CHALLENGES ASSOCIATED WITH VALUATION OF SPECIALIZED PROPERTIES (A CASE STUDY OF HOPE ALIVE TRUST HOSPITAL IDOFIAN KWARA STATE)

SYNOPSIS

Specialized properties are classes of proprietary bud wants which fall outside the general range of residential, commercial and industrial properties.

These properties have no comparable in the noble market, they lack rental evidence and they are not easily adapted to alternative uses.

Valuation of specialized properties poses a very tedious task for the values because of its specialized nature. It needs wider experience coupled with the availability for data and involves huge & capital outlay to build up.

The challenges associated with valuation of specialized property with a case study Hope Alive Trust Hospital, Idofian, Kwara State, would aim of revealing all the task and challenges that are involved in the valuation.

Furthermore, appropriate method for the valuing such specialized property shall be employed to determine the capital value of the said property.

Finally relevant recommendation will be made in order to ensure efficiency in the valuation exercise of a such property.

CHAPTER ONE

INTRODUCTION

1.0     BACKGROUND OF STUDY

According to Baun & Mackin define valuation as the act and science of estimating the value of interest in property.

Valuation is a science and art: Its is science because it is involves the use of scientific method and technique d it is an art because it is not science and also involves the use, its imagination to express ideal. Valuation involves attributing vale to land and landed property. It involves computation valuation van be required for many purposes. Valuation is carried for specific period so from these facts valuation can be comprehensively defined as the science and art of attributing value to land and landed property through the process of collecting data, and computing it, for specific purpose and for a particular period of time.

Valuation can be carried out for residential, commercial, agricultural, industrial and specialized properties. Therefore valuation requires expertise’s, skills and technical competence of the practitioner which make the valuation report to be a type of technical report.

As a result of these requirement, a valuer needs to process sound knowledge and undoubted skills, furthermore, substantial portions of the private, corporate and private wealth of the world consist of real estate. The very magnitude of these fundamental resources in our society creates a need for informed valuation to support decision pertaining to the use of and deposition of real estate and the right inherent in the ownership.

Specialized properties are of various categories depending on the applicable valuation techniques. Profit and account method is normally used for such properties as hotels, cinemas,, town halls, hospitals, while petrol filling station and agricultural properties have their own approaches as well. Other category of specialized property can be valued using replacement cost method.

1.1     STATEMENT OF RESEARCH PROBLEM

Valuation of specialized properties often poses a lot of problems because of its uniqueness in nature and due to the fact that they are not always sold and bought frequently in the market. Apart from these two facts, they still back mental evidence and comparable. As a result of these facts a lot of skills are required in its valuation. And also all the valuation process must be duly and thoroughly followed.

1.2     AIM AND OBJECTIVES

This project work aim at examining the challenges associated with valuation of a specialized property.

OBJECTIVES

  1. To identify the various type of property in the study area
  2. To examine the structural component of property in the study area.
  3. To access suitable method to carryout the valuation of property in the study area.
  4. To access the problem associated with the valuation of the property and recommend a reasonable subjection in solution to the problem.

1.3     SIGNIFICANT OF THE STUDY

The significant of the study is to find solution to the challenges associated with valuation of specialized property.

Secondly, the recommendation will serve as solution to the problem encountered in the valuation of specialized property.

It’s also a course or research materials for other researchers who want to study on challenges associated with valuation of specialized property.

Furthermore specialized properties valuation involves a lot of challenges and posed a lot of problems for the person and who face the task of estimating its value i.e the valuer.

1.4     SCOPE OF THE STUDY

 There is always a limited scope in any research work. The scope of the research is therefore based on the challenges associated with valuation of specialized property using HOPE ALIVE TRUST HOSPITAL Idofian as a point of reference.

1.5     LIMITATION OF THE STUDY

This dissertion has been subjected to a lot of clog and constraint among which are:-

  1. Lack of adequate fund
  2. Lack of adequate time for collection of data and analysis.
  3. Inadequate of previous work on the thesis of data and analysis.
  4. Lack of proper record.
CHALLENGES ASSOCIATED WITH VALUATION OF SPECIALIZED PROPERTIES (A CASE STUDY OF HOPE ALIVE TRUST HOSPITAL IDOFIAN KWARA STATE)

ANALYSIS OF JOB SATISFACTION OF PROFESSIONAL NURSES IN PUBLIC AND PRIVATE SECTORS IN ANAMBRA STATE, NIGERIA

TABLE OF CONTENTS                                                                    Page

Title Page                                ….               ….              ….                     i

Approval Page                       ….               ….              ….                    ii

Certification                            ….               ….              ….                  iii

Dedication                              ….               ….              ….                   iv

Acknowledgements                 ….               ….              ….                    v

Table of Contents                   ….               ….              ….                  vii

List of Tables                          ….               ….              ….                            xi

Abstract                                  ….              ….              ….                  xii

CHAPTER ONE:  INTRODUCTION

Background to the Study                           ….              ….              ….          1

Statement of the Problem                            ….              ….              ….          4

Purpose of the Study                        ….              ….              ….          6

Research Questions                           ….              ….              ….          6

Research Hypotheses                        ….              ….              ….          7

Significance of the Study                             ….              ….              ….          7

Scope of the Study                                      ….              ….              ….          8

Operational Definition of Terms       ….              ….              ….          8

CHAPTER TWO:  LITERATURE REVIEW 

Introduction                                                ….              ….              ….        10

Overview of Nigeria’s Health System        ….              ….              ….        10

Component Issues in the Nigeria Health System ….              ….        13

Conceptual Issues on Job Satisfaction and Motivation           ….        21

Theoretical Review on Job Satisfaction               ….              ….        29

Maslow’s Hierarchy of Needs Theory                           ….              ….        29

Frederick Herzberg’s two Factor Theory             ….              ….        31

Edwin Locke’s Range of Affect Theory               ….              ….        32

Timothy Judge’s core Self-Evaluation Model      ….              ….        32

Conceptual Framework on Nurses’ Job Satisfaction              ….        33

Empirical Studies on Professional Nurses’ Job Satisfaction   ….        35

Summary of the Literature Review                                          ….        41

CHAPTER THREE:    RESEARCH METHOD

Research Design                                ….              ….              ….        43

Area of Study                                    ….              ….              ….        43

Population of the Study                    ….              ….              ….        44

Sampling Procedure                          ….              ….              ….        45

Instrument for Data Collection                   ….              ….              ….        45

Validity of Instruments                     ….              ….              ….        46

Reliability of Instruments                           ….              ….              ….        46  

Ethical Consideration                       ….              ….              ….        46

Procedure for Data Collection           ….              ….              ….        47

Method of Data Analysis                           ….              ….              ….        47

CHAPTER FOUR:  DATA PRESENTATION AND ANALYSIS

Presentation of Results                      ….              ….              ….        48

Research Question One                     ….              ….              ….        49

Research Question Two                    ….              ….              ….        50

Research Question Three                            ….              ….              ….        51

Research Question Four                     ….              ….              ….        52

Hypotheses Testing                           ….              ….              ….        53

Hypothesis One                                 ….              ….              ….        53

Hypothesis Two                                ….              ….              ….        53  

Hypothesis Three                              ….              ….              ….        54

Hypothesis Four                               ….              ….              ….        55

CHAPTER FIVE:  DISCUSSION OF FINDINGS, CONCLUSIONS

AND RECOMMENDATIONS

Discussion of Findings                      ….              ….              ….        56

Nurses’ Satisfaction from Job Security                ….              ….        56

Nurses’ Satisfaction from Recognition                          ….              ….        57

Nurses’ Satisfaction from Opportunity for Advancement                ….        57

Nurses’ Satisfaction from Job Control/Responsibilities                    ….        58

Difference in satisfaction from job security between nurses

in Public and Private Hospitals                   ….              ….     ….        58

Difference in satisfaction from recognition between nurses

 in Public and Private Hospitals                 ….              ….     ….        58

Opportunity for Advancement and Job Satisfaction                        ….        58

Effect of Job Control on Job Satisfaction             ….              ….        59

Conclusion                                                           ….              ….        59

Implications of the Study                                               ….              ….        60

Limitations of the Study                                                ….              ….        60

Recommendations                                                          ….              ….        61

Contribution to knowledge                                  ….              ….        62  

Suggestion for further studies                              ….              ….        62

References                                                            ….              ….       64

Appendices                                                          ….              ….       73

Appendix A                                                                   ….              ….       74

Appendix B                                                                   ….              ….       75

Appendix C                                                                   ….              ….       79

Ethical Approval Letter                                       ….              ….       84

List of Tables

Table 1:      Study Sample                                                       ….           47

Table 2:      Sex and Age Distribution                                              ….          51

Table 3:      Mean Analysis of Satisfaction Derived from Job Security     51

Table 4:      Mean Analysis of Satisfaction Derived from Job Security     52

Table 5:      Mean Analysis of Satisfaction Derived from

Opportunity for Advancement                                                      53

Table 6:      Mean Analysis of Satisfaction Derived from Job Control            54

Table 7:      t-test Analysis of Nurses’ Response on Satisfaction

with Job Security                                                                           55        

Table 8:      t-test Analysis of Nurses’ Response on Satisfaction

with Recognition                                                                  56

Table 9:      t-test Analysis of Nurses’ Response on Satisfaction with

Opportunity for Advancement                                                      56

Table 10:    t-test Analysis of Nurses’ Response on Satisfaction

Job Control                                                                          57

ABSTRACT

This study investigated the job satisfaction of professional nurses in public and private health sectors in Anambra State.  A survey design was employed and a study population of 5903 comprising all professional nurses in private and public hospitals was used. Proportionate stratified random sampling technique was used in selecting a sample of 375 nurses for the study. Instrument for data collection was a structured questionnaire. Data collected were analyzed using mean and standard deviation statistical tool to answer the four research questions and t-test statistical tool was used to test the four hypotheses. Findings showed that nurses in public hospitals were satisfied from job security unlike nurses in private hospitals. Nurses in public and private hospitals were satisfied from job control/ responsibilities. Also, it was found that opportunity for advancement guarantees job satisfaction to nurses in public and private hospitals. Based on the findings, it was recommended that hospital management should create a work environment that is free from dissatisfiers in order that nurses would carry out their duties effectively towards the actualization of organization’s goal.  Few relevant areas that the present study did not cover were suggested for further investigation.

CHAPTER ONE
INTRODUCTION

Background to the Study

Output in terms of performance in any given organization is a function of many variables which job satisfaction is one of them.  Job satisfaction which is equally understood and sometimes referred to as “work satisfaction” has been variously defined in the literature.  Job satisfaction is the extent to which an employee expresses a positive orientation towards a job. It also describes how content an individual is with his or her job. Job satisfaction has also been defined as a pleasurable emotional state resulting from the appraisal of one’s job, an affective reaction to one’s job and an attitude towards one’s job (Chimanikire, Mutandwa, Gadzirayi, Muzondo, & Mutandwa, 2007; Thompson & Phua, 2012).  Job satisfaction is a worker’s sense of achievement and success on the job.  It is generally perceived to be directly linked to productivity as well as to personal well-being.  Job satisfaction implies doing a job one enjoys, doing it well and being rewarded for one’s efforts.  Job satisfaction further implies enthusiasm and happiness with one’s work.  Job satisfaction is the key ingredient that leads to recognition, income, promotion, and the achievement of other goals that lead to a feeling of fulfilment (Kaliski, 2007).

Job satisfaction has continued to be a major area of interest in the study of industrial and organizational psychology because of the presumed and common-sense linkages between satisfaction and other mainstream concepts like leadership, performance, reward system and group process (Poole & Warner, 2000).  Furthermore, job satisfaction has been an interesting construct for researchers in understanding employee behaviours and attitudes (Zurn, Dolea & Stillwell, 2005).  Despite the number of studies that dealt on different aspects of job satisfaction, Boles, Wood and Johnson (2008), stated that more studies are needed on job satisfaction because of several reasons.  According to them satisfaction with the job is directly related to organizational commitment, behaviours and actions.  To this end therefore job satisfaction among professional nurses should be of great importance and concern to any health organization, sector or nation given the pivotal role that nurses play in determining the efficiency, effectiveness and sustainability of health care delivery system. It is therefore imperative to understand what motivates nurses and the extent to which the organization and other contextual variables, add up to achieve satisfactory performance output in the overall health care delivery system. This is necessary going by the fact that job satisfaction is an essential part of ensuring high quality care and performance output (Lambert, Hogan & Barton, 2001; Mount, Ilies & Johnson, 2006). Job satisfaction does not necessarily concern the professional nurses only, but cuts across the entire system – patients and patients’ relations, hospital management as well as health sector, health organizations, and indeed the entire nation.  The inaction or inability of any organization to achieve a reasonable level of job satisfaction among her workforce will lead to dissatisfaction.

Job dissatisfaction generally, has been frequently cited as the primary reason for low/poor quality output, non-commitment, low productivity and high rate of staff turnover among others. Dissatisfied nurses not only give poor quality, less efficient care, there is also evidence of a positive correlation between professional nurse satisfaction and patient satisfaction and outcomes (Tzeng, 2002; Tsang, 2002, Takase, Maude & Manias, 2005). Nurses who were not satisfied at work were also found to distance themselves from their patients and their nursing chores, resulting in sub-optimal quality of care (Demorouti, Bekker, Nachreiner & Schaufeli, 2002).

The growing importance attached to studying job satisfaction especially among the professional nurses in recent times is not far-fetched. For instance, there is a growing need to strengthen health system in Nigeria to help meet the Millennium Development Goals (MDGs). It is widely believed that a key constraint to achieving the MDGs is the absence of a properly trained and motivated work force of which nurses are part and parcel, and improving the health workers working conditions is critical for health system performance (FMOH, 2007).  In addition, the HIV/AIDS epidemic is compounding the problem by creating a stressful environment for health workers through increased workload, exposure to infection and reduced morale.

The organization of the health care system in Nigeria is pluralistic and complex. It includes a wide range of providers, comprising the public health institutions and a large and equally growing private sector, made up of private-for-profit and private-for-non-profit providers, e.g. Non-Governmental Organizations (NGOs), Religious, Spiritual and Traditional Care Providers. This situation is equally the same in all the 36 States of the Federation including Anambra State.  Anambra State health care system consists of public sector health institutions that serve both the indigent and the affluent in the society, and the private health providers that specifically cater for the segment of the population that can afford their services.

Outside public health institutions, the private sector hospitals, maternity homes and clinics provide about 80 percent health services to Nigerians (Federal Ministry of Health, 2007).  Despite these remarkable contributions of the private sector to the overall health care need of the country, the sector are not very well supported (Kwahar & Ukeh, 2012).  Evidence from the literature, however, shows that the sector lags behind in training and refresher courses (Larbi, 2004).  With the exemptions of few non-governmental and mission hospitals, most private sector hospitals are privately owned and run by the physicians (doctors) who oversee the management of the hospitals on one man basis.  Most of the job satisfaction variables such as opportunity for advancement, recognition, job security, working conditions, interpersonal relationship, etc. are not regulated and policy driven in private sector as obtained in public health sector.  This situation, therefore, makes a critical evaluation of job satisfaction variables in the sectors worthwhile considering the rate of nurses’ turnover in both sectors.

Statement of the Problem

ANALYSIS OF JOB SATISFACTION OF PROFESSIONAL NURSES IN PUBLIC AND PRIVATE SECTORS IN ANAMBRA STATE, NIGERIA

CHALLENGES ASSOCIATED WITH PROPERTY RATING IN NIGERIA (A CASE STUDY OF ABEOKUTA NORTH LOCAL GOVERNMENT IN OGUN STATE)

SYNOPSIS

            Property rating is not a new phenomenon in history; it is as old as a man himself. The payment of tax was originated as man learnt to live together in an organized community. In Africa society for instance, grown up males are often participating in a communal labor to maintain the path way leading to village, farm kinds, construction of roads, public square.

            In view of the above historical facts, Abeokuta North Local Government Area is been involved in the course of rating exercise. This was backed up by the tenement rate edict of 1995, an edict that makes provision for the levying and collection of tenement rate on properties in Ogun State. The effective year that the local government under study started the exercise was 1996, while they did re-assessment in 1995, up till date.

            The local government in responsible for collection of the tenement rate but they are proposing to give it to a quality estate surveyor and valuers who is capable to collect the rates.

            This study is meant to confirm the challenges of property rating within the period of 1996 till date as well as to evaluate some of the benefits and problems confronting the success of rating exercise and the importance of property rating which make it serves as a durable source of revenue to the local government.

CHAPTER ONE

1.0        INTRODUCTION

            Property rating is a form of tax levied on real property and it is normally charged at local level for raising the revenue to carry out specific developmental projects. These rates are levied annually on owners or occupiers of landed property. It is charged on the annual value of occupation of the tenement and should reflect the income earning capacity of the built up landed property.  

            Historically, rating system has its origin in the Poor Relief Act, 1601 generally referred to in Britain as “the statute of Elizabeth”. This system inherited from Britain in 19th century has been recognized as a potentially rich source of raising fund within a Local Government Area for the purpose of providing and maintaining essential services and amenities in the rating area – such as roads, market squares, motor parks, communal halls are maintained through communal efforts. Individual in the community contribute their income and services for the up keep in their leaders’ household.

            It is the present day made of living and modernization that brought about the present sophistication and form of its application and collection. The local government now takes some of the roles formerly played by the Obas, Obis or Emirs which are presently more complicated like provision of electricity, schools, roads, clinics, refuse proposal services etc.

            The first real attempt to property rating was through the federal government guideline for local government reform of August, 1976. This document was designed to give guidelines on the structure, finance and administration of local government in the federation. The document introduced a pattern of rating law for the entire country and since then, all estate government have based their Rating Edict or Laws on it with very little modification. If is important to know that the major principles of the rating system in Nigeria is to defray the Local Government expenses. For example, that of Ogun state was called Tenement Rate Edict of 1995, where property types were zoned and appropriate unit was adopted. Thus the x – ray of the system in Nigeria was that of Tenement Rating, where value of the property for rating purpose is ascertained by a qualified estate surveyors and valuers and a percentage of the property is multiplied by a rate Nairrage to be adopted by the Rating Authority.

            Property Rating is a viable or stable source of revenue generation, though 70 – 80% of the total revenue to the local Government. In Nigeria is from the federal statutory allocation.

This Rating is a way of broadening the financial base of Local Government to provide necessary facilities for its subject.

Other source through which the Local Government can raise funds are, insurance of death and birth certificate, approval of plans, revenue from motor parks and market, insurance of license etc.

