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Insurgency, Political Risk, and Foreign Direct Investment Inflows in Nigeria: A Sectorial Analysis
No full textThis study examines, among others, the effect of terrorism, political violence, corruption, and religious tension on FDI inflows to the banking, construction, manufacturing, oil and gas, and telecommunication sectors in Nigeria. Thus, empirical models were estimated using the fully modified ordinary least squares (FMOLS) technique. The study spans from 2008Q1 to 2017Q4. Findings show that terrorism adversely affects FDI inflow to telecommunication sector, while corruption positively impacts on the oil and gas sector. Thus, this study among other things, recommends the intensification of effort in the war against terrorism and strengthening of relevant anti-graft agencies to adequately fight corruption in Nigeria in other to enhance the country’s attractiveness to FDI inflow
Relationship between Real Exchange Rate and Consumption in Nigeria: A Nonlinear Approach
No full textThis study analyses the relationship between real exchange rate and domestic consumption in Nigeria using the Smooth Transition Autoregressive (STAR) model from 1981Q1 to 2019Q4. Findings show that domestic consumption determines the regime shift in real exchange rate, suggesting a nonlinear linkage with clearly distinct regimes. The lagged exchange rate is shown to have a significant linear effect on the current exchange rate. On the other hand, current foreign consumption is positive but has no significant impact on the exchange rate in the linear part of the model. In the nonlinear part of the model, evidence of a significant negative relationship between real exchange rate and domestic consumption is found, thus, supporting the proposition of the standard international business cycle model. In addition, the study finds evidence of bi-directional nonlinear granger causality between real exchange rate and domestic consumption. The study concludes that the relationship between real exchange rate and domestic consumption is nonlinear and that fiscal and monetary authorities should aim at policies that would stimulate domestic consumption below the threshold level necessary to keep the exchange rate stabl
Impact of AML/CFT regulations on digital disruptions (FinTech) and financial inclusion in Sub-Saharan Africa
No full textFinancial Technology is becoming paramount in all financial institutions, being utilized in helping companies manage most of their financial operations efficiently through the use of software and specialized algorithms. The future of finance will shine brightest when it provides standard and valuable services to the society, however this will come with its own merits and demerits. I have prepared this report to carry out a detailed discussion on the impact that the AML/CFT controls have on FinTech and the financial inclusion initiative in sub-Saharan Africa. The AML/CFT controls can be applied more effectively in the formal systems for banking and financial service provisioning. Sub-Saharan Africa being among the developing countries is on the process of taking conscious measures aimed at developing regulations that can ensure greater AML/CFT controls on the financial technology-based service providing organizations as well. However, these controls should continue to evolve to stay relevant and to address the obstacles in the way of greater financial inclusion for this regio
The impact of external debt on agricultural production in Nigeria (1980-2016): Autoregressive Distributed Lag Modelling
No full textThe study analyzed the impact of external debt on Nigeria\u27s agricultural production from 1980 to 2016 using secondary data obtained from Central Bank of Nigeria (CBN) statistical bulletin and the World Development Indicators (WDI). Augmented DickeyFuller unit root test and the autoregressive distributed lag (ARDL) bound testing approach to co-integration were utilized, to achieve the objectives of the study. Empirical results revealed that the variables were cointegrated, indicating that they exhibited long run relationship, both in the short and the long run. External debt stock (EDS) had a significant positive impact on agricultural production (AGP), indicating that EDS positively impacted agricultural growth. i.e. higher EDS accelerated agricultural growth in the long run. To be precise, a 1 % increase in EDS led to 0.96 % increase in AGP. The remaining variables indicated negative and significant relationships with AGP. The ndings further showed that there was no positive impact of EDSP on agricultural production in Nigeria. Government should aggressively pursue the process of diversification of the economy through agricultural production. There is the need to diversify the source of external debt service especially to the non-oil sectors such as agriculture, mines, industry and manufacturing, to reduce the burden and the negative consequences of over dependence on foreign exchange from oil and the volatility in its price on Nigerians
Determination of Optimal Level of Foreign Reserves in Nigeria
No full textThis study adopts the ’buffer stock model’ advanced by Frenkel and Jovanovic (1981) to estimate the optimal level of foreign reserves for Nigeria. The Autoregressive Distributed Lag Approach (ARDL) was used to estimate the optimal foreign reserves function. The results show that the Nigeria’s optimal reserves level responses to adjustment cost of holding reserves and exchange rate volatility and that import and opportunity cost of reserves holding have insignificant impact on Nigeria’s optimal foreign reserves. The short run and long run estimates of the buffer stock model support the theory that foreign reserves holding in Nigeria is more sensitive to the precautionary than mercantilist motives of holding reserves. Thus, it is recommended that the Central Bank of Nigeria (CBN) should implement effective foreign reserves policies that consider exchange rate volatility, oil price volatility and global macroeconomic imbalances
