ASSESSMENT ON MISMANAGEMENT AND EMBEZZLEMENT OF FUNDS IN PUBLIC SECTORS A STUDY OF OBOWO LOCAL GOVERNMENT COUNCIL, IMO STATE

CHAPTER ONE INTRODUCTION 1.1 Background of the study Financial mismanagement is increasingly being scrutinised globally, as numerous countries are making intentional and substantial efforts to improve the management of public funds. Financial misappropriation represents a worldwide challenge that profoundly affects socioeconomic conditions, especially in developing nations (Tutino & Merlo, 2019). The improper handling of public funds is associated with misuse and potential loss of resources, leading to apprehensions regarding the trustworthiness of those overseeing the funds. Misappropriation refers to a deliberate act of misusing funds (World Bank 2020). It involves the misallocation of resources and assets that were specifically earmarked for an official function, repurposed for personal gain or for unintended uses. This represents an unlawful use of funds or other resources for individual gain (Adebayo, & Ilesanmi 2020). Misappropriation represents a grave form of fraud within the public sector, as individuals intentionally redirect public funds for their own benefit, disregarding the repercussions of their actions. The challenge of mismanagement and embezzlement of funds within public sectors continues to be a significant concern that detracts from institutional efficiency and diminishes public trust (Adebayo, & Ilesanmi 2020). Mismanagement entails the inadequate administration of resources, frequently marked by inefficiency, carelessness, or suboptimal decision-making, whereas embezzlement signifies the blatant theft or misappropriation of funds by those who have been given responsibility for their oversight. The effectiveness of public institutions in providing essential services and meeting their mandates is notably undermined by these practices (World Bank 2020). In many developing nations, Nigeria included, public sectors have increasingly emerged as environments conducive to financial impropriety. Inadequate oversight frameworks and policies frequently serve as the starting point for mismanagement, creating opportunities for exploitation. Abdulkareem (2020) highlights the patterns of corruption within Nigeria's public healthcare system, emphasising the detrimental effects of mismanagement and embezzlement on service delivery in institutions such as Ahmadu Bello University Teaching Hospital. This claim is additionally reinforced by Owolabi and Ogunode (2020), who emphasise the ongoing deficiency in accountability within the public sector as a significant factor facilitating the misappropriation of funds. The persistent nature of this issue is further highlighted by Nkak (2020), who points out the deficiencies in internal audit systems that do not adequately address financial mismanagement. Adebayo and Ilesanmi (2020) highlight that the Nigerian public sector is plagued by systemic deficiencies that obstruct effective financial resource management, thereby creating an environment conducive to embezzlement. In a similar vein, Ali (2021) argues that insufficient tools and procedures for managing financial activities in the public sector intensify the misappropriation of funds. The ineffective handling of resources not only reduces the efficiency of public institutions but also results in considerable waste of limited resources, as noted by Afolabi, Ibem, Aduwo, and Tunji-Olayeni (2020) in their analysis of digitising Nigeria's public procurement system. The assertion is made that the implementation of e-procurement technologies has the potential to alleviate these inefficiencies through improved transparency and accountability. The historical occurrence of embezzlement and mismanagement of funds is a well-established issue. Numerous governmental initiatives and reforms designed to tackle these challenges have been significantly compromised by deeply rooted practices of corruption and collusion among public officials. Yakub (2020) emphasises the shortcomings of punitive measures such as the Kano State Sharia Penal Code Law in addressing embezzlement, suggesting that a focus on systemic change is essential rather than depending solely on legal deterrents. Onwujekwe et al. (2019) highlight the deep-rooted nature of corruption within Anglophone West African health systems, pointing out that embezzlement frequently flourishes in the absence of transparency and accountability measures. Furthermore, the work of Jeff-Anyeneh, Ezu, and Ananwude (2019) illustrates that poor management of government expenditures frequently leads to the misallocation and embezzlement of public funds, ultimately hindering industrial development and other vital sectors of growth. Addressing the mismanagement and embezzlement of funds in public sectors is frequently obstructed by a prevailing culture of impunity and inadequate institutional frameworks. Adebayo and Ilesanmi (2020) contend that policy measures should concentrate on rectifying the systemic deficiencies that facilitate mismanagement. These encompass the fortification of internal controls, the augmentation of oversight functions, and the encouragement of ethical practices among public officials. Kumasey and Hossain (2020) highlight the significance of social capital and leadership in addressing dysfunctional behaviours within public service, asserting that trust and accountability are crucial elements for a successful public sector. Abdulkareem (2020) emphasises the necessity for focused strategies within certain organisations affected by corruption, particularly in public hospitals, where the repercussions of financial mismanagement are especially severe for at-risk communities. In light of various reforms and anti-corruption initiatives, it is evident that the ongoing mismanagement and embezzlement of funds persistently hinder the efficiency of the public sector. The continuation of these practices can be attributed, in part, to the shortcomings of current measures in tackling the fundamental causes of financial misconduct. Nkak (2020) highlights that internal audits, essential for overseeing and managing public sector finances, frequently suffer from issues of independence and political interference. In a similar vein, Afolabi et al. (2020) highlight deficiencies within the Nigerian public procurement system, which continues to be vulnerable to manipulation and misuse, even with