The South And Economic Dependency In The 21st Century: The Nigerian Experience 2015-2019

Description

ABSTRACT

In the 1960s, Nigeria was on a par, in terms of aspirations to attain a very high level of economic growth and development, with its fellow-oil producing and exporting countries such as Malaysia and Indonesia, but has since failed to keep pace with them. Nigeria’s agricultural, manufacturing and mining and quarrying sectors have played a continuous and significant role in the development of the country’s economy.

This is the background of this study, which is an empirical investigation into the factors affecting Nigeria’s bid to achieve sustainable economic growth and development with particular reference to such sectors as agriculture, manufacturing and mining and quarrying (solid minerals) over the period of 2015-2019. This involves the analysis of the relevance of  the health care and education sectors and examination of impediments to past economic development, a development model applicable to Nigeria, the efforts made and the challenges facing the country in achieving the MDGs, and the role of foreign development partners in complementing Nigeria’s development efforts.

LIST OF ABBREVIATIONS AND ACRONYMS

 

ADB:	African Development Bank
ADF:	Augmented Dickey-Fuller
CBN:	Central Bank of Nigeria
DAC:	Development Assistant Committee
ECM:	Error correction model
et al.:	et alii, means others
FDI:	Foreign Direct Investment
FOS:	Federal Office of Statistics
GDP:	Gross Domestic Product
HICPs:	Highly indebted poor countries
HIV/AIDS:	Human Immune Deficiency Virus/Acquired-Immune Deficiency Syndrome
IMF:	International Monetary Fund
LDCs:	Less Developed Countries
LN:	Logarithm
MAP:	Multi-country aid programme
MDGs:	Millennium Development Goals
MMSD:	Ministry of Mines and Steel Development
N :	Symbol for Nigeria’s currency note
NDE:	National Directorate of Employment
NEEDS:	National Economic Empowerment and Development Strategy
NEPA:	National Electric Power Authority
NEPAD:	New Partnership for Africa’s Development
NICs:	Newly industrialised Countries
NISER:	National Institute of Social and Economic Research
OECD:	Organisation for Economic Co-operation and Development
ODA:	Official Development Assistance
OLS:	Ordinary Least Squares
SAP:	Structural Adjustment Programme
SSA:	Sub-Saharan African
UK:	United Kingdom
UN:	United Nations
USA:	United States of America

 

TABLE OF CONTENTS

COVER PAGE

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWELDGEMENT

ABSTRACT

CHAPTER ONE

• INTRODUCTION
• BACKGROUND OF THE STUDY
• PROBLEM STAEMENT
• AIM/OBJECTIVE OF THE STUDY
• PURPOSE OF THE STUDY
• SCOPE OF THE STUDY
• RESEARCH QUESTION
• PROJECT PLAN

CHAPTER TWO

LITERATURE REVIEW

• THE EMANCIPATION OF THE NIGERIAN ECONOMY
• THE ADVANCEMENT OF THE NIGERIAN ECONOMY AFTER THE 1960 INDEPENDENCE
• NATIONAL ECONOMIC DEVELOPMENT PLANS AND POLICIES
• THE NIGERIAN CENTENARY ECONOMY
• OVERVIEW OF NIGERIA ECONOMY
• ECONOMIC HISTORY OF NIGERIA
• NIGERIA PROFILE – TIMELINE (2015 – 2019)
• HISTORICAL BACKGROUND OF MUHAMMADU BUHARI’S GOVERNMENT AND RECESSION
• CAUSES OF ECONOMIC

