THE EFFICIENCY OF CAPITAL MARKET IN THE ECONOMIC DEVELOPMENT OF NIGERIA

THE EFFICIENCY OF CAPITAL MARKET IN THE ECONOMIC DEVELOPMENT OF NIGERIA

ABSTRACT

The essence of this project is to evaluate the efficiency of capital market in economic development in Nigeria. Accordingly, some of the objectives of the study are to highlight the activities of the Nigeria capital market in relations to economic development as a means of providing credit and investment funds in the economic of the country. This project also tends to show the efficiency of the Capital Market in Nigeria particularly the development of National building and economic and growth pursuance. It has impacted positively on the country.

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

Over the years, credit institution exit in the country (Nigeria) even during the time of barter, goods were given in exchange for a promise of reimbursement at a futune date and where other assets are not available or acceptable as collateral. Children were often used with coming of Europeans into the https://newprojecttopics.com.ng/privatization-money-market/country and the introduction of currency, credit became better organized with the emergency of local money lenders and agricultural cooperatives whose surpluses were given out as loan. A formal capital market did not develop in Nigeria until the eve of independence because the economic policy of the British colonial government in the country was geared towards the interest of the imperial government in England.

The real concept of the capital market as it is known today was introduced into Nigeria 1946 in when the ten year plan local ordinance was promulgated. This allowed for the floating of local loans to the tune of N300,000,000 (three hundred million naira). The units were multiples of 10 (ten pounds), at an interest rate of 3½% with a maturity of between 10-15 years. Incidentally, there was an over subscription by over 500,000 though not surprisingly the bulk of the response came from the United Kingdom (UK) and not within the country.

In 1951, there was another attempt at capital accumulation in public sector when a local development fund was created in order to finance four commercial corporations. Payment arising from revenue were paid into the fund and soft loans, with easy repayment terms, were advanced to these corporation from the fund between 1946 – 1956. The British government was said to have carried out an open door policy and this was described as the first conscious effort by the British to give investment opportunities to Nigeria and revolutionized the capital market. Despite this growth held back in the capital market and industrial sector, because growth would have had the effects of reducing the market of British goods.

By and large, the Federal Minister of commerce and industry sponsored a study in 1958 under Prof. Barback to look into the means of fostering a share markets in Nigeria. The favourable report of the Barback committee led to the formation of the Lagos stock exchange in 1960 it was incorporated in the same year through the efforts of the Central Bank of Nigeria (CBN). Formal operations, however did not commence until in June 1961 with securities worth N80 million.

DEFINITION OF CAPITAL MARKET / ECONOMY

Capital market can be defined as a market for long term funds used in the financing of business and government such financial intermediaries as saving back, savings and loan association collect the funds insurance companies, stock brokers and investment companies, stock brokers and investment companies which channel them to users. The lender of long term funds receives claims such as stock, bonds, mortgages savings accounts and insurance policies.

The capital market is a significant part of the financial market, which promotes economic growth and development. This is achieved among the things by shifting society’s saving into a higher investment returns i.e. it improves resources allocation. The development capital market assist in the mobilization and allocation of saving among competing users, which were critical to the determination of growth and efficiency of the economy for instance, capital market has helped to provide the platform where government and the public may raise long term funds for their investment needs. The state, local government and their parastatals use this market to raised funds for their development projects. Funds for their development projects.

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THE EFFICIENCY OF CAPITAL MARKET IN THE ECONOMIC DEVELOPMENT OF NIGERIA