EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

PROJECT TOPIC- EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

 

CHAPTER ONE

1.0     INTRODUCTION

1.1     BACKGROUND OF THE STUDY

 The development of soil erosion began when man settled down and started turning pasture land into farmland. The intensive exploitation of the land disturbed the natural soil vegetative cover and exposed its, surface to the effect of erosive agents and to introduce such forms of agriculture that did not destroy the land the devastation of land by erosion often led to the down fall of civilization e.g in Mesopotamia Syria, China and else where.

According to Robert. M. (1984), Erosion is manifested by the determination of soil surface effected by exogenous forces, especially water. Ice wind and, man as the significant anthropogenic factor. The disturbance of soil surface is accompanied by the removal of the detached soil particles by the force of kinetic energy of some of the erosion agents, namely water and wind and the deposition of this matter with a decrease in this energy. Erosion is caused by surface num off and result complex natural process. Water erosion is caused by precipitation. Areas with a low precipitation usually have a small surface num off because precipitation water infiltrates into the soil is consumed by vegetation erosion which may also be broadly cause by a natural factor organ.

It can also be carried by improper channeling neglect of natural sewage systems and obstruction of naturally sewage by buildings. Form land and other unplanned structure causes a great deal of damage.

Although the nature of soil within the area under consideration is mostly sandy with a very low water storage capabilities. Practical observation orchestrated form visit to those site prone to erosion have shown that their may be possibility of erosion if the nun off water is not properly channel e.g the nature of the soil. In sandy soil they can form a very good soil material but danger exist if the water table is near or surface nun off is not adequately channeled. The sandy easily eroded a way from it position their by causing or may lead to fully erosion.

Furthermore, erosion is seen as one of the most serious defects in contemporary residential buildings, it is observed here that apart form it causing rapid destruction of structure / buildings, it also result to severe damage to the soil and in severe case it adversely affect the health of the occupants.

PROJECT TOPIC- EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

1.2     STATEMENT OF PROBLEM

A certain condition or factor can make a soil or structure / building to loose their Sharpe effectively or ineffectively attain their maximum structural physical and economic life span. It has been seen that a number of fact observed to be responsible for the in-adequate or in-appropriate functioning channeling of sewage surface nun off water at the due time.

These in turn expose the building site to the danger of erosion which accelerate their dilapidation. Among the factors or improper channeling / neglect of natural sewage system and obstruction of natural sewage by building without following the local authorities rules dropping of refuse in the drainage ways. Erosion plays a critical role in dilapidation of building and visible in construction industry as one of the most serious defect in contemporary residential buildings. All soils can suffer erosion but some are more vulnerable than others. Soils with dispersible subsoils, for example, are subject to serious erosion by funneling and gully formation.

 

1.3     RESEARCH AIMS AND OBJECTIVE

The major purpose of this study is to determine. The effective way of controlling erosion in a construction site prone to erosion problem.

1)      Identity the various causes of erosion in building sites.

2)      Examine the appropriate materials and (new and old) used in controlling the erosion.

3)      Determine the most appropriate materials and techniques required for the controlling it.

4)      To recommend measure if implemented will lead to effective control of erosion in a construction  

1.4     RESEARCH QUESTIONS

The study sought to answer the following research questions

1)      What are nature and various causes of erosion in building sites

2)      What are the process to be applied in erosion control.

 3)     What are the  various types of materials to be used in controlling erosion

4)      If implemented will lead to effective control of erosion in an erosion prone site  

 1.5    SIGNIFICANT OF THE STUDY

The significance of this study shall include the follow:

1)      Contractors and engineers shall know how to control erosion in an erosion prone site.

2)      The engineers and the general public will because more aware on the importance of erosion control in a site.

3)      Lecturers, students consultants and other stakeholders in the construction industry will be theoretically & technically equipped on how to control erosion in an erosion prone construction site.

