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External Shocks and Business Cycle Fluctuations in Oil-exporting Small Open Economies: the case of Nigeria
No full textThis study employs a sign-restricted Bayesian structural vector autoregressive (BSVAR) model to analyse how global demand, oil price and the US monetary policy shocks impact the Nigerian business cycle. The objective is to uncover the dominant external drivers of the business cycle in Nigeria. Results show that global demand and oil price shocks are the principal foreign drivers of the Nigerian business cycle. The global demand shock elicits the strongest responses from output growth and inflation; while oil price shock impacts the terms-of-trade and interest rate the most. The historical contributions of the global demand and oil price shocks to the evolution of output growth are significant and comparable, while that of oil price shock to inflation and interest rate is dominant. Further sensitivity analysis of pre-crisis period of 2008/09 suggests that macroeconomic risk arising from global demand shock is systematic, owing to the comparable impact on output growth and similar interest rate response in the two estimations. Evidence suggests that the GFC may have contributed to the more volatile inflation response to global demand shock in our full sample estimation. Given the strong and pervasive impact of the global demand shock on output growth, Nigeria can manage its vulnerability by shrinking the size of oil exports in its terms-of-trade, while growing non-oil exports progressively through sustained economic diversification and viable industrialisation strategy
The Sensitivity of Sector Stock Returns to Exchange Rate Risks in Nigeria
No full textExchange rate exposure has been identified in the literature as one of the standard metrics for measuring the performance of stock returns in both advanced and developing economies. This study adopts the capital market approach in investigating the effects of exchange rate exposure on stock returns in Nigeria, using monthly data spanning 2009 to 2018. The findings show that three sector stock returns, namely the NSE30, pension and banking indices, were significantly vulnerable to nominal effective exchange rate and bilateral exchange rates shocks. The non-significance of energy sector, proxied by the oil and gas, to exchange rate risk, is puzzling, but was consistent with the findings of Xie (2011) for the Japanese economy. Results from the bilateral estimates indicated that the NSE30 was most sensitive to the euro exchange rate risk, while positive exposure was evident for the pension sector for all currencies. The study recommended the need to sustain the central bank’s current exchange rate policies, which had resulted in the convergence of rates in the market
Addressing Housing Deficit in Nigeria: Issues, Challenges and Prospects
No full textThe article first, provides a detailed overview of the housing deficit problems in Nigeria and the Government’s efforts at resolving them. The next section briefly conceptualises and reviews the various issues and challenges faced in addressing the housing deficit in Nigeria. The article then discusses the prospects for resolving the housing crisis in Nigeria
Estimation of Fiscal Multipliers and Its Macroeconomic Impact: The Case of Nigeria
No full textFiscal multipliers are important tools for macroeconomic projections and policy design. However, very little is known about the size in developing countries, given the complexity of their estimation. The unavailability of reliable high frequency data and structural characteristics of these countries also make the estimation of fiscal multipliers difficult, in such countries. This paper estimated fiscal multipliers associated with government spending and tax-related revenue for Nigeria using quarterly data, spanning 1985: Q1 to 2015 Q4. The structural vector autoregression (SVAR) methodology suggested by Blanchard and Perotti (2002) was utilised in the model. The SVAR framework applied followed the approach by Favero and Giavazzi (2007) to augment for a feedback mechanism, arising from the level of debt, especially given Nigeria’s rising debt level. The results showed that government spending multiplier for Nigeria was high, at 0.47 on impact and at 0.35 within a quarter. Similarly, the tax revenue multiplier was equally high at 0.67 on impact and 0.33 within a quarter. This result suggested that reform programmes, aimed at rejuvenating the economy should consider the impact of these multipliers in assessing expenditure requirements and tax plans that would achieve government objectives over the programme period
Special Remarks by Okwu Joseph Nnanna
No full textThis special remarks presented by Dr. Okwu J. Nnanna, the Deputy Governor, Economic Policy Directorate of the Central Bank of Nigeria, at the seminar on “Addressing Nigeria’s Housing Deficit”, for CBN Executive Staff at Transcorp Hotels, Calabar, Cross River State, October 07 - 09, 201
Housing Sector, Economic Growth and Development: Conceptual Issues and Theoretical Underpinnings
No full textThis article provides a theoretical overview of the contribution of housing sector in economic growth and development. The sector plays a very important role in the social and economic development of a country through its impact on major macroeconomic indicators such as: employment, savings, investment and labour productivity. After the introduction the article examined: conceptual issues on housing, economic growth and development; housing and economic growth and development: theoretical issues; housing, economic growth and development debate: historical perspective. The article concludes by recommending that: Governments in less-developed countries can intervene in the housing sector through comprehensive policies and large-scale investments, to effectively harness the growth benefits of the sector; economic development strategies can be developed to strategically situate housing as a tool for economic development; housing policies should be developed to look beyond welfare consideration given that that the housing sector is a leading economic sector