1.1                                STATEMENT OF PROBLEMS 

The problem associated with rate collection cannot be underestimated. That is why many Local Governments have not being embarking on the implementation.

It is important to say that rating can only be effective when certain conditions such as street numbering, culture, qualified personnel, population etc have to be taken into consideration. Many Rating Authorities did not consider these that is why collection of rate is very tedious.

2,1                                AIM AND OBJECTIVES

Aim

            The aim of this study is to examine the challenges associated with Property Rating in Abeokuta North Local Government of Ogun State.

Objectives

–           To identify the rateable hereditament in the case study.

–           To examine the process of assessment of reteable properties within the case study.

–           To evaluate level of awareness of property rating by general public especially in the study area.

–           To identify the challenges of property in the study area.

–           To recommended possible solution to problem, the Local Government is facing as a result of rating exercise.

CHALLENGES ASSOCIATED WITH PROPERTY RATING IN NIGERIA (A CASE STUDY OF ABEOKUTA NORTH LOCAL GOVERNMENT IN OGUN STATE)

VELOCITY OF MONEY AND FINANCIAL DEVELOPMENT IN NIGERIA

Table of Contents

Title page…………………………………………………………………………………ii

Certification………………………………………………………………………………iii

Approval page……………………………………………………………………………iv

Dedication………………………………………………………………………………..v

Acknowledgments………………………………………………………………………..vi

Table of contents…………………………………………………………………………vii

 List of tables………………………………………………………………………………x

List of figures…………………………………………………………………………… xi

 Abstract…………………………………………………………………………………xii

 CHAPTER ONE: INTRODUCTION…………………………………………………1

1.1 Background to the Study…………………………………………..…………………1

1.2Statement of the Problem……………………………………..……………………….7

1.3Research Questions…………………………………………..……………………… 9

 1.4 Objective of the Study……………………………..………………………………9

1.5 Research Hypotheses.………………………………………………………………….10

1.6 Significance of the Study…..……………………………………………………..…10

1.7 Scope of the Study……………………………………………………………………….10

CHAPTER TWO: LITERATURE REVIEW…………………………………….……12

2.1 Conceptual Literature …………………………………………………………….…12

2.2 Theoretical Literature………………………………………………………………14

2.2.1 Quantity Theory of Money……………………………………………………….

2.2.2 Cambridge Economists……………………………………………………………

2.2.3 Keynesian Model…………………………………………………………………..

2.2.4 Friedman’s Theory……………………………………………………………….

2.2.5 The Monetarist-Structuralist Dichotomy…………………………………….

2.2.6 Loan Pricing Theory……………………………………………………………….

2.2.7 Openness Hypothesis…………………………………………………………………….

2.2.8 Credit Market Theory…………………………………………………………………..

2.2.9 Financial Liberalization Hypotheses……………………………………..

2.2.10 Efficient Market Theory……………………………………………………………….

2.3 Empirical Literature…………………………………………………………………..17

2.3.1 Foreign Evidence…………………………………………………………………….

2.3.2 Domestic Evidence………………………………………………………………………

2.4 Limitations of Previous Studies………………………………………………………24

 CHAPTER THREE: RESEARCH METHODOLOGY…………………………….26

3.1 Theoretical Framework……………………………………………………………..26

3.2 Model Specification…………………………………………………………………….27

3.3 Estimation Techniques………………………………………………………………29

3.4 Model Justification…………………………………………………………………….29

3.5 Diagnostic tests……………………………………………………………………29

3.6 Data Sources…………………………………………………………………………29

CHAPTER FOUR: PRESENTATION AND INTERPRETATION OF EMPIRICAL RESULTS…………………………………………………………………………………..

4.1 Results of Stationarity Test…………………………………………………………..

4.2 Results of Co-Integration…………………………………………………………….

4.3 Estimation and Interpretation of the Results of Objective One and Two…………

4.4 Estimation and Interpretation of the Results Objective Three……

4.5 Analysis of Post-Diagnostic Results………………………………………………….

4.6 Evaluation of Hypotheses…………………………………………………………….

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS………

5.1 Summary…………………………………………………………………………………

5.2 Conclusion……………………………………………………………………………….

5.3 Policy implications and Recommendations…………………

5.4 Contributions to Knowledge……………………………………………………………

5.5 Avenues for further research……………………………………………………………

REFERENCES………………………………………………………………………….36

APPENDICES………………………………………………………………………

List of Tables

Table 4.1.1: Results of Unit Roots Test At Levels………………………………

Table 4.1.2: Results of Unit Root Test At First Difference…………………………..

Table 4.2.1: Results of Co-Integration…………………………………………

Table 4.3.1: Results of Estimated Co-Efficient…………………………………….

Table 4.3.2: Results of Long-Run Causality………………………………………

Table 4.3.3: Results of Short-Run Causality……………………………………………

List of figures

Figure 1.1: Graph of GDP………………………………………………………………

Figure 1.2: Graph of Broad Money Supply to GDP (M2GDP)…………

Figure 1.3: Ratio of Credit of Private Sector to GDP……………………………………

Figure 1.4: Plots of Income Velocity of Narrow Money (Mv1) and Velocity of Broad Money (Mv2)…………………………………

Figure 4.1: Result of Normality Test………………………………………………………..

Figure 4.2: Plot of Cumulative Sum of Recursive Residuals………….

Figure 4.3: Plot of Cumulative Sum of Squares Recursive Residual………………………

Abstract

The study focuses on investigating the impact of velocity of money on financial development in Nigeria. Velocity of money is a very important concept in the economy. Therefore, the study of its determinants is necessary. Our study therefore, investigated the link between velocity of money and financial development in Nigeria covering a period of 1981-2013 under the framework of Vector Error Correction Model (VECM). Our findings show that financial development has a long-run relationship with velocity of money in Nigeria. In addition to this, financial development has a significant impact on velocity of money and also real interest has a significant impact on velocity of money. Our results also show that there is no differential impact of financial development on velocity of money in Nigeria during the pre and post-liberalization regimes. For the test of causality, our results show that there is a uni-directional causality flowing from financial development (proxied by CPSGDP) to velocity of money (proxied by M2/GDP) without a feedback. We also found a bi-directional causality between velocity of money and real GDP as well as that between financial development and real GDP. A uni-directional causality exists between real GDP and treasury bills rate and between real GDP and exchange rate and this flows from these two variable to real GDP. Finally, there is a uni-directional causality running from real interest rate (RINT) to real GDP. On the strength of these, we recommend that policies to boost financial development in Nigeria should be put in place.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The income velocity of money plays an important role in both economic stabilization and development programmes. According to Akinlo (2012), the study of the behavior of the velocity of money has intrigued many researchers. The study contended that the increasing research works on the behavior of money velocity is as a result of its importance in setting credible monetary policy programmes. The volume of money supply and its speed of circulation link money to the economic activity in a country. Therefore, the velocity of money is very crucial in the design and implementation of monetary policy. Indeed, the numerical value of money and its determining factors play a major role in ensuring the effectiveness of monetary policy for purpose of ensuring price stability and rapid economic growth in any country.

 In a similar vein, Gill (2010) noted that the total money supply in an economy is determined by the quantity of money and the rate of circulation of money, i.e. the velocity of money (VM). It is the contention of the study that to determine the optimal amount of money in an economy, the numerical value of VM and its determining factors is as vital as the total quantity of money. For the setting of credible monetary policy programs, understanding the behavior of VM and its determining factors is very crucial to developing countries such as Nigeria where yearly economic growth fluctuates frequently. For the conduct of efficient monetary policy, a reliable estimate of VM and its forecast is very crucial. If VM is not predictable, the demand for money is also unstable and that makes the standard relationship between GDP, inflation, and money supply uncertain and the result is weak monetary policy. The critical concern of the monetary authority is to ensure adequate supply of money to spur economic growth without causing inflation. This goal cannot be achieved if VM is not stable.

Traditionally, the velocity of money (VM), is the average frequency which a unit of money is spent on new goods and services produced domestically in a specific period of time. Velocity has to do with the amount of economic activity associated with a given money supply. When the period is understood, the velocity may be presented as a pure number otherwise it should be given as a pure number per time. Here, the relationship between money, output and prices is the cynosure of monetary theory and policy alike. Analytically, what lies at the heart of this relationship is the velocity of money, that is, the ratio of nominal income to the stock of money (Jadhav, 1994). The monetary authorities in the developed and developing countries strive to control money supply not for its own sake, but for regulating the flow of spending in the economy with a view of containing inflationary pressures. However, the flow of spending depends not only on money supply but also its turnover, or the velocity of money, which is not under the direct control of the monetary authorities.

On the other hand, financial development has attracted the interest and attention of economists and financial experts over the years. According to Adekunle, Salami and Adedipe (2013), the financial sector of any economy in the world plays a vital role in the development and growth of the economy. The development of this sector determines how it will be able to effectively and efficiently discharge its major role of mobilizing fund from the surplus sector to the deficit sector of the economy. The study noted that a well developed financial system performs several critical functions to enhance the efficiency of intermediation by reducing information, transaction and monitoring costs. If a financial system is well developed, it will enhance investment by identifying and funding good business opportunities, mobilizes savings, enables the trading, hedging and diversification of risk and facilitates the exchange of goods and services.

The link between financial development and velocity of money has been stressed by many researchers. As Short (1973) cited in Hassan, Khan and Haque (1993) noted, the behavior of the velocity is an important determinant of how much financial resources an economy can generate through the operations of its financial system without eroding it through higher inflation. According to Judd and Scadding (1982) as cited in Akinlo (2012), in the mid-80s several developing countries embarked on far reaching financial reforms. The basic objectives of these reforms are to enhance the efficiency of the financial sector and promote the development of the economy as a whole. The study concluded that the introduction of the financial reforms and innovation would have implications for stability or instability of the money demand and therefore the velocity of money function. Financial reforms could alter or cause shifts in money velocity; and in particular, where the velocity is variable, the relationship between money and income becomes uncertain and less predictable. The variability in velocity breaks the rigid link between money and income, since changes in money supply, however induced, may result in pushing velocity up or down rather than produce the desired effects on spending and income (Akinlo, 2012).

Prior to 1986, government had sufficient financial resources to finance a reasonable proportion of each development plan. The implication of this stranglehold on the economy became glaring by the middle of the 1990s as the country grappled with  an excruciating external debt burden and other economic problems such as falling terms of trade in the international market place, decline in growth of output, high rate unemployment etc. For the financial system, Nigeria operated a highly regulated and under-developed financial system prior to the introduction of the structural adjustment programme (SAP) in the mid-eighties. For example, in the early seventies, as a result of the prevailing economic paradigm at that time, the sector was highly regulated with government holding controlling shares in most of the banks, Odeniran and Udeaja (2010). The paper maintained that in 1986, the liberalization of the banking industry was a major component of SAP put in place to drive the economy from austerity to prosperity.

In another vein, according to Adegbite (2005), the result of all the economic woes occasioned by pre-SAP economic policies was a shift in the economic development paradigm from government-led to private sector-led development. In line with this paradigm shift, according to Adegbite, was the need to relieve every sector of all strangulating regulations that had hitherto characterized it. Consequently, by 1986 a programme was fashioned out for the nation called the Structural Adjustment Programme (SAP). The SAP attempted to move the country away from government direct-control of economic activities to indirect control, (i.e. control of economic activities-through the market forces).

With the introduction of SAP, the impediments on the financial sector operations were reduced thus enhancing major financial reforms. According to Nnanna et al. as cited in Iganiga (2010), the major financial sector policies implemented were the establishment of the Nigerian Deposit Insurance Corporation (NDIC) in June 15 1988 by decree NO 22 OF 1988 with outlined procedure on the provision of deposit insurance and related services to banks. Its main importance was brought to focus in 1994 and 2006 when most of Nigerian banks and other financial institutions were submerged in distress and banks consolidation exercise of 2004 and 2005 respectively. In June 1989, privatization which is a tenant of the program was enacted to improve management, efficiency and performance of affected enterprises; reduce government debt, increase funds for infrastructure, enhance economic growth and development and instil market discipline. It was expected that this method will enhance capital market development by increasing the quality and quantity of financial instruments traded in the country. In the same year, Bureau De Change was licensed to enhance access to foreign exchange rate to small users and to enlarge the foreign exchange market in Nigeria.

In 1987, the financial liberalization policy was introduced as part of economic blueprint under SAP. The key reforms that were implemented as part of the policy include; liberalization of interest rate, changing the concept of a credit ceiling with open market operation (OMO), decontrolling exchange rates, developing the capital market, promoting competition and efficiency by liberalizing bank licensing/entry barriers which increased the number of banks from 34 in 1987 to 90 in 2003 and decreased to 20 in 2012. Other measures implemented included, strengthen the regulatory and supervisory institutions, upward review of capital adequacy standard and the introduction of direct monetary policy instruments.

Under the financial sector liberalization, certain measures were taken which involved interest rate deregulation, the introduction of an auction market for treasury bills, the identification of insolvent banks for restructuring, the introduction of more stringent prudential guidelines for banks, increases in banks’ minimum capital requirement, and the upgrading and standardization of accounting procedures. (Bakare 2011). In all these measures, the study maintained that interest rate deregulation was the first step. Thereafter the policy makers embarked on further financial liberalization measures. The legal reserve requirements were relaxed, credit controls were removed, and the capital account was liberalized. The financial sector liberalization i.e. the removal of restrictions on international financial transactions, was expected to boost the non-oil export and attract foreign investment while the relaxation of constraints and granting of licensing to new banks were to increase competition; interest rate liberalization and the abolition of credit rationing should provide incentive for economic agents to increase their rate of savings, investment and output growth. Financial liberalization, was also expected to directly generate international competition for funds, foster specialization and thereby drives capital towards the most productive projects. Indirectly, it should foster financial development which in turn could positively affect productivity.

As a result of the key role played by interest rate in stimulating the economy, the monetary authorities, even after the deregulation, keep fine-tuning the interest rate. In a bid to ensure a reduced interest rate, Kolawole (2012) argued that the CBN guaranteed inter-bank transactions as part of its quantitative easing policy. This has contributed to a downward slide in interest rates. For example, the weighted average inter-bank call rate, which stood at 2.89 per cent at the end of 2009, declined to 1.50 per cent at the end of 2010, compared with the monetary policy rate (MPR) of 6.00 per cent. The low and declining inter-bank rate was evidence of surplus of funds in the banking system. The paper contended that notwithstanding the declining inter-bank rates, the interest-rate structure of commercial banks showed high lending rates. The average lending rate increased slightly to 23.3 per cent at the end of 2010 from 23.1 per cent at the end of 2009. In addition, deposit rates declined from an average 6.13 per cent in 2009 to an average 5.53 per cent in 2010. Thus, the spread between the average lending rate and the average deposit rate widened in 2010 reflecting inefficiencies in cost management, and unrealistic profit expectations and targets in commercial banks. The most popular instruments of monetary policy were the setting of targets for aggregate credit to the domestic economy and the prescription of low interest rates. With these instruments, the CBN hoped to direct the flow of loanable funds with a view to promoting rapid development through the provision of finance to preferred sectors of the economy (agriculture, manufacturing and residential housing) (Onafowora and Owoye,2007).

In furtherance of the government’s efforts at improving the financial system, Odeniran and Udeaja (2010) contended that in 2004, the consolidation exercise in the banking industry took a leading role in the National Economic Empowerment and Development Strategy (NEEDS), which was in place at that time to drive the economic agenda of the government. In 2009, as part of the broad economic measures to respond to the adverse effects of the global financial and economic crises, the Central Bank of Nigeria in conjunction with the fiscal authorities engineered measures to avert a collapse of the financial system with a view to maintaining economic growth. 

Despite all these financial reform measures, statistics on financial development in Nigeria do not paint an encouraging picture. The stylized facts on the comparison between the two main financial development indicators and economic growth as shown below reveal that financial development in Nigeria has not influenced GDP much. From figures 1.1,1.2 and1.3 below, it can be seen that while the ratio of broad money supply to GDP (M2/GDP) and credit to private sector as a ratio of GDP experienced increases (though in a fluctuating manner) from 1985 up till 2005, the GDP  was almost flat within the same period. This shows that financial development may not have influenced economic growth within these periods.

VELOCITY OF MONEY AND FINANCIAL DEVELOPMENT IN NIGERIA

CHALLENGES AND PROSPECT OF PROPERTY RE-DEVELOPMENT (A CASE STUDY OF TAIWO ROAD ILORIN)

SYNOPSIS

        landed properties ( houses ) have been observed, undergoing changes in their design shapes and uses, this changes in  use as a result of alteration being made could also be know as redevelopment, that is the restructuring of the building to suite the uses which they were designated.

        this dissertation in the pros of redevelopment in an urban centre, which is ilorin metropolis.

        further more, it examines the causes of redevelopment and analysis its effect on re-development properties developer and property users.

        it also, highlights the significance of redevelopment challenges analysis of any project.

CHAPTER ONE

  1. INTRODUCTION

A study of road property investment in ilorin revealed a number of constraints which were associated with the regulation of houses that is the restructuring of building.

In the area of pre- investment students for property development or redevelopment the anticipated return can only be tested or ascertained with proper understanding analysis and taking into consideration.

The factor affecting redevelopment omuojine ( 1993) history has it  that ilorin was founded  orgurally by those who built according to hallet arahan ( 1979) all value in arty hand  under go continue evaluation form a stage of non existence through a circle of change.

In Nigeria the law of Nigeria (1948) cap 155 defines development or redevelopment as any building operation and any use of land or any building there in for a proposed which is disproved from the proposed which the land for building was last being used.

More ever, british town and country planning act (1947) carrying out building engineer, mining or other operation in an over, under land or the making of any material residential building in the area, which later brought up to a standard of a distinct settlement most of those building built were able to change in their use as a result of the development of the town physically environmentally and economically.

With the federal government pronouncement of ilorin as a capital of kwara state.

There arose the need to create a business district and the resultant use for commercial use some are bergs restored to us  formal use due to obsolescence that had set on the building for instance a three (3) bedroom residential could have it use change to an estate surveyors office.

Similar conversion may governor involve tampering with the structure by way of pulling down we all, addition of new accommodation and imploring the physical fabrics of the building.

Also, an obsolete terminates building with eight (5) rooms (i.e. face to face) may be converted to flat or any other type of design.

Although, the redevelopment enhancement aesthetic value of the building and make alternative enough for the type of the use proposed.

