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The transmission of monetary policy in Nigeria
No full textThis paper investigates the transmission channels and mechanisms through which monetary policy affect economic activities with particular focus on the Nigerian economy. Even though there is no consensus on how monetary policy affects the economy, the liquidity or interest rate, credit (including bank loan) and exchange rate channels of monetary transmissions were identified in the literature. The propagation of monetary policy through the various channels were explained broadly under the monetarist and Keynesian theoretical frameworks. The monetarist transmission mechanism relies mainly on portfolio adjustment of the assets and liabilities in the balance sheets of banks, firms and households for the transmission of monetary policy changes to the rest of the economy, while the keynesian transmission mechanism is centered on the ability of changes in money supply to affect the cost of capital (through interest rate movements). The various channels and mechanisms reinforce each other but may vary in importance from country to country and over time; and are applicable in the Nigerian case. In addition, the informal credit market forms an important avenue for the transmission of monetary policy in Nigeria. In order to establish the existence of the credit channel, the composition of manufacturing firms\u27 sources of finance data from Central Bank of Nigeria Annual Business Survey was analyzed. The results indicated that the portion of the firms\u27 financing from banks was responsive to the stance of monetary policy during the review period. A further examination of the Lagos area component of the data revealed that banks lend more to larger manufacturing firms than to smaller ones in conformity with the generally held views on the subject and results of previous studies. The smaller firms, unlike their larger counterparts, relied more on their internal funds for fixed investment than from other sources. The transmission of monetary policy in Nigeria could be further improved if capital flows are liberalised; open market operation (OMO) instruments are made more attractive; and the activities in the informal financial market are better understood
An Empirical Analysis of the Prices of Nigeria\u27s Agricultural Export Commodities
No full textThe study examines the role of price incentives in expanding agricultural commodity exports. Using the concept of efficiency, based on the theory of opportunity cost, nominal and effective protection coefficients (NPC & EPC) were estimated for cocoa, coffee, cotton, palm kernel, palm oil, rubber and soyabean. Their world market prices served as the efficiency benchmarks in order to determine the pattern of incentives or disincentives to the Nigerian agricultural export sector. The NPC values obtained ranged from 0.47 for cotton to I. I 8 for soyabean pre-Structural Adjustment Programme (SAP) and during the SAP the values ranged from 0. 63 to 2.14 for the respective crops. This result confirmed that incentives improved substantially for export crop production during the SAP. The result of the EPC analysis complemented that of the NPC which indicated that incentives were more in favour of the production of soyabean, a non-traditional export crop in Nigeria. Consequently, the study concluded that the programme for boosting industrial and export crop production recently launched by the Federal Government should emphasise the production of soyabean in order to diversify our agricultural export base, along with palm produce and rubber particularly now that oilseeds and rubber have better prospects in the world market
Harnessing the potentials of Nigeria\u27s oil and gas for economic development.
No full textThe paper looks at the Upstream sector of Nigeria\u27s petroleum industry, Nigeria and OPEC, Natural gas resource, management and development, refining and downstream issues
Welcome address at the 4th CBN Executive Seminar
No full textWelcome Address delivered by Dr. M.O. Ojo at the fourth in-house Executive Policy Seminar organized by the Research Department and the Personnel Department
Infrastructure and economic development: the Nigerian experience.