Bridging Housing Deficit in Nigeria: Lessons from Other Jurisdictions
No full textThis article examine housing deficit in Nigeria, drawing lessons from other jurisdiction with a view to recommending measures that would bridge such deficit. The article first examine facts and figures behind the housing Deficit in Nigeria. These include supply side constraints; demand side constraints; housing sector and Nigeria’s economy; housing interventions in Nigeria; intervention and policies in the colonial period; the post-independence period; the post-military era; and 2000 till date. The article highlighted lessons from other Jurisdictions specifically: mortgage lending in selected developed economies like: United States, German, United Kingdom, Israel, Spain; othe countries Singapore; Egypt; Malaysia. In conclusion the article proposes a socio-economic inclusion approach to bridging housing deficit in Nigeria that would: ensure the inclusion of the largely affected proportion of the population and upgrade of their current community and formulating housing policy that will ensure they are not relocated away from the centre of their economic activities; modelled to address: about 70 per cent of Nigerians live below poverty line; about 80 per cent living in either slums or poor conditioned homes in the urban centres should benefit; very weak purchasing power of end-users; lack of access to mortgage facilities by vast majority of low- and middle-income classes; and over 17 million housing deficits
Addressing Housing Deficit in Nigeria: Issues, Challenges and Prospects
No full textThe article examines the dimension of housing deficit in Nigeria, assess government intervention in tackling the problem of house shortages and proffer solutions that can help reduce the deficit considerably. Basic conceptual issues relevant to housing deficit in Nigeria is first discussed. These issues include: housing, housing deficit, urbanisation, and housing policy. This is followed by an examination of the current level of housing deficit in Nigeria which put existing housing stock at 23 per 1000 inhabitant; housing deficit as at December 2018 at 20 million units (15.0 per cent increase); N21 trillion required to finance the deficit. A look at past and present housing policies and programmes in Nigeria with focus on four periods of government intervention. These include the colonial, post-independence, second civilian administration and post second republic periods till the present date. The article then highlighted key issues/challenges affecting affordable housing delivery in nigeria to include: paucity of long-term funds; housing finance; rural-urban migration/ urbanisation. On the way forward policy options are suggested to include: redefinition of the role of government; policy and regulation; financial sector reforms; capacity building and knowledge gap; urban planning; government involvement. The article concludes by stressing the need for: creating an enabling environment for the housing; strengthening the coordination among public institutions and government ministries that play a crucial role in housing, including ministries of finance; and development partners and the private sector to join the government to tackle the crisis
Impact of Trade Openness on Economic Growth among ECOWAS Countries: 1975-2017
No full textThis study assesses the impact of trade openness on economic growth among ECOWAS countries using secondary data from 1975 to 2017. The study uses non-stationary heterogeneous dynamic panel models through the application of Pooled Mean Group (PMG) and Mean Group (MG) estimators since time dimension was more than cross-sections. Using the Hausman test, PMG estimator was preferred. Results show that trade openness has positive effects on growth in ECOWAS countries in the long-run but mixed effects in the short-run. The study therefore recommends that ECOWAS member countries improve cooperation among economic actors by using export consortia so as to help SMEs in the region access international markets and to pursue a twin strategy of trade and competitiveness
The Growth-Differential Effects of Domestic Investment and Foreign Direct Investment in Africa
No full textThis paper employs dynamic panel models; Pooled Mean Group (PMG) and Mean Group (MG) estimators to assess the growth-differential effects of Foreign Direct Investment (FDI) and Domestic Investment (DI) among 41 selected African countries from 1970 to 2017. The result of Hausman test shows that PMG estimator is preferred. The study found that FDI and DI are important grease for growth of African countries in the long-run. The study also found that inflows of FDI crowds-in DI in Africa and that there is significant difference in the growth effects of foreign direct investment and domestic investment while the joint effects of foreign direct investment and domestic investment on growth of African countries is found to be statistically significant. In the short-run, estimates show that foreign direct investment has negative influence on growth of 24 countries out of which four (Benin, Madagascar, Nigeria and Equatorial Guinea) are highly significant at 5% level, while the estimated influence of domestic investment on growth of most African countries was positive. This shows that foreign direct investment in Africa has negative effects on growth of host economies in the short-run. The study recommends that African governments should continually encourage domestic savings and investment as major source of growth and only consider FDI as a growth supplement