1.6     STUDY OF AREA

This study was delimited to the problem of erosion in a site prone to erosion. It focused on the type and magnitude of erosion at site in Anambra state and also looked at the specific remedial techniques to that building site will function effectively and efficiently. Attempt should be made to look into laboratory experimentation of the material used for effective control of erosion in building site prone to erosion. Ekwulobia erosion is gully erosion-gully erosion is of concern due to periodically intense rainfall and a large average of erodible soils. Effective design of gully control system must consider the gully network as a whole and be based on geomorphologic indicators such as type of network, order and stage of development. 

1.7     DEFINITION OF TERMS

According to Grolie (1990). Erosion is the wearing away of the earth surface by the action of water.

According to Milos Holy (1987). Building is permanent or temporary structure enclosed within exterior walls and a roof and including all attached apparatus. Equipment and fixtures that cannot be removed without cutting into ceiling floors or walls. In the year 1960 Bernard Huss define soil as the top layer of the earths surface in which plants an grow consisting of rock and mineral particles mixed with decayed organic matter and having the capability of retaining water. 

PROJECT TOPIC- EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

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EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

PROJECT TOPIC- EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

CHAPTER ONE

1.0     INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The development of soil erosion began when man settled down and started turning pasture land into farmland. The intensive exploitation of the land disturbed the natural soil vegetative cover and exposed its, surface to the effect of erosive agents and to introduce such forms of agriculture that did not destroy the land the devastation of land by erosion often led to the down fall of civilization e.g in Mesopotamia Syria, China and else where.

According to Robert. M. (1984), Erosion is manifested by the determination of soil surface effected by exogenous forces, especially water. Ice wind and, man as the significant anthropogenic factor. The disturbance of soil surface is accompanied by the removal of the detached soil particles by the force of kinetic energy of some of the erosion agents, namely water and wind and the deposition of this matter with a decrease in this energy.

Erosion is caused by surface num off and result complex natural process. Water erosion is caused by precipitation. Areas with a low precipitation usually have a small surface num off because precipitation water infiltrates into the soil is consumed by vegetation erosion which may also be broadly cause by a natural factor organ. It can also be carried by improper channeling neglect of natural sewage systems and obstruction of naturally sewage by buildings. Form land and other unplanned structure causes a great deal of damage.

Although the nature of soil within the area under consideration is mostly sandy with a very low water storage capabilities. Practical observation orchestrated form visit to those site prone to erosion have shown that their may be possibility of erosion if the nun off water is not properly channel e.g the nature of the soil. In sandy soil they can form a very good soil material but danger exist if the water table is near or surface nun off is not adequately channeled.

The sandy easily eroded a way from it position their by causing or may lead to fully erosion. Furthermore, erosion is seen as one of the most serious defects in contemporary residential buildings, it is observed here that apart form it causing rapid destruction of structure / buildings, it also result to severe damage to the soil and in severe case it adversely affect the health of the occupants.

PROJECT TOPIC- EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

1.2     STATEMENT OF PROBLEM

A certain condition or factor can make a soil or structure / building to loose their Sharpe effectively or ineffectively attain their maximum structural physical and economic life span. It has been seen that a number of fact observed to be responsible for the in-adequate or in-appropriate functioning channeling of sewage surface nun off water at the due time. These in turn expose the building site to the danger of erosion which accelerate their dilapidation.

Among the factors or improper channeling / neglect of natural sewage system and obstruction of natural sewage by building without following the local authorities rules dropping of refuse in the drainage ways. Erosion plays a critical role in dilapidation of building and visible in construction industry as one of the most serious defect in contemporary residential buildings. All soils can suffer erosion but some are more vulnerable than others. Soils with dispersible subsoils, for example, are subject to serious erosion by funneling and gully formation.

1.3     RESEARCH AIMS AND OBJECTIVE

The major purpose of this study is to determine. The effective way of controlling erosion in a construction site prone to erosion problem.

1)      Identity the various causes of erosion in building sites.

2)      Examine the appropriate materials and (new and old) used in controlling the erosion.

3)      Determine the most appropriate materials and techniques required for the controlling it.