No full textThe paper analyses the role of Infrastructure in national economic development and traces Nigeria\u27s efforts in providing economic infrastructure services in recent years
Agriculture and Nigeria\u27s economic development: policies, problems and prospects
No full textThe paper discusses agriculture in Nigeria vis-Ã -vis the country\u27s economic development. It also looks at the policies, problems and prospects to boost the sector. The paper concludes that Nigerians need to look inwards to bring about the needed change in the agricultural sector of the economy
Money supply, inflation and the Nigerian economy
No full textExperience in many countries, including Nigeria, show that fiscal policies, in particular, intended primarily to stimulate output growth and enhance real income often end up as a major source of financial imbalances and macro-economic instability. The accompanying high inflation has critical allocative and distributional implications that can be detrimental to the growth process. It is against this background that, this short paper attempts, to identify the relationship between monetary growth and inflationary developments in Nigeria and the implications for economic growth. Following this Introduction, Thus, the challenge of maintaining monetary stability has often been a difficult one, the world over, owing, among other factors, to the uneasy trade-offs involved the rest of the paper is divided into four major parts, with Part 2 focusing on conceptual issues. Part 3 attempts to delineate the trends in money supply, inflation and economic growth in Nigeria between 1986 and 1996, while Part 4 evaluates policy responses to those trends. In Part 5, the paper concludes by identifying economic policy challenges ahead and the proffered solutions
Central Bank of Nigeria Statistical Bulletin, June 1996
No full textFinancial data is compiled from documents like balance sheets and financial statements, which are primarily designed for legal and administrative purposes. The Finance and Accounts Department uses Bloomberg sources to prepare CBN accounting balance sheet data for the Research Department to compile analytical accounts. The Financial Statistics Office compiles the analytical CBN balance sheet without reclassifications or rearrangements of available accounting data. The consolidation of accounts of monetary authorities and deposit money banks produces monetary survey accounts. Monthly interest rate returns are used to compute weighted average lending and deposit interest rates. Deposit rates are computed for various maturities. Clearing house statistics show the number and value of cheques cleared within the commercial banking system, reflecting the volume of transactions. Public sector indicators include revenue and expenditure of the Federal Government.
Since 1988, the Nigerian and foreign debt program has received and processed a total of yearly applications from Nigerians and foreigners. The program offers a total amount for redemption, with average discount rates indicating the highest and lowest discounts offered at each auction. Debts cancelled out of auction are processed without auctions, granted in rare cases to meet the financial needs of benefitting organizations. The price of such conversions is determined by the weighted average of discounts quoted by successful bidders at the most recent auction. Promissory Notes are legal certificates of indebtedness issued by the Central Bank of Nigeria and the Federal Ministry of Finance to Nigeria\u27s Creditors. Restructured and refinanced debt instruments ceased operation after 1991, as the debts were converted to Par Bonds. The average prices of debt instruments are quoted in U.S. Cent/Dollar.
The System of National Accounts (SNA) is a set of macro-economic accounts, balance sheets, and tables based on internationally agreed concepts, definitions, conventions, classifications, and accounting rules. It provides a comprehensive accounting framework for economic analysis, decision-making, and policy making. The table includes Gross Domestic Product, Gross Fixed Capital Formation, Private Consumption Expenditure, Government Consumption Expenditure, Gross Consumption Expenditure, and Gross National Savings. Gross Domestic Product (GDP) is the values of production in an economy during a period of time, calculated without deductions for depreciation. Gross Fixed Capital Formation is expenditure on fixed assets, while Gross Domestic Investment is the total change in the value of fixed assets plus change in stocks. Agricultural crops are defined in terms of staples and other cash crops, with livestock and livestock products excised from agriculture. Electricity generation and consumption are also included in the table. In summary, the SNA provides a comprehensive accounting framework for economic analysis, decision-making, and policy making. It includes tables on Gross Domestic Product, Gross Fixed Capital Formation, Private Consumption Expenditure, Government Consumption Expenditure, and Gross National Savings. The tables in this text are derived from data on agriculture, livestock, fish, and forestry from Federal Office of Statistics (FOS) agricultural survey reports. The seasonal data on crops is converted to annual data, while livestock data is converted to carcass weights. Fish output data is provided by the Federal Department of Fisheries, and forest product data is from the FAO Annual Year Book of Forest Product. The Consumer Price Indexes (CPIs) are designed to measure changes in retail prices paid by consumers. The first CPIs were computed separately for the then Federal and Regional Capitals, but the Consumers Expenditure Survey (CES) was reviewed in 1957 to provide a single national CPI based on prices of a union market basket of commodities. The CPI adopted the 1975 base as the ruling base year, and indices from 1976 to 1988 have 1975 as the base period. The CPI is continually updated and rebased, with the Consumer Expenditure Survey of 1980/8l updating the base period to 1985.