efforts to enhance it via e-procurement technologies. Ali (2021) critiques the lack of strong financial management tools as a significant barrier to preventing embezzlement, emphasising the necessity for innovative strategies in resource management within the public sector. Eventually, the widespread occurrence of mismanagement and embezzlement within public sectors underscores the pressing necessity for comprehensive reforms. These encompass the establishment of more rigorous accountability protocols, the integration of technology-based solutions, and the fostering of a culture rooted in transparency and integrity. Abdulkareem (2020) emphasises the critical role of institutional accountability in tackling corruption, whereas Adebayo and Ilesanmi (2020) support the development of thorough policy frameworks to eliminate loopholes that enable financial misconduct. Onwujekwe et al. (2019) contend that addressing corruption in public sectors necessitates an indepth strategy, which involves enhancing governance frameworks and encouraging increased public involvement in monitoring and evaluation activities. Solving these issues transcends mere policy considerations; it represents a vital step in rebuilding public trust and guaranteeing the efficient provision of essential services. 1.2 Statement of the Problem The mismanagement and embezzlement of funds within public sectors continue to be a significant concern in Nigeria, eroding the fundamental principles of transparency, accountability, and effective governance (Yakub, 2020). This systemic issue is notably apparent in local government councils, like Obowo Local Government Council in Imo State, where the mismanagement of public resources persists in obstructing the provision of essential services and sustainable development efforts. In this context, mismanagement and embezzlement are evident through intentional breaches of financial protocols, insufficient oversight mechanisms, and unethical conduct by officials. Abdulkareem (2020) highlights that the patterns of corruption within public institutions are deeply rooted in fragile institutional frameworks, enabling officials to bypass financial regulations. This dysfunction has undermined public confidence, intensifying inefficiencies in local governance structures. The persistent misuse of financial resources within the Obowo Local Government Council has fostered an environment characterised by inefficiency and a lack of progress. The misappropriation of designated funds by individuals charged with public service duties has resulted in the ongoing inadequacy of the council in achieving its developmental goals (Yakub, 2020). For instance, initiatives aimed at enhancing community welfare frequently end up unfinished, neglected, or inadequately implemented because resources are redirected for individual gain. Adebayo and Ilesanmi (2020) highlight that the absence of robust financial resource management policies significantly contributes to these challenges, exacerbating local governments' struggles to meet their obligations. This situation not only weakens governance but also breeds dissatisfaction among the populace, who find themselves disenchanted by the lack of substantial advancement. The lack of sufficient checks and balances has consistently played a role in the issues faced by Obowo Local Government Council. Afolabi et al. (2020) contend that the implementation of e-procurement systems can effectively address ambiguities in public procurement processes by improving transparency and accountability. Nevertheless, in numerous local councils, such groundbreaking technologies are often not fully leveraged, creating an environment where unethical practices can thrive. In Obowo, the conventional and unclear approaches to fund disbursement and procurement have fostered a situation where dishonest officials can exploit financial processes without being noticed. Consequently, funds allocated for vital infrastructure, education, healthcare, and other essential services are frequently syphoned off into private accounts, resulting in the community being stripped of fundamental amenities. Furthermore, the ongoing culture of impunity within local government frameworks, such as Obowo, continues to exacerbate issues of mismanagement and embezzlement. Nkak (2020) emphasises the vital importance of internal audits in preventing fund misappropriation, asserting that strong auditing systems are crucial for safeguarding against financial abuses. Nonetheless, in numerous instances, internal audits within local councils are either inadequately executed or swayed by the very officials involved in corrupt activities (Yakub, 2020). The absence of accountability measures has empowered public officials, leading to a normalisation of mismanagement within the council's operations. The consequences of these actions extend widely, as the resources diverted through these unethical practices frequently account for a substantial share of the budget that might have been directed towards essential developmental initiatives. The mismanagement and embezzlement of funds within Obowo Local Government Council are further compounded by the inadequate enforcement of anti-corruption policies and the ineffective prosecution of offenders. Ali (2021) argues that financial management tools can be essential for mitigating public sector corruption; however, the lack of stringent enforcement in councils like Obowo diminishes the effectiveness of these tools. When cases of mismanagement remain unaddressed, an environment of recklessness and irresponsibility flourishes, undermining ethical practices among other officials (Ali, 2021). The absence of repercussions for unethical conduct not only exacerbates systemic corruption but also diminishes public engagement in governance, as individuals become disillusioned with their leaders' capacity to bring about meaningful change. Ultimately, the inefficiencies present within local government structures play a significant role in the ongoing issues of mismanagement and the misappropriation of funds in Obowo Local Government Council. Owolabi and Ogunode (2020) highlight the significance of value-for-money audits in guaranteeing that public expenditures correspond with their intended objectives. Nonetheless, in numerous local administrations, including Obowo, the presence of bureaucratic obstacles and insufficient political commitment impede the successful execution of these audits. The lack of thorough monitoring and evaluation of expenditures enables financial irregularities to remain unnoticed, exacerbating the problem (Ali, 2021). The issue of mismanagement and embezzlement of funds in Obowo Local Government Council highlights a wider crisis of governance and accountability in Nigeria's public sector. The particular challenges encountered in Obowo are deeply embedded in its distinct administrative and cultural framework. This systemic nature of the issues underscores the necessity for comprehensive reforms and the establishment of effective oversight mechanisms. It is on this backdrop that this study will examine mismanagement and embezzlement of funds in public sectors : A study of Obowo Local Government Council, Imo State. 