CHAPTER THREE

METHODOLOGY

• INTRODUCTION
• RESEARCH DESIGN
• METHOD OF DATA COLLECTION
• SAMPLE COLLECTION
• STATISTICAL ANALYSIS

CHAPTER FOUR

RESULT ANALYSIS

• RESULT AND DISCUSION

CHAPTER FIVE

• CONCLUSION
• RECOMMENDATION
• REFERENCES

CHAPTER ONE

1.0                                                            INTRODUCTION

1.1                                              BACKGROUND OF THE STUDY

The Nigerian economy slipped into recession in the second quarter of 2016 which has recorded two consecutive quarters of negative growth rate in Gross Domestic product. Available data from CBN and NBS report (2016) show that the Nigeria economy contracted by -2.06 percent in the second quarter of 2016, as a result of a contraction of -0.36 percent in the first quarter. By the fourth quarter of 2016, the economy further sank into recession with -2.24 percent and -1.03 percent in growth rate of GDP. The decline by -2.06 percent in Nigeria Gross Domestic Product (GDP) in the second quarter was 1.70 percent lower than the growth rate of -0.36 percent in the first quarter, and also 4.41 percent lower than the growth rate of 2.35 percent in the second quarter of 2015. This rapid decline in GDP growth rate deepened 2016 recession in Nigeria compared to when the Nigeria economy declined by 0.51 percent and 0.82 percent in two consecutive quarters in 1987 during the regime of Ibrahim Babangida. It is expedient to say that Economic recession is a downturn in the economy which is characterized by such symptoms like exchange rate fluctuations, rising cost of goods and services, inability of government to pay workers salaries and other allowances or to meet other financial obligations and poor performance of other macroeconomic variables which define the state of the economy at a given period (Farayibi, 2016). Similarly, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales”. The fall in GDP has to be consistent over a period of time ranging from a quarter to half a year to attract attention from stakeholders. It is imperative to state that gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country at a specific time period. Thus, gross domestic product is largely identified as the sum total of economic activities of a nation measured over a given period of time. It is an indicator of the economic well being of any nation. This implies that GDP is used to measure the standard of living of the population of a nation.

However, what is of concern is that the current economic recession in Nigeria is not the first of its kind nor is it the last to experience, but what makes this one more worrisome is that it is coming against the backdrop of two macroeconomic problems of high unemployment rate and high inflation rate. The main aim of this paper examines the problem surrendering the declarations by world economics pertaining the recession in Nigeria between 2015 – 2019.

1.2                                 PROBLEM STATEMENT

The Nigerian economy was at the same level of development as countries such as Brazil, Indonesia, Malaysia and Pakistan in the 1950’s – 60’s, but today it is far behind all of them in terms of its overall level of economic development. In essence, Nigeria has lagged behind other oil producing countries in terms of development, especially as most of these countries are now emerging as newly industrialised countries (NICs).

The development challenges facing the country today as follows: how to revive the prostate economy, promote efficient and respectable economic growth, and increase productivity; and how to establish and sustain a viable and stable macroeconomic framework in the context of a stable democratic political system. In light of deteriorating social indicators, the government must urgently begin to reduce poverty, create employment opportunities and revive the infrastructural services in the country.

In September 2000, at the dawn of this twenty-first century, while Nigeria was still searching for development break-through, at the 55th Millennium Summit, a global development mandate was given to all developing countries in partnership with the rich countries and development institutions and agencies, to: reduce poverty and extreme hunger; ensure universal primary education; eliminate gender disparity in primary and secondary school; reduce infant and child mortality by two thirds; reduce maternal mortality by three quarters; ensure universal access to productive health; and ensure sustainable development and reverse the loss of environmental resources by 2015 (United Nations, 2003). The MDGs declaration by the UN is a wake up call for Nigeria to redouble its economic development efforts towards achieving rapid and diversified development in the twenty-first century.

Reflecting on the performance of Nigeria’s economy, that it is still not satisfactory for the average Nigerian citizen. Problems, therefore, exist given that the different development planning, objectives and efforts put in place by the various past governments aimed at poverty reduction and general economic development, have not achieved the desired objectives. The problem is either that the agricultural, manufacturing, mining and quarrying, education and health policy objectives are not well articulated or that certain actions by the governments and others within the economy have tended to encourage variables that hinder the implementation and realisation of economic development in the country.

1.3                                OBJECTIVE OF THE STUDY

The broad objective of this study is to explore policy scenarios that could enable Nigeria to achieve rapid economic development success. Explicit focus is on agriculture, manufacturing, and the mining and quarrying (solid minerals).

This canenable Nigeria to move towards achieving rapid economic development. This model thus represents a distinctive feature of this study and a significant departure from earlier studies in development policy in Nigeria. To achieve the high, sustained economic growth rates needed to reach the global development goals, Nigeria will need to quicken the pace of its economic development, attain and sustain broad balanced development in the various sectors of the economy.