International Trade Statistics (ITS) measure the quantities and values of goods that move into or out of a country, affecting the nation\u27s stock of goods. They are compiled from Customs Bills of Entry, which indicate the quantities and values of goods imported into or exported out of the country. ITS can also be derived from foreign exchange transactions. The Standard International Trade Classification (SITC) format presents ITS in six main groups: Food and Live Animals, Beverages and Tobacco, Crude Materials, Mineral Fuels, Animal and Vegetable Oils, Chemicals, Manufactured Goods, Machinery and Transport Equipments, Miscellaneous Manufactured Article, and Miscellaneous Transactions Unclassified. The Balance of Payments (BOP) compilation captures changes in international economic transactions, such as the rapid depreciation of the naira exchange rate, accumulating payments arrears, and debt conversion. The BOP table D.2.1, based on the fourth manual, provides information on vital components, such as the Current Account, Capital Account, and Reserve. The Current Account is divided into two main sections: visible and invisible. The visible accounts for tangible goods, such as exports and imports, which are recorded as credit or debit entries. The invisible section includes services and income, such as freight and insurance. Credit entries are made when freight charges are collected by domestic airlines and shipping companies, while debit entries denote payment by residents to foreign airlines and shipping companies. The investment income aspect of the invisible accounts refers to accrued income on existing foreign financial assets. Unrequited transfers are unilateral transfers from the reporting economy to the rest of the world without asking for an equivalent value. The balance on the Current Account consists of the balances of these three separate sections. The capital account records changes in a country\u27s foreign assets and liabilities through various capital movements and investments. Capital movements can occur between a reporting economy and the rest of the world, with credit entries and debit entries. The double-entry accounting system ensures that debits and credits equate themselves for every transaction, but this equality could be defective if either the debit or credit is understated
Cho Tae-Hyon: Foreign Direct Investment in Korea: Recent Trends and Changes to Improve the Investment Environment , Korea Exchange Bank Quarterly, First Quarter, 1995, Vol. xxx, No. 1
No full textKorea opened its doors to foreign investors in 1962 to raise capital for economic development. As at end-1994, the total accumulated volume of Korea\u27s Foreign Direct Investment (FOI) on an approved basis amounted to US $12,525 million financing 4,709 projects. The conclusion of the Uruguay round and the establishment of the World Trade Organisation (WTO) which linked the global economy to free flows of trade and investment, are new challenges facing Korea in the search for ways to cope with the emerging era of unlimited competition. Tae-Hyon\u27s paper attempts to review the trends in FDI and the recent incentives to promote a healthy environment in Korea which would provide the impetus for a much higher level of foreign capital inflow. The article is organised in four parts. Part I is the introduction, Part II presents Korea\u27s recent trends in FOI, Part III focuses on recent changes to improve the investment environment, while Part IV concludes the paper
Catherine Bonser-Neal. Does Central Bank Intervention Stabilize Foreign Exchange Rates? Economic Review, Federal Reserve Bank of Kansas City, Vol. 81, No. 1, First Quarter 1996 (14pp)
No full textThe paper tried to establish whether central bank intervention could reduce exchange rate volatility by stopping speculative attacks against a currency. The author\u27s concern centered on the fact that exchange rate volatility has increased since the adoption of flexible exchange rate system in 1973 and the subsequent interventions by most central banks. She observed that many European countries have intervened in foreign exchange markets when deemed necessary to reduce volatility and possibly keep exchange rates within a band around a target rate. But opinions still differ on whether these interventions could stabilize exchange rates. The paper, therefore, sought to present empirical evidence suggesting that central bank intervention does not generally reduce exchange rate volatility but appears strongly to have had minimal effect on volatility. This it did by using implied volatility to measure exchange rate volatility through the estimation of a model that relates changes in volatility to central bank intervention and other economic variables