial projects prompted the Federal government, in the 1960s, to embark on the establishment of numerous state-owned industrial enterprises, particularly in iron and steel, petro-chemical industries, as well as pulp and paper and motor vehicle assembly industries. The oil boom provided resources to government to expand industrial outfits around the nation. This development induced steady output growth averaging 11 percent per annum in the manufacturing

Table 4: Selected Performance Indicators in the Nigerian Manufacturing Sector, 1980-2001.Indicator 1980 1990 1992 1998 2001Share of GDP (%) 5.4 8.1 7.9 7.5 6.0Share in total exports (%) 0.30 0.67 0.63 0.6 0.6

aCapacity utilization (%) 75.0 36.92 35.44 30.4 39.6Share of total imports (%) 60.3 73.3 65.6 88.8 80.7Value of manufactured exports (Naira, Million) 39.0 730.8 1,095.5 4,134.4 12,707.9Manufacturing employment (‘000) 294.2 340.1 NA 238 NAManufacturing value added per capita (1984 constant prices) 5,194.07 7,361.4 7,657.2 6,587.5 6,596.7

Note: a =Data are for 1975Sources: Federal office of statistics (FOS); Annual Abstract of Statistics (various years); CBN Statistical Bulletin and Annual Reports and Statement of Accounts (various issues).



sector in the 1970s, while its share in the GDP also increased from 5.4 percent in 1977/78 (1984 constant prices) to a peak of 13 percent in 1982. Table 4 reveals key indicators of performance in the Nigerian manufacturing sector between 1980 and 2001. It shows that the sector’s share in the nation’s GDP rose from 5.4 percent in 1980 to a peak of 8.1 percent in 1990, before declining to 6 percent in 2001. However, the sector doubled its share of exports, rising from 0.3 percent in 1980 to 0.6 percent in 2001.

As shown in Table 4, capacity utilization in the nation’s manufacturing sector remains poor, particularly in the past

economy since the 1970s.

·Fast track Infrastructural Development: The nation’s

social and physical infrastructures are in a deplorable state. The

dearth of power, good road networks, water, communications,

etc is a disincentive for rapid economic growth. The

development has assumed a critical dimension, particularly, in

rural areas, fueling a rural – urban migratory drift that

compounds development challenges in both rural areas and

urban centers. Policy makers need to commit adequate

resources to rehabilitate the nation’s moribund infrastructures

in order to make both rural and urban areas conducive for social

and commercial activities. This is critical to supporting

sustainable livelihoods and freeing many from the vicious

circle of poverty and extreme deprivation.

·Promote Public – Private Partnership Agenda: An

emergent paradigm shift in development policy and practice

features increasing reliance on effective collaboration between

the public and private sectors to forge effective partnerships for

development. Hitherto, the public sector had engaged in

commercial activities better conducted by the private sector,

resulting in failed outcomes, which had drained scarce public

resources. This development has led to structural reform that

acknowledges the primacy of the private sector as the engine of

growth; limiting the public sector as an umpire tasked with

provision of an enabling environment for the private sector to

thrive and prosper. Consequently, the public-private

partnership framework aims at pooling resources to support

commercial activities that create a win-win outcome for all

players.

·Foster capacity building Initiatives: Human resources

remain the biggest assets in any organization, public or private.

In an increasingly interdependent and globalized market

environment, there is need to create a new breed of players;

employees, managers and entrepreneurs, who understand the

dynamics of the global economy and the intricacies of the

market mechanism. The nation’s education system needs to be

re-oriented towards an emergent economy, driven by

information and communications technology (ICT) and the

new skills and knowledge necessary to excel in the increasingly

dynamic environment. Therefore, policy makers must shift

emphasis and embrace education and learning mechanisms that

foster innovation, creativity, leadership skills and knowledge stnecessary to compete successfully in the 21 century. This is

necessary to educate and equip both present and future

managers in the various sectors of the economy if the nation



must compete successfully in the global environment.

·Embrace Export-led Economic Framework: One of the

major challenges of the Nigerian economy is the imperatives

of an export led economic framework. The nation is in dire

need of an economic transformation agenda, featuring

diversification of its exports away from code oil and

embracing non-oil exports in agriculture, solid minerals and

manufactures. The challenges also include the production of

both intermediate and manufactured goods, in addition to

primary commodities which are already in abundance. A

break-through in export orientation would enhance the

revenue profile of Nigeria and diversify its foreign exchange

earnings. It would also remove the vulnerability associated

with the nation’s petroleum-driven economy, which is prone

to incessant market volatility that characterizes the global oil

and gas industry. An export-led economy therefore provides

Nigeria with the gateway into lucrative markets in both

industrialized and emerging economies, as well as the

springboard towards a stable, prosperous and dynamic

industrial economy.

4.3 ConclusionThe profile of the Nigerian economy reveals a paradox: On the one hand, the economy is endowed with a large stock of natural resources; on the other, the economy has shown a record of poor performance in the past few decades and is now ranked among the poorest in the world. The nation’s extreme reliance on the oil and gas industry, to the detriment of the real sectors, accounts for its poor performance trends. The development has unleashed macroeconomic shocks that continue to undermine the nation’s development prospects since the 1980s. Consequently, policy makers have initiated various economic reforms aimed at reversing the nation’s poor macroeconomic indicators. The challenges include the need to revive the agricultural and industrial sectors, while developing solid minerals to diversify and transform the economy into a major player in an increasingly competitive and global economic environment.

ReferencesAdenikinju, A. (2008): Country case study of the manufacturing sector:

Nigeria in: African Imperatives in the New World Trade order (Oyejide, T. and W. Lyakurwa, eds). African Economic Research Consortium. Nairobi.

Anyanwu, .J. Oyefusi, A. Oaikhenan, H. and F. Dimowo (1997): The structure ofThe Nigerian Economy (1960-1997). Joanee Educational Publishers.

Onitsha.Central Bank of Nigeria (CBN) (2000): The Changing structure of the

Nigerian Economy and Implication for Development. Research Department. Abuja.

CBN Statistical Bulletin (Various issues) Energy Information Administration (ETA) (2007): Nigeria Country

Analysis Brief. United States Department of Energy. Washington, D.C.

Human Rights Watch (HRW) (1999): The Price of Oil: Corporate Social Responsibility and the Human Rights Violation in Nigeria’s

Oil Producing Communities. New York.Iledare, W. and R. Suberu (2010): Oil and Gas Resources of the Federal

Republic of Nigeria. proceedings of an International Conference organized by the World Bank and the Forum of Federations on the Management of Oil and Gas in Federal

rd thSystem. 3 and 4 March, Washington, D.C. Igbatayo, S. (2008): The challenges of Natural Resources Management in

Nigeria and Implications for Sustainable Development. The certified National Accountant. Vol 16, No 4, October – December.

Kogbe, C. and A. Obialo (1974): A Statistics of Mineral Production in Nigeria, 1946-1974, and the contribution of the Mineral Industry to the Nigerian Economy in: Geology of Nigeria, Kogbe, C. (ed.). Elizabethan Publishing Co. Lagos.