More so in some cases, alternation  may have to be done to be both the internal and external part of the building for instance  a converted office accommodation  proposed to house a new bank may give it s approach view redesign and filled with many architectural decoration further more  the  frontal fence may have to be pulled down to aid visibility  and give room for parking lots redevelopment project  cannot be carried out without learning some  task or challenge on the developer and even the property consumer.

In carrying out such project the developers encounter difficulties which stand as obstacle to the successful, efficient and effective development redevelopment project.

The challenge includes government policies building material the real estate finance and others.

1.1   STATEMENT OF THE PROBLEM

As it is not unusual for any dissertation like this to be   constrained due to some reasons. this particular project work. he therefore, not has been an exception. there searcher had been confronted with the inadequate fund to carryout the project work. he had utilized the very limited resource at his disposal to work toward the success of the work.

Insufficient time was another problem. the writer has to distribute the short available time at his disposal to the pursuit of this project work and to other academic pursuits.

During the collection of the data used for this project work, the researcher was faced with the poor response of the few available people or property owners interviewed thinking that the researcher may have be one of the frauds in the town, thus preferred to keep their words to themselves.

Inadequate literatures on  the topic has been of the problem faced as the researcher could  not lay his hand on one quick referencing, thus, making him to rely exclusively on the data gotten from the field.

Another major problem was the unavailability of some property owners for interview by the researcher.

1.2   AIM

To examine the challenges and prospect of within the redevelopment property in the study area

1.2   OBJECTIVES

  1. To identify the properties under redevelopment on the case study
  2. To know the stage of the properties  under
  3. To examine the prospect of  the  properties redevelopment
  4. To examine the challenge involve in the redevelopment
CHALLENGES AND PROSPECT OF PROPERTY RE-DEVELOPMENT (A CASE STUDY OF TAIWO ROAD ILORIN)

TRADE LIBERALIZATION – IMPLICATION FOR NIGERIA’S INDUSTRIAL GROWTH

CHAPTER ONE

INTRODUCTION

1.1 Background of Study

There has been a massive liberalization of world trade since 1950 following the establishment of General Agreement on Tariffs and Trade (GATT). Ever since, global economy has become much more interconnected especially, in recent decades. World trade has increased faster than world Gross Domestic Product (GDP) over the years with majority of this trade in manufactured goods (Thirlwall 2000, McCalman 2004). This points to the fact that the role of industrial development in the economic wellbeing of any economy cannot be overemphasized. The reason is that international development experiences suggest that a country can earn a relatively high per capita income when the growth of industrial output is relatively high (Adeyumi, 2005). Contrary to the conventional wisdom that trade liberalization is always good for development, Thirlwall (2000) states that economic theory offers a wide array of views on the issue.

The overall pattern portrays a long-held belief that trade policy can be used to influence the trade regime in directions that can promote growth. Consequently, many economic development analysts have proposed that Nigeria has no option but to integrate into the global market or risk being excluded in the scheme of things in the world economy (Amponsah, 2002). Also, Miles and Scott (2005) are of the view that trade liberalization under the framework of comparative advantage shows that a country as a wholecan benefit from free trade but does not show that everyone within a country benefits. Some groups within society are better off as a result of trade but the standard of living of others remains unchanged even declines in some cases. Despite such observations, the global economy has been persistent in its move towards barrier-free borders; perhaps in finding solace in the words of Adam Smith: “when it comes to international trade, not only the prejudices of the public but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it” (see Mikic, 2006). Though the concept of trade liberalization was popularized by Adam Smith in 1776, trade across country’s borders has spanned over two centuries with early doctrines on free trade traced to 1400s (Ursprung 1999). Economists however, base their acceptance of the mutual benefits from trade across borders on the theory of comparative advantage which is most closely associated with the writings of the great English classical school economist, David Ricardo (Krol 2008).

Trade liberalization has come to stay in Nigeria through policies that encourage the expansion of trade openness, capital account liberalization, establishment of free trade zones, regional integration, bi-lateral and multi-lateral trade agreements, and so on. Nigeria’s trade policy profile shows different policy swings since 1960 starting with import substitution strategy between 1960s till early 1980s. The import substitution strategy appeared to have placed the economy on the part of rapid growth until global economic downturn that plagued most developing countries of the world in the  in the late 1970s and early 1980s began to throw its negative trends on the economy. As a result, Nigeria adopted a trade liberalization, the Structural Adjustment Programme (SAP) in September 1986 as recommended by the World Bank and International Financial Institution (IMF). With the introduction of SAP, the economy began to pave way for market forces to determine resource allocation in the economy with a view to improving competition and efficiency in trade and overall economic performance (Shafaeddin 2005, UNEP 2005, Obokoh 2008, Lionel, Okon, and Eyo 2011). The liberalization policy prompted the government to commence the removal of different forms of protection and subsidies for local industries in terms of sourcing for raw materials and foreign exchange to such extent that special credit arrangement necessary for industrial growth was further removed in 1992. The call for trade liberalization intensified in 1993 with the establishment of World Trade Organization (WTO) which replaced GATT of 1947 (Thirlwall 2000).

In other to make sure that improved industrial performance in the face of this arrangement, a number of industry pro-policies have been introduced under such national development platform as National Economic Empowerment and Development Strategy (NEEDS) and Vision 20:2020 (Alao, 2010). The Federal government has maintained an attitude of opening up avenues of negotiation capable of promoting trade liberalization through bilateral and multilateral development cooperation, agreements and trade interests. Nigeria is also taking part in the African Growth and Opportunity Act (AGOA) proposed by United States of America, and the new EU-African, Caribbean and Pacific (EU-ACP) Agreement in response to trade liberalization arrangement (UNEP 2005).

Observations arising from existing literature show that while some countries count their gains, others count serious losses under trade liberalization arrangements. Many are of the view that trade liberalization widens the gap between developed economies and their less developed counterparts. Abimanyu (1996) in Gallagher and Ackerman (2000), reveals that when the concept of comparative advantage is coupled with controls for other economic factors that influence trade, the relationship between trade liberalization and other macroeconomic concerns with special reference to location of industry, becomes weaker.

In the wake of this discourse, there is an urgent need to investigate the effects of Nigeria’s trade liberalization on its industrial growth over the decades. This is the motive behind this study.

1.2 Statement of the Problem

The philosophy behind the recommendation of trade liberalization is that trade openness would aid industrialization and economic development (Shafaeddin, 2006). Anderson and Wincoop (2004) however, warn that a country taking up liberal trade must seriously weigh its ethical status since liberal trade is strengthened by ethical considerations and the trade policies of rich countries hurt the poor disproportionately. This supports the view that liberalization is essential when an industry reaches a certain level of maturity provided it is undertaken selectively and gradually. This perhaps influences Obokoh (2008) and Shafaeddin (2005) views when they opine trade liberalization as recommended by the Bretton Wood institutions is more likely to lead to the destruction of the existing industries particularly those that are at their early stages of infancy as well as hamper the emergency of new ones.

TRADE LIBERALIZATION – IMPLICATION FOR NIGERIA’S INDUSTRIAL GROWTH

AN EXAMINATION OF PROBLEMS ASSOCIATED WITH THE MANAGEMENT OF PRIVATE RESIDENTIAL ESTATE. (A CASE STUDY OF ALHAJI OSENI OLANREWAJU ESTATE)

SYNOPSIS

          Developers and property ensure now realizes the close relationship between property management and effectively managed property and the income flow form which property, termites too are becoming increasingly aware of their ringlets and liabilities within the legal framework of their tenancy, a situation which now makes property management practices more technical and broad in operation.

          This research work is therefore carried out to examine a critical analyzes of the management procedure, associated with private residential estate.

          It also identifies the management problems and recommends possible solutions to the problem.

          Both Primary and secondary sources of data collection will be adopted in the research work to get necessary information about the research problem.

CHAPTER ONE

  1. INTRODUCTION

Until recently, property management as an area of real estate practice was considered as simple of rent collection and attendance to minor repair works in building. Landlords or their appointed surveyor in most cases, were involved in this regard.

However, the national economy coupled with the resultant effect of increasing cost of building material and souring cost of capital caused a shift of attention to corporate management in landed properties, the risk involved in real estate development has inevitably increased. Consequently, additions to existing stock of properties have reduced strongly. In conforming to the attributes of capital appreciation, rents and value on properties rise with multiple years rent now being demanded.

For new lettings, the market forces if supply and demand are easily reflected in rents and other considerations. However, requires professional experience to negotiate comparative terms with “sitting tenants”, besides, vacant possession is not easily obtained as it involves intricate legal procedure.

For these and other related reasons property owners and developers are beginning to appreciate the important roles estate surveyor could pay ion realizing their investment objectives of profit maximization while extending the economic life of their properties.

  1. STATEMENT OF PROBLEM

Inadequate management of most private residential estate has load most of them being in a state o obsolescence. This inadequate property management is largely due to non discount attitude among Nigerians towards maintenance culture. The owners of most private residential estate have the full responsibility I entrusting their properties into the hands of efficient property manager in other to enjoy profitable returns which will allow the occupant a peaceful stay in the property. But in most cases, it is affected by the interview of those who need to be trained.

Alhaji Oseni Olanrewaju estate which is private residential estate use for developing place have been facing little management problem in view of the state of the economy.

The problems which are connected with private residential estate management include nature of electricity, water supply, effect of inflation on rent, service charge administration and maintenance culture.

  1. AIMS AND OBJECTIVES OF THE STUDY

The aim of this dissertation is to certifiably examine the management procedure associated with private residential estate with or view to identify the management problems and prefer solution.

The following objectives were pursued to achieve the aim:

  1. To determine the various hips of residential properties with the estate.
  2. To examine the state and condition of the state
  3. To analyze the management procedure in the management of Alhaji Oseni Olanrewaju estate.
  4. To identify problems of private residential estate management.
  5. To suggest ways that would enhance better management of the estate.
    1. SIGNIFICANT OF THE STUDY

The significant of the study is to analyze management and maintenance procedure of a private residential estate. It also provides an essential body of knowledge that will encourage further research on ht4e topic. It also serves as a valuable material to the general public to stop the non-chalet attribute towards management and maintenance of landed properties. Also the study maintenance of existing physical facilities is part of the overall process of national development.

AN EXAMINATION OF PROBLEMS ASSOCIATED WITH THE MANAGEMENT OF PRIVATE RESIDENTIAL ESTATE. (A CASE STUDY OF ALHAJI OSENI OLANREWAJU ESTATE)

TRADE LIBERALIZATION, EXPORT PERFORMANCE AND ECONOMIC GROWTH IN ECOWAS

CHAPTER ONE INTRODUCTION

1.1       Background to the study

There is scarcely any nation that can develop and grow in isolation. From colonial times to the present, nations and regions of the world have continued to collaborate with each other in the areas of trade, investments, science, technology, agriculture, health, education among others. They have formed and entered into various economic co-operations, collaborations, partnerships, joint venture agreements, which have remained catalysts for economic growth and freedom (Akpan and Effiong, 2012). These co-operations and agreements are results of deliberate policies of various governments to allow free flow of trade (in goods and services) across their national borders.

According to the World Trade Report (2013), world merchandise trade and trade in commercial services were worth in 2011 about USD 18 trillion and USD 4 trillion, respectively, despite global economic adversities, natural disasters, and political upheavals around the world. In the last three decades, world trade has grown dramatically and much faster than global output (Rueben and Arene, 2013). Between 1980 and 2012, world merchandise trade has increased by more than 7% and trade in commercial services, by about 8% per year (WTR, 2013). With such unprecedented growth in global trade, It is becoming increasingly obvious that strength lies in international co-operation amongst countries, particularly those within the same geographical regions, and that the world is experiencing the second age of globalization after the long and deep fall in the global economy that occurred between 1914 and 1945 due to two world wars and the Great Depression.

The dynamics of international economic relations and the complementary nature of development activities at the international level, coupled with scarce resources on a worldwide scale, forced a large number of developing countries to look for ways of participating more effectively in the world economy (Brautigam and Knack, 2004). One way was to set up economic and monetary free-trade areas.The aim of these regional economic grouping among others is to promote cooperation and integration, leading to the establishment of an economic union in order to raise the living standards of the people in the sub-region while maintaining and enhancing economic stability and fostering relations among member states so as to achieve a meaningful human centered development in the sub-region in particular and the continent as a whole (Busari, 2006). 

Consequently, the formation and success of the European Economic community in the 1950s spurred developing countries in Africa, Asia and Latin America to establish regional co-operation arrangements of their own, and the first United Nations Conference on Trade and Development

(UNCTAD) saw the promotion of economic co-operation among developing countries as a means to expanding their intra-regional and extra-regional trade and encouraging industrial and Agricultural diversification (Yusuf, Malarvizhi, and Khin, 2013). These activities culminated to the establishment of the Economic Community of West African States (ECOWAS) on 28th May, 1975. ECOWAS is a product of the go-between two distinct political lining that brought about the continental political organization in place. Their fundamental objectives which appears to be perfect the way they are conceived, is such that, the end result of these conceptions, when fully realized will bring not only socio-economic development, but also translate the entire west African community into a ‘near perfect’ community; where lives and properties will not only be safe and secured, but have a guarantee for realizing the full potentialities of life in a safe environment, where poverty will no longer have a place to hibernate and a community that tends to develop its own technological needs from within (Sakyi, 2011). Prior to trade liberalization among ECOWAS, exports within the region was distorted by export taxes, overvalued currencies, export licensing, existence of monopoly marketing boards and high import duties. As Chaudhry (2010) observed, trade liberalization could be said to have moved rapidly in many ECOWAS member countries in the 1990s through the adoption of a combination of unilateral and regional modalities. 

Different authors have attempted to define trade liberalization. According toOgunkola and Babatunde (2008) Trade liberalization can be characterized as the shifting of control over imports and foreign exchange towards tariff based protection. The shift in the mode of control can occur in various stages. It can progress through the rationalization of the tariff structure, reduction of tariff dispersion, and reduction/elimination of tariff rates. Orji (2014) definedtrade liberalization as the removal or reduction of restrictions or barriers on the free exchange of goods between nations. This includes the removal or reduction of both tariff (duties) and non-tariff obstacles (licensing rules, quotas). The easing or eradication of these restrictions is often referred to as promoting tree trade (Klasra, 2011). Trade liberalization is therefore expected to reduce the anti-export bias and make export more competitive in the international market through the reduction/elimination of tariff barriers, non-tariff barriers, export duties and exchange rate distortions (Arodoye and Iyoha, 2014). The process of economic development is as a process of structural transformation where countries move from producing “poor-country goods” to “rich-country goods,” a precondition for this transformation is often the existence of an elastic demand for countries’ exports in world markets so that countries are able to leverage global export markets without fearing negative terms of trade effects (Narayan, 2005).

 In many developing countries, there is often very low domestic demand so exports remain one of the few channels that in the longer run significantly contribute to higher income per capita growth rates of a country. That notwithstanding, the competitiveness and ensuing improvement of a country’s exports as a result of exposure to global competition, suggests that export remains the hallmark of economic growth. To record improvements in country’s export performance, countries’ exports need to be globally competitive to take advantage of leveraging world markets. Import restrictions of any kind, create an anti-export bias by raising the price of importable goods relative to exportable goods (Pernia and Quising, 2003). The removal of this bias through trade liberalization will encourage a shift of resources from the production of import substitutes to the production of export oriented goods. This in turn will generate growth in the short to medium term as the country adjusts to a new allocation of resources more in keeping with its comparative advantage (McCulloch, Winters and Cirera, 2001).

Trade liberalization does not necessarily imply faster export growth, but in practice the two appear to be highly correlated. The impact of trade liberalization on economic growth outlined above probably works mainly through improving efficiency and stimulating exports which have powerful effects on both supply and demand within an economy (Oladipo, 2011). There are several measures of trade liberalization or trade orientation, and most studies seem to show a positive effect of liberalization on export performance. Likewise there are different studies of the relation between exports and growth and the evidence seems overwhelming that the two are highly correlated in a causal sense, but the relative importance of the precise mechanisms by which export growth impacts on economic growth are not always easy to discern or quantify (Yanikkaya, 2003).

The high performance Asian countries are perhaps the most spectacular examples of economic success linked to exports (notwithstanding the recent crisis in East Asia). The economies of Japan, South Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia and Thailand have recorded some of the highest GDP growth rates in the world – averaging approximately 6 percent per annum since 1965 – and also some of the highest rates of export growth, averaging more than 10 percent per annum (Santos-Paulino and Thirlwall, 2004). It should be noted, however, that this success has not always been based on free trade and laissez-faire. Japan and South Korea, for example, have been very interventionist, pursuing relentless export promotion but also import substitution at the same time (Jin, 2006).

ECOWAS trade liberalization scheme has been marked by the unwillingness of many countries to implement its provisions relating to elimination of tariff and non-tariff barriers to trade and the functioning of a compensation mechanism (Arodoye and Iyoha, 2014). This is reflected by: difficulties in standardizing and harmonizing customs documents and tariff schedules; failure to extend total exemption from duties and taxes for unprocessed goods and traditional handicraft products; failure to apply preferential tariffs to approved industrial products; continued existence of non-tariff barriers, especially in the case of food and textiles; absence of certificates of origin for unprocessed goods and for industrial goods, and failure to produce both the certificates of origin and the export declaration; rigid border formalities and customs officials’ intransigence among others (Awokuse, 2008).

As a result, countries within the ECOWAS sub-region also adopted the structural adjustment programme (SAP) aimed at liberalizing their economy including the external sector. These new development options which marked the region’s total departure from the import substitution strategies, sought to redirect growth strategies towards the external market (Amponsah, 2004). Among the countries in the ECOWAS sub-region that adopted this strategy in the early period include Gambia, Ghana, Guinea and Mali. Consequently, foreign trade was liberalized through the reduction of tariffs and non-tariffs barriers as well as the reduction of import duties applied to imports in the ECOWAS sub-region (Chuku, 2014). Currencies were also devalued to encourage exporters with the aim of boosting exports and growth and fostering the integration of the countries into the global economy. As Amponsah (2002) noted, with fiscal and monetary discipline, appropriate financial sector reforms and the decontrol of domestic prices are expected to raise international competitiveness. In the same dimension, regional liberalization schemes within the ECOWAS was established as a result of the small size of the typical African economy and the perceived disadvantages associated with smallness (Oyejide, 2010). The basic objective of such liberalization scheme is to significantly increase trade within each integrated area and as well expand the areas overall trade.To this effect, recently, after a seven-year delay, ECOWAS finance ministers agreed in 2013 to launch a Common External Tariff, with five tariff bands (UNCTAD, 2014). The common tariff aims to discourage the high-level of smuggling and wide price differentials on products across the region. An ECOWAS Monetary Union and central bank are expected to be launched in 2020 (AfDB, 2013), bringing together the six countries of West African Monetary Zone (WAMZ) and the eight countries of the West African Economic and Monetary Union (WAEMU).

