PROJECT TOPIC- IMPACT OF AGRICULTURAL CREDIT ON AGRICULTURAL OUTPUT IN NIGERIA

ABSTRACT

The study examines the impact of agricultural credit on agricultural output in Nigeria from 1980-2010. The research design adopted for this study is the analytical/ causal research design which establishes relationship between the dependent and independent variables. To ascertain the relationship that exist between the dependent and the independent variables, secondary data were sourced from central bank statistical bulletin. Descriptive statistics and correlation matrix analysis were used to check the direction of movement among the variables. The study adopted the Ordinary Least square  (OLS) regression analysis method to test for the long run relationship between the dependent and the independent variables. The statistical package used is the EVIEWS 7.0 econometric software package. The findings of the study were that deposit money bank and government expenditure exert a significant positive influence on agricultural output in Nigeria. Base on the findings, we therefore recommend that government should encourage deposit money banks to allocate and disburse loans to the agricultural sector, especially to the rural farmers.

 

 

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Nigeria in the last few years had clamored for foreign portfolio investment. This is believed to be a facilitator of stock market development, which leads to economic development and industrialization of the economy in the long run (Adeleke, 2004). Foreign portfolio investment means the purchase of shares in a foreign country where the investing party does not seek control over the investment. A portfolio investment typically takes the form of the purchase of equity (preference share) or government debt in a foreign stock market, or loans made to a foreign company.

Foreign portfolio flows are commonly known as Foreign Institutional Investment refers to the flow of capital made by individuals and institutional investors across national borders with a view to creating an internationally diversified portfolio. Unlike Foreign Direct Investment (FDI) flows which refer to that category of international investment aimed at obtaining a lasting interest by a resident entity in one economy in an enterprise resident in another economy by way of exercising significant control over its management, foreign portfolio investment is the entry of funds into a country where foreigners make purchases in the country’s stock and bonds markets for the sole purpose of financial gains and does not create a lasting interest in the management control.

It is positively influenced by high rates of returns and reduction of risk through geographical diversification and the return on FP1 is normally in the form of interest payments or non – voting dividend. It involves the passive holdings of securities and other financial assets which do not entail active management or control of the securities issuers.

Foreign portfolio investment (FPI) is an aspect of international capital flow comprising the transfer of financial assets: such as cash; stock or bonds across international borders in need of profit. It occurs when investors purchase non-controlling interests in foreign companies or buy foreign corporate or government bonds, short-term securities, or notes. Thus, just as trade flows result from individuals and countries seeking to maximize their well-being by exploiting their own comparative advantage, so too, are capital flows the result of individuals and countries seeking to make themselves better off, moving accumulated assets to wherever they are likely to be most productive (ERP, 2006).

In the late 1980s a distinguished international study group for the World Institute for ‘Development Economics Research (WIDER) headed by Sir Kenneth Berrill, forcefully argued for developing countries to liberalize their financial markets in order to attract foreign portfolio equity flows. The study group’s essential argument was that there was a huge amount of financial capital available in developed countries through pension and investment funds that could be attracted to developing countries provided they liberalized their markets externally and developed their stock markets internally. Although the report noted the lack of a clear connection between economic growth and stock market development, it presented a large number of benefits that developing countries can reap. These included:

  • an additional channel for encouraging and mobilizing domestic savings;
  • improvements in  the productivity of investments through market allocation of capital: and
  • increased managerial discipline exercised though the market for corporate control (WIDER, 1990).

Portfolio investment is a recent phenomenon in Nigeria. Up to the mid 1980’s, Nigeria did not record any figure on portfolio investment (inflow or outflow) in her balance of payment account. The nil returns on the inflow column of the account is attributable to the absence of foreign portfolio investors in the Nigerian economy. This is largely because of the non-internationalization of the country’s money and capital markets as well as the non-disclosure of information on the portfolio investments in foreign capital/money markets (Obadan, 2004).

Following a careful review of the consequences of the Exchange Control Act of 1962 on the economy, after some thirty three years of its operations, Nigerian authorities came to the conclusion that the Act had not brought the economy any substantial benefits. The Act was judged inimical to a market driven economy, new policy government had pursued since 1986, with the deregulation of the economy. While equity investment trickled into Nigeria as a result of the Exchange Control Act of 1962, Portfolio Investments dried up, because portfolio investments required an investment climate, which guarantees speedy “free entry” and “free exit” of investment funds in a flash.