Mobbs, P. (1998). The Mineral Industry of NigeriaNational Planning Commission (NPC)(2004): Nigeria: National

Economic Empowerment and Development Strategy. Abuja.Onah, F, (2001): Promotion of Economic Activities through the

Development of Solid Mineral Potentials in the States. thProceedings of the 10 Annual Conference of Zonal Research

Units. Central Bank of Nigeria. Abuja.United Nations (UN) (2001): Nigeria Common Country Development.

United Nation Agencies in Nigeria LagosUnited Nations Development Programme (UND) (2008): Human Development Report, 2008-2002. Achieving Growth with Equity. Abuja.

*The author is Dean, College of Business and Management Studies, Igbinedion University, Okada, Edo State.



1.0 IntroductionEnvironmental problems are international problems.

They are not just limited to Nigeria. Hence, given the huge number of environmental problems and their disparity, it is not an easy matter to identify their characteristic features; especially with the level of development in Nigeria. An environmental problem is any change of state in the physical environment which is brought about by human interference with the physical environment, and has effects which society deems unacceptable in the light of its shared norms. It constitutes an instance in which people’s behaviour affects their physical environment in such a way as to place their own health; other people’s health; the built environment or natural systems in jeopardy. This is the case where pollution occurs; where natural resources are exhausted; where natural features are damaged or degradation.

Environmental problems are both physical and social problems. This means that any study of the subject has to include their social context and the conflicts taking place within it. Modernization, urbanization and industrial revolution have had dramatic effects on the quality of the physical environment not only in terms of public health, but also of the disappearance of all sorts of age-old natural features. Extinction of plant and animal species are consequences of human behaviour. In all these instances of environmental problems, certain changes took place in the physical environment which were either difficult or impossible to reverse. Changes in the physical environment have created a new political challenge; the question of how to deal with the maintenance of the world’s basic stock of natural resources. Today’s

Environmental Accounting And Degradation

AbstractThis paper presents environmental accounting as an alternative paradigm to solving environmental degradation. As an early warning technique to be adopted at the initiation stage of every process of development; it will provide an understanding of the contribution of natural resources to economic well-being and the costs imposed by pollution or resource degradation. The paper also examines the various disciplines of environmental accounting and its applications and asserts that depletion of natural capital should be accounted for in the same way as other productive assets. It however notes the low level of compliance with existing regulations and the need for enlightenment to improve environmental responsibility on the part of individuals, organizations and government. The paper recommends the need to develop a framework or standards for environmental accounting and reporting. It suggests the need for accounting professionals to be trained in environmental accounting methods and that government should kick-start the implementation of environmental accounting to ensure a better understanding of the linkage between environment and the economy. Conclusively, the National Environmental Standards and Regulation’s Enforcement Agency (NESREA) and other regulatory organizations should step up enlightenment programmes on policies and laws on environmental protection to enable Nigeria develop sustainably.

Daferighe, Emmanuel Emeakponuzo

environmental problems are no longer incidental difficulties which can be resolved by means of ad hoc solutions. Environmental problems require a multidisciplinary approach for their solution. This paper presents Environmental Accounting as an alternative paradigm to dealing with environmental problems with particular reference to degradation.

The result of some human activities leaves the ecosystem worse-off comparatively. Most of such activities come through the release of waste as well as the extraction of environmental resources. Although benefits may accrue to some immediately, the consequences outweigh the benefits and those who benefit from environmental degradation usually ignore these problems. According to Chen et al (2002) soil degradation is lowering and losing of soil functions and is becoming more and more serious worldwide in recent decades, and poses a threat to agricultural production and terrestrial ecosystem. They state that an estimated two billion hectares of soil resources in the world have been degraded; which is about 22% of the total cropland, pasture, forest and woodland. The questions are how did our environmental problem arise; what efforts have been put in place to check/control this problem and how effective are these efforts? The objectives of this paper are to:

(i) examine environmental degradation and its threats to sustainable development;

(ii) examine existing efforts at checking environmental degradation;

(iii) present an alternative paradigm to solving environmental problem – Environmental Accounting; and




(iv) review regulatory and reporting framework.With tremendous increase in population and Neolithic

revolution (development of the human society from a hunting and gathering lifestyle to agriculture); agriculture and cattle breeding led to the need to develop techniques for food conservation. The Neolithic revolution is usually not regarded as a severe threat to the ability of the biosphere to sustain itself. Even though soil erosion, pollution, deforestation and land degradation did occur, sunlight still provided the primary energy source and people and their crops still neatly filled into the natural geocycles This was followed by Industrial and Green revolutions which saw the springing up of cottage industries and factories resulting in an increasing demand for machinery, coal and iron. Industrial production stimulated the development of means of transportation and the associated infrastructures. With revolutionary changes in agriculture, cultivation of new varieties of crops with the use of fertilizers, irrigation, fungicides and other pesticides; and other accompanying technological changes have had adverse environmental impacts. Both industrial and agricultural revolutions have had appreciable development which has been achieved by significantly altering the natural environment. Mineral resources are being used in a wasteful way and have been depleted, so also our fossil energy resources. Even worse, we are rapidly polluting the environment, making it less habitable for us humans, for our fellow creatures and for our and their offspring. An environmental disaster is inevitable; a social disaster looms.

2.0 Understanding Environmental DegradationEvery organism sees the environment as a resource

store which he can conveniently fall back on for his needs (Faniran and Ojo, 1981). However, efforts made by man to harness these environment-based resources have translated into environmental degradation. One of the damages caused by man is the indiscriminate release of pollutants into the ecosystem by industries. Environmental degradation relates to the depreciation in the qualities and quantities of vegetation, soil, air and water resources among other. However, Miller (1989) sees environmental degradation as a downward trend in the environmental resources such that their level of use in the human societies equally decreases at an increasing rate. Environmental resources cover soil resources, vegetation, mineral resources, air and water resources including sea animals and fishes, other animals and so on. The issue of environmental degradation comes into play when these resources dwindle in size.

The constituents of environmental degradation include; soil erosion, deforestation, animal extinction, land degradation, among others (Barrow, 1995; Odum,

1983). Environmental degradation may be in the form of chemical and biological degradation, aerobic and anaerobic biotransformation and mineralization processes. Deforestation is an example of both the scale on which and the rate at which we are changing our natural environment. The process has both local and global impacts of increasing erosion, the silting up of rivers, and the flooding of farmlands, loss of habitats for species and; accelerating and irreversible destruction of genetic diversity. The resultant effect is imbalance ecosystems. Deforestation which results in a net release of carbon dioxide contributes to the greenhouse effect. The amount of carbon dioxide released into the atmosphere has increased dramatically over the time. The concentration of other greenhouse gases— methane and nitrous oxide is also on the increase. Greenhouse gas emissions resulting from land use, land-use change and forestry includes deforestation and forest degradation. Nigeria, as at the year 2000, was 22nd position in a list of 100 top emitting countries. Worrisome is that this position does not reflect our level of development. It may just be that our priority and attitude to environmental degradation is not adequate. The effects have been a rise in the temperature on Earth and hence a rise in the sea level with a disastrous effect on the climate and human life. Late President Umaru Musa Yar’Adua in October 2008 declared that Nigeria’s annual losses from environmental degradation were an estimated 5.1 billion US Dollar.