4)      To recommend measure if implemented will lead to effective control of erosion in a construction

1.4     RESEARCH QUESTIONS

The study sought to answer the following research questions

1)      What are nature and various causes of erosion in building sites

2)      What are the process to be applied in erosion control.

3)     What are the  various types of materials to be used in controlling erosion

4)      If implemented will lead to effective control of erosion in an erosion prone site

1.5    SIGNIFICANT OF THE STUDY

The significance of this study shall include the follow:

1)      Contractors and engineers shall know how to control erosion in an erosion prone site.

2)      The engineers and the general public will because more aware on the importance of erosion control in a site.

3)      Lecturers, students consultants and other stakeholders in the construction industry will be theoretically & technically equipped on how to control erosion in an erosion prone construction site.

1.6     STUDY OF AREA

This study was delimited to the problem of erosion in a site prone to erosion. It focused on the type and magnitude of erosion at site in Anambra state and also looked at the specific remedial techniques to that building site will function effectively and efficiently. Attempt should be made to look into laboratory experimentation of the material used for effective control of erosion in building site prone to erosion.

Ekwulobia erosion is gully erosion-gully erosion is of concern due to periodically intense rainfall and a large average of erodible soils. Effective design of gully control system must consider the gully network as a whole and be based on geomorphologic indicators such as type of network, order and stage of development.

1.7     DEFINITION OF TERMS

According to Grolie (1990). Erosion is the wearing away of the earth surface by the action of water.

According to Milos Holy (1987). Building is permanent or temporary structure enclosed within exterior walls and a roof and including all attached apparatus. Equipment and fixtures that cannot be removed without cutting into ceiling floors or walls. In the year 1960 Bernard Huss define soil as the top layer of the earths surface in which plants an grow consisting of rock and mineral particles mixed with decayed organic matter and having the capability of retaining water.

PROJECT TOPIC- EFFECTIVE WAYS OF CONTROLLING EROSION IN A BUILDING SITE IN SELECTED SITES IN EKWULOBIA ANAMBRA STATE

 

EVALUATION OF THE IMPACT OF ROAD NETWORK ON THE SELLING OF AGRICULTURAL PRODUCTS IN ANAMBRA STATE.

 

ABSTRACT

This research work problem into the place of impact of road network in the selling of agricultural products in Nigeria Anambra State. This study tries to identify the causes of road network in the selling of agricultural product, in addition of this research work in summary. Chapter one; this work entails the introduction, back ground of the study, statement of problems, purpose of the study, significance of the study, area of the study. Chapter two: this work entails with the review of related literature. Chapter three; summary of research design methodology, sample size and technology, method of data collection, methods of distribution of questionnaire, chapter four; it equally goes with presentation and analyzing of data. Chapter five; summary of the research findings testing of hypothesis, recommendation and conclusion.

 

CHAPTER ONE

INTRODUCTION

Food production is geographically disposed and it is not an easy work, like food production centers with the production center.  The Nigerian food industry for example depends on the distribution of food it produces. Most of the food produced cannot get to the market due to the acute road network difficulties that will serve the food industry. Food production therefore depend upon road network for the creation and preservation of their values. The effect and the importance of road was critically investigated in this study with a particular product in Njikoka Anambra State Nigeria.

Food production is one of the priority facing most of the world’s people today. It is also a problem that may worsen rapidly in the years ahead Acccording to the Food Agricultural Organization (FAO), food production of the developing countries will increase by a staggering 125% by 2010. On the other hand, problems relating to rural penetration have contributed to wooing the world and particular Nigeria Agriculture.t is because of the above problems that the government must intensify efforts to improve the road networks especially in the rural areas.

Collection and individual efforts should be directed towards fighting a war against hunger and the provision of road network to allocate the agricultural products. Investment decision in agricultural policy can help to ensure supply of additional food and its distribution to consumers.

 

EVALUATION OF THE IMPACT OF ROAD NETWORK ON THE SELLING OF AGRICULTURAL PRODUCTS IN ANAMBRA STAT

1.2 STATEMENT OF THE PROBLEM

Since the early years of man, agriculture and road network have always co-existed together due to the source of food and other economics products must be accessible for the collection distribution to market port and factories.