However, while the general consensus is on the need to design and implement reforms, it is still not certain if the growth of the ECOWAS sub-region would be enhanced through the adoption of programs that encourage more open economic policies. This is because despite significant trade liberalization and membership of regional trade arrangements over the past two decades, trade flows within the sub-region are distinguished by the shrinking share of the sub-region trade in the share of world trade, high dependence of exports on primary commodities and high dependence of the countries within the region on their European trade partners (Rueben and Arene, 2013).

1.2        Statement of the Problem

In spite of the aforementioned positive impact of regional trade liberalization and the evidences that abound in relation to the benefits many countries across the globe have gained from regional integration, African countries seem to not have derived much and have overall been left behind. The major concern is the fact that Africa trades very little with itself.

TRADE LIBERALIZATION, EXPORT PERFORMANCE AND ECONOMIC GROWTH IN ECOWAS

AN EVALUATION OF URBAN HOUSING PROBLEMS IN NIGERIA (A CASE STUDY OF IBADAN, OYO STATE)

SYNOPSIS

Housing problems on earth can be traced to the time when God evicted Adam and Eve from the garden of Eden, because of their sin. This project is aimed at evaluating housing problems in Ibadan, Oyo state. Many theories were reviewed in other  to get more facts on this research work. Data were collected by administering questionnaires to selected population located in Sango East of Ibadan. The researcher identified the different types of housing and housing problem in the study area, factors that constitute housing problem in the study area and the strategies that can be employed to check or minimize the problems.

Morealso, for the critical analysis and presentation, table were used for clear explanation of the subject matter.To give the work a final touch, finding on the negligence of the concerned local government, the necessary stakeholder and appropriate  provision of facilities, lacking in the area were exposed, due to this various procedure  of urban policies were itemized and explained, also Government have been advised on poverty alleviation programmes and also to educate the people living in the study area the effect and dangers in living in a bad housing to give the case study a new look of a development.

CHAPTER ONE

1.0     INTRODUCTION

1.1.    BACKGROUND OF THE STUDY

Housing is the permanently shelter for human habitation. Because shelter is necessary to everyone, the problem of providing adequate housing has long been a concern, no only of individuals, but to government as well. Thus, the history of  housing is inseperable from the social, economic and political development of mankind

All over the world, it is a widely acknowledge fact that shelter is one of the most basic human needs suffice it to say that inspite of its importance, it is one of the problem that has been given the least attention in both urban and rural areas of the country.

The genesis of housing problems in Nigeria dated back to colonial government failed to evolve and articulate housing programme beyond the Government Reserved Areas (GRA).

The colonial era has been a period of self centeredness on the part of the colonial masters as far as social housing in Nigeria was concerned. Studies have shown that the colonial masters built empires for themselves in the so- called Europeans quarters and Government Reserved Areas (GRA). This was necessitated partly by the colonial masters quest for quiet residential areas  and partly for their desire for class and executive life. The colonial masters never considered it necessary to provide decent housing for their black counterparts, but were forced to do so when there was a threat to their lives following to outbreak of an epidermis. A case in mind was that of Lagos Executives Development Board, which was established in 1928 as a result of the destructive effect of the bubonic plaque,and was aimed at the clearing the slums in Lagos, being the area suspected to be epidemic by promoters. An attempt was further made by colonial master to provide housing for the civil servants under  a plan tagged “African Staff Housing Scheme” that was tagged to be facilitated by Nigeria building society.

In post-colonial Era, sequel to Nigerian Independence in 1960, emphasis was placed on five-yearly development plan as a vehincle for economic growth, The first and second national Development plan covering the period 1960-1970 did not give housing any significant place until 1972 when during the extended second National Development  Plan, housing scheme under which government was to build 54000 housing unit by the end of 1979. Under third National Development Plan, whixh covered the period of 1975 -1980 government took a giant stride to address the National housing deficit of the country by engaging in social housing provision.

During the period a rent panel was set up to review the level in the country.  This  marked the first attempt by government to recognize the housing problem of the less privileged people of Nigeria who has lost all sense of dignity as well as economic worth as citizen of an oil rich country. The forth  National Development plan, which covered the period 1980-1985 contained the most significant policy that addressed that nations housing problem and an overriding objectives of improving the overall quantity and quality of housing for all income, groups both in rural and urban especially.

1.2     STATEMENT OF PROBLEM.

The pooled effect of high population upsurge and urbanization in a declining economy has thrown Nigeria into serious housing problems, Ironically, the low-income groups who constitute the majority in  the society are the most affected by the finance menance.

The problems of housing shortage grow worse by the day in many developing nations including Nigeria. Conceivably, a major trait of housing crisis notable in urban centres in most developing nations is that of inadequate supply relative to demand (Olotuah, 2000).

The shortage, in both quantitative and qualitative terms, is more acute in urban centres. Omijinmi (2000) observed that people that sleep in  indecent in urban Nigeria are more than people who sleep in decent houses; Thus, it is ascertive that there is inadequacy in population in Nigeria. (Arayela 2003)

The causes of this dearth in housing are numerous, High construction cost is found to be present in all countries, albeit in varrying degree of significance ( Adedeji  2007).

      Afolayan  (1987) attributes the high cost of construction rate  in  economy, high space and  quality  standard adopted by designer and construction

AN EVALUATION OF URBAN HOUSING PROBLEMS IN NIGERIA (A CASE STUDY OF IBADAN, OYO STATE)

THE IMPACT OF LIQUIDITY MANAGEMENT ON DEPOSIT MONEY BANKS’ PERFORMANCE IN NIGERIA

CHAPTER ONE

INTRODUCTION

Background to the study

The unique role of banks as engine of growth in any economy has been widely acknowledged. Banks occupy central position in the country’s financial system and are essential agents in the development process. The intermediation role of banks can be said to be a catalyst for economic growth as investment funds are mobilized from the surplus units in the economy and made available to the deficit units. By intermediating between the surplus and deficit units within an economy, banks mobilize and facilitate efficient allocation of national savings, thereby increasing the quantum of investments and hence national output. Banks as financial intermediaries provide avenue for people to save incomes not expended on consumption. It is from the savings accumulated that they extended credit facilities to the entire economy. To perform their role effectively deposit money banks (DMBs) have to be adequately liquid. This implies that the survival of deposit money banks depends largely on its liquidity, because illiquidity being a sign of imminent distress can easily erode the confidence of the public in the banking sector hence sound liquidity is inevitable.

Liquidity management helps deposit money banks to maintain stability in operations and earnings by serving as a guide to investment portfolio packaging. Effective liquidity management serves as a veritable tool through which deposit money banks maintain the statutory requirements of the central bank as it affects the proportion of deposits to liquid assets and deposits to loans and advances. Liquidity management reduces the incidence of bankruptcy and liquidation which can be the later effect of illiquidity, and help them to achieve some margin of safety for their customers’ deposits. Adequate liquidity helps banks to sustain public confidence of the depositors and the financial markets. Liquidity management assists banks in trading off between risk and return; and liquidity and profitability. It serves as a tool through which deposit money banks avoid over liquidity and under liquidity and their consequences. It also enables the banks to avoid forced sales of unfavourable and unprofitable venture or its assets to generate cash. It is for this reason; governments of countries through their apex bank and other relevant authorities formulate reform policies and programme for banking industry (Olagunju, Adeyanju, and Olabode 2011).

The importance of accurate liquidity management cannot be over stressed as it reveals the liquidity positions of the banks through which the operators of the financial market and other creditors adjudged the credit worthiness of the banks. Liquidity management requires an appraisal of holdings of assets that may be turned into cash. The determination of liquidity adequacy within this framework requires a comparison of holding of liquid assets with expected liquidity needs.  The stock concept of liquidity management is widely used and involves the application of financial ratios in the measurement of liquidity positions of deposit money banks. One of the financial ratios used in such measurement is liquidity ratios which measures the ability of the bank to meet its current obligations. Other ratios which have been developed to measure liquidity are liquid assets to total assets; liquid assets to total deposits; loans and advances to deposits. Calculating the ratio of liquid assets to total assets explains the importance of a bank’s liquid assets among its total assets. It indicates the proportion of a bank’s total assets that can be converted into cash at a short notice. Cash ratio to total deposits or assets is another measure of bank liquidity. Its advantage over others is that liquid assets are related directly to deposits rather than to loans and advances that constitute the most illiquid of banks assets.   The ratios serves as a useful planning and control tool in liquidity management since deposit money banks use it as a guide to extend credit to the economy ( Olagunju,  Adeyanju , Olabode 2011).

In an attempt to enhance adequate liquidity the Nigerian government through the monetary authorities have implemented various policies reforms and regulations in banking sector. Such policies and regulations include: The introduction of the 1952 Banking Ordinance which imposed entry conditions for banks in Nigeria. For the first time, indigenous banks were required to have a minimum paid-up capital of £12,500 while foreign banks were required to have a minimum paid-up capital of £100,000. Banks were also required to maintain a reserve into which a minimum of 20 percent of their annual profits had to be paid. The 1952 Banking Ordinance was however ineffective in managing banking liquidity (Nwankwo 1980).

The 1952 Banking Ordinance did not make any provision for assisting banks as there was no Central Bank to act as lender of last resort. The Banking Ordinance of 1958 was subsequently enacted, establishing the Central Bank of Nigeria. The 1958 Banking Ordinance raised the minimum statutory reserve from 20 percent to 25 percent of annual profits; maximum lending to 20 percent of the sum of paid-up capital and statutory reserves; and specified a list of acceptable liquid assets. The 1958 Banking Ordinance was amended in 1962; the amendment raised the minimum paid-up capital of indigenous banks from £12,500 to £250,000 while foreign banks were required to maintain a minimum of £250,000 worth of banks assets (Ajayi and Ojo 1981).

The 1958 Banking Ordinance and its 1962 amendment were repealed in 1969 and replaced by the Banking Act of 1969. The Banking Act of 1969 empowered the CBN to stipulate minimum holding by banks of cash reserves, specified liquid assets, special deposits and stabilization securities. The maximum lending to a single borrower was also increased from 20 percent to 33.3 percent of the paid-up capital and statutory reserves.

IMF supported Structural Adjustment Programme (SAP) was introduced in 1986 in order to encourage competition and market led resource allocation. NCEMA (2003) explain that SAP “relies on market forces and the private sector in dealing with the fundamental problems of the economy.” The package of financial reforms introduced during this period led directly to an increase in deposit money banks from 40, before 1986, to 120 in 1992. In 1990, entry into the Nigerian Banking Sector was further liberalized as foreign banks were allowed to open offices in the country. CBN Decree 24 and the Banks and Other Financial Institutions Decree 25 both of 1991, which repealed the Banking Decree 1969 and all its amendments were thereafter enacted to strengthen the power of CBN to cover new institutions in order to enhance the effectiveness of monetary policy. By 1998, however, the number of deposit money banks in operation whittled down to 89 when the monetary authorities liquidate thirty (30) terminally distressed deposit money banks.

In addition, other frantic efforts were made to enable banks to perform optimally. These include the establishment of the Nigerian Deposit Insurance Corporation (NDIC); Banks and Other Financial Institutions Act (BOFIA) No. 25 of 1991; and the introduction of Prudential Guidelines in strengthening the regulatory and supervisory institutions. The Removal of Credit Ceilings and upward review of capital adequacy standards were also enacted. Also, the introduction of Prudential Guidelines in 1990, increased minimum paid-up capital requirements of deposit money banks from N20 million to N50 million in 1992, N50million to N500 million in 1998 and N500 million to N2 billion in 2002. For banks to become stronger in liquidity, perform better, become more competitive and contribute to the Nigerian economy and attain a global standard, the “mother” of reforms was carried out in 2004. The minimum paid-up capital for deposit money banks was increased from N2 billion to N25 billion (Iganiga, 2010).

The relationship between liquidity management and deposit money banks’ performance is on the notion that well articulated liquidity management in banking industry will improve deposit money banks’ performance. This will in no small measure improve the asset base of deposit money banks and make more credit available to the economy.

1.2      Statement of the Problem

The relevance and the need for liquidity management became clearer in Nigeria when the country witnessed crises in the banking sector, leading to costly bank failures. The Nigerian banking sector suffered inadequate liquidity which led to series of bank failures, and subsequent policy measures. The first took place in the late 1930s and early 1950s mainly due to lack of liquidity management policy and poor asset quality. In fact, 21 of the 25 indigenous banks which had been established in the country by 1954 failed (Okigbo, 1951). The challenges of inefficient liquidity management in banks were also witnessed during the liquidation and distress era of 1980s and 1990s. The negative cumulative effects of banking system liquidity crisis from the 1980s and 1990s lingered up to the re-capitalization era in 2005 and the 2009 post recapitalization.

The intervention of Government in the banking sector to resolve distress crises led to the various reform programme and policies. Such as the Banking Act of 1969 and the establishment of Nigeria Deposit Insurance Corporation (NDIC) in 1988 and liberalization policy in 1986 which re-introduced banks with foreign equity. Systematic distress resurfaced in the Nigerian banking industry again between 1989 and 1998 leading to a number of distress syndromes. The alarming rate of distress scourge in the banking sector between 1997 and 2003 gave birth to the banking sector reform of July 6, 2004 of which consolidation is one of the 13 point reform agenda (Hamman, 2004).  The Central Bank of Nigeria requested all deposit banks to raise their minimum capital base from about US$15 million to US$192 million by the end of 2005. In the process of meeting the new capital requirements, banks raised the equivalent of about $3 billion from domestic capital markets and attracted about $652 million of FDI into the Nigerian banking sector.

Barely five years of what was applauded and considered as a fortified repositioning of banks against liquidity shortage.  The global financial crisis of 2008 also had its claws on the banking sector as several banks remain relatively fragile and incapable of withstanding periodic liquidity shocks .Central Bank of Nigeria (CBN) in 2009 came on a rescue mission to bailout nine (9) out of the twenty four (24) banks with the sum of N620 billion to prevent the occurrence of distress in the industry as some banks had seriously exhibited varying symptoms of distress. The action of the CBN became imperative because the balance sheet of the affected banks had shrunken, their shareholders funds impaired and they had liquidity problem. During the period from December 2008 to December 2009, Nigerian banks wrote off loans equivalent to 66% of their total capital; most of these write offs occurred in the eight banks receiving loans from the CBN. Most of the banks also suffered panic runs and flights to safety during the period (Sanusi, 2009). This development is yet another indication of poor liquidity management which led to poor credit creation in the economy.

According to Central Bank of Nigeria (CBN) 2005 annual report, total credit to GDP ratio fell from 49.8 percent in 2004 to 45.0 percent in 2005, this was in the face of reduction in the minimum reserve requirement from 15 percent to 13 percent during the period. Like any other developing countries, the ratio of credit to GDP has not increased significantly. The quantity, quality, cost and availability of loanable funds have continued to constrain the expansion of businesses and self-employment which are effective channels of job creation due to inconsistent liquidity management policy in the country.

Despite the various policy efforts and the attempts to improve the performance of deposit money banks in Nigeria, a look at the banking industry still showed that the industry return on equity declined from 27.35% in 2004 to 10.6% in 2006, while return on asset declined from 3.12% to 1.61 within the same period. Non-performing credits grew from N316 billion in 2004 to N357 billion in 2005 representing an average of N337 billion in the pre consolidation era. In the post-consolidation era, it was N222 billion in 2006, N388 billion in 2007, N464 billion in 2008 and N620 billion in 2009 (Okafor 2012). By 2012, Industry equity capital decreased by 14.45% from N220.21 billion in December 2011 to N188.39 billion in 2012. Then reserves decreased marginally by 2.21% from N2, 266 billion in 2011 to N2, 216 billion in 2012. The industry total loans stood at N8.15 trillion in 2012, an increase of 12.10% over the N7.27 trillion reported in 2011. The industry recorded a profit-before-tax of N525.34 billion in 2012, representing a significant improvement over the loss of N6.71 billion reported in 2011. Non-interest income on the other hand dropped by 31.92% from N845.66 billion to N575.75 billion (NDIC annual report, 2012).

In addition, only 10 banks were declared sound, 63 satisfactory, 8 marginal and 9 unsound in 2001. However in 2002, there was an improvement. The number of sound banks was 13, the satisfactory banks were 54, marginal were 13 and unsound were 10. The sound banks reduced to 11, the satisfactory banks were 53, and marginal were 14 and the unsound banks reduced to 9 in 2003. After the consolidation specifically in 2006 and 2007, the Sound banks were 4, Satisfactory 17, Marginal 2, and Unsound 1 (NDIC annual report, 2011). The total credit was N2, 840.10 billion and N5, 250 billion respectively in 2006 and 2007. Also, the banks’ Non performing credit was N225.08 billion and N387.99 billion; ratio of non-performing credit to shareholders’ funds was 22.5 and 23.98; and Profit before tax was N181.04 billion and N397.75 billion. The banks’ non-performing credits to total credit ratio was as high as 88.35% with an average capital to risk weighted assets ratio of 11.74% (Cowry Research Desk, 2009).

It was further revealed that there was a quantum leap in the proportion of Reserves to total liabilities as it increased from 0.96% in 2010 to 10.35% in 2011. Total assets increased by 17.31% from N18.66 trillion in 2010 to N21.89 trillion in 2011  In 2012, all the banks, except one met the stipulated minimum capital adequacy ratio (CAR) of 10.0% and industry liquidity ratio at an average of 63.9% against the prescribed minimum of 30.0%. The asset quality of banks improved substantially as it declined to 3.47% at 2012 which was below the threshold of 5.0% (NDIC annual report, 2011).

The foregoing underscores the need to examine the impact of liquidity management on deposit money banks performance in Nigeria. In light of this, several studies have been carried out in Nigeria. Such studies include Agbada and Osuji (2013), Ayodele, et al (2013), Ibe (2013), Uremadu (2012), Adebayo et al (2011), Fadare (2011), Florence (2003), Yauri (2012) Owolabi (2012) and Aremu (2011). Virtually all the works failed to directly examine the impact of liquidity management on deposit money banks performance in Nigeria at the macro level. The main focus has been on liquidity management and banks profitability, and at the micro or firm level. Agbada and Osuji (2013) who examined the relationship between liquidity management and banks performance employed descriptive statistics and Pearson’s Product Moment correlation analysis. This methodology has the drawback of not being able to show the direction of cause and effect. Also, most of the studies, such as Ayodele and Oke (2013), Ibe (2013) and Florence (2003) suffered micronumerousity due to limited data points used in their works. This study therefore examines the impact of liquidity management on performance of deposit money banks in Nigeria with specific reference to banks asset and credit to the economy.