Environmental degradation is a result of the dynamic interplay of socio-economic, institutional and technological activities. Environmental changes may be driven by many factors including economic growth, population growth, urbanization, intensification of agriculture, rising energy use and transportation.

The result of population growth; the development of technology and a desire to achieve economic growth that is highly dependent on intensive energy consumption and an intensive exploitation of natural resources have led to fundamental environmental changes; which should be of concern not only to the present generation but also constitute threats to future generations as well. I am not doom- mongering but to produce a sense of realism and a desire to identify the characteristic features of the problem in question.

The problem in question is adverse effects of economic behaviour which is widely regarded as a benefit rather than a problem. Natural resources are one of the key factors behind production decisions. The results of the economic process have an impact on the environment. Production and consumption may lead to a decline in the environmental quality that is needed in order to safeguard the continuity of the economic



process.Developing countries need to develop their resources

through industrialization so as to improve the quality of her people. Interestingly, industrialization leads to degradation of environment. The reduction in value and quality of the environment referred to as degradation could be caused by movement of waste, ozone layer depletion, endangered species and land use planning, management and control (Owolabi, 2000).

The issues are:l not enough attention is paid to the potential for

environmental degradation inherent in economic processes;l setting economic growth as a policy target

encourages environmental degradation ; and l environmental degradation is sustained by

international economic interdependences.Environmental degradation is — in economic

terms— an external effect passed on from those who produce the effects to society as a whole. Those responsible for the external effects of degradation are not compelled to pay for the resulting damage caused to nature, drinking water supplies or buildings. This insight has led some of us with interest in environmental issues to state that price stimuli should play an important role in the prevention of environmental problems. Prices must tell the social truth about the cost of environmental degradation.

Environmental degradation is not, however, simply a by-product of economic activity. It is also the consequence of the priorities set by governments in their economic policies. These policies are aimed at stimulating production and tend to ignore its environmental consequences. While there is on the one hand a need to move away from modern forms of economic development characterized by high levels of energy use and an intensive exploitation of natural resources, the presence on the other hand of widespread poverty forces many communities to aspire to short-term economic growth at any cost

In many cases, there is no other option but to treat the control of environmental degradation as a lower priority. The results of this trend are apparent in recent times. For instance, there is a tendency for companies to relocate to developing countries where the environmental requirements which they have to meet are not as strict as in other countries. Some firms which have set up in developing countries are so ‘dirty’ that they would not even be tolerated in other regions.

A country, like Nigeria, at a low level of economic development will find it practically impossible to take the necessary measures to prevent environmental degradation. Not only does it not have the financial means for buying the necessary technology and creating

the right infrastructure, but its economic priorities are also different.

It should be noted that the measurement of annual economic growth and output has been said to ignore declining productivity of soil, forests and fisheries as well as the degradation of the natural ecosystems. Unless these costs are adequately provided for, individuals cannot declare true profit and a nation also cannot claim real development.

Development cannot be said to be real except it is sustainable development. No wonder Adeyemi (2002) defines development as the emergence from a primitive state through progressive advancement in sustained socio-politico-economic growth and stability to improved standards of living for the citizenry.

World Commission on Environment and Development (WCED) (1987) defined sustainable development as a process in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations. On their part, Lee, Chung and Koo (2005) state that sustainability is the continuity of the environmental carrying capacity more or less indefinitely into the future. The fundamental measures of environmental sustainability are those related with the endowed environmental carrying capacity and eco-efficiency, which cannot be changed unless a society changes the way it produces and consumes. Therefore, for the environment to be sustainable, the society needs not only to limit the level of pollution, but also to improve the eco-efficiency of a society as a whole.

Environmental degradation can undermine economic development. It is therefore futile to attempt to deal with environmental problems without widening the perspective to encompass the economic system. The issue is who should pay and how the destruction to the ecosystem by man should accounted for.

3.0 Environmental Costs According to Marsh and Grossa (1996), the real and

intangible costs associated with air and water pollution and land ecosystem degradation and destruction, is borne by the society. Environmental costs, as described by Graff et al (1998), are impacts incurred by society, an organization or individual resulting from entities that affect environmental quality.

Environmental costs are generally defined narrowly. Environmental costs are those costs incurred in compliance with, or prevention of breach of, environmental law regulation and company policy. However, White, Becker and Savage (1993) categorize environmental costs into two major dimensions. Those



that directly impact on an organization’s bottom-line; they referred to as private costs. These they classified as Conventional costs, potentially Hidden costs; Contingent costs; and Image and Relationship costs.

The other dimension encompasses the cost to individuals, society and the environment for which the organization is not legally accountable; which they called societal costs. Societal costs also referred to externalities or external costs include environmental degradation for which organizations are not legally liable and also have adverse impacts on human beings, their property, and their welfare that cannot be compensated for through the legal system. They include damage caused to a river because of polluted wastewater discharges or to ecosystems from solid waste disposal or to asthmatics because of air pollutant emissions. Valuing these societal costs is both difficult and controversial.

In relation to environmental degradation, environmental cost could be said to include cost of preventing degradation, cost of bringing the environment to its former state, cost of making persons prevent degradation or cost of making them bring depleted environment to normal state or a combination of the above. Therefore, accounting for environmental costs needs an integrative approach which examines the interrelationship between accounting; the environment and management information; decision making and accountability.

4.0 In search of an Alternative Paradigm to solving Environmental Problems: Environmental Accounting to the rescue

There is the need to first understand what the subject Environmental accounting is all about. Environmental accounting can be considered a subset of accounting proper; because it aims to incorporate both economic and environmental information. It is a growing field that identifies, measures, and communicates costs from an organization’s actual or potential impact on the environment. Costs can include costs to clean up or remedy contaminated sites, environmental fines, penalties and taxes, purchase of pollution prevention technology and waste management costs.

Environmental accounting is an important tool for understanding the role played by the natural environment in the economy. Environmental accounts provide data which highlight both the contribution of natural resources to economic well-being and the costs imposed by pollution or resource degradation. Environmental accounting is on expansion path with increasing social focus on the environment; accounting fills an expectation role, to measure environmental performance.

An environmental accounting system is composed of

environmentally differentiated conventional accounting and ecological accounting. Environmentally differentiated accounting measures impact of the natural environment on an organization in monetary terms. Ecological accounting measures the impact an organization has on the environment, but in physical units (e.g. kilograms of waste produced, kilojoules of energy consumed) rather than in monetary terms.

‘Green’ or environmental accounting systems seek to capture either the physical side of sustainability; that is, dematerialization or its monetary value; this is, capital maintenance. Besides physical and monetary accounting; and an intermediate, hybrid (physical-monetary) approach has been adopted.

Physical accounts and hybrid accounts link physical environmental statistics to the national accounts. They are in termediate s teps towards in tegrated environmental-economic accounting. To this end, Material Flow Accounts (MFA) calculate aggregate indicators of Total Material Requirement (TMR) of the economy as well as Total Material Output (TMO) of wastes and pollutants.