The investment climate in Nigeria engineered by the Exchange Control Act of 1962 did not guarantee the speedy mobility of funds across international borders. It took the authorities more than three decades to realize that protection of the economy in a world striving to dismantle economic frontiers had not paid off, and that the capital market being a major player in the mobilization of funds for investment has to be liberalized and modernized to enable it capture enough resources for the economy from within and from outside. The Exchange Control Act of 1962 was identified as a major constraint on the growth of the Nigerian capital market. Accordingly the Act was blown away with gale force in 1995, •n the strong wind of deregulation, which swept across the Nigerian Macro-economic policy arena, from the beginning of the last quarter of 1986 (Onoh, 2002).

PROJECT TOPIC- IMPACT OF AGRICULTURAL CREDIT ON AGRICULTURAL OUTPUT IN NIGERIA

1.2      STATEMENT OF PROBLEM

Although FP flows help supplement the domestic savings and augment domestic investments without increasing the foreign debt of the recipient countries, correct current account deficits in the external balance of payments’ position, reduce the required rate of return for equity, and enhance stock prices of the host countries, yet there are worries about the vulnerability of recipient countries’ capital markets to such flows. FPI flows, often referred to as ‘hot money’ (i.e., short-term and overly speculative), are extremely volatile in character compared to other forms of capital flows.

Foreign portfolio investors are regarded as ‘fair weather friends’ who come in when there is money to be made and leave at the first sign of impending trouble in the host country thereby destabilizing the domestic   economy   of   the   recipient   country.   Often,   they   have   been   blamed   for exacerbating small economic problems in the host nation by making large and concerted withdrawals at the slightest hint of economic weakness. It is also alleged that as they make frequent marginal adjustments to their portfolios on the basis of a change in their perceptions of a country’s solvency rather than variations in underlying asset value, they tend to  spread  crisis  even   to  countries  with  strong  fundamentals  thereby  causing ‘contagion’ in international financial markets (FitzGerald, 1999).

Further, it is feared that 500 worth of FPI inflows may build up sizeable surpluses on a country’s balance of payments, create excess liquidity and hence exert upward pressure on the exchange rate of the domestic currency or on domestic prices. The fear of foreigners capturing a large part of the securities’ market also associated with FPI flows. Accordingly it is viewed that as securities markets in developing countries like Nigeria are narrow and shallow and as the foreign investors have command over considerable funds and occupy a dominant position in the capital market.

FPI flows have the potential for major capital flight out of Nigeria driving the prices down sharply and hence inducing considerably instability in the Nigeria stock market. The danger of abrupt and sudden outflows inherent with FPI flows have been highlighted in several research studies. Froots, O’Connell, and Seasholes (2001). These issues have made the policy makers all the more wary about FPI flows as questions have begun to be raised about the wisdom in promoting such flows

 However, the issues of whether FPI flows affect stock market returns or the other way round is a matter of controversy. It has been perceived in some quarters that FPI flows are the major drivers of stock markets in Nigeria and hence a sudden reversal of such flows may harm the stability of the market. Contrary to this belief, it is viewed by others that FPI flows react to the existing crisis in the stock market, possibly exacerbating it rather than causing it. The implication of this is that knowledge and understanding foreign portfolio investment and the Nigerian stock market development is imperative to save warranted an empirical study of this nature.

1.3        RESEARCH QUESTIONS

To this end, the study intends to answer the following questions:

  1. What is the relationship between foreign portfolio investment and stock market development in Nigeria?               
  2. What is the relationship between exchange rate on stock market development in Nigeria?
  3. What is the relationship between interest rate on stock market development in Nigeria?

 

1.3       OBJECTIVES OF THE STUDY

Acknowledging the role of foreign portfolio investment in the mobilization of funds for market development, this study presents an overview of the nation’s foreign investment activities and stock market development. This would be made possible by relating the indicators of FPI with the proxies of stock market development. Specifically, the study seeks to achieve the following objectives:

  1. to determine the relationship between foreign portfolio investment and stock market development in Nigeria;
  2. to ascertain the relationship between exchange rate has on stock market development in Nigeria; and
  3. examine the relationship between interest rate on stock market development in Nigeria.

1.4       HYPOTHESES OE THE STUDY

            The hypotheses of this study is stated in the null and alternative forms as follow;

  1. HO1: There is no significant relationship between foreign portfolio   investment and stock market development in Nigeria.

HA1:    There is a significant relationship between foreign portfolio     investment and stock market development in Nigeria.