1.3       Research Questions

This study seeks to address the following research questions:

THE IMPACT OF LIQUIDITY MANAGEMENT ON DEPOSIT MONEY BANKS’ PERFORMANCE IN NIGERIA

THE IMPACT OF FOOD IMPORTATION ON FOOD PRODUCTION: THE CASE OF RICE IMPORTATION AND PRODUCTION

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

Agricultural sector was the main stay of the Nigerian economy before independence and immediately after it, until the oil boom of the 1970s. In the period before the 1970s, agriculture provided the needed food for the population as well as serving as a major foreign exchange earner for the country (Alabi and Alabi, 2009). Most government policies have been directed towards accelerating economic development with the ultimate aim of transforming the economy into an industrialized one as well as the welfare of the population (Obiechina, 2007), hence cannot be attained without drastic boost in agricultural sector which is expected to act as a catalysts towards the realization of this goal. The traditional role of agriculture in economic development provides the foundation for this position. The role includes product contribution, market contribution, factor contribution and foreign exchange contribution (Johnston and Mellor, 1961).It is the main source of food for most of the population. It provides the means of livelihood for over 70 percent of the population, a major source of raw materials for the agro-allied industries and a potent source of the much-needed foreign exchange (Alabi, Aigbokhan and Ailemen, 2004).

Rice is one of the world’s most important food crops that serve as a stable food for a large percentage of the world’s population, especially in India, China, other parts of Asia, and Africa. In Nigeria, rice is a vital food consumption staple but has also become an important cash crop where it provides employment for more than 80% of the population in the major producing areas (Okoruwa and Ogundele, 2006). Ayinde et al.(2009), drawing on WARDA (1996), note that Nigeria is both the largest producer and consumer of rice in the West African sub-region. Moreover, Nigeria consumes considerably more rice than it produces (Business Day, 2009), leading to significant imports in recent years (Table 1 – appendix iii).

Over the years, several government programs have attempted to stimulate domestic rice production with the goal of addressing the increasing demand-supply gap and making Nigeria more self sufficient in rice amongst which two of the most recent programs are the Presidential Initiative on Rice (PIR), established in 1999 and the National Program for Food Security (NPFS). There have also been trade policies constituting periods of  bans and tarrifs aimed at encouraging local rice production. Despite these policies and programs, domestic rice consumption has continued to outpace domestic production leading to an ever-increasing role for rice imports. As can be seen from Table 1, rice imports have been growing steadily in Nigeria and this growth is expected to continue due to increasing demand resulting from growth in incomes, urbanization, and the associated expansion of fast food restaurants (Daramola, 2005).

In general, of the estimated 5 million metric tons of annual rice consumption in Nigeria, the annual domestic output of rice still hovers around 3.0 million metric tons, leaving the huge gap of about 2 million metric tons annually, a situation, which has continued to encourage dependence on importation. Some of the reasons for the gap are connected with the improper production methods, scarcity and high cost of inputs, rudimentary post – harvest and processing methods, inefficient milling techniques and poor marketing standards particularly in terms of polishing and packaging. Also poor or low mechanization on rice farms means heavy reliance on manual labor to carry out all farm operations Daramola (2005). Another reason is that imported rice is viewed as of better quality than locally produced rice, and that therefore domestic and imported rice are not perfect substitutes. Yet another explanation is that the long history of consuming imported rice in Nigeria has led to habit persistence and consumption inertia, which makes it more difficult for locally produced rice to compete with imported rice, Akaeze (2010). Achieving sustainable economic development in Africa will confront three central challenges: alleviating wide spread poverty, meeting current and future food needs, and efficiently using the natural resource base to ensure sustainability.

Nigeria’s population is estimated at 160 million with an annual growth rate of about 4%, World Bank (2010). Nigeria must then draw lessons from the Malthusian theory as well as follow the Human Capital led growth formula of the Asian Tigers (Singapore, Taiwan, Malaysia) by drawing on comparative advantages in production and import substitution cum export promotion strategies of trade. This means self sufficiency in food which is currently lacking following that the country currently imports much of her food needs to meet local consumption demand. The implication of Nigeria’s food import as opposed to export is becoming ever more crucial to growth and development. The thrust of this paper is to ascertain the impact of rice importation on rice production in Nigeria.

1.2    Problem Statement

The need for a country to attain self sufficiency in food as a panacea for economic development cannot be over emphasised as it is one of the Millennium Development Goals (MDG). Simply put, Nigeria has been clamoring for growth but much of her policies have been targeted at macroeconomic indices such as inflation, Balance of payments, exchange rates, debt profile and so on while little attention has been given to the agricultural sector.

THE IMPACT OF FOOD IMPORTATION ON FOOD PRODUCTION: THE CASE OF RICE IMPORTATION AND PRODUCTION

THE IMPACT OF EXCHANGE RATE VOLATILITY ON THE MANUFACTURING SECTOR OUTPUTS IN NIGERIA

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

Manufacturing activities have significant impacts on the economy of nations as their contributions, which account for substantial proportion of total economic activities of nations, play crucial roles in the development process of any economy. In 2008, Nigeria manufacturing accounted for 4.13% of the Gross Domestic Product (GDP). The figure is an indication of downward movement, from 11.05% in 1980. Before independence, Nigeria, with its large population notwithstanding, had very little industrial development; a few tanneries, and oil crushing mills, which processed raw materials for export. During the 1950’s and 1960’s, a few factories, including the first textile mills and food-processing plants, opened to serve Nigerians. During the 1970’s, and early 1980’s, industrial production increased rapidly, principally in Lagos, Kaduna, Kano and Port Harcourt. Factories also appeared in smaller, peripheral cities such as Calabar, Bauchi, Katsina, Akure and Jebba, due largely to government policies encouraging decentralization.

Most of the manufacturing outputs in Nigeria are food and beverages, cigarettes, textiles and clothing, soaps and detergents, footwear, wood products, motor vehicles, chemical products and metals. Smaller-scale manufacturing businesses engage in wearing, leather-making, pottery-making and word-carving.

The smaller industries are often organized in craft guilds involving particular families who pass skills from generation to generation. In an attempt to broaden Nigeria’s industrial base, the government invested heavily in joint ventures with private companies, since the early 1980’s. The largest of such project is the integrated steel complex at Ajaokuta, built in 1983 at a cost of $4 billion. The government has also invested heavily in petroleum refining, petrochemicals, fertilizers and equipments for assembling of automobiles and farm equipment. In terms of the manufactured goods used within Nigeria, it is of interest to examine the level of indigenous production as opposed to the imported manufactured goods (out-puts) as this shows the level of exchange rate volatility in Nigeria. In Nigeria, from independence to date, importation has been on the increase. The level of exportation has never since independence, caught-up with the level for importation. For some years, in the past, Nigeria has always aspired to attain equilibrium in trade balance by designing different forms of trade and exchange rate policies.

These polices remain very important because exchange rate, whether fixed or floating, affects macroeconomic performance such as import, export, national price level, output, interest rate, and so on. It also affects economic units such as individuals’ purchasing power, firms’ performance, and so on. Chong and Tan’s (2008) empirical analysis revealed that exchange rate volatility is responsible for changes in macroeconomic fundamentals for developing economies. The volatility and unpredictability of exchange rate is due to the confluence of the factors that affect it (Anoruo et al, 2006; Benita and Lauterbach, 2007; Hanias and Curtis, 2008). As such, the issue of exchange rate sensitivity and determinacy is controversial and has been a subject of much debate. A large number of studies have tried to address the issue both theoretically and empirically, and found different results, which have fueled the debate further. The traditional view is that fluctuations in exchange rates affect relative domestic and foreign prices, causing expenditures to shift between domestic and foreign goods (Khan et al, 2010; Benita and Lauterbach, 2007; Betts and Kehoe, 2005). The new view is that relative prices are not much affected by exchange rate fluctuations in the short-run (Cheong, 2004). Besides, exchange rate fluctuations influence domestic prices through their effects on aggregate supply and demand. In general, when a currency depreciates, it results in higher import prices if the country is an international price taker; while lower import prices result from appreciation. The potentially higher cost of imported inputs associated with exchange rate depreciation increases marginal costs and leads to higher price of domestically produced goods (Kandil, 2004). Further, import-competing firms might increase prices in response to foreign competitor price increases to improve profit margins. The extent of such price adjustment depends on a variety of factors such as market structure, the relative number of domestic and foreign firms in the market, the nature of government exchange rate policy, and product substitutability (Fouquin et al, 2001; Sekkat and Mansour, 2000).

Most Nigerian manufacturing companies depend on imported inputs in the form of equipment, plant, machinery, and other materials. Given the fact that the bulk of the country’s foreign earnings is from oil, which accounts for over 80.0 per cent of the foreign exchange earnings (CBN, 2008a), thus revealing the extent of the vulnerability of these companies to swing in the exchange rate which is greatly affected by fluctuations in the oil price in the international market. Mohammad (2010) noted that the risks associated with volatile exchange rates are major impediments for countries such as Nigeria that attempt to develop through export expansion strategies and financial liberalization. Besides, Chong and Tan (2008) posit that the impact of exchange rate volatility on economic fundamentals is substantially great if an economy does not provide possible tools in hedging currency risk in its market place which unfortunately, is the case in Nigeria. Furthermore, Chong and Tan (2008) argued that exchange rate volatility has a catalytic effect to various parties’ importers, manufacturers and consumers.

 One of the most dramatic events in Nigeria over the past two decades was the devaluation of the Nigerian Naira with the adoption of the Structural Adjustment Programme (SAP) in 1986. A cardinal objective of the SAP was the restructuring of the production base of the economy with a positive bias for the production of agricultural exports. The foreign exchange reforms that facilitated a cumulative depreciation of the effective exchange rate were expected to increase the domestic prices of agricultural exports and therefore boost domestic production. Significantly, this depreciation resulted in changes in the structure and volume of Nigeria’s exports and imports. However, the volatility, frequency, and instability of the exchange rate movements since the beginning of the floating exchange rate, raise a concern about the impact of such movements on Nigerian manufacturing companies.

Nigerian manufacturing sector seems to remain underdeveloped and is not showing any significant growth, despite the implementation of the Structural Adjustment Programme (SAP). According to Delude (1999), apart from objectives not realized, exchange rate policy and management under Structural Adjustment Programme (SAP) have left some issues unresolved and/or created some distortions in the economy, one of which is deindustrialization. A close look at the relative contribution of manufacturing production to Gross Domestic Product (GDP) before and after SAP shows that SAP, indeed, triggered a shrinking of the manufacturing sector in Nigeria. In 1980, manufacturing accounted for 10.4% of the Gross Domestic Product (GDP). This relative share rose to 10.44% in 1983, and decreased to 9.53% in 1986 (CBN, 2011). But, with the adoption of SAP, the manufacturing sector’s relative share in GDP began to fall and reached a low of 5.75% in 1989, and fell further to 5.14% in 1997 (CBN, 2011). Since the enthronement of democracy in 1999, the contributions of the sector to the GDP has continued to decrease to 2.52% (in 2007) and fell to 1.85% (in 2011) (CBN, 2011). Apart from structural rigidity, poor quality of labour force, high interest rate, corruption, and so on, are responsible for the poor performance of the sector. Also, exchange rate volatility is a major factor that affects its performance (Delude, 1999).

 Below is the diagram of exchange rate volatility and percentage change in Nigeria manufacturing output to GDP computed from CBN statistical bulletin from 1980 to 2011.

where,

EXR = Exchange rate,

%NMAO to GDP = Change in Nigeria manufacturing sector output to GDP.

Figure 1.1: Manufacturing Sector-GDP ratio over the years.

The diagram above shows that since 1998, exchange rate has been on increase from 21.886 per dollar to 132.888 in 2004. However, as exchange rate was depreciating over the years, the percentage change in Nigeria manufacturing output to GDP declined from 5.22% to 3.1%. In 2005, exchange rate reduced to 131.2743 and to 118.546 in 2008. These show the appreciation in naira. The percentage change in Nigeria manufacturing output to GDP decreased from 2.83% to 2.41%. Between 2009, 2010 and 2011, the exchange rate increased from 148.9017 to 150.298 and to 154.6994 respectively. The depreciation in naira show that percentage change in Nigeria manufacturing output increased from the past year to 2.47% in 2009, and declined to 1.89% and 1.85% respectively, in 2010 and 2011. One of the questions that demand attention is this: “Do the depreciations in Naira affect the decline in Nigeria’s manufacturing output?”

THE IMPACT OF EXCHANGE RATE VOLATILITY ON THE MANUFACTURING SECTOR OUTPUTS IN NIGERIA

THE DYNAMIC RESPONSE OF SAVINGS TO SELECTED MACROECONOMIC VARIABLES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The study of dynamic relation between savings and macroeconomic shocks has received considerable attention in recent years especially in emerging economies like India. However, it is a well recognized fact that the dynamic response of savings to macroeconomic shocks can bevery significant in developing countries and Nigeria in particular. Agenor, McDermott, and Prasad (2000) argued that terms of trade disturbances are highly correlated with output fluctuations and can be a major source of aggregate economic volatility. Such disturbances tend also to have a large impact on savings (both private and public), because of their large income effects. Moreover, terms of trade shocks can also entail an asymmetric response in savings, as a result, of the existence of borrowing constraints on world financial markets. World Bank (1999) argued that the experience of the past few years suggests that households (and governments) from poor countries may be able to deposit their windfall savings on the international capital market in good times, but that they may be unable to borrow as much as they would like in bad times because of collateral problems or a (perceived) high risk of default. Deaton (1992) suggested that this asymmetry can create an incentive for precautionary savings, because in the case of a negative shock, consumption can be smoothed only by running down previously accumulated assets.

There exists some disagreement about what counts as savings. For example, the part of a person’s income that is spent on mortgage loan repayments is not spent on present consumption hence; this is savings, even though people do not always think of repaying a loan as savings. Savings is closely related to investment. By not using income to buy consumer goods and services, it is possible for resources to instead be invested by being used to produce fixed capital, such as factories and machinery. Savings can therefore be vital to increase the amount of fixed capital available, which contributes to economic growth (Bower, 2011).

Pertinent to note here is that on one side, countries that save more tend to grow faster provided that the financial system is deep while on the other hand, some analysts fear that a rising savings rate could hamper economic recovery if consumer expenditures form a large component of aggregate demand. More so, low savings rate has been cited by some studies as one of the most serious constraint to sustainable economic growth, one of those studies is that of World Bank (1989) which concludes that on the average, third world countries with higher growth rates incidentally are those with higher savings rates. United Nation also maintained that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth (UN Department of Economics and Social Affairs 2005). This makes savings as a macroeconomic variable a subject of critical consideration while Nigeria strives to attain economic growth and development.

The rate at which savings fluctuate remains a source of challenge to policy-makers world over, and Nigeria in particular. Consequently, the critical importance of savings for the maintenance of strong and sustainable growth in the world economy and particularly Nigeria cannot be over emphasized. Hence, savings rates have doubled in East Asia and stagnated in Sub-Saharan Africa, Latin America and the Caribbean for more than three decades (Loayza, Schmidt-Hebbel and Serven, 2000).

In Nigeria, savings rate has not been stable. It is worthy of note here that nothing stops countries that are faced with different preferences, income streams and demographic characteristics from choosing different savings rates theoretically. In practice, the intertemporal choices that underlie savings for instance, in Nigeria, depend on an array of market failures, externalities and policy-induced distortions that are likely to drive savings away from socially desirable levels (Heijdra and Ligthart, 2004).

Savings accumulation helps countries in promoting economic growth which in turn, leads to economic development. Generations differ in their savings propensities and possibly creativity; consequently, innovations may come more frequently at certain stages in life. Thus, both investment opportunities and the supply of available savings may depend on the age distribution of the population thereby generating Macroeconomic shocks. However, when a bad shock hits the economy, the responsiveness of savings to macroeconomic shocks depends on a lag response of real interest rate to change in national or private savings as well as to output growth, and other macroeconomic variables (Uremadu, 2007).

Olusoji (2003) maintained that when applied to capital investment, savings increase output. More so, institutions in the financial sector like deposit money banks (DMBs) or commercial banks mobilize savings deposit on which they pay certain interest. To effectively mobilize savings in an economy, the deposit rate must be relatively high and inflation rate stabilized to ensure a high positive real interest rate, which motivates investors to save from their disposable income. In Nigeria, the problem of mobilizing savings and deposits has always been the bane of economic growth and development.

However, in Nigeria, savings rates have been fluctuating overtime. The ratio of total savings to Gross domestic product (GDP) in Nigeria fluctuated between 7.8 percent and 8.5 percent in the 1970 to 1975. Thereafter, in the year 1976 to 1980, it fluctuated but, increased from 8.5 percent to about 11.6 percent. Furthermore, it remained on the increase from about 13.8 percent to 18.4 percent between the periods 1981 to 1985.

During the period 1986 to 1989, Nigeria’s savings GDP ratio averaged 16.4 percent. However, with the distress in the financial sector of the 1990s, the rate of aggregate savings to GDP ratio declined significantly. The distress syndrome resulted in a significant fall in Nigeria’s domestic savings in the period 1990 to 1994, with the savings to GDP ratio dropping to 11.6 percent on the average. Between the periods 1995 to 2000, it dropped further to about 6.9 percent on the average. Between the periods 2001 to 2005, the figure increased to about 8.4 percent on the average. More so, from 2006 to 2011, the ratio of aggregate savings to GDP increased on the average, to about 16.6 percent.

As evidenced from the Nigerian data, Central Bank of Nigeria (CBN, 2011), the ratio of savings to GDP is dynamic as the year increases but, between 2005 and 2008, it increased significantly. However, the periods between 2009 and 2011 show that the dynamism in the savings/GDP ratio is on the decrease. However, the transformation of these fluctuations in savings/GDP ratio into a sustained output expansion remains a source of challenge to policy makers and government. It is certain that without a significant increase in the level of savings (public and private), no meaningful growth in output would be achieved. Hence, this will make the stability of savings difficult.

From the foregoing discussions, it is clear that an understanding of the nature of aggregate national savings behaviour is critical in designing policies to promote savings, investment and growth (Umoh, 2003). Accordingly, for an effective mobilization of savings, it is vital to understand how savings responds to its core and leading determinants in Nigeria since this has not been sufficiently established by policymakers and researchers.