Environmental accounting is a set of aggregate national data linking the environment to the economy, which will have a long-run impact on both economic and environmental policy-making. It is not valuation of environmental goods or services, social cost-benefit analysis of projects affecting the environment or disaggregated local data about the environment.

There is however close links between environmental accounting and these activities, which is why they are frequently discussed together and occasionally confused. Valuation refers to the process of deriving a monetary value for things which are not sold in the market. Valuation is an essential input into both social cost-benefit analysis and approaches to environmental accounting. It is only one element in the construction of environmental accounts.

According to Environmental Agency, UK (2006), Environmental Accounting is defined as the collection, analysis and assessment of environmental and financial performance data obtained from business management information systems, for example, environmental management and financial accounting systems.

It added that the taking of corrective management action to reduce environmental impacts and costs, plus where appropriate the external reporting of the environment and financial benefits in verified corporate environmental reports or published annual reports or audited accounts can be referred to as Environmental Accounting.

Env i ronmenta l accoun t ing invo lves the identification, compilation, analysis, use and reporting of environmental costs information. It refers to the


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estimation and reporting of environmental liabilities and financially material environmental cost.

Environmental accounting can be employed in every industry; no matter the size of the firm; small or large. However, top management support and cross-functional teams are essentials for its successful implementation.

Top management commitment can set a positive tone and incentive to adopt environmental accounting and because it is not solely an accounting issue, it is necessary to bring together professional experts to develop a common vision that will make environmental accounting a reality towards the attainment of the overall corporate objective.

Part from being a logical decision support tool, environmental accounting plays an effective part in new business approaches adopted by many companies. It is relevant in Activity Based Costing (ABC); Total Quality Management (TQM); Cost Reduction; Cost of Quality Model; Life-Cycle Design, and Life-Cycle Costing.

All of these approaches are compatible with environmental accounting and provide platforms for integrating environmental information into business decisions towards enhancing the corporate status of a company. In accounting for environmental costs, each type of cost is to be considered as it arises; so as to accord it the appropriate treatment in line with Generally Accepted Accounting Principles (GAAP). Some examples of environmental costs and the way they should be treated are:

(i) If not material, the expenditure is charged to the profit and loss account of the period in which it is incurred;

(ii) If material, the expenditure is disclosed as exceptional items and given full explanation in the note to the accounts;

(iii) Fines and penalties paid for non-compliance with regulations are charged to the profit and loss account in the period in which they are incurred, regardless of whether the activities that resulted in the penalties had taken place in an earlier accounting period;

(iv) If the expenditure is on fixed assets, it is capitalized and depreciated in the way any other tangible fixed asset should be treated;

(v) If the entity has to embark on fundamental reorganizations or restructuring or to discontinue particular activities in order to protect the environment, the costs (if material) should be treated as exceptional items and shown on the profit and loss account; and

(vi) If Research and Development (R&D) expenditure is incurred in respect of environmentally friendly products, processes or services, the provisions of the standard on accounting for research and development should be applied

Accounting professionals appears to focus on the role

of environmental accounting under consideration that environmental issues are fundamental to human survival. However, an environmental accounting framework is yet to be developed; such a framework when developed will contribute standards for reporting, and standards for accounting.

4.1 Environmental Accounting and its DisciplinesEnvironmental accounting can be broken into three

disciplines:(i) National Environmental Accounting(ii) Global Environmental Accounting(iii) Corporate Environmental Accounting

Figure 1: Environmental Accounting DisciplinesSource: Author’s Conceptualization

4.1.1 National Environmental AccountingNational Environmental Accounting is an accounting

approach that deals with economics on a national level. It is a macroeconomic measure that looks at the use of natural resources and the impacts of national policies on the environment. (US EPA, 1995; Jasch, 2006) Environmental accounting sometimes referred to as green accounting or integrated economic and environmental accounting refers to modification of the System of National Accounts to incorporate the use of depletion of natural resources. The System of National Accounts (SNA) is the set of accounts which national governments compile routinely to track the activity of their economies. SNA data are used to determine Gross Domestic Product (GDP), Gross National Product (GDP) etc. These indicators are used for policy analysis and economic monitoring purposes. The economic accounts are calculated across countries using a standard format developed by the United Nations Statistical Division (UNSTAT) for easy of comparison. However, there have been calls for reform of SNA as they do not include the full economic value of environmental resources or the role they play in productive activity.

Some of the elements missing from the accounts include:

Environmental expenditures. Expenditures to protect the environment from harm, or to mitigate that harm, cannot be identified from the data in the accounts. Such expenditures include costs incurred to prevent environmental harm such as pollution control equipment

Environmental Accounting

Corporate Environmental Accounting

Global Environmental Accounting

National Environmental Accounting

Environmental Management Accounting

Environmental Financial Accounting



divided into Environmental Management Accounting and Environmental Financial Accounting. In contrast to national environmental accounting, corporate environmental accounting focuses on the cost structure and environmental performance of a company (Odum, 1996).

(a) Environmental Management AccountingXiaomei (2004) defines Environmental Management

Accounting (EMA) as the identification, collection, estimation, analysis, internal reporting, and use of materials and information relating to energy flow and environmental and other costs for both conventional and environmental decision making within an organization. On their part, Bartolomeo et al (2000) define EMA as the generation, analysis and use of financial and related non-financial information, to support management within a company or business.

Environmental management accounting integrates corporate environmental and business policies, and thereby provides guidance on building a sustainable business. It analyses environmentally related financial costs and benefits, contributing to recognition of the high and increasing levels of capital and operating expenses, for pollution control equipment and environmental taxes. Also, possible environmental initiatives, such as incentive-based regulation, are incorporated in analysis and reporting (Fryxell and Vryza, 1999).

Companies in making internal business strategy decisions use environmental management accounting. The information gathering in the process according to Tennenbaum (1988) may be physical information on the use, flows and fates of energy, water and materials including waste or monetary information on environmental related costs, earning and savings. The main problems of EMA relate to the specification of environmental accounting information, the allocation of environmental costs, legislation issues and the lack of environmental accounting standards.

(b) Environmental Financial Accounting.Environmental Financial Accounting is used to provide

information needed by external stakeholders on a company financial status. This type of accounting allows companies to prepare financial reports for investors, lenders and other interested parties but focuses on environmental financial and non-financial data, such as, that given in environmental reports.

An inescapable feature of environmental accounting is the need for multiple disciplines. Inescapability is found in several dimensions of environmental accounting (Grinnell and Hunt, 2000). They state that first is the need to position environmental policy in the overall business policy and strategy; second are the disciplines involved in producing environmental accounts and their reporting; third is the audit requirement to assure compliance with environmental regulation and appropriate reporting by environmental accounting; fourth is education of students,

future practitioners, to provide technical; and legal basis in academic preparation and to avoid ‘discipline insularity’

Conclusively, accounting research; particularly environmental accounting needs to be interdisciplinary in nature. The contributions of other disciplines must be recognized.