  1. HO2: There is no significant relationship between exchange rate and stock                                   market development in Nigeria.

            HA2:    There is a  significant relationship between exchange rate and stock                                     market development in Nigeria.

  1. HO3:    There is significant relationship between interest rate and stock market                                development in Nigeria.

            HA3:    There is no significant relationship between interest rate and stock market                           development in Nigeria.

 

1.5       SCOPE OF THE STUDY

The research work is concerned with the empirical analysis of the impact of foreign portfolio investment on stock market development using stock market indicator. This research work covers a time period of 25 years (1986-2010).

 

1.6       LIMITATION OF THE STUDY

It is axiomatic to say that nothing in the real world is absolute and as common to all other this research was faced with some unavoidable constraints.

The major limitations of this study relates to data sourcing. There was difficulties in obtaining relevant data from their various sources.

Secondly, because of using proxy variables, the conclusion of this study may not be absolute hence the need for further research in this area in Nigeria.

 

1.7       SIGNIFICANCE OF THE STUDY

As a result   of   the   constantly   changing   environmental,   economic   and   political environment, this study will help produce or generate current and up to date information regarding   the state of the Nigerian stock market in relation to how foreign portfolio investment flows through the stock market mechanism to engender the growth of our economy thereby knocking off every form of obsolete knowledge that existed in this regard. This study will help policy makers to know the extent to which their policies towards making sure that the Nigerian stock market lives up to it bidding have performed.

Furthermore academicians would find the outcome of this research useful; because it updates the already existing knowledge on foreign portfolio investment and stock market development. The findings of this study might also establish the basis for further research in this area.

PROJECT TOPIC- IMPACT OF AGRICULTURAL CREDIT ON AGRICULTURAL OUTPUT IN NIGERIA

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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

PROJECT TOPIC- INVESTMENT IN AGRICULTURAL PROPERTY AS A CATALYST IN ORUMBA NORTH L.G.A OR ANAMBRA STATE

ABSTRACT

Investment in agriculture was purely on subsistence basis in the past until recent when it has been operated on large scale. It is a booming venture in developed countries of world. In Nigeria, it is mainly focused on cash crops. Live stocks, fishery. Wood lands pasture lane etc. Most of them are owned by government and their agents. The emphasis and campaign placed on agricultural property investment has made individuals to embark on such venture. Due to the fact that the benefit derived from agriculture and numerous, the government has started giving proper attention to investing in agricultural properties rather than hoping on oil for the economy. In this project research work, the main objectives are to discuss, on the investment in agricultural properties as a catalyst in Orumba North local Government Area, the types and their importance the impacts, problems affecting it etc. Going by the widely prevalent thirst are urge for investing in agricultural property however, my recommendations are conclusion are very lively to favour the positive effects.

      CHAPTER ONE

  • 0 INTRODUCTION:

1.1   BACKGROUND OF THE STUDY

Investment in agricultural property is not advanced as that of developed countries of the world. Agricultural property investment amounts to all investment operation in such property as cash crops, livestock, pasture land, cottage etc.

Nigeria generally is blessed with fertile and large area of land with abundant human and natural resources, which if harnessed effectively under the guide and supervisor of the experienced property manager  (Estate surveyors) will help a lot in solving the battered economy of Nigeria.

Inspite of the numerous benefit derived from agricultural properties, Nigeria still give it little attention they keep on hoping on crude oil for the economy instead of diversifying her investment in other resource like Agricultural property.

With the benefit ard returns realizable form the investment in agricultural properties, it will serve as an alternative. Sources of life and a catalyst for speeding development of rural areas.

1.2   STATEMENT OF PROBLEM

Investment in Agricultural properties in rural areas amounts to under utilization of both natural and human resources to boost the increase in production of food and cash crops etc in large quantity.

This work is made to know how agricultural investors would achieve their objectives. It will be shown that agricultural property investment is a worthwhile and beneficial venture forming the catalyst to rural development and economic revetry of Nigeria’s battered economy.

1.3   RESEARCH QUESTION

Due to some hindrance encountered in agricultural investment in some area: the following questions were emanated on its effect to the area of study.

  1. Will agricultural investment reduce the increase of unemployment in the country?
  2. Is there any formal training for investors?
  3. can the investors in agricultural properties receive any grant, from he government?
  4. What are the major problem facing the investment in agricultural properties?