It is important that adequate and effective road network should be introduced or encouraged to achieve the modern food selling system objectives. Transportation is therefore to serve as a means of marketing goods. In Njikoka Anambra State, most of the network do not pass within the agricultural areas and thereby hinder agricultural progress. In some rural areas, most of the road network which passes through agricultural areas from farm to the market places is often too bad all the years for easy transportation. Most of these feeders road networks are interfaced narrow, poorly drained that they prevent easy access to the interlard where the majority of the farmers are located.

There are also the problems of maintenance, adequate executive capacity suitable materials and management where the road networks are in fair conditions.

Beside the poor condition of the feeder road network delay in transport, bad loading and offloading and rough handling goods result to great damages spoilage and deterioration of products.

Poor road network also has the additional effect of preaching from the specializing in the corps that offer attempt to keep his family supplied with all their needs and therefore retains food than he adequately needs. This is because if he runs shortage, it will be difficult to tap other resources and this entails. Higher cost as a result of road network. It often poses a problem because urban dwellers will be faced with shortage of food staff and other essential goods manufactured from agricultural materials these problems will hinder the ability to import system of land use for agricultural production.

If agriculture is to respond to the growing demand then it will be necessary to involve a good progressive rural structure with rural roads to quicken and reduce the cost of the flow of agricultural commodities, information and ball sort of rural services to enable contribute meaningfully to generate growth.

EVALUATION OF THE IMPACT OF ROAD NETWORK ON THE SELLING OF AGRICULTURAL PRODUCTS IN ANAMBRA STAT

THE IMPACT OF PUBLIC POLICY IMPLEMENTATION IN ENUGU STATE: A CASE STUDY OF ENUGU STATE AGRICULTURAL DEVELOPMENT PROGRAMME (ENADEP) 1995-2005

ABSTRACT

 

This study was on the impact of public policy implementation in Enugu State Agricultural Development Programme (ENADEP) 2001-2012. The study inquires into critical issues of policy implementation failures, such as corruption, regime instability, executive interference, “top-down” and “bottom-up” policy approaches, statutory incoherence, etc and attempts to identify, examine and analyze those of the variables that have contributed to the low pace of development in the agricultural sector in Enugu State. Employing the documentary study approach, secondary data relevant to the inquiry were collected from ENADEP progress annual, quarterly, field and implementation completion reports (ICR), journals, Federal and State ministries of agricultural and natural resources research reports, the examination of seminar papers, published and unpublished works, textbooks, conference proceedings as well as detailed and rigorous interviews of key stakeholders and specialists in the field.

The following major findings emerged from the study; first, there is frequent executive interference in the internal affairs and management of Enugu State Agricultural Development Programme by the state government resulting in frequent high level management staff turn-over particularly with regard to the office of the Project Manager with the attendant consequence of protracted delays in the execution of project activities. Second, there is a clear lack of prudent management of available project funds, occasioned by the high rate of corruption and diversion of project funds by the state government. Third is the issue of farmer‟s lukewarmness and conservative attitude to technological changes in the agricultural field. Finally, based on the findings, the following recommendations are made: (1) it was clear from the study that executive interference and politicization of the office of ENADEP‟s Project Manager contributes to the ineffectiveness of ENADEP, (2) identified also, was the issue of low staff morale occasioned by the non-payment of staff salaries and entitlements. This gave rise to the use of seconded ministry staff that does not pay loyalty to ENADEP management to perform crucial functions. To secure the commitment of staff for better and effective policy implementation, ENADEP should be made to hire and retain enough staff capable of its services.