4.2 Why Environmental Accounting?Environmental accounts are critical for managers and

policy makers at all level of governance. At the macroeconomic level, the Ministry of Finance needs to know whether the development strategy is laying the basis for long-term economic growth or not. A country like Nigeria which is dependent mainly on petroleum can only be economically sustainable if revenue from petroleum exploration is transformed into alternative assets. With environmental accounts, Nigeria can monitor this process, providing a sound basis for policy interventions consistent with sustainable development at each stage.

Environmental accounts provide the basis for answering questions such as:

* How much resources rent is being generated, and would different policies increase rent?

* How much resources rent is recovered through taxes and non-tax instrument?

* How much of the received rent is invested in other assets, providing the basis for sustainable long-term growth?

In Nigeria, the stated objective of the adopted Poverty Reduction Strategy Programme (PRSP) is to promote sustainable economic growth and poverty reduction. However, PRSP uses GDP as a primary macroeconomic indicator in their monitoring framework; consequently policy makers receive information about only half of the objective, short-term economic growth, but not sustainability of that growth. The long-term cost of environmental degradation; for example soil erosion, which is enormous undermine any short-term gains in GDP. Environmental accounts provide macroeconomic indicators of sustainability, such as changes in Total Wealth or Adjusted Net Savings, which are complementary to GDP.

The Ministry of Finance often makes budgetary allocations based on information from national accounts that underestimates the true contribution to the economy from the environment and natural resource sectors, resulting in misguided government policies and poor investment decisions.

Environmental Agency, UK (2006) states several reasons why business may consider adopting environmental accounting as part of their accounting system. These include:

(i) Possible significant reduction or elimination of environmental costs.

(ii) Environmental costs and benefits may be over looked or hidden in overhead accounts.

(iii) Possible revenue generation may offset

60Certified National Accountant JULY - SEPTEMBER, 2010


purchased by factories or catalytic converters in cars. They also include the costs of remedying that harm; medical expenses or replacement of property destroyed in landslides caused by deforestation. These expenditures are already included in the income accounts along with all other intermediate or final consumption. However, they cannot be disaggregated to highlight the costs incurred to prevent or mitigate environmental degradation.

Consumption of natural capital. The SNA treats the gradual depletion of physical capital – machine and other equipment – as depletion rather than income, in accordance with conventional business accounting principles. However, the depletion of natural capital – forests, in particular – is accounted for as income. Thus, the accounts of a country which harvests trees very quickly will show quite high income for a few years, but nothing will show the destruction of a productive asset, the forest. Those of us with interest in the environmental accounting are of the view that the depletion of natural capital should be accounted for in the same way as other productive assets.

Integration of sustainability and ecosystem valuation into economic growth has increasingly focused on ‘greening’ the national income accounts. Sustainable development serves as the stated objective of many development initiatives, most recently the Millennium Development Goals (MDG), but ecosystems are still deteriorating worldwide, and with them, the capacity to support human well-being.

One of the primary motivations for environmental accounting efforts was the concern that rapid economic growth in some countries was achieved through liquidation of natural capital – a temporary strategy that creates no basis for sustained advances in wealth and human well-being. Hence, the development of environmental accounts as a tool to promote sustainable development. The development of the System of Environmental and Economic Accounting (SEEA) under the UNSTAT provides a comprehensive and broadly accepted framework for incorporating the role of the environment and natural capital into the conventional system of national income accounts through a system of satellite accounts for the environment.

4.1.2 Global Environmental AccountingGlobal Environmental Accounting is an accounting

methodology that deals with energetic, ecology and economics at a global scale. The earth is the system of interest with the input, sequestration and dissipation of solar energy, which constitutes the energy budget (Odum, 1996; Tennenbaum, 1988).

The SNA is a complex system which follows a number of widely-accepted accounting conventions. These conventions ensure logical consistency across the different components of the accounts, guaranteeing that a given type of entry has the same meaning in all contexts and in all countries. This standardization is essential for the accounts to be a reliable source of comparable data about the

economies of many different countries.Unfortunately, this standardization has made it difficult

to change the SNA in order to introduce a quite different issue like the goods and services provided by the environment. The difficulty arises primarily because most environmental goods and services are not traded in conventional markets; thus it is hard both to define discrete products and to put a monetary value on them.

Some of the most important debates concern the following issues:

Physical verse monetary accounts. Physical accounts only include information about natural characteristic of the environment and its use; the size of forests or mineral reserves, the quality of water or air, the depth of topsoil etc. In contrast, monetary accounts place an economic value on those characteristics or their use, so as to understand the role they play in the economy. Given the difficulty of estimating the monetary value of certain aspects of the environment, some individuals and countries advocate development of only physical accounts.

Integrated accounts verse satellite accounts. Integrated accounts change the calculation of GDP, GNP and other key national indicators. Satellite accounts are linked to the SNA, but do not change either the calculation of key indicators or the central framework of the accounts. The advantage of satellite accounts is that they allow the accountants to violate some of the conventions of the SNA in ways quite useful for environmental data, without threatening the consistency of the information in the conventional accounts. However, because they do not change GDP or GNP, they do not correct the distortions inherent in those indicators.

Inclusion of ‘maintenance costs’. Maintenance costs are the expenditures that a country would have to make in order for its use of the environment to be sustainable. Some experts on environmental accounting believe that these should be deducted from the accounts to arrive at a correct level of ‘green’ economic activity. Others argue that estimation of such costs is highly subjective and subtracting them from indicators like GDP is misleading.

Valuation of non-marketed environmental services. Most approaches to environmental accounting do not include this item because the valuation required is difficult and subjective. However, it is of interest to environmentalists in many countries, so its inclusion still warrants strong consideration.

The way these issues are resolved determines how environmental accounts are used to support policy-making. Moreover, if the international community can come to consensus; irrespective of the methods they choose; their agreement on one set of standard accounting principles will encourage many hesitant governments to move into this relative new arena.

4.1.3 Corporate Environmental Accounting Corporate environmental accounting can be further sub-



environmental costs (e.g. transfer of pollution allowances).

(iv) Improved environmental performance which may have a positive impact on human health and business success.

(v) May result in more accurate costing or pricing of products and more environmentally desired processes.

(vi) Possible competitive advantages as customers may prefer environmentally friendly products and services.

(vii) Can support the development and running of an overall environmental management system, which may be required by regulation for some types of businesses.

US EPA (1995) highlights seven benefits from adopting environmental accounting by a company as follows:

(i) Provides better estimates of the true cost to the firm of producing a product. This improves pricing and hence profitability.

(ii) Allocates costs to the appropriate product, process, system or facility and thus reveals costs to the responsible managers.

(iii) Assists managers in targeting cost reduction, improving environmental quality and in reinforcing quality principles.

(iv) Motivates staff to search for creative ways to reduce environmental costs;

(v) Encourages changes in processes to reduce waste, reduce resources use, recycle waste or identify markets for waste;

(vi) Increase employee awareness of occupational health and safety issues; and

(vii) Increases the likelihood of the company having a competitive advantage and greater customer acceptance of the firm’s product or service.