1.4   PURPOSE OF THE STUDY

The main purpose of this research work of agricultural investment as a catalyst to Orumba North Local Government area centers of the following:

i       To assess agricultural property investment as a catalyst to rural, development.

ii      To assess different investment as an agricultural property.

iii     To examine investment in agricultural properties in order to assessing the benefits.

iv     To examine the problems facing the investors in Agricultural property.

v      The make recommendations on how the agricultural properties can be handled in order to make the best use of it.

1.5   SIGNIFICANCE OF THE STUDY

PROJECT TOPIC- INVESTMENT IN AGRICULTURAL PROPERTY AS A CATALYST IN ORUMBA NORTH L.G.A OR 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

RELATIVE IMPACT OF FINANCIAL SECTOR REFORMS ON AGRICULTURAL AND MANUFACTURING SECTOR GROWTH IN NIGERIA

 

The study investigates relative impact of financial sector reforms on agricultural and manufacturing sector growth in Nigeria. To guide the study, Ordinary Least Square technique was adopted and Eviews 8.0 econometric software was utilized for the analysis. A time series quarterly data sourced from Central Bank of Nigeria Statistical Bulletin 2009 and 2013and it covered the period 1970-2013 was used for the analysis. After carrying out necessary pre- and post diagnostic test, the result shows that gross fixed capital formation and credit to private sector ratio to GDP has positive but insignificant relationship with agricultural and manufacturing sector output. While real interest rate, manufacturing capacity utilization and financial sector reform dummy were positive and significant, interest rate spread, real exchange, average annual rainfall and money supply ratio to GDP displayed negative relationship with agricultural and manufacturing sector output. Upon comparison of impact of key financial indictors on agricultural and manufacturing sector output, the result revealed that impact of real interest rate and financial sector profitability index (SINR) in the pre- and post-financial sector reform were significant in each sector. In contrast, while impact of real exchange rate does not significantly influence agricultural sector output, it subsequently became significant in the model for manufacturing sector output.

The study however concludes that domestic investment on infrastructure and credit facility to the sectors was sub-optimal. Secondly, participants in the sectors were made worse-off by the reform. Extensive review of existing policies, provision of incentives, accessible and affordable funding was recommended by the study.

 

CHAPTER ONE

INTRODUCTION
1.1 Background to the Study

The financial sector is central to any economy of the world, and the ripples of the sector’s downturn are usually felt in all other sectors of the economy. Lin, Sun, and Jiang (2009) hinted that the structure of the financial sector reveals the nature of the productive activities in such economy. It is therefore not surprising that Nigeria like most developing economies, has adopted various forms of policy and institutional reforms since independence to ensure that the sector remains in good health. The success story is not the same everywhere though, while some countries have been successful in eliminating underlying distortions and restructuring their financial sectors in the beginning of the new millennium, in some cases financial sectors remains underdeveloped (Dileep, Rambabu, & Bhisma, 2007). Financial sector reforms, especially a comprehensive one, would be a turnaround approach to cope up with the threats of global competitiveness in carrying out the financial services. The country has witnessed a wave of reform in the financial sector. It is pertinent to point out at this juncture that financial sector is comprised of banks and non-bank financial institutions (money and capital markets) along with other financial system that supports them.

As the financial reform phenomena advances, so do the understandings of it advance. Financial reform as Gencalo (2011) puts it “is a multifaceted phenomenon”. According to Ebong (2006), they are deliberate policy response to correct perceived or impending financial crises and subsequent failure. In other words, the different interventions of the federal government through the central bank of Nigeria and other financial institutions regulators to enable the financial sector and the economy recover from actual or impending disaster is what is here referred to as financial reform. On the expectations on financial reforms, Edirisuriya (2008) reported that financial sector reforms are expected to promote a more efficient allocation of resources and ensure that financial intermediation occurs as efficiently as possible. By implication, financial sector reforms brings competition in the financial markets, raises interest rate to encourage savings, thereby making funds available for investment, and hence lead to economic growth (Asamoah, 2008). The different ways in which these competitiveness have been kindled includes deregulation of interest rates, exchange rate, entry/exit into the banking business, establishment of the Nigeria Deposit Insurance Corporation (NDIC), strengthening the regulatory and supervisory institutions, upward review of capital adequacy, sectoral credit guidelines, capital market deregulation and the introduction of direct monetary policies instruments (Nnanna, Englama, & Odoko, 2004, and Iganiga, 2010).