 

 

CHAPTER ONE

INTRODUCTION

 

Since independence in 1960, several reports have been made concerning policy failures in Nigeria (Report of Vision 2010). Of recent is the vision 2010, which is an encapsulation of policies and programmes ranging from agriculture, education, health, political order, economics and others that have been poorly executed. In agricultural sector, bold attempts have been made to encourage the growth and development of the sector through agricultural education, development and financing programmes. Agricultural policies, strategies, and programmes in Nigeria have undergone many changes since independence in 1960. These changes were in the main, a reflection of changes in government philosophy on the best approach to agricultural development while the philosophic changes were, in themselves, often brought about by changes in government. But in broad sense, government philosophy on agricultural development has undergone three major phases, the first from 1960 to about 1970, the second from about 1970 to about 1985, and the third which is still unfolding, from about 1985 to present time. One of the specific agricultural programmes aimed at increasing agricultural production and improving farmer‟s conditions is the Agricultural Development Projects (ADPs) (ASADEP Annual Report, 1986). The programme was conceived in 1972, while the first projects (Enitua in Kaduna, Gusau, in Sokoto and Gombe in Bauchi) commenced operation in 1975 (ASADAP Annual Report, 1986).
The success of the first generation Agricultural Development Projects (ADPs) made the Federal Government to accord the agricultural development project idea prompt recognition as prime contributors to incremental food production (CBN Statistical Bulletin

and Annual Reports various issues, Yahaya, 2000). Thus, it became the policy of the federal government of Nigeria to extend agricultural development strategy to all the states of the federation (ENADEP Progress Review and Implementation Status, 1994). Despite the fact that the projects were supported by the food strategies mission of the World Bank, it was obvious that the organization could not solely fund further expansion of more Agricultural Development Projects (ADPs). Therefore, jointly funded programme, which would enable the basic agricultural development project concepts to be more readily extended to those areas which had not benefited from the conventional agricultural development project packages, was recommended (ASADEP Annual Report, 1986). The Agricultural Development Projects is a tripartite development strategy among the World Bank, the Federal Government and the State Government. The Anambra State Agricultural Development Project (ASADEP) benefited from the World Bank joint funded programme, and the project activities commenced fully in 1986 (ASADEP Annual Report, 1986).

Following the creation of Enugu and Anambra State in August 1991, the Enugu State Agricultural Development Project (ENADEP) came into being, and since then, it has been implementing the aims and objectives for which the parent agricultural development project was established. Ihimodu (1986:10) noted that among the important features of the Agricultural Development Projects (ADPs), is the improvement of infrastructure within the project areas through construction of dams to provide water for crops, animals and man, provision of extension services and marketing services, provision of credit facilities to farmers to enable them take advantage of the facilities of health and other social services

provision of base for the improvement of health and other social services in the project areas. The contemporary agriculture in Nigeria is dominated by small scale farmers using traditional methods. Thus, the principal objective of Enugu State Agricultural Development Project (ENADEP), is to increase food production and incomes of small-scale farmers in the project areas and thereby increase total food supply and raw materials for the growing population, and the agro-based industries, which will be achieved by producing a package of essential inputs, and an efficient delivery system through the farm service centre. However, a downward trend was observed from 1991. This has persisted ever since. Food importation has rather been on increase, which sustained decline in domestic production. This was the period of essential commodity and the beginning of massive corruption, which permeated various sectors of the economy. This was the situation until 1999 when a democratic government was sworn in. During this period, the Fadama development project was introduced in 1992. It however, did not make sufficient impact.

The democratic government headed by president Olusegun Obasanjo initiated some policies and programme, which involved: reorganizing, restructuring, privatizing institutions and agencies, and encouraging partnership to make impact, Nigeria Agricultural Cooperatives and Rural Development Bank, NACRDB, (2000); National Agricultural Development Fun, NADF (2002); National Special Programme on Food Security, NSPFS (2002); Commodity Marketing and Development Companies, CMDC (2003); all these have had some positive impact on agricultural production and consequent improvement in agricultural development projects.There has been a lot of reorganization, restructuring of agricultural programmes in the country. A lot of policies and projects have been embarked upon without a corresponding result. The food productions that supposed to boom and reduce food insecurity in the state keep on fluctuating. The study want to examine how these projects have been managed.

