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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
To identify the various type of property in the study area
To examine the structural component of property in the study area.
To access suitable method to carryout the valuation of property in the study area.
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:-
Lack of adequate fund
Lack of adequate time for collection of
data and analysis.
Inadequate of previous work on the
thesis of data and analysis.
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.
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.
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.
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
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
To identify the properties under
redevelopment on the case study
To know the stage of the
properties under
To examine the prospect of the
properties redevelopment
To examine the challenge involve in
the redevelopment
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.
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
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.
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.
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:
To determine
the various hips of residential properties with the estate.
To examine the
state and condition of the state
To analyze the
management procedure in the management of Alhaji Oseni Olanrewaju estate.
To identify
problems of private residential estate management.
To suggest
ways that would enhance better management of the estate.
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.
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.
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
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:
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.
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 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 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.
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.
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:-
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.
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.
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 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
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.
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
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.
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
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:
To identify types of residential
properties in the study area
To examine the rental values of
residential properties for the past 10 years (2003-2012) in the study area.
To examine the causes of variation or
trends in rental values of residential properties in the study area.
To examine factors that affects the
rental values of residential properties in the study area and provides
recommendations to the factors.
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.
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
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.
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.