Specifically, financial sector reforms began in Nigeria with the deregulation of interest rates in 1987 (Ikhide & Alawode, 2001). The reforms were initiated to enhance competition, reduce distortion in investment decisions and evolve a sound and more efficient financial system. The reforms which focused on structural changes, monetary policy, interest rate administration and foreign exchange management, encompass both financial market liberalization and institutional building in the financial sector (CBN June 2009).Since the deregulation of interest rate, far reaching policy measures had been initiated and implemented, amongst these measures includes licensing of new banks, the capital market reforms, and the direct to indirect monetary controls have been undertaken (Mike & Lawal, 2012).

Economists believe that the link between financial sector and the real sector of the economy can be explored from two perspectives, namely: the intermediation role of the financial institutions and the monetary policy perspective (i.e. the transmission mechanism of monetary policy impulse) (Levine, 2005). In whichever case, Harvey (1993) believes that the motive for the establishment of financial institutions is primarily to extend credit access to local businesses. In the words of Sanusi (2012) on the imperative of reforms, he said “there is a need for periodic reforms in order to foster financial stability and confidence in the system. In line with this primary objective, Enang and Francis (2011) observed that the banking system’s credit to the private sector improved significantly during the first few years of the reforms, although bulk of the credit was mainly a short term investment.

According to Mbutor (2007), the impetus for the reforms follows from the understanding that a sound financial system will render monetary policy more effective and also support growth in the real sector of the economy. He therefore suggests that if the financial sector is healthy, it will certainly reflect in the activities of the real sector of the economy. Prominent among these sectors where the effect of these reforms could be manifest is the manufacturing and the agricultural sectors.A vibrant agricultural and manufacturing sectors activity creates more linkages in the economy than any other sector and thus would reduce the economic pressures on the external sector. One may ask, why these sectors? According to Ogwuma (1995), the manufacturing sector has a wider and more effective linkage among different sectors. Loto, (2012) refers to manufacturing sector as an avenue for increasing productivity in relation to import replacement and export expansion, creating foreign exchange earning capacity, raising employment and per capita income which causes unrepeatable consumption pattern. This sector also creates investment capital at a faster rate than any other sector of the economy. The manufacturing sector is therefore an important component of the real sector. In terms of its contribution to GDP, manufacturing in Nigeria however is still at an infant stage. It accounted for only about 5.02 percent of the Gross Domestic Products in 1998 in Nigeria, and the subsector is responsible for an average of about 10 percent of total GDP annually. Manufacturing in Nigeria includes: cement, oil refining and other manufacturing, although the industrial base is small, there is great scope for expansion which is believed could have been possible if there were a level playground for the industries to compete given a reliable financial system (NBS, 2010).
The percentage changes in the agricultural and manufacturing sector share of the GDP indicates that both sectors has not been performing well for close to two decades now, which is very alarming (CBN Statistical Bulletin 2010). As a result it has attracted the attention of researchers in recent times (Adam, 2008, Eze & Ogiji 2013) among others. On the other hand, agriculture is the dominant sector of the Nigerian economy. As a matter of fact, over 60% of the population is engaged in this sector with an average of 41% contribution to the GDP between 2006 and 2010. Despite the dominance of agriculture, the crude petroleum sub sector contributes over 80% of Nigeria’s foreign exchange. As a result governments, over the decades, initiated numerous policies and programs aimed at restoring the agricultural sector to its pride of place in the economy. This sector comprises crops, livestock, fishing and forestry (Adedepo, 2004 & Ezirim, 2010).

Furthermore, in the word of Binswanger, Townsend and Tshibaka (1999) agriculture has a backward and forward linkage with itself and other sectors of the economy. It supplies raw materials to the agro allied industries which enhance the provision of foods, job opportunities and income to those engaged in the sector as well as the government. Like the manufacturing sector, percentage growth rate of the agricultural sector contribution to GDP has also been relatively low for close to two decades now compared to its performance during the periods before the Structural Adjustment Programme (SAP).
It is again imperative to point out that period 1986-1988 correspond with the SAP during which austerity measures were introduced to remove all the bottlenecks impeding the growth of the economy. The growth in GDP responded favorably during the period when financial sector reform and economic liberalization were embarked upon. Interest rate structure was employed principally to direct cheap credit to specific sectors such as agricultural and manufacturing sector. This was done by consistently stipulating relatively lower interest rates for loans and advances of the sectors

