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Capital account liberalization: the way forward for Nigeria
No full textCapital account liberalization is a complex and multifaceted issue, which if not properly addressed could increase the risks of a crisis in a country with serious negative consequences for the real sector. The purpose of this paper is to dwell in some detail on capital account liberalization, emphasizing the preconditions for tits safe implementation, the degree and sequencing of implementation, effects of capital account liberalization, noting costs and the way forward to its effective administration in Nigeria
Capital account liberalization: reflections on theory and policy
No full textDeveloping countries as well as other member countries of the IMF have been encouraged to open up to foreign capital flows through the liberalization of their capital account transactions. Capital account liberalization is embedded in international standards and codes as best practice necessary for developing countries engaging in inter-governmental and non-governmental international relations. It also represents the systemic removal of administrative and legal controls on international capital transactions
The achievement of convergence in the Nigeria foreign exchange market
No full textThe fact that Naira is floating is not a panacea for effective monetary policy management learning from the Argentina experience. Also with volatile capital flows, there are associated over - and undershooting of exchange rates that the economy would encounter. This paper discuss the achievement of convergence in the Nigerian foreign exchange market and monetary policy, the liberalization of the foreign exchange market and the process of foreign exchange convergence. It was observed that there were supply shortage and so the supply side of resource allocation was deployed. It was also observed that the harmony between the money market and foreign exchange market must be strengthened. The exchange rate is exogenous to money market operators while the interest rate is exogenous to foreign exchange market and both require having consistency in resource allocation. The CBN then took the decision in March, 2006 to allow the BDCs to the official market as brokers. The brokerage was to have the BDC operators come to buy cash at the official windows twice a week and thus increased the supply of dollar
Enhancing long-term savings culture in Nigeria through National Savings Certificate.
No full textIn Nigeria\u27s economic history, the strides of the last five years, which have been internationally acclaimed, are unprecedented. The many reforms that have engendered the current success have largely included those in the financial sector, particularly, the positive policy shifts in the domestic money market as first steps towards a more robust and enduring face-lift for the sector. Part of the expectations are that the improved enabling environment from the reforms would continue to make more investment funds readily available, as well as attract droves of foreign direct investment. The challenges that remain include the need to deliver on the remaining objectives, as well as build on and sustain the current achievements. This paper considers the operations of a national savings certificate as a panacea to the dearth of long term savings for long term investments, to justify the reforms and achieve accelerated economic growth. A case study of two countries, India and the United Kingdom will be the focus of this paper, to serve as lessons of experience for recommending appropriate logistics and policies in adopting the Nigerian version of the National Savings Certificate. The introduction of the National Savings Certificate in Nigeria is expected to serve three major purposes; namely, harness the idle funds in the informal sector/outside the banking system to complement liquidity management; serve as a sustainable process of long-term savings mobilization; and inculcate savings culture, particularly the low income earners and the un-banked. It is, therefore, of great regret that the scheme is yet to take off after the policy pronouncement and the inauguration of the Board of the National savings certificate in 2003. The study reveals that The introduction of the National Savings Certificate in Nigeria is expected to serve three major purposes; namely, harness the idle funds in the informal sector/outside the banking system to complement liquidity management; serve as a sustainable process of long-term savings mobilization; and inculcate savings culture, particularly the low income earners and the un-banked. It is, therefore, of great regret that the scheme is yet to take off after the policy pronouncement and the inauguration of the Board of the National savings certificate in 2003
Currency Restructuring: The role of the media.
No full textOne of the mandates of the Central Bank of Nigeria (CBN) as provided in the CBN Act of 1991 (as amended) is the issuance of legal tender currency. This paper examines the rationale for currency restructuring so as to elicit the buy-in and support of the media and in that way enhance the acceptability of the currency in economic transactions in Nigeria. The rest of the paper is organized as follows: Section 2 outlines the major elements of currency restructuring, while section 3 discusses the critical success factors. In section 4 the role of the media is enunciated while section 5 contains the summary and some concluding remarks. The paper concluded that, there those who believe that transactions in cash provides anonymity, is convenient and avoids debt. Because cash is popular in our jurisdiction, it is likely to remain for quite sometimes. The electronic media can provide support in the form of discussions etc., as their contribution to enlightenment campaign
Conceptual issues on savings in Nigeria.