4.3 Applicability of Environmental AccountingEnvironmental accounts include the value of all

ecosystem goods and services, providing the information necessary to support:

* better allocations from the current budget to support management of environment and natural resource sectors;

* better guidance to business about most efficient private sector investments; and

* better infrastructure investment decisions that reflect all the potential gains from sustainable management of environment and natural resource sectors.

Environmental accounts are also used to assess ways of addressing problems arising from other kinds of pollution, energy and material use, taxes, emission trading schemes, vehicle emission standards etc. Environment and natural resources sectors can build more effective cross-ministerial alliances by demonstrating the contribution of, for example, forests to other sectors such as agriculture, fisheries, and tourism. This can be a basis for improved forest management. It will be easy to determine how logging concessions will affect water supply, opportunities for agriculture and tourism.

maximization of a firm, environmental accounting should be applied in its operations - cost allocation, capital budgeting and process/product design. Numerous observers have recognized the complexity, consequences and necessity of rationalizing accounting systems to ensure proper allocation of costs to the sources within the firms that are responsible for such costs (Cooper et al, 1992; Johnson and Kaplan, 1991; Ness and Cucuzza, 1995; Todd, 1994).

Through the application of environmental accounting; management in particular, and other concerned stakeholders can identify environmental cost. Hence, they are motivated to find ways of reducing or avoiding those costs while at the same time improving environmental quality. This is the conceptual cornerstone of Activity Based Costing, (Schaltegger and Muller, 1997).

It may be easier to include environmental cost in capital budgeting, if existing processes; system and products are already being assigned environmental costs in cost accounting systems. Integrating environmental accounting into capital budgeting involves:

*Quantifying environmental costs *Allocating and projecting environmental costs and

benefits *Using appropriate financial indicators *Setting reasonable time horizon that captures

environmental benefits. The design of a process or product would certainly have

significant impact on environmental costs and performance. Hence, companies should adopt ‘Life cycle design” programmes to take environmental considerations into account at an early stage.

4.4 Challenges of Environmental AccountingThe hitherto discipline of environmental accounting

which is an emerging and contemporary field has not been without challenges. Some of these challenges are highlighted below:

The costing of environmental impacts in terms of national capital consumption requires putting a money value on the physical changes of natural capital, that is, changes in the availability of its resources, sink and possibly other ecological functions. This is a prerequisite for maintaining the accounting concepts and equations and compiling the adjusted economic aggregates. However, the imputation of monetary values on non-market transactions and processes has been challenged, not only by environmentalists but also by accountants.

In environmental accounts, market prices can be estimated by different valuation techniques or could be modeled for the achievement of environmental targets and shadows prices. Three commonly proposed valuation techniques of assessing environmental impacts and repercussions are:

*Market valuation – uses prices for natural assets which are observed in the market. Where market prices for



natural resources stocks are not available, the economic value of these assets can be derived from the – discounted-sum of net returns, obtained from their potential use in production. Market valuation also applied to changes in asset values caused by depletion. Depletion cost allowances call for the re-investment of environmental cost in any income-generating activity such as capital formation or financial investment.

Another problem is the difficulties of measuring capital depreciation that made GDP the standard for measuring overall economic performance and growth. Environmental protection expenditures though identified in separate classifications, are not deducted from GDP as a ‘defense’ against welfare losses. The reasons are difficulties of distinguishing between welfare improving and maintaining outlays, the objective of measuring income, consumption and production rather than welfare, and the need for maintaining accounting balances and equations.

*The answer to this problem is maintenance valuation – it permits the costing of losses of environmental functions that are typically not traded in markets. Environmental externalities of pollution can indeed be of far greater importance than natural resources depletion. Maintenance costs are therefore those that would have been incurred if the environment had been used in such a way as not to have affected its future use.

Maintenance costs are the missed-opportunity costs of avoiding the environmental impacts caused during the accounting period. They refer to best-available technologies or production processes with which to avoid, mitigate or reduce environmental impacts. As with depreciation allowances for productive capital; such costing can be seen as estimating the funds required for re-investing in capital maintenance.

*The other technique is contingent and related damage valuation – it refers to the ultimate welfare effects (damages) of environmental impacts,hich are quite impossible to trace back to causing agents.

The UN System for Integrated Environmental and Economic Accounting (SEEA) frowns at the aggregative use of indicators for assessment of ecological sustainability. The reason is the problem of assessing the significance of diverse environmental impacts by weight of materials and substances.

The use of Environmental Condition Indicators (ECIs) which measure the quality of the environment and are used to assess the impact of emission on air or water quality should be a way out. The indicators can be separately presented as:

*absolute figures, like tonnes of waste per year*relative figures compared to other parameters such as

production volume, production hours, sales (turnover) and number of employees

*percentages in relation to a baseline like hazardous waste as a percentage of total waste, or hazardous waste as a percentage of the previous year.

*Jasch and Rauberger (1997) suggest principles to be adopted in installing an indicator system as: relevance, understanding, target, orientation, consistency and comparability.

5.0 The Need for Environmental Reporting From the first world environment conference, UN

Conference on Human Development held in Stockholm in 1972, through the 1988 Intergovernmental Panel on Climate Change (IPCC) by UN to collect scientific evidence and the Rio de Janeiro Conference of 1992 to Copenhagen Conference of 2009, there have been timeline of main events in relation to climate change and international politics on environmental problems.

Many well-publicized environmental disasters occurred in the late 1980s that led to the creation of awareness for the need for environmental reporting. Bagley (1995) reported some of those disasters as:

The Union Carbide disaster at a pesticide factory outside of Bhopal, India when some 40 tonnes of methyl isocyanate gas was emitted from the plant on 3 December, 1984. As at 1991, more than 3,800 persons had died as a result of the accident, and 20,000 were left seriously disabled.

The explosion at the Chemobyl nuclear power plant in the former Soviet Union in 1986, which released a radioactive cloud that spread over the Soviet Union and across Europe.

The oil spill from the tanker Exxon Valdez into the water of Prince William Sound in Alaska on 24 March, 1989. More than 36,000 migrating birds were killed, an estimated 1,000 miles of shoreline was affected, and one of the world’s richest Salmon fisheries was greatly impaired.

Environmental reporting according to US EPA (1995) is the disclosure of information relating to an organization’s environmental effects and its contribution to sustainable development. Environmental reporting is the disclosure of information of the effect that the operations of an entity has on the natural environment. This disclosure could be in the entity’s published annual report or in separate environmental report. Environmental reporting has since evolved into sustainability reporting which incorporates the triple bottom line of environmental, social and economic information and it focuses on continue improvement.

There has been a growing recognition of the importance of transparency for economic growth and social development. Also, there have been calls from civil society and a broader range of stakeholders for greater transparency and accountability to aid decision-making (PR News Wire Association LLC, 1996-2007).

A recent initiative encouraging transparency which can help strengthen reporting in the extractive industry sectors is Nigeria Extractive Industries Transparency Initiative (NEITI) launched in February, 2004. While substantial efforts have already been undertaken in the reporting area, continued action is necessary to strengthen transparency.



ecocentricAnthropocentrismThe anthropocentric theory is human-centered and

expressed the view that all environmental responsibilities are derived from human interest alone. The assumption is that only human beings are morally significant persons and have a direct moral standing.