THE IMPACT OF PUBLIC POLICY IMPLEMENTATION IN ENUGU STATE: A CASE STUDY OF ENUGU STATE AGRICULTURAL DEVELOPMENT PROGRAMME (ENADEP) 1995-2005

 

1.1 Statement of the Problem

 

The principal policy position of Enugu State Agricultural Development Programme (ENADEP) is to increase food production and income of small scale farmers. The programme was fashioned to revolutionize agricultural sector of Enugu State economy, which was derailing from its normal contribution to the economy. However, extent literature and available evidence indicate that these objectives are yet to be met. Since the introduction of Agricultural Development Projects in Enugu State in 1992, which signaled the beginning of a serious process of implementation, there have been further accusations that the implementation process has not been consultative enough; that it is heavy-handed, and that the solutions are uniformly imposed, with little sensitivity to local realities (Emehelu, 1994). From complaints about relative statistics, the tune has now changed to complaints of overload and inundation with too many things happening at the same time (IKelegbe, 1996). In addition, policy implementation failures in Nigeria are also a direct consequence of political instability. Within the period under study (1995-2005), Enugu State has embarked on so many Agricultural Development Programmes due to instability in the government.

The Enugu State government has been experiencing new-governed-new-policy. Consequently, the study poses the following questions:
(1) Does the Enugu State Agricultural Development Programmes increase food production in Enugu State between (1995-2005)?
(2) Is there any link between public policy implementation and the success or failure of Enugu State Agricultural Development Projects?
(3) Does the institutional structure of ENADEP affect the policy implementation of Agricultural Development Projects in Enugu State?

 

THE IMPACT OF PUBLIC POLICY IMPLEMENTATION IN ENUGU STATE: A CASE STUDY OF ENUGU STATE AGRICULTURAL DEVELOPMENT PROGRAMME (ENADEP) 1995-2005

THE EFFICACY OF CENTRAL BANK INTERVENTION ON THE FOREIGN EXCHANGE MARKET IN NIGERIA

 

Abstract

This paper empirically investigated the efficacy of Central Bank intervention on the Foreign Exchange Market in Nigeria. The study utilized a probit model to ascertain the determinants of Central Bank intervention in the foreign exchange market. This model was divided into two parts. The first part was a probit model of determinants of positive intervention and the second is a probit model of negative intervention (these models were used to capture objective one). As a result of this, six regressions were run using the Ordinary Least Squares (OLS) method of estimation. This was to show that in the presence of heteroskedasticity and/or auto correlation,results of the OLS estimates may sometimes be biased and inconsistent. Consequently, to allow
for comparison, the analyses concentrated on the Two Stage Least Squares Generalized Method of Moment (for long run analysis) and Error Correction Model (for short run analysis).

The empirical evidence show that in the long run, Central Bank of Nigeria (CBN) intervention in foreign exchange market is significantly not determined by inflation but, by other variables such as: real exchange rate, real gross domestic product, and standard exchange rate. However, in the short run, it was found that last year’s foreign exchange supplies by the CBN, last two year’s foreign exchange supplies by the CBN, both last year’s and last two year’s exchange rate, and last two year’s inflation rate insignificantly determine Central Bank of Nigeria intervention in foreign exchange market while, last year’s inflation, both last year’s and last two year’s real gross domestic product, the Error Correction Mechanism, and the constant term are significant determinants of Central Bank of Nigeria intervention in foreign exchange market.

On the second methodology which was applied to examine the effectiveness of CBN intervention on exchange rate volatility (i.e objective two), OLS, robust OLS, and Two-Stage Least Squares Generalized Method of Moment were adopted. These regressions were run to also compare the results of the
estimates of OLS in the presence of heteroskedasticity and/or autocorrelation. However, to enable for comparison, the analyses concentrated on the robust OLS and the Two-Stage Least Squares Generalized Method of Moment. Consequently, the results of these models suggest that all the variables, except the constant term in regressions (2), are significant determinants of exchange rate volatility. Therefore, for CBN intervention policies to be efficacious in the
achievement of foreign exchange rate stability, it must recognize the importance of the supply channel of foreign exchange rate linkage and subsequently adopt heterodox policies while trying to intervene.