1.2       Statement of the Problem

The savings rate plays a very important role in economic growth process especially when it is stable and increasing. But fluctuations in savings can make it difficult for the financial market to function.

Savings stabilization can offer Nigeria substantial economic benefits by enhancing investment level. Since Nigerian savings fluctuate may be, because of temporary changes in global economic and political conditions that affect the increased savings sustainability and stability, then the case for strengthening and stabilizing savings makes economic sense.

In Nigeria, the level of funds mobilization by banks is quite low due to a number of reasons, ranging from low savings deposit rates to the poor banking habit or culture of the people (Nnanna, Englama and Odoko; 2004). According to them, another disincentive to funds mobilization is the attitude of banks to small savers. Most banks target corporate customers and government deposits and pay little or no attention to the small savers. Admittedly, the services rendered to the small savers are more tasking on the banks, but there is need to encourage them to save. As a matter of fact, the funds from household savings are relatively cheaper and more stable than government deposits that are very volatile and expensive.

However, in mobilizing savings in Nigeria, the behaviour of savings and real rate of interest has to be examined. Reduction in inflation rate and proper sensitization of savers on the vital role which real interest rate plays on savings mobilization, may make investors give due attention to real rate, while trying to save or invest in deposit accounts (Chete, 1999). Further, people consider some other reasons for financial savings other than the spread on savings and/or its yields (Chete, 1999).

More so, government expenditure, intervention and/or regulation could cause savings distortions in the economy but, financial liberalization would indeed foster economic growth (McKinnon, 1973 and Shaw, 1973). In Nigeria, the savings response to government expenditure needs to be examined since distortions in savings could occur as a result of government expenditure, and this in turn, affects the whole economy.

General Price level also remains a central issue to policy makers and analysts since its importance is premised on the distortions which its high rate can exert on domestic macroeconomic conditions, especially on savings, with the potential to derail the economy from the path of sustainable growth and development (Central Bank of Nigeria, CBN, 2007). Inflationary trend and/or the trend of general price level in Nigeria have been cyclical. Between 1970 and 1979, the index of price in Nigeria averaged 0.43 percent but, between 1980 and 1989, it increased to 2.21 percent.  More so, there existed a rise in the average index of price in Nigeria from 1990 to 1999. The index of price in Nigeria between 1990 and 1999 averaged 35.0 percent. However, from 2000 to 2010, the index of price in Nigeria averaged 143.87 percent.

Furthermore, CBN (2009) posited that historically, from 2006 to 2012, Nigerian price rate averaged 10.58 percent, whereby February 2010 recorded its peak at 15.6 percent and July 2006 has its lowest value of 3 percent. Furthermore, the rate of price in Nigeria was recorded at 12.90 percent in June of 2012. As a result, price in Nigeria has not been stable. Hence, for a country like Nigeria, characterized by significant structural imbalances and uncertainties, an insight into the way savings respond to price is very necessary.

More so, oil price in Nigeria has not been stable. The price of oil declines and increases over time may be as a result of increased sale of oil and gas production in the US.  This comes soon after other reports show that the US is reducing its imports of African crude oil including that from Nigeria and will fully halt importation from Africa next year. Therefore, the tragedy of Nigerian participation in international trade derives from our inability to influence the prices at which these commodities (in this case oil and its associated products) are sold. Nigeria therefore, accepts the prices offered it irrespective of the huge internal transaction costs (dilapidated infrastructure, inflation, inappropriate policy-orchestrated uncertainties and so on) that feed into Nigerian prices (Oluba, 2010). Poignantly, Nigeria is at the mercy of the industrialized world even when it participates in trade on its own commodities. Nigeria has suffered several oil price shocks in the past four decades. The most recent was the global economic crisis of 2008 which saw the price of crude oil nosedive considerably and consequently threatening macroeconomic stability. Therefore, in Nigeria, the price of oil between 1970 and 1979 averaged ₦140.5281. Also, the average oil price in Nigeria between 1980 and 1989 is ₦100.688. Furthermore, from 1990 to 1999, price of oil in Nigeria averaged ₦72.80933. Finally, between the year 2000 and 2011, the price of oil in Nigeria averaged ₦228.8139.

Moreover, evidence from the Nigerian data show that while government expenditure, the growth rate of GDP, and total savings fluctuates on a high rate (level), price, oil price, population and interest rate fluctuates on the low rate (level) but, are relatively stable.

The literatures reviewed so far seem to have taken for granted the dynamic response of savings to some selected macroeconomic variables in Nigeria’s case. Although a vast empirical literature has shed light on various aspects of savings behaviour (for instance, to investment), this study will include many macroeconomic indicators (e.g. output, general price level, oil price, government expenditure, population and interest rate) while examining the dynamic response of savings to selected macroeconomic variables in Nigeria. However, the questions that shall be addressed here are:

THE DYNAMIC RESPONSE OF SAVINGS TO SELECTED MACROECONOMIC VARIABLES IN NIGERIA

POVERTY ODDS AND HOUSEHOLD EXPENDITURE PATTERNS IN NIGERIA

Abstract

The determination of household expenditure and estimates are fundamental in identifying consumption patterns of the poor. It has been proven that the identification of the poor, accounts for the poverty incidence in a society. Poverty and household expenditure patterns are like the two sides of a coin, where poverty is a state of lacks and denial and household expenditure patterns are the mirrors of the households’ welfare. This study examined the poverty incidence in Nigeria and investigated the effects of some household expenditure patterns on the odds ratio of poverty majorly. The Harmonized National Living Standard survey (NHLSS 2009) was used in this study while descriptive statistics, graphs and ordinary logit model were adopted in the analysis. The empirical evidence from this study showed that about 52.25 percent of Nigeria’s populations are poor. Expenditure patterns of the households decomposed by their socio-economic characteristics: poverty status(poor and non poor), sex(male and female) and sector(rural and urban) revealed that the rural resident households spend more on food while the urban residents spend more on health. The expenditure of the poor is skewed to food consumption while that of the non poor is spread across other expenditure patterns. Likewise, female-headed households spend more on health while the male-headed households spend more on food. Health and food expenditures are the significant expenditures patterns with other poverty indictors like sector and household size in the model. Considering “sector” (urban and rural) in the study, the rural household residents increase, in turn, increases the log of the odds ratio of poverty more, relative to the urban resident households. Findings showed that urban households spend more on health while the rural households spend more on food. This suggested that poverty is prevalent in the rural sector. Household size correlate with the log odds ratio of poverty implied that the log of the odds ratio of poverty increases as household size increase. Health insurance scheme, education subsidy, pension scheme women empowerment and family planning advocacy were recommended.

TABLE OF CONTENTS

Title Page             –           –           –           –           –           –           –           i          

Approval Page-     –          –           –           –           –           –           –           ii

Certification-      –           –           –           –           –           –           –           iii

Dedication-   –           –           –           –           –           –           –           iv

Acknowledgement-  –          –           –           –           –           –           –           v

Abstract-      –           –           –           –           –           –           –           –           vi

Table of Contents-   –                 –           –           –           –           –           vii

CHAPTER ONE: INTRODUCTION–    –   –           –           –           –           1

  1. Background of the Study-          –           –           –           –           –           1
  2. Statement of Problem-            –           –           –           –           –           5

1.3 Research Questions –        –           –           –           –           –           –           8

1.4 Objective of the Study-             –           –           –           –           –           –           9

1.5 Hypothesis of the Study-              –           –           –           –           –           9

1.6 Significance of the Study-          –           –           –           –           –           10

1.7 Scope of the Study-       –           –           –           –           –           –           11

CHAPTER TWO: LITERATURE REVIEW–   –           –           –           –           13

2.1 Conceptual Framework-           –           –           –           –           –           13

2.1.1 Poverty Incidence-    –           –           –           –           –           –           13

2.1.2 Household Expenditure Patterns-         –           –           –           –           14

2.2 Theoretical Literature            –           –           –           –           –           18

2.3 Empirical Literature         –     –           –           –           –           –           22       

2.4 Limitations of Previous Studies–           –           –           –           –           36

CHAPTER THREE: METHODOLOGY –   –           –           –           –           –           37

3.1    Method of Analysis           –           –           –            –          –                   37

3.1.1 Binary Model: Logistic Regression. —       –           –           –           37

3.1.2 Logit Model Overview-         –              –           –           –           –           39

3.1.3. Justification of Logit  Model :           —            –            –      39

3.1.4 Foster Greer-Thorbecke Index Justification               –           –           40

3.1.5 Logit Model Statistics and Implications         –           –           –           41

3.2   Model Specification-   –           –           –           –           –           –           46

3.3   Data source and method of collection. –  –           –           –           47

CHAPTER FOUR

 4.0 ANALYSIS, RESULT PRESENTATION AND INTERPRETATION   48

4.1 Analysis Procedure-         –           –           –           –           –           –           48

4.2 Graphical Result Presentation.             –           –           –           –           –           49

4.3 FGT Statistics and Implications-           –           –           –           –           54

4.4 Result Presentation and Interpretations-              –           –           –           55

4.5  Hypothesis Testing-       –           –           –           –           –           –           60

4.6  Procedure of Hypothesis Testing: –   –     –           –           –           –           61

4.7 Likelihood Ratio Test-           –              –  –           –           –           63

4.8 Likelihood Ratio Hypothesis –     –              –  –           –           –           63

4.9 Model Fitting-    –          –           –           –           –           –           –           64

CHAPTER FIVE: SUMMARY, POLICY IMPLICATION AND CONCLUSION

5.1 Summary-        –          –           –           –           –           –           –           65

5.2 Policy Implications-          –              –  –           –           –           66

5.3 Recommendations                          –              –                                71

5.4 Conclusion– – –     –         –          –           –            –             –        –        –  71

REFERENCES–       –           –           –           –           –           –           –           72

CHAPTER ONE

INTRODUCTION

Background of the Study

Poverty odds and households’ expenditure patterns are like the two sides of a coin, where poverty is a state of lacks, deprivations and denial while household expenditure patterns are the mirrors of the households’ poverty status.

Poverty commonly refers to the lack of basic human needs faced by certain people in the society. African nation typically falls toward the bottom of any list measuring small size economic activity, such as income per capita or GDP per capita despite a wealth of natural resources. Nigeria is classified as a middle income country, practicing mixed economy and an emerging market in the world, with expanding financial service, communication and entertainment sector. Human capital is an important factor for the wealth of a nation due to its influence on the overall production of the country. The Human Development Index (HDI) provides a measure for human capital development in dimensions: education, shelter and health. These dimensions involve emerging poverty indicators measures of poverty. The recent value of HDI reveals that Nigeria is ranked 156 with the value of 0.459 among 187 countries. The HDI value places Nigeria in the rare, implying that Nigeria is considered to have low level of human development. Nigeria is also ranked 151 out of countries in the United Nation’s Development index, (UNDP 2004).  It can be observed from statistics that Nigeria’s human capital is underdeveloped and this in turn reflects poverty in Nigeria.  

Poverty is conceptualized in many dimensions, concepts and approaches such as (absolute poverty, Relative poverty, non-income dimensional poverty etc). Poverty in absolute term refers to the deprivation of basic human needs, which commonly include food, water, sanitation, clothing, shelter, health care and education assess. An absolute line in poverty concept is fixed in terms of living standards indicator being used and fixed over the entire domain of the poverty comparison (Ravallion 1992). Absolute poverty line defined in Appleton (2001) was obtained after applying the Ravallion and Bidani (1994) method to data from the first monitoring survey of 1993. Relative poverty is defined contextually as economic inequality in the location or society in which people live. The poverty trend estimate focused on the cost of meeting caloric needs and some allowance for non food needs measured in absolute terms.

The characteristics of poverty incidence encompasses the following:(hunger, lack of health care, lack of education, lack of housing and utilities, violence, low household expenditure capacities and others).These characteristics are used to classify poverty into poverty Incidence, Depth of poverty (poverty gap) and poverty severity (squared poverty gap).Incidence of poverty in this context is the share of the population that cannot afford to buy a basket of goods. Depth of poverty provides the information regarding how far off households are from the poverty line. This measure captures the mean aggregate income or consumption short fall relative to the poverty line across the whole population. Poverty severity takes account not only the distance separating the poor from the poverty line (the poverty gap) but also the inequality among the poor. This implies that, a higher weight is placed on those household who are further away from the poverty line. Household expenditure or income is often adopted in the case of poverty line determination. The Nigeria food poverty line is N39, 759.49 naira, the absolute poverty line is N54, 401.16 with food and non food inclusive and relative poverty line is N66, 802.20 naira. These monetary lines separate the poor from the non-poor. The individual whose per capita expenditure is less than the poverty line as above are considered to be poor while those above the poverty line are considered to be non poor.

Per capita expenditure in poverty concept support that determination of expenditure and estimates of household is fundamental in identifying the consumption patter of the poor as stated by (National Bureau of Statistics: Nigeria Poverty profile 2012).An Engel curve describes how household expenditure on a particular goods or services varies with households’ income. The consumption function relates the consumption expenditure decision of household. Household final consumption expenditure (HFCE) is a transaction of the national account use of income account, representing consumer spending. It consists of the expenditure incurred by households on the consumption of goods and service, including those sold at prices that are not economically significant. Household final consumption expenditure (HFCE) is not exhaustive measure of the goods and services consumed by household. This is because there are other consumptions that may not be accounted by available statistics. The expenditure aggregates compute all individual households’ expenditures into their primary headings such as expenditure on food, non food, rents, health, education etc for the purpose of poverty profile. It also includes some non monetary measures such as consumption from own produce, uses value of owned assets and inputted owner occupied rents.

Poverty incidence in Nigeria showed that poverty level declined from 46.3 percent in 1985 to 42.7 percent in 1992, it sharply rose to 65.8 percent of the population in 1996. Nigeria poverty incidence is currently estimated to be 112.47 million in 2010; this represent 69.0 percent of Nigeria Population that are living in poverty out of the 140 million people based on the 2006 National population census and 163 million based on National population Commission’s estimate. The population of Nigerians living below national poverty line in the year 2004 and 2007 respectively are 54.7 percent and 70 percent (World Bank 2004; CIA 2007 & National Bureau of Statistics 1996; 2012). 

Nigeria’s economy is struggling to leverage the country’s vast wealth in fossil fuel in order to displace the poverty that affects her population. From 2003 to 2007, Nigerian government attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDs).The purpose of the NEEDs was to raise the country’s standard of living (poverty targeting) through a variety of reforms. The NEEDs thrust addressed basic deficiencies such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediment to private enterprise and corruption. All these basic deficiencies are the manifestation of poverty.

Statement of Problem

POVERTY ODDS AND HOUSEHOLD EXPENDITURE PATTERNS IN NIGERIA

AN ASSESSMENT OF THE PERFORMANCE OF MORTAGE INSTITUTE OF REAL ESTATE DEVELOPMENT (A CASE OF FEDERAL MORTAGE BANK OF NIGERIA IBADAN BRANCH)

SYNOPSIS

        Real properly development is the application of capital managerial skill and entrepreneurial activities to the economy of land resources development whose form is subordinate to the constraint imposed on it by nature.

        The research carried out during project work revealed some of the problems facing the financial institutions in real property development which are problems arising from the mortgagor side which include non-repayment of borrowed loan by the mortgagor. Secondly the problem arising from the mortgage sides are financial problem and government policy.         The major role of financial institution is to examined based on the provision of home construction loan to individual and estate developers. Recommendations were given in order to alleviate some of the mentioned problems which include the enlighten of the public of function of financial institutions

CHAPTER ONE

1.0   BACKGROUND OF THE STUDY

1.1   INTRODUCTION

As it generally known that shelter is as important as food and it is one of the basic necessities of life for human being. As this result, the main motive of man is therefore to own a house on earth where he and his family will be secured and protected against any external forces.

To secure a house, it requires lump amount of capital which is not easily available to the investors no property and as a result, made the dream to be realized by just few people, they therefore rely on external source of finance to carry out such project since the personal savings and income are not enough to execute the development. Hence, the purpose of this study is to asses the roles and problem financial institution in the provision of capital needed by the investors in real property development.

        Real property development is the application of capital managerial skills, and entrepreneurial activities to the economy of land resources development whose form is subordinate to the constraint imposed on it by nature. Illinois (2001) define it.

        In Nigeria today, the demand and supply of real property in case of land and building are inelastic relative to price changes. Some of the factors resulted to these are:-

  • General growth and development of the community
  • Change in taste, fashion and general standard of living.

The institutional frame work for housing is very rudimentarily developed to carter for the dare need oof individual and groups. In the past, few decades, the federal government has direct it effort toward encouraging every Nigerian to own a decent and affordable house. Also, in alleviating this problem, government has come out with an enactment and launching some decrees on construction policy etc. All these need stern implementation in real property market. The financial institution is the last resort to remove the friction by provoking mortgage finance. This is used to finance real property that can be offered as a security for the loan. Such as owner occupied houses, commercial properties, industrial outlet, agricultural building and undeveloped land.

It is therefore, important to emphazise that this study is concerned with critical analysis of the activities of federal mortgage. Bank of Nigeria with a view to examine the activities of the bank as well as their problems. Identifying their problems with regard to granting of mortgage loan and making recommendation.

AN ASSESSMENT OF THE PERFORMANCE OF MORTAGE INSTITUTE OF REAL ESTATE DEVELOPMENT (A CASE OF FEDERAL MORTAGE BANK OF NIGERIA IBADAN BRANCH)

AN ASSESSMENT OF LOW INCOME HOUSING PROGRAMME IN NIGERIA (A CASE STUDY OF STATE LOW INCOME HOUSING IN KWARA STATE)

CHAPTER ONE

GENERAL INTRODUCTION

 1.0      INTRODUCTION

            Housing is paramount human existence as it ranks among the top three needs of man. Its provision has always been of great necessity to man as a unit of the environment housing has profound influence on the health efficiency, social behaviour, satisfaction and general welfare of the community. It is a reflection of the cultural, social and economic values of society and one of the best historical evidences of the civilization of a country (Olotuah, 2000)

            The provision of adequate housing in any country is very vita as housing is a stimulant of the national economy. Housing is a set of durable assets, which accounts for a high proportion of country’s wealth and on which households spend a substantial part of their income. It is for these reasons that housing has become a regular feature in economic, social and political debates often with highly charged emotional contents (Agbola 1998).