Anthropocentrism or human-centeredness is believed by some to be the central problematic concept in environmental philosophy, where it is used to draw attention to a systematic bias in traditional western attitudes to the non-human world (Ness, 1973). Biocentrism

The second theory of moral responsibility to the environment is biocentric. It is a life-centered theory, which states that all forms of life have an inherent right to exist. Biocentrism is most commonly defined as the belief that all forms of life are equally valuable and humanity is not the centre of existence.

Biocentric positions generally advocates a focus on the well-being of all life in the consideration of ecological, political and economic issues. Animal rights theorist contends that if the suffering of all beings is minimized, then the environmental destruction will be appeased. They segregate living organisms into a hierarchy based upon moral criterion such as sentience or a basal level intelligence (Singer, 1990). Ecocentrism

The theory of ecocentricism is more holistic in its approach, typically building upon the interdependence of each organism, species, community and ecosystem. It often sees that acts of destruction against a specie have a ripple effect; affecting other symbiotic species and thus the stability of the entire biological community and ecosystem. The environment is considered to be in a moral par with humans

Many tasks of industry, such as procuring raw materials, manufacturing and marketing, and disposing of wastes, are in large part responsible for pollution. This is not because any industry or company has adopted pollution as a corporate policy.

When raw materials are processed, some waste is inevitable. It is usually not possible to completely control the dispersal of all by-products of a manufacturing process. The cost of controlling waste can be very important in determining a company’s profit margins.

Protecting the environment involves meeting the need of both current and future generations. Welford (1996) examines the various approaches to environmental policy to get businesses to improve their environmental performances, and how business itself influences that policy. These approaches according to him are: the free market approach and self-regulation; the reformist approach and financial incentives; and the interventionist approach and legislation.

8.0 ConclusionIn Nigeria, environmental problems are of concern to

government and a reasonable amount is claimed to be spent

periodically to tackle environmental degradation problem. Organizations, especially industries causing these harms have shown very little commitment to the menace; this is not be unconnected with lack of appropriate standards on environmental accounting and reporting and weak or enforcement problems of existing regulations (Asaolu and Daferighe, forthcoming).

According to Osae-Addo (1992), over 80% of industries in Nigeria discharge solid, liquid and gaseous effluent directly into the environment without any treatment. Furthermore, he added that only 18% of industries perform even rudimentary recycling before disposing off wastes. Expanding urban populations exacerbate the impact of industrial pollutions, as people are forced to live in crowded, unsanitary communities near industries.

Both FEPA and the World Bank determined that degradation of environmental quality is most severe in the four states that contain 80 percent of the nations industries Lagos, Rivers, Kano and Kaduna (Osae-Addo 1992).

There is the need for environmental sustainability. Environmental sustainability is ensuring the needs of the present generation without compromising environmental carrying capacity for the future generation. Maintaining environmental sustainability needs not only to limit pollution and degradation but also to ensure eco-efficiency in meeting the needs of the present generation.

Green accounting especially in developing countries like Nigeria is mostly needed owing to the fact that the country is a resource-dependent economy where faulty economic treatment of environmental changes is likely to be associated with large-scale misallocation of national resources. One particular strength of green or environmental accounting is the measurement of environmental depletion and degradation costs caused by economic agents. The policy concern is to hold the responsible agents accountable for these costs.

This development places impetus on the need to have standards in environmental accounting; these are reliable measures of environmental impacts, assets and liabilities. The failure to value ecosystem services is a major contributing cause to the problem of degradation. As part of the solution, the economic background to decision-making should be changed so that policy making and planning take into account the full value of ecosystem services; market and non-market. What is needed to achieve this is a framework that is quantitative and comprehensive with respect to the environment and can be reliably integrated with economic accounts used for decision-making.

A concise way to view environmental accounting discipline in producing environmental accounts is to consider the goals of the users. According to Bebbington (1997), these include to:

*assure compliance with regulations; *increase efficiency of resource use, energy and

material, and to decrease waste; *reduce or minimize damage to the environment over



It is essential that environmental accounting reporting should be given a pride of place, as it is relevant to: Risk Management, Government, L e g a l N e e d s , Accounting Requirements, Competition, Communities, Certification Need, Investors’ interest, Contractors and Environmental Groups.

Accountants have the potential to play a crucial role in environmental management and reporting through their managerial; performance measurement and evaluation; auditing and reporting skills. If environmental accounting is the enabling vehicle to form a common basis for users of the environment; both internal and external; the effective vehicle is environmental reporting (Dorweiler and Yakhou, 2002).

Reporting portrays accountability to outside interests. These interests may require openness and transparency regarding the environment, and require change in the organization, changes in business products and processes and changes in organization structure. The projection is for change to occur in other business areas (Bebbington, 1997; Reynolds and Reynolds, 2001).

6.0 Examining Regulatory and Reporting Framework

In Nigeria the periods before 1988 was characterized by a near total lack of public awareness concerning environmental protection and development. Issues as biodiversity, conservation, effluent limitations, pollution abatement and sustainable development of natural resources did not form part of the general public discourse.

At the official level, there was a slow realization of the interdependence of environment and development. This was evidenced by the absence of a deliberate national policy aimed at protecting the environment while ensuring the conservation and sustainable use of natural resources. The absence of such policy meant the non-existence of an agency entrusted with the responsibility for the protection and the development of the environment.

Real environmental legislation in Nigeria was a product of National emergency. The development of environmental regulation was greatly aided in the late 1980s by the Koko toxic and hazardous waste dump of 1987. The Koko episode propelled the Federal Government to reassess the general state of its environmental regulation, thus revealing the inadequacy of the legal framework for environmental protection in Nigeria. This gave rise to the first decree in that respect.

Some main environmental laws in Nigeria include:(a) The National Effluent Limitation Regulation S.1.8 of

1991, which makes it mandatory for industrial facilities to install anti-pollution equipment.

(b) The Pollution Abatement in Industries and Facilities Generating Wastes- Regulations S.1.9 of 1999, which among other things impose restriction on the release of toxic substances and stipulates requirements for monitoring of pollution; to ensure that permissible limits are not exceeded

as well as spelling out generator’s liability. (c) The Solid and Hazardous Waste Management

Regulation S.1.15 of 1991, which regulates the collection, treatment and disposal of solid and hazardous waste from municipal and industrial sources. The regulation also provides a list of over 1000 hazardous chemicals to be controlled by FEPA by toxicity category

(d) The Harmful Wastes (Criminal Provisions) Act 42 of 1988, which sentences individuals who trade, dispose, or transport toxic waste in Nigeria or its Exclusive Economic Zone to life imprisonment. Koko toxic dump in Delta State in 1988 gave rise to this Act.

(e) The Environmental Impact Assessment (EIA) Act 86 of 1992, which provides the procedure for conducting an EIA of any major development. The sectoral guidelines for the EIA Act have now being developed for oil and gas, mining, agricultural, manufacturing and infrastructure sectors.