1.3 Research Questions The following questions which are in line with the objectives of this study will be answered; i. What are the impact of fund mismanagement and embezzlement on the delivery of public services in Obowo Local Government Council? ii. What are the effects of mismanagement and embezzlement on the socioeconomic development of Obowo Local Government Area? iii. What are the roles of internal control mechanisms and financial monitoring in curbing mismanagement and embezzlement in Obowo Local Government Council? 1.4 Objectives of the study The primary objective of this study is to assess mismanagement and embezzlement of funds in public sectors : A study of obowo local government council, Imo State. Specific objectives of this study will be: i. To assess the impact of fund mismanagement and embezzlement on the delivery of public services in Obowo Local Government Council. ii. To analyze the effects of mismanagement and embezzlement on the socioeconomic development of Obowo Local Government Area. iii. To examine the role of internal control mechanisms and financial monitoring in curbing mismanagement and embezzlement in Obowo Local Government Council. 1.5 Significance of the study The government will benefit from this study as it provides clear enlightenment into the underlying causes of fund mismanagement and embezzlement within the public sector. Identifying these issues will help government agencies implement more effective financial oversight measures, ensuring that public funds are properly allocated and utilized for their intended purposes. Strengthening accountability within the Obowo Local Government Council will serve as a model for other local governments, promoting transparency and efficiency in governance. The public stands to gain from the findings of this research as it highlights the impact of financial mismanagement on service delivery. Poorly managed public funds often result in inadequate infrastructure, poor healthcare, and substandard education services. Addressing these issues will contribute to better public service delivery, ensuring that resources meant for community development are effectively utilized for the welfare of the people. Policy makers will find this study valuable in designing and implementing more robust financial control policies within local government councils. The study underscores the importance of internal control mechanisms and financial monitoring systems in curbing corruption and ensuring fiscal discipline. With well-informed policies, government institutions can reduce loopholes that enable embezzlement and mismanagement, fostering a more accountable and responsible public sector. The research community will benefit from this study as it adds to the existing body of knowledge on financial mismanagement and governance in local government administrations. Future researchers can use the findings as a reference point for further studies on public sector accountability and transparency. Additionally, the study opens up opportunities for exploring new strategies and models for improving financial governance in developing economies, contributing to the broader discourse on public financial management.. 1.6 Hypotheses The following null hypotheses will be validated in this study: Ho1: There is no significant impact of fund mismanagement and embezzlement on the delivery of public services in Obowo Local Government Council. Ha1: There is a significant impact of fund mismanagement and embezzlement on the delivery of public services in Obowo Local Government Council. Ho2: There is no significant effect of mismanagement and embezzlement on the socioeconomic development of Obowo Local Government Area. Ha2: There is a significant effect of mismanagement and embezzlement on the socioeconomic development of Obowo Local Government Area. Ho3: There is no significant role played by internal control mechanisms and financial monitoring in curbing mismanagement and embezzlement in Obowo Local Government Council. Ha3: There is no significant role played by internal control mechanisms and financial monitoring in curbing mismanagement and embezzlement in Obowo Local Government Council. 1.7 Scope of the study Broadly, this study focuses on the mismanagement and embezzlement of funds in public sectors using Obowo Local Government Council, Imo State as a case study. Contextually, this study explores the causes of mismanagement and embezzlement of funds within the public sector, the impact of fund mismanagement and embezzlement on the delivery of public services, the effects of mismanagement and embezzlement on socioeconomic development and the role of internal control mechanisms and financial monitoring in curbing mismanagement and embezzlement in public sectors. 1.8 Limitations of the study The study will be limited by a number of factors notable among the limitations was our people’s poor reaction to research questions and reading meaning into any attempt at any form of interview. Some of the most notable restraints encountered in the course of this study will include: Capital Restrains: This research cost the researcher capital transport fares, buying of materials and browsing the internet to obtain more points. Reluctant: Most of the respondents were reluctant of giving out information demanded by the researcher, they were ignorant of the research purpose and thought it will be used for negative reasons. Evasion of privacy: Some of the questions that was asked in this study appeared to be evading the privacy of the respondents, for this reason, the researcher did not get all the cooperation he requires in order to conduct a good research.