           In Nigeria, like in many other developing nations of the world housing problem are multi dimension. The problem of population explosion continuous influx of people from the rural to the urban centre, and the lack of basic infrastructure required for good standard of living have compounded housing problem over the years. Access to this basic need by the poor whose constitute the large percentage of the world population has remained a mirage and it needs to be critically addressed. Ogieto (1987) has observed that the disparity between the price and quantity of housing on the one hand, and the number of household and the money available to them to pay these prices in the other, constitute the central problem of housing. The cost at which houses reach the market goes a long way to determine affordability, where the unit cost of houses is abnormally high only a few people are able to afford the houses. According to Okupe the Windapo (2000) the gap between income and shelter cost in Nigeria is very wide. This has almost eliminated the low-income earners from the housing market. A panacea to the problem is the contribution of co-operative societies and private developers to housing finance whose activities, particularly in tertiary institutions, this paper focuses in towards facilitating improved accessibility level to housing finance by low-income earners in Nigeria

1.1       STATEMENT OF PROBLEM

        It is accepted worldwide that in order of priority, only food takes precedence over shelter in man’s wants or needs. One of the most important things in our lives is where we live. Though low income housing had been prepared, our dream of housing for all in the year 200 had come and gone without any meaningful improvement in both the quality and quantity of our real estate.

         The problem of adequate and quantity housing remain unsolved and threaten civilization.

        Government has been largely responsible for the large scale of housing project whose greater proportion ends up in hand of high income have been done in many area from real estate development that make re-arrange the low income for benefit of people.

1.2       AIM AND OBJECTIVES AIM

The aim of this research work is to assess the low income housing programme in Nigeria.

OBJECTIVES

1. To determine the stages and condition of housing in the study area

2. To examine the problems associated with the management of housing in Kwara state

3. To suggest the way forward in making housing available for the populace.

4 To make suggestions on improvement in the quantity and quality of the various existing low cost housing scheme.

1.3       SCOPE OF THE STUDY

The study is basically designed to look into various effort undertaken by the state and Federal Government in the provision of houses for the people in form of low cost housing estate.

This study also takes a cursory look at the estate management/ development principle as practiced by the Kwara state government statutory bodies.

AN ASSESSMENT OF LOW INCOME HOUSING PROGRAMME IN NIGERIA (A CASE STUDY OF STATE LOW INCOME HOUSING IN KWARA STATE)

OIL REVENUE FLUCTUATIONS, FISCAL POLICY RESPONSE AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

Every time the economy recesses the role of government intervention as proposed by Keynes again reiterates. However the nature and magnitude of these policies are important to note. It is on this premise that this study examines the impact of oil revenue fluctuations and fiscal policy response on economic growth in Nigeria. The study used data from the Central Bank of Nigeria (CBN) Annual Reports and Statistical Bulletin, the World Bank Indicators and National Bureau of Statistics. The data was analysed with the aid of multiple regression analysis and Garch model of analysis .The results suggest that Gross fixed capital formation, labour, foreign direct investment, Gross national expenditure and fuel subsidy were significant determinants of GDP. While: inflation, corruption perception index, and the excess crude dummy were not significant determinants of GDP. However, while corruption perception index and excess crude dummy were negatively related to GDP, the rest of the variables displayed a positive relationship with GDP. The study also shows that oil revenue fluctuations significantly and positively impacts on GDP in Nigeria. The study therefore recommends that excess crude account and fuel subsidy should be consciously reinstated for it to perform at full capacity and significantly affect economic growth in a positive sense.

TABLE OF CONTENT

Cover Page…………………………………………………………………………..…………….i

Title page…………………………………………………………………………….……………ii

Certification Page …………………………………………………………………….………….iii

Approval Page…………………………………………………………………………. …………iv

Dedication …………………………………………………………………………….………….v

Acknowledgements …………………………………………………………………….…………vi

Abstract…………………………………………………………………………………………..vii

Table of Content ….………………………………………………………………………………viii

List of Tables …………………………………………………………………………..…………xi

List of figures…………………….……………………………………………………..…………xi

Appendix…………………….……………………………………………………..…………..….xi

CHAPTER ONE: INTRODUCTION

Background to the Study…………………………………………………………………………..1

Statement of the Problem…………………………………………………….4

Research questions……………………………………………..6

Objectives of the Study………………………………………………………….6

Statement of Hypotheses…….…………………………………….6

Significance of the Study…………………………………………………….6

Scope of the Study …….………………………………………………………………………….7

Limitations of the Study…….………………………………….7

Organization of the Study …………………………………………7

CHAPTER TWO: LITERATURE REVIEW

Conceptual Framework……………………….……………………..8

Conceptualization of Fiscal Policy ………………………….……………8

The Concept of Excess Crude Account……………………………..9

The Concept of Fuel Subsidy…………………………………10

Theoretical Literature…………………………………………….11

The Harrod Domar Model ……………….……………………11

Solow’s Neo-classical Theory.…………………………….…….13

Wagner’s Law…………………………………………………………………………………….17

The Permanent Oil Income Model…………………………………18

The Benchmark Model……………………………………………21

Theories on Fuel Subsidy…………………………………22

Federal Government Oil Revenue Management in Nigeria….……………..23

Background of Oil Prices in Nigeria since Oil discovery………………..25

Empirical Literature……………………………………………………26

Global Evidence …………………………………………………………..……………………..26

Nigeria Evidence …………………………………………………………..…………………….30

Limitations of Previous study…………………………………………36

CHAPTER THREE: RESEARCH METHODOLOGY

Introduction………………………………………………………………………………………37

Fiscal Policy Response and Economic Growth in Nigeria: …………37

Theoretical Framework……………………………………………………..37

Model Specification………………………………………………………………………………38

Theoretical Framework for Garch model ………………..39

Model Specification for Garch…………………………………39

Estimation Procedure……………………………………………..40

Nature and Sources of Data………………………………………….43

Software Package………………………………………………………………………………..43

CHAPTER FOUR: EMPIRICAL RESULTS

Stationarity and Co-integration test: .……………………………..44

Stationarity test.…………….……………………………………………………………………44

Co-integration test for Ordinary Least Square Results…………………45

The Impact of Excess Crude Account and Fuel Subsidy on Economic Growth..………..……..46

Impact of Oil Revenue Fluctuations on Economic Growth in Nigeria………….50

Evaluation of Hypotheses…………………………………………….51

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

Summary of Finding…………………..…………………………………52

Policy Implications..……………………….……………………………………………………53

Recommendations……………………………………………………………………………54

Suggestion for further Research………..…………………………..54

Conclusion ………………………………………………………………………………………54

References ……………………………………………………………………………………….56

LIST OF TABLES

Table 4.1: Unit Root on Variables and Residuals of all the Regressions..……44

Table 4.2: Co-integration Results ……………………………………………………….45

Table 4.3: OLS Results on the Impact of ECA and Fuel Subsidy on Economic Growth…………47

Table 4.4: Garch Estimation on the Impact of Oil Revenue on the Nigerian Economic Growth.50

LIST OF FIGURES

Figure 1.1: Oil and Non-oil Revenue Trend (#)…………………………..5

Figure 2.1: Solow growth model diagram…..………………………………..15

Figure 4.1: Normality Test for the estimation of Economic Growth and its Determinants ……46

Figure 4.2: Scatter-gram of Economic Growth and its Residual ……………4

APPENDICES

Appendix 1: Augmented Dickey Fuller Unit Results……………………………………. i

Appendix 2: Ordinary Least Square Results………………………………………. iv

Appendix 3: Garch Results………………………………………………………….. v

CHAPTER ONE

INTRODUCTION

  1. Background of the Study

Every economy experiences destabilization at one point in time or another; often referred to as fluctuations. Keynes (1936) describes these fluctuations as the business cycle comprising of high and low economic activities in the economy. The period of high income, output and employment has been called the period of expansion, upswing or prosperity, and the period of low income, output and employment has been described as contraction, recession, downswing or depression. At times, the economy finds itself in the grip of recession when levels of national income, output and employment are far below their full potential levels. A noteworthy feature about these fluctuations in economic activity is that they are recurrent and have been occurring periodically in a more or less regular fashion. Fluctuations in economic activity create a lot of uncertainty in the economy which causes anxiety to the individuals about their future income and employment opportunities and involve a great risk for long-run investment projects (Ahuja, 2012).

This fluctuation is common in the oil market where prices are determined by external forces and this goes a long way to hinder developmental activities. Owing to the fact that revenue is a function of price, any shock in the oil prices will be transmitted on the oil revenue. Prior to recent economic reforms, Nigeria’s history of oil revenue management had generally been poor (Okogu & Osafo-Kwaako, 2008). This is premised on the fact that managing oil wealth has proven to be a difficult challenge for many countries across the world, and this is evident in Ecuador, Mexico, Nigeria, and Venezuela. In Nigeria, oil revenues have led to huge investments in capital and infrastructure in the 1970s and 1980s but productivity declined and per capita GDP remained at about the same level as 1965. In other words, accumulated oil wealth over a 35 year period of some $350 billion did not raise the standard of living but worsened the distribution of income in Nigeria. Studies show that not only Dutch disease but more importantly waste of capital resources through bad investments and corruption have resulted in this predicament of oil revenue management (Budina, Pang & van Wijnbergen, 2007). 

The paradox is that despite the huge resources from oil, Nigeria is still characterized by increasing threats of hunger and poverty. For instance, about 51.6 per cent of the population was living below one dollar (US$1.00) per day as at 2004; and by 2010, the percentage had increased with 61.2 per cent of the population living below US$1.25 per day, coupled with rising youth unemployment and high food prices (NBS, 2010). Consequently, the incomes of most families are not adequate for the basic sustenance of life.

Oil revenue which is the income earned from the sale of crude oil (Ogbonna & Ebimobowei, 2012) plays a key role in Nigerian economy. According to Budina and van Wijnbergen (2008), oil is the dominant source of government revenue, accounting for about 90 percent of total exports, and this approximates to 80% of total government revenues. The problem of low economic performance in Nigeria in recent years has been attributed not only to the failure of government to productively utilize the financial windfall from the export of crude oil particularly from the mid – 1970s, but also due to the frequent fluctuations of prices in the crude oil market. The oil boom of the 1970s led to the neglect of non-oil tax revenues, expansion of the public sector, and deterioration in financial discipline and accountability. In turn, oil-dependence exposed Nigeria to oil price volatility which threw the country’s public finance into disarray (Yakub, 2008).

The government of an oil-exporting country is confronted with significant uncertainty relating to its export earnings and fiscal revenues. Supply and demand in the oil market are both highly inelastic in the short run, with the result that even small shocks can have large effects on price. The unpredictability regarding oil revenues, which stems from uncertainties about such issues as the future trend in oil prices, the size of the oil reserves, and the cost of extraction is problematic for both short-run and long-run management of the economy (Rewane, 2007).

Fiscal policy involves the use of government spending, taxation and borrowing to influence the pattern of economic activities and also the level and growth of aggregate demand, output and employment (Ebimobowei, 2010; Abata, Kehinde, & Bolarinwa, 2012). Fiscal policy entails government’s management of the economy through the manipulation of its income and spending power of government to achieve certain desired macroeconomic objectives (goals) amongst which is economic growth (Medee & Nembee, 2011).

Jhingan (2004), Musgrave and Musgrave (2004), Oner (2002), and Hottz-Eakin, et al. (2009) viewed fiscal policy as mostly to achieve macroeconomic policy; it is to reconcile the changes which government modifies in taxation and expenditure programmes, or to regulate the full employment price and total demand to be used through instruments such as government expenditures, taxation and debt management. Typically, the objective of fiscal policy is directed towards maintaining sound public finances. This invariably amounts to an unwavering commitment to the maintenance of balanced budget by restricting aggregate spending to the size of aggregate recurrent revenue, and a sound public sector balance sheet is by implication achieved (Valmont, 2006; Osuka & Ogbonna, 2010; Jhingan, 2004).

Amongst the fiscal policy responses in relation to oil price/revenue in Nigeria have been the excess crude and the fuel subsidy program. Excess crude refers to the profit obtained when the price per barrel of crude oil exceeds the revenue estimate per barrel made in the budget at the time of its approval. When this occurs, the surplus profits are held in a separate fund called the Excess Crude Account (ECA) established in 2004. These profits are intended to boost the country’s revenue when oil prices are low. For instance, the 2006 robust global growth and high oil prices resulted in the excess crude account holding $20 billion. When the global financial crises hit in 2008, causing global demand for oil to drop and prices to fall from $147 per barrel in early 2008 to $35 per barrel in 2009, the country was spared from debilitating budget deficits by savings from the ECA. These spare funds helped stabilize the economy against the negative shock before oil prices rebounded after the 2009 downturn (Soneye, 2012).

The fuel subsidy program is another fiscal policy response to oil price fluctuation in Nigeria and other oil producing countries. Many countries have attempted to reform their fossil-fuel subsidies with varying degrees of success. The motivations behind these reforms can include a desire to reduce fiscal expenditures, improve energy efficiency or to reduce urban air pollution and greenhouse gas (GHG) emissions. However if poorly planned and executed, the removal of subsidies can cause adverse economic, social or environmental repercussions as a result of higher energy prices. Governments that implement subsidy reform badly will pay a high political price. (Laan, Beaton & Presta, 2010).

A subsidy is defined here as any government policy that lowers end-user prices or transfers cash to producers, reduces their cost of operations, bears risk or increases their returns. Consumer subsidies for fossil fuels typically stimulate fuel consumption by industry or the public. Producer subsidies promote domestic exploration, extraction or refining (Laan,et al., 2010). The available literatures on fuel subsidy shows that there is no comprehensive and accurate account of the origin of fuel subsidy as the authors have different opinions regarding the concept of fuel subsidy in Nigeria. Notwithstanding, the researcher has drawn a conclusion from the available literatures regarding the concept of fuel subsidy in Nigeria. The fuel subsidy payment was introduced as a policy into Nigeria in 1973. Under International Monetary Fund (IMF)/World Bank instigation, petroleum subsidy in Nigeria has been stated by the government as the difference between the product domestic price and the export price which said to have started in 1973 with a subsidy of 33.7 percent, when the federal government fixed retail prices of domestic oil consumption at $1.9/bbl (Anyanwu, 1993). Something of a creeping phenomenon, the value of the subsidies has gone from 1 billion in the 1980s to an estimated 6 billion Dollars in 2011. In this period, the specific products targeted for subsidy have changed. Diesel oil has had its associated subsidy redaction while petrol (Gasoline), kerosene (DPK) continues to enjoy a 54.4 % subsidy over the international spot market price at the Nigerian pump (Centre for Public Policy Alternatives [CPPA], 2012).

An important objective of fiscal policy is to promote economic conditions conducive to business growth while ensuring that any of such government actions are consistent with economic stability (Anyanwu, 1993). Given the central importance of the latter, the key objective of fiscal policy in addition to guaranteeing sound public finances is to promote equity in taxation without creating economic distortions or disincentives to wealth creation (Valmont, 2006). Fiscal policy is generally meant to maintain full employment and stabilize growth with its primary tools being government expenditure and taxation or subsidy. For the sake of this study, the major fiscal policy responses to oil price fluctuation will be the excess crude account and fuel subsidy policies, while the overall fiscal effort to stabilize oil price will also be examined.

1.2       Statement of the Problem

OIL REVENUE FLUCTUATIONS, FISCAL POLICY RESPONSE AND ECONOMIC GROWTH IN NIGERIA

AN APPRAISAL OF TREND IN RENTAL VALUE OF RESIDENTIAL PROPERTY WITHIN THE LAST TEN YEARS (2003-2012) (A CASE STUDY OF GRA (TPS100 ILORIN)

SYNOPSIS

Housing problems in urban centers have often been viewed in terms of qualitative and quantitative inadequacy with or without attention to the problem of increasing rent.

The rent which land and landed properties may generate can be affected by some trends/factors, the aim of this study is to access and probe into the circumstances responsible for the constant changes in rental values of residential properties in the study area which are as follows; the location factors, population, characteristics of neighbourhood, architectural design, income of the people, facilities provided among others. Also, the realism of future technological advancement influences the rental value of property.

The periodic trend in rental value is considered by some landlord/owners as easy access to boost their ego. It is necessary to correct this in an area where development and commercial activities are very rampant and also in an improved speed particularly in GRA of Ilorin.

To determine the trends in rental values of properties considering its location or position in Ilorin metropolis, its level of commercial activities and the population of the people therein. It is important and paramount to estimate and arrive at the most suitable and optimum value for properties in other to forestall the level of its commercial activities and also to encourage continuous developments.

 The increment in rental values have been a major setback to some people both individual, organization, government, society etc. which have in one way or the other affected their income generation. The problems have therefore led to changes in property value which remained one of the most persistent and socio-economic problems facing properties in the society at large.

The variation and the rise in the rents of real estate had led to this research work, with the aim of examining the causes, effects and the likely solutions to the problems.

CHAPTER ONE

  1. INTRODUCTION

Housing problems in urban centre have often been viewed in term of qualitative and quantitative inadequacy with or without attention to the problem of increasing rent. As there are many urban residents struggling to get accommodation, most of them will have a roof over their heads in rented accommodation. However, the majority of the low-income earners are not comfortable because of galloping rent increases.

The  problems reached a crisis in the early 1970’s, which led the federal military government to set up a rent panel to review among other things, the level and structure rents in urban centre. Various long and short term recommendations were made and all state governments were directed to implement them.

Today, the rent situation has not improved rather it has been further worsened by the equally sprawling inflation which has tremendously shot-up the cost of building materials.

This study therefore aims at examining through empirical investigation the annual trend and variation in rental values of residential properties in GRA Ilorin, using a time frame of the past ten years (2003-2012). The study shows the variation and trend in the property rents which can serve the basis for projection into the future to aid decision making by investigators, managers and other stakeholders. It also identifies the causes of rising trend and then recommends pragmatic solutions

Moreover, several factors do affect the values of real property, these includes physical factor, economical, social, political and environmental factors.

Physical factor is the factor that best describe the physical appearance of a property in terms of the design and life cycle, availability of certain service such as water, boiler, electricity, garden and security. The economic factor is based on the reasonable significant influence of property values in a favorable economic situation of many activities that trends to yield returns consecutively.

Political factors are government laws that inference in the public use of land in a way that will benefit them. Example is the rent control edict.

Environmental factor simply describes the location of a property, the neighbourhood and population phenomenal (increase or decrease) which may cause positive or negative effect to the values of such properties.

Finally, rate of (increase or decrease) demands for landed properties, ranges from supply of properties, level of employment, availability of mortgage loans facilities, low interest rate couple with low tax burdens on property incomes are economic measures that have great influence on property values.