No full textIt is often held that capital accumulation is necessary and sufficient condition for growth and capital accumulation is almost synonymous with saving, hence the route to growth is then one of raising savings and smoothing consumption (Deaton, 1991). Savings is one of the key relevant macroeconomic variables in any economy. Its impact on the rate of capital accumulation, productivity and the degree of dependency of a nation on foreign capital and foreign ownership of domestic assets cannot be overemphasised. This paper reviews conceptual issues on savings behaviour in Nigeria. It also provided an analysis of the factors that may have led to weak saving performance, as well as some suggestions about future behaviour of savings through a review of the literature. The study found that even though the number of financial institutions has increased, saving mobilisation has not increased appreciably. The need to enhance investment and economic growth potentials calls for measures to mobilise savings both in the short run and long-run. First, the constraints to mobilisation of savings has been identified to include financial repression, fiscal deficits, scanty saving instruments, near non monetisation of the economy, externalities, negative deposit rates, among others. Consequently, measures suggested to stimulate savings include financial liberalisation and removal of all distortion to savings, savings enlightenment programme and adopting positive savings culture attitude, introduction of more savings instruments, development of the money and capital markets, reduction of fiscal deficits, macroeconomic stability, and continuation of democracy to ensure stability
Tax Assignment and Revenue Sharing in Nigeria: Challenges and Options
No full textThis paper build on the history as well as the current legal framework of tax assignment and revenue-sharing in Nigeria to identify the challenges while also drawing from the theoretical framework for policy options which will provide for a stable federal system in Nigeria. The paper recommended among others the strengthening of states internal revenue bases, adjustments on the vertical and horizontal revenue-sharing formula, effective compliance with the allocation of the mandatory 10% of states internally generated revenue. The paper concludes that changes to the existing tax assignment and revenue-sharing arrangements will go a long way in protecting our nascent democracy
Towards developing a vibrant bonds market in Nigeria: a review
No full textThe paper highlights two major challenges in bond market which reflects in Nigeria. The author suggests methods and proposal that will enhance a better performance derivatives in long time. The article seek to established the narrative on two argument that, bond finance is less expansionary than money finance and that the expansion is sometime undesirable. While the Microeconomics argument posited that bonds are issued for different reasons. the findings revealed that corporate borrowers use debt market to obtain working capital and new equipment
Challenges of exchange rate volatility in economic management in Nigeria.
No full textThe motive behind initiating an exchange rate policy, an integral element of monetary policy, is to preserve the value of the domestic currency, maintain favorable external reserves and ensure the realization of price stability in the domestic economy. The pursuance of these goals is to ensure external balance without compromising the need for internal balance and macroeconomic stability. It is important that the monetary authority, in its bid to designing an appropriate and sustainable exchange rate policy framework, addresses issues that are fundamental to the introduction of the policy itself. This paper discussed the challenges of exchange rate volatility management in the Nigeria economy in maintaining international competitiveness and nominal anchor for domestic prices. The paper reveals that the In addition, the increasing openness of the economy under the impetus of globalization also challenges the CBN to adopt a more skillful approach to the management of floating exchange rate of the Naira; otherwise it may cause the depletion in country\u27s external reserves. It is however, expected that an effective management of the current exchange rate policy will help to further strengthen the value of the domestic currency and enhance the confidence on the exchange rate system. Although, the sustainability of the WDAS is an ambitious one, it is however abound with attendant challenges for which the CBN must prepare for thoroughly. The impressive performance of the current exchange rate policy gives the confidence to state that the CBN and other stakeholders are quite prepared to confront these challenges with determination and sincerity
Overview of currency management in Nigeria.
No full textThis paper seeks to highlight the issues in currency management, identify the challenges of currency management in Nigeria, and situate the currency management reforms of the Central Bank of Nigeria in proper context. The paper is structured into six sections. Following the introduction, the key dimensions of the currency management function is highlighted in section 2. Section 3 reviews the major currency episodes in Nigeria while section 4 examines the shortcomings of the existing currency arrangements. Nigeria\u27s reform effort in currency management is discussed in Section 5 and the paper is concluded in section 6 by observing that: as inflation has substantially eroded the value of the existing range of coins, it is advisable to demonetise some of them; the present N5 note should be coined; to facilitate currency distribution, the CBN should establish branches in those States of the Federation where it is not yet represented. This would go a long way in minimizing the cost and risks involved in currency movements. Ultimately, this function should be privatized; Furthermore, as is the practice in the United Kingdom, there is need to explore the possibility of using a private company to distribute currency through the Automated Teller Machines (ATMs); and the CBN should also expedite action on withdrawing defaced and dirty Naira notes from circulation