THE PROBLEM OF FINANCING INTERNATIONAL TRADE IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE

posted on October 18, 2018

THE PROBLEM OF FINANCING INTERNATIONAL TRADE IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE

ABSTRACT

This research work tries to give an insight into the issue of the problems of financing international trade in Nigeria from the period (`1990-1995).

This study is aimed at analyzing Nigeria’s foreign transactions during and after (SAP) periods.

The work is organized into chapters to easy comprehension and deduction.

Chapter one deals with the introduction, Background, statement of problems, purpose / objective of the study, significance of the study, limitations of the study and the definition of terms.

Chapter two involves a review of related literature, international cash flow in trade, roles, risk factor in international cash flow in trade, major problems, trade restriction major and cash flow problems.

This chapter also treat, the important of international trade, and some underline issues towards the cash flow problem in Nigeria, through spanning through structural Adjustment programmer (SAP).

Chapter three deals with research design and methodology, source of data, location of data method of data collection.

Chapter four involves summary of finding where I summarize everything in this project.

Chapter five involves recommendation, conclusion and Bibliography.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND

The Nigeria economy has since the early 1990s been faced with adverse financial constrains especially in its international trade.

This can be traced to the responsible fiscal policies enacted during the oil boom period. The sought increase in the volume and value especially in 1990 / 91 placed the oil sector as the mainstay of the Nigerian economy, not only in terms of foreign exchange earnings but also as the source of government revenue and domestic liquidity.

The huge revenue from oil stimulated a phenomenal increase in government spending spilled into the rest of the economic sector and generated an unsustainable growth in the economic activities.

In particular, the patter of investment shifted mainly to construction and services sectors to the detriment of productive sector that is industrial and Agricultural sector which had been the sole earner and should provide the basis of economic growth.

The stump in oil market from the early to mid “goes”.

This phenomenon, exacerbated the problem already existing from the tuba lance experience in the proceeding decade following the glut in the market, oil price dropped from $40 to $35.5 per barrel and continued to slide thereafter till it reached to wightly $12 per barrel.

Consequently oil export revenue which had accounted for about 96% of Nigeria’s exchange earning dropped sharply.

Moreover, the glut also forced production down by 0.4 million barrel per day, as at the middle of 1991, and dropped further to o.6 million barrel per day, during the first quarter of 1992 the oil glut and the attendant low unit price of oil signed the beginning of economic recession from Nigeria.

As a result of these economic recession, the country ability to meet its trade. Obligations become necessary for trade partners to request new terms of trade and re-negotiation of existing loan and credit, subsequently, the country external payment position was adversely affected.