Social factors are the role of the socio activities that control human social behavior which coordinate their mode of interaction and cooperation within the society.

  1. STATEMENT OF PROBLEM

The creation of Kwara state led to a claim of economic and administrative actions in Ilorin, the state capital. This has given rise to government decision to reserve an area for government to aid administration. The influx of people into Ilorin metropolis as a result of the conferment of capital status has increased demand for residential property. There is inadequacy/availability of housing stock to accommodate the increasing population of the town.

The above situation has given rise to increase in house rent, increase demand for land and among others

  1. AIMS AND OBJECTIVES

The aim of this study is to examine the trends in rental value of residential properties in GRA[TPS 100] Ilorin, with a view to identifying the causes of variation in values of residential accommodation.

The specific objectives of the study one:

  1. To identify types of residential properties in the study area
  2. To examine the rental values of residential properties for the past 10 years (2003-2012) in the study area.
  3. To examine the causes of variation or trends in rental values of residential properties in the study area.
  4. To examine factors that affects the rental values of residential properties in the study area and provides recommendations to the factors.
  1. SIGNIFICANCE OF THE STUDY

The significance of this study are as follows:

  • The study is significant to Estate Surveyors and Valuers, Town planners, Quantity surveyors etc. because improved residential property development will enhance their professional performance
  • To the general public, there will be enough residential accommodation at their disposal for occupation at relatively moderate rent of study will be taken and
  • It will assist in the forecasting of future trend in rental value of residential property and therefore provide a guide for prospective investors and policy makers
    • SCOPE OF THE STUDY

The purview of this study is specifically restricted to GRA (TPS 100) neighbourhood in Ilorin, Kwara state in order to set a proper view of rental value trends of residential properties. This study covers the trends in rental value of residential properties in the study area for the past (ten) 10 years (i.e. 2003-2012)

Therefore, the study further examines the type of residential properties available within the location.

AN APPRAISAL OF TREND IN RENTAL VALUE OF RESIDENTIAL PROPERTY WITHIN THE LAST TEN YEARS (2003-2012) (A CASE STUDY OF GRA (TPS100 ILORIN)

OIL PRICE SHOCKS AND THEIR EFFECTS ON OIL AND GAS STOCK RETURNS IN NIGERIA

TABLE OF CONTENTS

Title Page       –                   –           –           –           –           –           –           –           2

Certification  –              –           –           –           –           –           –           –           3

Approval Page          –            –           –           –           –           –           –           4

Dedication     –           –                    –           –           –           –           –           –           5

Acknowledgement   –         –           –           –           –           –           –           6

Table of Contents     –                 –           –           –           –           –           –           7

List of Acronyms            –           –           –           –           –           –           9

List of Figures           –     –           –           –           –           –           –           –           10

List of Tables               –           –           –           –           –           –           11

Abstract               –           –           –           –           –           –           –           –           12

CHAPTER ONE:    INTRODUCTION

1.1       Background to the Study    –         –         –           –           –           13       

1.1.1    Oil Price Volatility –                –           –           –           –           –           14

1.2       Statement of the Problem    –     –           –           –           15       

1.3       Research Questions –           –                  –           –           –           17       

1.4       Objective of the Study        –                    –           –           –           –           17

1.5       Research Hypotheses          –              –           –           –           17

1.6       Significance of the Study    –             –           –           –           –           18

1.7       Scope of the Study   –               –           –           –           –           –           18

CHAPTER TWO:   LITERATURE REVIEW

2.1       Conceptual Framework       –          –           –           –           –           19       

2.2       Theoretical Literature         –             –           –           –           –           20

2.3       Empirical   Literature          –                –           –           –           23

2.3.1   Foreign Studies         –           –         –           –           –           –           23

2.3.2.   Nigerian Studies      –           –            –           –           –           –           29

2.4.      Limitations of Previous Studies              –           –           –           30

CHAPTER THREE:           METHODOLOGY

3.1       Theoretical Framework       –          –           –           –           –           31

3.1.1   The Model     –           –            –           –           –           –           –           32

3.2       Estimation Procedure and Model Justification   –         –           33

3.3       Sources of Data        –           – –           –           –           –           34

CHAPTER FOUR:  RESULTS ANALYSES AND INTERPRETATION

4.1Presentation of Results  –           –            –           –           –           –           35
4.1.3Response of Oil Stock Returns to Oil Price Shocks      –           –           39

4.1.4Diagnostic Tests Results        – –           –           –           –           –           40

CHAPTER FIVE:   CONCLUSION AND POLICY IMPLICATIONS

5.1     Conclusion     –                   –           –           –           –           –           –           43

5.2       Policy Implications  –            –           –           –           –           –           43

References    –           –           –               –           –           –           –           –           45

LIST OF ACRONYMS

OPEC = Organisation of Petrol Exporting Countries.  

VAR=Vector Autoregressive.

OECD=Organisation for Economic Cooperation and Development.

GARCH=Generalised Autoregressive Conditional Heteroscedasticity.

ARCH=Autoregressive Conditional Heteroscedasticity.

CBN=Central Bank of Nigeria.

LIST OF FIGURES

Figure 1: OPEC Crude Oil Price in US Dollar from January 1986 to February 2016.           15

Figure 2: Oil Export and Import-   –            –           –           –           –           16

Figure 3: Transmission of Shocks –           –           –           –           –           19

 Figure 4: Plot of the Residual of Oil and Gas Stock Returns-  –           –           35

Figure 5: Response of Oil Returns to Negative and Positive Oil Price Shocks-         –           39

LIST OF TABLES

Table 4.1.1 ADF and KPSS Unit Tests      –           –           –           –           36

Table 4.1.2aResults of the Mean Equation         –           –           –           38

 Table 4.1.2bGeneralized Autoregressive Conditional Heteroscedasticity (GARCH 1, 1). 39      

 Table 4.1.4aCorrelogram of Standardized Residuals Squared –    41       
Table 4.1.4b Heteroscedasticity Test         –                  –           –           42

Abstract

This study examines the effect of oil price shocks on oil stock returns in Nigeria for the period from January, 2000 to December, 2015. The study employs the Augmented Dickey-Fuller (ADF) and Kwiatkowski-Phillips-Schmidt-Shin (KPSS) tests for Unit root, Schwartz-Bayesian criterion for lag length, and a General Autoregressive Conditional Heteroscedasticity (GARCH 1, 1) modeling approach. First, the mean equation was estimated and residual derived from it was used to estimate the variance equation. Finally, volatility impulse response function was estimated. The mean equation reveals that if oil price increases by one percent, oil sector stock returns will decrease by 74%. If exchange rate increases by $1, oil sector stock returns increases by about 0.78%. Furthermore,an increase in interest rate differential will cause a decrease in oil sector stock returns by about 25%. On the other hand, results of the variance equation, which captures volatility, suggest that oil price shocks and oil stock returns are negatively related. It shows that the expected negative relationship between these two variables in an oil importing economy outweighs the positive relationship expected in an oil exporting country. The impact of oil price shocks due to importation crowdsout the supposedly positive impact due to oil exportation.On the other hand, results of the impulse response suggest that the effect of the negative and positive shocks are equal in absolute terms. Thus, the study recommends that the government should make concerted effort toward ensuring a conducive investment environment that would cushion the effect of oil price shocks on oil stock returns to attract both local and foreign investors.

CHAPTER ONE

INTRODUCTION

  1. Background to the Study

Over the years, oil price has experienced incessant volatility and this has attracted the attention of researchers. The spillover effect of oil price shocks on the economy in general and specifically on the stock market returns has necessitated lots of studies in oil exporting and importing countries respectively. This is informed by the fact that the dynamic and pass-through effects of oil price shocks on the capital market are of utmost importance to the financial sector and investors. Thus, Ready (2013) is of the view that given the apparent importance of oil prices, it is natural to examine the relationship between oil prices and other traded assets, such as equities, to help better understand the link between oil prices and the economy. However in doing this oil price changes and stock market returns seem to be unrelated.

Furthermore, it is necessary to note that the effectof oil price shocks is different in oil exporting and importing countries.For instance, according to Abdelaziz, Chortareas and Cipollini (2008),in an oil-exporting country, a rise in world oil prices improves the trade balance, leading to a higher current account surplus and an improving net foreign asset position. At the same time, increase in oil prices tends to increase private disposable income in oil-exporting countries. This increases corporate profitability, at the same time raises domestic demand and stock prices. In oil-importing countries, the process works broadly in the reverse: trade deficit are cancelled out by weaker growth and, over time, stock prices decrease.

Volatility of stock markets returns has been related to key macroeconomic indicators. Oil price and its volatility has a major impact on economic activity and hence on futures and spot stock market returns. If oil price affects real GNP, it will affect the earnings of companies for which oil is a direct or indirect operational cost. Thus, an increase in oil prices will possibly cause expected earnings to decline, and this will bring about an immediate decrease in stock prices if the stock market efficiently capitalizes the cash flow implications of the oil price increase. If the stock market is not efficient, there may be a lag in the adjustment to oil price changes (Valdés, Vázquez and Fraire, 2012).

As such, policy makers, international institutions, politicians and investors have expressed concern about the volatile nature of oil price and its possible detrimental consequences on the aggregate economy. Consequently, researchers have become increasingly interested in understanding the nature of the linkage between oil price volatility and macroeconomic performance (Aye, 2015).Again, much of the extantliterature has focused on the effects of oil price changes on stock market returns. Current evidence suggests that oil price changes are associated with fluctuations in stock prices, although the results are mixed (Degiannakis, Filis and Floros, 2013).And as shown by Arouri and Nguyen (2010) and Arouri, Bellala and Nguyen (2011), various transmission channels exist through which oil price fluctuations may affect stock returns. The value of stock in theory equals discounted sum of expected future cash-flows. These discounted cash-flows reflect economic conditions and macroeconomic events that are likely to be influenced by oil shocks. Accordingly, oil price changes may affect stock returns.

Meanwhile, Broadstock, Cao and Zhang (2012) provided an insight into how this channel may likely take place in an oil importing country. The mechanism by which the effect of oil price shocks is transmitted can be summarized asfollows: higher oil prices increase the cost of production for companies that directly or indirectly require oil as an input; assuming that firms will not fully transfer rising costs onto their customers/investors, profits will inevitably shrink hence reducing expected returns. Therefore, the consequence of an oil shock upon the stock market will in general be negative. Another indirect mechanism by which oil prices affect stock values comes from the stylized fact that an increase in oil prices pushes up overall inflation. This can cause central banks to respond by raising the interest rate, which will in turn affect stock prices.

Oil Price Volatility

OIL PRICE SHOCKS AND THEIR EFFECTS ON OIL AND GAS STOCK RETURNS IN NIGERIA

NIGERIA’S MULTILATERAL TRADE RELATIONS WITH THE G8 ECONOMIES

ABSTRACT

It is an undeniable fact that trade has been facilitating growth and development of countries across the world. This underscores the recent upsurge in establishing multilateral trade relationship between Nigeria and other countries especially, the G8 member countries. While these realities are still contestable in terms of the potential benefits of the trade linkage that Nigeria stands to gain, the trajectory of the influx of export to Nigeria from the latter countries calls for a concern and a need to investigate the possible socio-economic, political and geographical variables that trigger this trend. It is in view of this, that this study empirically investigates the magnitude of the factors driving increasing Nigeria-G8 multilateral trade relations. To achieve this, we employ the augmented variant of gravity model (GM) that allows for the inclusion of country specific and country-pair characteristics in addition to the traditional GM variables (income and distance). We find that Economic Size, Population, the Geographical Landmass, Degree of Trade Openness, and Exchange Rate of the trading partners, drive multilateral trade flows between Nigeria and the G8 member countries. Therefore, promoting a broad-based diversification of the Nigerian economy is crucial for more beneficial Nigeria-G8 trade relations.

TABLE OF CONTENTS

                                                                                                                     Pages

Title Page                                                                                                               i

Certification                                                                                                      ii

Dedication                                                                                                               iii

Acknowledgement                                                                                                 iv-v

Abstract                                                                                                                      vi

Table of contents                                                                                               vii-ix

List of tables                                                                                                               x

CHAPTER ONE                                                                                         

1.0       Introduction                                                                                                    1

1.1       Background of the study                                                                          1-3

1.2       Statement of the Problem                                                          4-6

1.3       Objectives of the study                                                                            7

1.4       Research Hypotheses                                                                        7

1.5       Significance of the study                                                                      7

1.6       Scope of the study                                                                                      8

CHAPTER TWO

2.0       LITERATURE REVIEW                                                                        9

2.1.      Conceptual framework                                                                         9

2.1.1   Understanding the concept of Trade integration                         9-11   

2.1.2   Globalization and Trade Integration                                          11-13

2.2       Theoretical Literature                                                           13-17

2.2.1   Understanding the G8 and its Multilateral Relation                  17-20

2.3       Empirical Literature                                                                             20-23

2.4 Limitations of Previous Studies                                                               23

CHAPTER THREE

METHODOLOGY

3.1     Theoretical Framework                                                                     24-25

3.2     Model Specification                                                                          25-28

3.3     Estimation Procedure                                                                        28-29

3.4     Data Issues                                                                                        29-30

CHAPTER FOUR

DATA ANALYSIS AND RESULTS PRESENTATION

4.1     The basic Newtonian Form of Nigeria G8 Multilateral

Trade Gravity Model                                                                         31-32

4.2     The Augmented Nigeria G8 Multilateral Trade Gravity Results                 33-40

4.3     Model Specification                                                                          41-42          

CHAPTER FIVE

SUMMARY OF THE STUDY, RECOMMENDATIONS ANDCONCLUSION

5.0     Summary of the Study                                                                      43-44

5.2     Policy Recommendation                                                           44-45

5.1     Conclusion                                                                                        46

References                                                                                                  47-53

Appendices                                                                                                54-63

LIST OF TABLE’S

Table1.1                         Nigerian Trade with G8 Partners 2007                          5

Table 3.1                        The Sampled Countries used for the Study         30

Table 4.1                        The basic Newtonian form of GM for Nigeria G8 Multilateral Trade Relations.             32     

Table 4.2                        Comparison of the Pooled fixed effects and Random effect GM for Nigeria G8 MT.                39-40

Table 4.3                        Models Comparison.                                           42    

CHAPTER ONE

1.0                                              INTRODUCTION

BACKGROUND OF THE STUDY

Development in international trade over the decades points to the fact that countries of the world cannot live in isolation. A close look across different political and economic climates of the world shows that this phenomenon has assumed a more competitive and multi-dimensional scale. Lurking at the background of multilateral trade relations is a quest to complement a country’s production deficiencies or limited resources by exploring available opportunities in some other countries. Global trade has expanded significantly since World War II and many countries have benefited from increased cross-border trade and investments for reasons which include: lower transportation and information costs, higher per capita income and changes in government policies (Onwuka and Eguavoen 2007 andKrol 2008). As a result, there is a global call for more trade across borders. This call has elicited one of the most enduring debates among policy makers in the world.  Economists tend to believe that movements toward trade relations among countries, on balance, provide positive benefits. For instance, increased trade and investment flows help countries to develop faster than it should as trade generates income and the flows enable them to increase their stock of productive capital without compromising their level of consumption (Onwuka and Eguavoen 2007).

It is obvious that views would vary as some other economists like McCalman (2004) are of the opinion that when countries embark on a process of unilateral (or multilateral) trade arrangements, a period of backsliding is not far away. The main reason for this skepticism is the existence of groups with vested interests in maintaining tariff protection. Differences in production costs within countries determine much of the flow of goods and services across international borders in line with the concept of comparative advantage but not every nation is a full member of the global village especially, a developing country like Nigeria (Onwuka and Eguavoen, 2007). Developing countries are losing out as they experience the worsening of existing imbalances and distortions in the global economy which manifest in form of unequal distribution of political, economic and military power. The implication being that while global trade has created immense opportunities of wealth for some, it has produced two contrasting global villages – one which indeed is prosperous, rich and democratic for a few who live in it, and another in which the majority are poor, alienated and marginalized with hardly any voice to determine their own destiny (Collier and Dollar 2001, Zuma 2003).

Nigeria has trade relations with The Group of Eight (The G8); a group described as the world’s “most powerful” economic and political organizations in the world. The group participants have consistently supported the role of the General Agreement on Tariffs and Trade (GATT), and since 1995 its successor, the World Trade Organization (WTO), in monitoring multilateral trade agreements with a view to ensuring the openness of the international trading system, and as a forum for negotiations (Ulrich 2006; Adler 2008). However, it has been observed that Africa remains basically outside the global trading and investment system. At the end of the 1990s, a decade of globalization in finance and trade sees Sub-Saharan Africa still accounting for less than 2% of world trade and received less than 1% of global capital flows. A majority of the least-developed countries including Nigeria are in this category, and even the “middle-income” countries have suffered severe declines in per capita gross national product for year. (Wood and Browne, 2004).

The main thrust of Nigeria’s trade policy is the integration of the economy into the global market system(Briggs, 2007; Oyebanjo et. al. 2009). This entails progressive liberalization to enhance competitiveness of domestic industries; effective participation in trade negotiations to harness the benefits of the multilateral trading milieu; promotion of transfer, acquisition and adoption of appropriate technologies; and support for regional integration and co-operation. Thus, the government of Nigeria has a every opportunity reiterated its commitment to the principles and objectives of the multilateral trading system (WTO, 2005).

 In response, there has been a remarkable increase in external trade and openness in the Nigerian economy over the two decades and has even grown more rapidly in recent times, especially since 2002 (Obiora, 2009). Nigeria became a founding member of World Trade Organization (WTO) with the coming into effect of the Marrakech Agreement establishing the Organization, in January 1995. However, Nigeria’s involvement in the multilateral trade system dates back to 1960, when the country formally joined the General Agreement on Tariffs and Trade (GATT) after gaining independence from colonial rule (Briggs, 2007). Trade openness has risen from just above 3% in 1991 to over 11% by 2008. Direction of trade data indicates that the US, the EU, and Brazil are Nigeria’s largest trade partners while US is Nigeria’s single largest trade partner as it accounts for nearly 45% of Nigeria’s export. However, oil exports account for the vast bulk of total exports (Briggs, 2007).

From the forgoing, one cannot say with precision how Nigeria’s multilateral trade activities especially with the G8, have fared or impacted on Nigeria’s economy. This indeed is an empirical puzzle this work wants to investigate.

1.2 STATEMENT OF THE PROBLEM

NIGERIA’S MULTILATERAL TRADE RELATIONS WITH THE G8 ECONOMIES