This requires the reliance on the growth of money supply and credit to manage money supply, while avoiding high interest rates policy due to its deleterious implications on production cost and the competitiveness of the emerging product globally. Finally, inflation should also be stabilized and monitored very closely by the CBN since the study showed that an increase in it increases the volatility of exchange rate.

However, in the short run, it was found that last year’s foreign exchange supplies by the CBN, last two year’s foreign exchange supplies by the CBN, both last year’s and last two year’s exchange rate, and last two year’s inflation rate insignificantly determine Central Bank of Nigeria intervention in foreign exchange market while, last year’s inflation, both last year’s and last two year’s real gross domestic product, the Error Correction Mechanism, and the constant term are significant determinants of Central Bank of Nigeria intervention in foreign exchange market. On the second methodology which was applied to examine the effectiveness of CBN intervention on exchange rate volatility (i.e objective two), OLS, robust OLS, and Two-Stage Least Squares Generalized Method of Moment were adopted.

These regressions were run to also compare the results of the estimates of OLS in the presence of heteroskedasticity and/or autocorrelation. However, to
enable for comparison, the analyses concentrated on the robust OLS and the Two-Stage Least Squares Generalized Method of Moment. Consequently, the results of these models suggest that all the variables, except the constant term in regressions (2), are significant determinants of exchange rate volatility. Therefore, for CBN intervention policies to be efficacious in the achievement of foreign exchange rate stability, it must recognize the importance of the supply channel of foreign exchange rate linkage and subsequently adopt heterodox policies while trying to intervene. This requires the reliance on the growth of money supply and credit to manage money supply, while avoiding high interest rates policy due to its deleterious implications on production cost and the competitiveness of the emerging product globally.

Finally, inflation should also be stabilized and monitored very closely by the CBN since the study showed that an increase in it increases the volatility of exchange rate. of the economy to attain optimal productive capacity (Ogiogo, 1996). The Central Bank of Nigeria purchases or sales of a foreign currency change the domestic monetary base, without additional market transactions such actions would change interest rates, exchange rates and ultimately prices of goods and services.(Ajayi,1988.)Since 1986 when the exchange rate was floated in Nigeria, the Central Bank of Nigeria (CBN) has
periodically intervened in the foreign exchange market. As part of the International Monetary Fund (IMF) conditions under the structural adjustment package, the CBN has also intervened in the form of foreign exchange purchases in order to accumulate foreign reserves for the government. Intervention entails buying and selling of a foreign currency against the local currency (Naira) based on market conditions.

Its operations usually check the stability of the foreign exchange rate market (Rankin, 1998). The issue of whether these interventions affect the exchange rate and how this happens has important implications for policy and has been a subject of much debate in the literature (Simatele, 2004). Distinguishing between sterilized and non-sterilized intervention is very important. On the one hand, there is general agreement that non-sterilized intervention can affect the exchange rate through its effect on money supply. On the other hand, the effectiveness of sterilized intervention is still controversial
(Danker et al., 1996; Lewis, 1988b; Humpage, 1989; Baillie and Humpage, 1994; Dominguez, 1998). The question of the effects of interventions on the exchange rate in Nigeria has both research and policy interest. Research interest because very few of such studies have been done on Africa and only one such study (for example, Simatele, 2004) exists. It is of policy interest because, if sterilized intervention has an effect on the exchange rate in Nigeria, this offers the monetary authority an additional policy tool independent from general monetary policy. In an open economy, once the exchange rate is floated, it
becomes an important component in the transmission mechanism.

The more open the economy, the greater the importance of the exchange rate in the policy process and the more important this variable becomes as an optional policy conduit. However, the figure below shows the supply of foreign exchange in Nigeria by the Central Bank of Nigeria (CBN). From the graph above, it can be seen that between 1996 and 2010, supply of foreign exchange rate (SFEX) by the CBN in Nigeria were not relatively stable because of the managed float that characterised the period. Noteworthy here is that exchange rate fluctuations in Nigeria usually affect the equilibrium
position of the money supply. For instance, when exchange rate is depreciated, inflation rate is increased and vice versa. For this reason, the stability of the exchange rate is very important for price stabilization. To ensure this, most Central Banks intervene in foreign exchange markets to smooth out short run
fluctuations of the exchange rate. However, the effects of Central Bank intervention in the foreign exchange market are not straightforward. The efficiency of the foreign exchange market matters coupled with the nature and credibility of the interventions. The effect of such interventions, therefore, is an
empirical question, which this paper attempts to address.