Five sectors considered to be critical in this study include: agriculture, industrial (manufacturing), mining and quarrying (for non-renewable resources), education and health. Their choice can be explained as follows:

1. Agriculture is one of Africa’s most important It has two major components; namely, food production and export commodities, and a more productive sector that would boost growth (World Bank, 2004a:211);
2. Progress in industrialisation is highly dependent upon agricultural development;
3. The mining and quarrying of solid minerals sector could play an important role in rural areas and in the national economy as a whole by serving as sources of employment and The earned income could improve the people’s lives, enabling many to invest in good quality housing, businesses and livestock;
4. Formal education plays a role in the development of human capital. Moreover, Koven & Lyons (2003:50) has linked education to economic progress for individuals and for the society; and
5. Maintaining a healthy population is an important goal in its own This is crucial to the development of a productive workforce, which in turn is essential for economic development (World Bank, 2000:134).

Other objectives of the study are to:

1. Asses the challenges, progress and efforts of the stakeholders towards achieving the global development goals in Nigeria;
2. Identify and evaluate the role of domestic financial institutions in the mobilisation of financial resources for productive investment to complement foreign investment in the development process in Nigeria; and Suggest a pragmatic and practicable development model as a policy guide towards the implementation and achievement of rapid development and thus attain the MDGs in

1.4         CONTRIBUTION AND JUSTIFICATION FOR THE STUDY

This study aims to contribute to the understanding of macroeconomic development policy stimulations. This focuses on the linkages between variables reflected in the agriculture, manufacturing, mining and quarrying, and other relevant sectors and socio-economic factors. Nigeria needs to improve on its knowledge base policymaking, particularly the inter-sectoral linkages between economic and social factors. This study is also justified for a number of other reasons, including:

1. The achievement of rapid economic development through the transformation of the country’s real sectors will not only reduce poverty by providing food security. By increasing agricultural and industrial production, increasing exports, and per capita income and consumption, it can also help to build a literate and healthy workforce and foster peace and security in Nigeria;
2. The achievement of a diversified economic development and the MDGs in Nigeria through the transformation of the non-oil sectors will strengthen and broaden the productive base of the country, so that it no longer relies heavily on the petroleum sector as the major earner of foreign exchange to the country;
3. Since this is the first time the delayed development in Africa and indeed in Nigeria is being addressed globally, attention should be concentrated in channelling global financial resources to the agricultural, industrial, mining and quarrying, educational and healthcare sectors, because of their strong linkage to and high value-added effect to the rest of the The achievement of rapid and diversified development in Nigeria through the country’s agricultural, industrial, mining, educational and healthcare sectors can help raise the economy to being a global player; and

• 5 SCOPE OF THE STUDY

The current recession in Nigeria is characterized by dwindling oil revenue caused by drop in global crude oil price in the market, unfavorable and inconsistent foreign exchange regime, over- reliance on imports, high inflation rate and mass job loses, Consequently, the economic recession in Nigeria has led to the following experiences: high cost of living, fall in investment and savings; decline in the activities of stock market, increase in crime rate, high poverty incidence, budget deficit in government spending, high rate of inflation, low domestic production capacity, depreciating value of Naira, scarcity of foreign exchange and high cost of doing business in Nigeria. Furthermore the issues of high interest rates, poor electricity supply, lack of portable water, high cost of transportation and poor state of aggregate infrastructure are resultant effects of the said recession. Some indices reveal that the growth rates in major sectors of the Nigerian economy are either slow or negative. Therefore the declaration by world economics in April 2017 that Nigerian’s economy has come out of recession is political and still far from the reality on ground. The indicators of sales manager index (SMI) do not reflect the true position of the Nigeria economy but rather capture the transaction and activities of the political elites who are in the position to spend foreign currency for everything. The study used the misery index (sum of inflation rates and unemployment rates), per capita income or real GDP to determine the economic well being of Nigeria. Our findings show that the average misery index for Nigeria economy for the period under review stood at 29.88% while the average real GDP for Nigeria for the reference period stood at (1.03%). We submit that the acclaim declaration by world economics is not true. We recommend a shift from a mono product economy to a diversified structural based economy driven by agriculture, mining and manufacturing.

• 6 RESEARCH QESTIONS

Nevertheless, three pertinent pivotal questions that will drive the aim of achieving a rapid and sustainable development in Nigeria are:

1) Why is Nigeria still an underdeveloped and low- income country?

2) What should the country do to make rapid economic progress?

3) How can it attain a diversified and sustainable economic development and growth?.

1.7                                 OUTLINE OF THE STUDY

The rest part of the paper is structured as follows: Section two discusses the review of literature, Section three deals with the research methodology, Section four presents the analysis and discussion of results while Section five gives the conclusions.