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Global oil prices and the Nigerian external sector: an empirical investigation
No full textOil price shocks have a stagflationary effect on the macro economy of an oil - importing country. The effect of such shocks is determined by the size of the shock, both in terms of the percentage increase in oil prices and the real price. The dependence of the Nigerian economy on oil makes it susceptible to the vagaries of oil price shocks in the international market. This paper empirically investigated the effects of the cyclical global oil price shocks on Nigeria\u27s external sector using Vector Autoregressive (VAR) model covering the period 2000:Q1 and 2008:Q4. The outcome of the VAR model and Pearson correlation revealed that oil price shocks largely influence the performances of the Nigerian external sector. Reserves (RES) exhibit upward trend right from the first quarter to the sixth quarter. After the sixth quarter it started moving toward the origin. External reserves increased by 0.05 per cent in the third quarter and, thereafter, continued to increase. The positive response of external reserves to oil price shocks persisted in the subsequent quarters. This implies that the level of external reserves was influenced by oil price shocks. However, the response of current account balance to oil price shocks revealed that the current account balance declined by about 0.05 per cent in the eighth quarter and remained negative due to oil price crash in 2008
Financing infrastructure and growth: lessons and experience.
No full textInfrastructure forms the foundation for all development in a country. Inadequate infrastructure restricts productivity and limits competitiveness. A 2008 Infrastructure Consortium for Africa (ICA) study identified the dearth of infrastructure, amongst many other constraints, as responsible for Nigeria‘s low level of performance in all the key economic performance variables. Indeed, Nigeria‘s diminished competitiveness (127 of 142) could be directly attributed to the abysmal level of infrastructure development in the country. Nigeria‘s stock of basic infrastructure falls far short of the minimum required for meeting the demands of a 21st-century global economy. The paper would address the issue of finance for infrastructure, the adequacy or otherwise of the traditional annuall budgetary allocation, and alternative methods for funding infrastructure. The potentials of the stockmarket in filling the financing gap, option of Public Private Partnership (PPP) arrangement in upscaling our infrastructure will be examined. The paper covers an assessment of the merits and demerits of PPP, the PPP process and framework in Nigeria, and how Nigeria could benefit from the experiences of other jurisdictions
The Millennium Development Goals: what role for the financial sector in Nigeria.
No full textExplanations from this paper revealed that financial sector development can make an important contribution to economic growth and poverty reduction. This is especially likely to be true in Nigeria, whose financial sectors is still developing, and without which economic development of the country as well as achievement of the MDGs may be constrained, even if other necessary conditions are met. It was discovered that the poor in the country, who are the target for the achievement of the MDGs often do not have access to ongoing, formal financial services, and are forced to rely instead on a narrow range of often risky and expensive, informal services. This constrains their ability to participate fully in markets, to increase their incomes and to contribute to economic growth. Thus, formal and semi-formal financial services channels, as mentioned in this paper, could provide inclusion opportunities to the poor (the target group in the MDGs) in Nigeria
A common economic space for the West African Monetary Zone (WAMZ): imperatives for financial systems development
No full textThe international financial turmoil of the 21 century has provoked much reflection and analysis within the international community on ways to strengthen the international financial architecture. It left behind important lessons, while exposing the limitations of individual country policy frameworks for preventing a systemic crisis. However, the issue of whether a common economic space is feasible within the West African Monetary Zone is still doubtful, given current efforts towards monetary union in Sub-Saharan Africa. This paper adopts an empirical review approach, identifying benefits and key constraints to a common economic space in the WAMZ vis-à-vis macroeconomic development in the WAMZ, with a view to deepening financial sector dynamics in the region. The review leads to the following broad conclusions: that financial sector development in the region is needed in facilitating economic integration, growth and poverty reduction as well as the need to balance financial innovation and economic stability. The paper concludes with strategies for promoting integration in the region that would ultimately create an open and integrated market among the WAMZ countries. This will leverage further opportunities for economic operators, promote trade and investment, and reinforce economic cooperation, reforms and competitiveness of the region
Empirical investigation of agricultural export trade in Nigeria (1975 - 2008): a case study of cocoa and palm kernel
No full textThe study examined the export performance of two major agricultural commodities (cocoa and palm kernel in Nigeria). It covered the periods 1975 to 2008 and it adopted cointegration and error correction modeling (ECM) methodology. The time series data were obtained from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), Food and Agricultural Organisation (FAO) for the empirical work. Unit root and cointegration tests were conducted which revealed the existence of short and long term equilibrium relationships between the dependent and independent variables in the model. The parsimonious error correction result shows that, virtually all the variables were rightly signed and significant. The result showed that, a 1% increase in producer price, commercial loan to Agriculture and exchange rate will reduce export quantities of cocoa by 0.11, 0.23 and 0.8 per cent respectively, while the result of palm kernel are almost similar to that of cocoa. The empirical findings show that, there is the need to promote expanded production in both cocoa and palm kernel, while at the same time giving greater attention to the packaging and the design of export product to command better prices and patronage at the international market
Good governance, transparency and regulatory issues in financial sector development and stability.
No full textThe paper examines the effects of good governance and transparency in fixing regulatory issues in the financial sector for development and stability
Effects of Exchange Rate Movements On Economic Growth in Nigeria
No full textThis study investigates the effect of exchange rate movements on real output growth in Nigeria. Based on quarterly series for the period 1986 to 2010, the paper examines the possible direct and indirect relationship between exchange rates and GDP growth. The relationship is derived in two ways using a simultaneous equations model within a fully specified (but small) macroeconomic model. A Generalised Method of Moments (GMM) technique was explored. The estimation results suggest that there is no evidence of a strong direct relationship between changes in exchange rate and output growth. Rather, Nigeria’s economic growth has been directly affected by monetary variables. These factors have tended to sustain a pattern of real exchange rate, which has been unfavourable for growth. The conclusion is that improvements in exchange rate management are necessary but not adequate to revive the Nigerian economy. A broad program of economic reform is required to complement the exchange rate policy adopted
Strategy for economic development in South Korea: lessons for Nigeria
No full textThe paper is organized into six sections; introduction, section two presents on overview of Korea\u27s economic development, section three looks of the success factors. Section four examines the emerging challenges while section five draws some lesson for Nigeria from the Korean experience and section six concludes the paper
Financing Inclusive Growth in Nigeria: Challenges and Prospects
No full textThis paper is divided into four Sections. The first is the introduction and definition of the title of the article, next is Section 2, which contains literature on theoretical construct on economic growth and development models, including Inclusive Growth (IG) model while in Section 3 we present the role of money in economic growth. Section 4 looks at models of financial inclusion and evidence of financing inclusive growth in some developing countries. In Section 5, we identified challenges and prospects for financing inclusive growth in Nigeria. Section 5 is the concluding remark where some recommendations are proposed for successful inclusive growth financing in Nigeria
Modelling and forecasting exchange rate volatility in Nigeria: does one model fit all?
No full textThis study analyses the extent of volatility in exchange rate in Nigeria covering the sustainable democratic transitions between 1999 and 2011 using daily returns. The main innovation of this paper is that it evaluates the volatility under each democratic regime of four years namely 05/29/ 1999 – 05/28/2003; 05/29/2003 – 05/28/2007; and 05/29/2007 –05/28/2011. The empirical evidence indicates that the behaviour of exchange rate tends to change over short periods of time with inconsistent leverage effects and persistence of shocks. Thus, applying a one-model-fits-all approach for exchange rate volatility in Nigeria will yield misleading and invalid policy prescriptions