The interest in this paper is to determine whether foreign exchange intervention has an effect on exchange rates in Nigeria (the exchange rate in this study will be defined as the number of naira per unit of foreign exchange). We would like to determine whether or not intervention in Nigeria is indeed sterilized. This is of importance because stabilization policy in Nigeria is based on the control of money supply with M2 as an intermediate target and base money as the policy instrument. Policy implementation is conducted by minimizing deviations of M2 from target. If intervention is not sterilized, then interventions are likely to affect money supply growth and this becomes a part of monetary policy issues. Hence, this study will investigate whether or not intervention by the Central Bank of Nigeria (CBN) in the Nigerian foreign exchange market has been very effective in stabilizing the Naira exchange rate.

THE EFFICACY OF CENTRAL BANK INTERVENTION ON THE FOREIGN EXCHANGE MARKET IN NIGERIA

 

 

1.2 Statement of the Problem

Central Bank of Nigeria (CBN) intervenes in the foreign exchange market in order to achieve a variety of economic objectives. The main reason being to target the level of foreign exchange rates, dampen exchange rate volatility or influence the amount of foreign reserves (Moreno, 2005). The CBN has also
intervened in the form of foreign exchange purchases in order to accumulate foreign reserves for the government. In the past there was exchange rate depreciation which was not properly coordinated and harmonized in order to achieve a good macroeconomic stability in Nigeria. The issue of whether these interventions affect the exchange rate and how this happens has important implications for policy and has been a subject of much debate in the literature Adebayo, 2007). Evidence of the effectiveness of intervention is generally mixed (Sarno and Taylor, 2001) but unsuccessful intervention is costly. There are several significant reasons why officials have to target the level of foreign exchange rates. Firstly, Central Banks target foreign exchange rates to achieve external balance or enhance competitiveness and boost growth.

The foreign exchange rate targets have been used to prevent exchange rate misalignment and achieve external equilibrium. According to Marshall (1923), Lerner (1944) and Stern (1973), this equilibrium obtained by using depreciation is weak and depends on the elasticity of exports and imports demand and offer. From time to time, the goal has been to prevent real exchange rate appreciation and large current account deficits, and finally the officials target the level of exchange rate to prevent a crisis. The second motive for Central Bank operations in the foreign exchange market is to influence the
level of foreign exchange rate (Sack and McNeil, 2011). While some countries try to accumulate the reserves, others sought to reduce the. Three considerations guiding the policy are exchange rate impact, market friendliness, and costs and benefits. In contrast to other goals of Central Banks’ participation in the foreign exchange market which mainly focuses on maximizing the exchange rate impact, Central Banks’ goal in influencing the amount of reserves is to minimize the impact on exchange rates.

In addition, Central Banks’ policies to adjust foreign reserves have to be market friendly as government market operation can impair foreign exchange market development. The size of Central Bank presence in the foreign exchange market can discourage private sector participation and price discovery.
In Nigeria, Yaqub (2010) observed that Exchange rate policy has been identified as one of the endogenous factors that can affect the economic performance of a nation. In light of this perception, the Nigerian authority tried both the fixed and the market based exchange rate regimes so as to attain a
realistic exchange rate that would ensure efficient allocation of foreign exchange rates and pave way for a non-inflationary growth. Despite the change from one regime to another, the economic performance of Nigeria was still epileptic. Omolara (2010) observed the trends and variations in the exchange rate particularly within the Structural Adjustment Programme (SAP) periods and post-SAP periods. It was clear from the study that the

THE EFFICACY OF CENTRAL BANK INTERVENTION ON THE FOREIGN EXCHANGE MARKET IN NIGERIA