With the liberalization of interest rates in 1987, coupled with the abolition of the administrative sectoral allocation of bank credit, market forces were then allowed to determine the appropriate interest rate, exchange rate and credit allocation. Experience has shown that since the post-SAP market reforms, lending rate has been on the upward trend. Lending rates at present vary between 15.0 percent and 25.0 percent (excluding other ancillary charges) and are too excessive for a developing economy like ours (CBN, 2012). This is contrary to what is obtainable in developed economies of the world where lending rates are usually single digit and even tilted towards zero per cent at the peak of the global financial crisis in those countries (Mike, 2010).
To further establish a fact that finance is very crucial for these sectors, in a study conducted in mid-2001, Nigerian Manufacturing Enterprise survey (NMES), the study covered three main regions in Nigeria: The western region (Lagos & Ibadan), the eastern region (Enugu, Onitsha, Nnnewi & Aba), and the northern region (Kaduna & Kano), (Soderbon & Teal 2002). Based on the responds gathered, the perceived main problem facing the sector were nine, out of which access to credit was identified as the second main factors militating against the sector. Also, based on the number of programmes initiated in the agricultural sector since the SAP, one plausible assumption that could be made is that finance is also identified as the major factor militating against the sector, it therefore provide opportunity to access the efficacy of these financial reforms in the agricultural and manufacturing sectors.

RELATIVE IMPACT OF FINANCIAL SECTOR REFORMS ON AGRICULTURAL AND MANUFACTURING SECTOR GROWTH IN NIGERIA

 

1.2 Statement of the Problem

Over the years, the financial sector had undergone reforms with the aim of positioning it to play a catalytic role, thereby stimulating the real sector. However, opinions abound that the period of the financial sectors reforms coincided with the economic reforms (structural adjustment programme). Again, the results arrived at by Taiwo and Anthony (2011) suggests that financial sector reform has not actually improved the performance of the Nigerian economy. Considering the contributions of the manufacturing and agricultural sectors to the country’s GDP, it becomes imperative that this relationship is investigated to ascertain the impact of the financial sector reforms on the manufacturing and agricultural sectors in Nigeria. Moreover, statistics has confirmed the low and decreasing contribution of both sectors under study to the economy’s GDP (CBN, 2012). Even the recent publication by NBS showed that the manufacturing sector’s contribution to the economy is minimal with an average of 3% which is an indication of poor performance (NBS, 2010).

It’s no gainsaying to argue that the near total neglect of agriculture in the country has denied many manufacturers the primary source of raw materials needed in production. It has also been postulated that the financial sector had not done well enough in providing credit to both the manufacturing and agricultural sectors. Ultimately, the rate of interest at which loans are granted to the firms in the manufacturing sector makes it almost impossible for them to access fund for expansion and entry. Consequently, a series of programmes have been drawn up to ensure that credit are made available to both sectors, among these programmes include: the Agricultural credit guarantee scheme fund, (ACGSF) 1978, interest drawback programme (IDP) 2003, agricultural credit support scheme (ACSS) 2006, Commercial Agriculture Credit Scheme (CACS) 2009 in the agricultural sector. As a way of encouragement to firms in the manufacturing sector, the Small and Medium Scale enterprise Credit Guarantee Scheme (SMECGS) was empowered with loan to the tune of N 200 billion.
Granted that the real cost of small loans is very high, the approach thus far has been to deregulate interest rates for financial activities in order to stimulate credit provision. Since the influence of monetary policy operates through the interest rate and credit, the question is then: has financial sector reforms really helped to make credit available to the manufacturing and agricultural sectors? Recent analyses of the Nigerian reforms have focused on specific reforms that emerged and its myriad consequences. The evidence leads to mixed conclusion across time periods and across reform and policy areas. And also, less attention has been given to the issue of whether; reforms notwithstanding the dramatic switch in regulatory regime generated any of the efficiency and growth benefits predicted by the literature on financial reforms.

Although it may be argued that financial sector reforms (with respect to its impact on real interest rate, interest rate spread and real exchange rate) have engendered a well developed, healthy and competitive financial system, which in turn as would be expected, impacted on the manufacturing and agricultural sectors of the economy. However, it is not convincing how these reforms have hit the real sector, specifically the manufacturing and the agricultural sectors, considering the fact that most manufacturing firm have closed up and others moved out of the country while agriculture remained at subsistence level. Nigeria, though an agrarian economy still rely on the importation of agricultural finished goods despite the plethora of financing schemes. Against this backdrop, the researcher in this work has raised a number of critical questions.

RELATIVE IMPACT OF FINANCIAL SECTOR REFORMS ON AGRICULTURAL AND MANUFACTURING SECTOR GROWTH IN NIGERIA