Traffic congestion in F.C.T: demand and supply approach
No full textThis study examined traffic congestion in Abuja metropolis, F.C.T.- Nigeria using demand and supply approach. The study adopted survey research design. Primary data was collected using questionnaires. Descriptive statistics was used to analysed the data with the aid of tables and graphs. It was discovered that as a road reaches its capacity, each additional vehicle imposes more total delay on others than they bear, resulting in excessive traffic volumes. Congestion is mainly due to the intensive use of automobiles, whose ownership has spread massively in the F.C.T. in recent decades. The study revealed that traffic congestion causes serious consequences in the F.C.T. by increasing travel time, arrival unreliability particularly, during peak hours, fuel consumption, pollution emissions and driver stress, and reduce life satisfaction. The study recommends the need to expand road capacity and greater utilization of modes of transportation with a high occupancy coefficient, including carpooling and rationalization of on-street parking
Analysis of the causal link between economic growth and development in Nigeria (1960-2019)
No full textTaking cognizant of Nigeria\u27s recent policies toward translating growth to meaningful development, this study aimed at analysing causality amid economic growth and development using annual series from 1960-2019.The study engaged vector autoregressive method by embracing Toda and Yamamoto 1995 model. The results reveals a bidirectional causality between economic growth and dependency ratio; population growth rate and economic growth and also it reveals the evidence of uni-directional causality from dependency ratio to life expectancy and from population growth to life expectancy. But economic growth and life expectancy as well as dependency ratio and life expectancy does not present evidence of causality
Capital adequacy requirement and bank behaviour in Nigeria
No full textThe divergent views on the usefulness of capital adequacy ratio (CAR) in controlling the risk appetite of banks necessitates further research on its efficiency and effectiveness. Whereas proponents of CAR believe that it enhances the soundness and stability of the banking system, opponents contend that it can impedes on the intermediating capabilities of banks and possibly ignites credit crunch that could induce fall in the level of output. This study empirical verifies the infuence of CAR on the behavior of banks in Nigeria. The study adopts a system of simultaneous equation, in the tradition of Maraghni (2017) using Generalized Method of Moment (GMM) approach on micro-level annual data of banks in Nigeria from 2007 to 2018. The results reveal, amongst others, that capital adequacy ratio indeed moderates bank appetite for risk and, as a feedback, risk taking behavior of banks in-turn enhances capital adequacy ratio. The study concludes that there is the strong need for regulatory authorities to often monitor banks appetite for risk, particularly in period of economic booms to avoid excessive risk that could erode their capital during burst that could aggravate loan default
Currency Substitution and Exchange Rate Volatility in Nigeria: an Autoregressive Distributed Lag Approach
No full textThis study investigates the relationship between exchange rate volatility and currency substitution in Nigeria, using Autoregressive Distributed Lag (ARDL) model. After accounting for the presence of structural breaks, evidence from the findings shows that domestic interest rate and expected changes in exchange rate are important determinants of currency substitution. In addition, there is empirical support for a positive relationship between exchange rate volatility and currency substitution both in the short- and long-run. This implies that higher real exchange rate volatility is associated with an increased level of currency substitution. In view of these findings, the paper calls for sustained efforts by the monetary authority in containing exchange rate volatility and inflation as a way of curbing the spate of currency substitution in the countr
Impact of Government Expenditure on Economic Growth in Nigeria, 1970-2019
No full textThis study investigates the impact of Nigerian government expenditure (disaggregated into capital and recurrent) on economic growth using time series data for the period 1970-2019. The paper employs Autoregressive Distributed Lag (ARDL) model. To ensure robustness of results, the study accounts for structural breaks in the unit root test and the co-integration analysis. The key findings of the study are that capital expenditure has positive and significant impact on economic growth both in the short run and long run while recurrent expenditure does not have significant impact on economic growth both in the short run and long run. The study recommends that government should increase the share of the capital expenditure especially on meaningful projects that have direct bearing on the citizen’s welfare. Government should also improve the spending patterns of recurrent expenditure through careful reallocation of resources toward productive activities that would enhance human development in the country