(f) The Sea Fisheries and Inland Fisheries Act, 1992, which controls access to fisheries resources. The Act includes wide provisions for the regulation of catch species, sizes and fishing zones. The regulation sets minimum net size for both finfish and shrimp.

(g) Federal Environmental Protection Agency (FEPA) Act, No. 58 of 1988 amended Decree No. 59 of 1992. The Act specifies establishment, membership, functions and powers of the Federal Environmental Protection Agency and National Environmental Standards.

In 2007, the National Environmental Standards and Regulations Enforcement Agency (NESREA) Act repealed the FEPA Act. NESREA has amongst other functions the power to enforce compliance with laws, guidelines, policies and standards on environmental matters. The issue is how effective has the Agency been in the enforcement of compliance and also of note is its lack of jurisdiction over environmental matters emanating from the oil and gas sector.

7.0 Environmental Theories and EthicsIn this era of globalization and industrial development,

there is strong interdependence between human development and the environment. Self-consciousness and intelligent management of the earth is one of the greatest challenges facing humanity. There is therefore the need for a new environmental ethic to meet these challenges.

Science and environmental policies are the most commonly accepted options for dealing with this crisis. The environmental crisis is primarily a consequence of human action. Therefore, there is the need to question the most fundamental values. This highlights the importance of ethical thinking in relations to the environmental crisis. The three main classes of ethical theory are teleological, utilitarian and deontological.

Environmental ethic is a topic in applied ethics which examines the moral basis of environmental responsibility. There are three primary theories of moral responsibility to the environment. These are anthropocentric, biocentric and



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Daferighe, E. E. and Aje, S. O. (2005). “Management of Environmental Accounting System”. International Journal of Economic and Development Issues Vol.5, No 1&2, pp.204-213.

Dorweiler, V.P. and Yakhou, M. (2002). Dimensionality of environmental accounting. Journal of Accounting and Finance Research, Vol 9(4) pp47-64.

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*The author is a lecturer at the Department of Accounting, Faculty of Business Administration, University of Uyo, Nigeria.



the life-cycle of products and processes; and *continually improve environmental performance in

the above areas.Specifically, regarding environmental accounting,

quantifying environmental costs is a target within accounting. It is obviously unfortunate that development policies aimed at reducing poverty that ignore the impact of our current behaviour on the natural environment may well be doomed to failure.

9.0 The Way Forward: Policy RecommendationsThe issues of environmental degradation which is a

serious environmental problem should be of concern to government and organizations as well. To this end the following recommendations are advanced here as the way forward:

(i) the environmental accounting discipline need to develop a framework that would contribute standards for accounting and reporting. The emphasis here is on framework as it will:

*raise awareness of environmental issues; *develop guidelines to assist identification of

environmental issues and evaluation and reporting of those issues;

*develop practices of environmental accounting, with recommendations on best practices; and

*provide direction to link teaching with developments and practices in business.

(ii) Accounting professional need to be trained in environmental accounting methods and have appropriate guidelines to follow. Hence, the Nigerian Accounting Standards Board (NASB) should think of having an accounting standard that will have a framework to extend practices to include costing and methods of pollution control; comparing alternative materials to be used, investigating possible recycling alternatives etc.

(iii) Government should step-up its enlightenment programme on policies and laws on environmental protection in order to increase awareness amongst organizations operating in the country. Also, the relevant agencies such as NESREA should review some of the existing regulations where necessary and ensure enforcement and compliance with these policies and laws.

(iv) At the corporate level, investment should be on cleaner or ‘green’ technology to ensure the design of environmentally preferable processes and products. Hence, Daferighe and Aje (2005) recommend that companies in Nigeria should seek, understand and apply environmental accounting techniques to their cost allocation, pricing/product design and capital budgeting processes with a view to achieving a better corporate performance.

(v) Government should support implementation of environmental accounts, and the indicators and policy analyses based on environmental accounts. It should build sufficient awareness and support for environmental

accounting to ensure a more thorough way to compile national accounts. A major focus should be also to influence Multinational and national agencies to mainstream environmental accounting in their programmes.

( v i ) A n i n t e r d i s c i p l i n a r y p o l i c y r e s e a r c h programme/group should be set up to address critical issues related to asset valuation and particularly accounting for ecosystem goods and services.

(vii) Government in the implementation of its Poverty Reduction Strategy Programme (PRSP) and Millennium Development Goals (MDG) should ensure a better understanding of the linkages between environment and the economy. The problem of environmental degradation affecting well-being and imposing excessive costs should be tackled through adoption of environmental accounting.

(viii) Nigeria as a developing and resource-dependent economy should quickly establish a system of environmental accounting for treatment of economic changes to avoid misallocation of natural resources. The example of Indonesia, Namibia, The Netherlands, Costa Rica and The Philippines should be understudied.

In conclusion, a major step is to support implementation of environmental accounting and to advance environmental accounting in several critical areas such as accounting for ecosystems, if Nigeria is to develop sustainably. Appropriate legislations and standards should be used to provide a regulatory framework for environmental accounting. When done rightly, environmental accounting could help us shape the fate of the country.

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ASSOCIATION OF NATIONALACCOUNTANTS OF NIGERIA(Founded in 1979 and Chartered by Act No. 76 of 1993)

NIGERIAN COLLEGE OF ACCOUNTANCY, JOSADMISSION TO EACH ACADEMIC SESSION

Applications are invited from qualified candidates for admission to each Academic Session commencing in September and ending in following May.

REQUIREMENTS:(A) Bachelor of Science (B.Sc) in Accountancy of any NUC accredited Nigerian

University, or any approved Overseas University;(B) Higher National Diploma in Accountancy (HND) or any NBTE accredited Nigerian

Polytechnic.

NOTE:

Any applicant who is a graduate of an Overseas University/Polytechnics is required to provide Transcript of his/her academic records properly issued and signed by the Registrar of the institution.

Holder of B.Sc/HND in Business Administration, Economics and Banking and Finance, may be admitted to the CONVERSION PROGRAMME, which after nine months, qualifies a candidate for admission to the Professional Class.

METHOD OF APPLICATION

Request for Application Form should be made direct to:Director-General, Nigerian College of Accountancy,No. 42T, Bauchi Ring Road, Dogon-Dutse, P.M.B. 2734, Jos, Plateau State.Candidates should enclose self-addressed envelope (30cm x 22.5cm) with N50 stamp affixed.

AN APPLICATION FEE OF N5,000 IN BANK DRAFT MADE PAYABLE TO THE NIGERIAN COLLEGE OF ACCOUNTANCY, JOS, should accompany the request for forms. Personal cheques or Postal Orders WILL NOT BE ACCEPTED.

The INFORMATION BOOKLET of the College giving details of existing syllabus and other requirements, can also be obtained for a token fee of N500.

DIRECTOR-GENERAL,Nigerian College of Accountancy,Jos.

Certified National Accountant OCTOBER - DECEMBER, 201068Certified National Accountant OCTOBER - DECEMBER, 2010

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