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PROJECT TOPIC:AN APPRAISAL OF THE ROLE OF THE WORLD BANK IN THE INDUSTRIAL DEVELOPMENT OF NIGERIA

AN APPRAISAL OF THE ROLE OF THE WORLD BANK IN THE INDUSTRIAL DEVELOPMENT OF NIGERIA

 

 

ABSTRACT

The objective of this study is to evaluate the contributions  of the world  bank to the industrial development in Nigeria. In particular, it is intended to examine the adequacy of the world bank contributions to the nations industries with regains to the provision of funds. Data employed in this project are primary and secondary in nature and are sourced from both world bank publication and the CBN statistical bulletine. The hypothesis which were formulated at the commencement of the research were subsequently tested. However, at the end of the study, some observations were made.    The result of the analysis revealed that world bank has poorly financed industries. Also finance was identified as a major obstacle hampering industrial growth and expansion in Nigeria.

Furthermore, the world bank was observed as being agriculturally biased in the granting of its loans with less attention to the industrial and technical skills, other factors like managerial and technical skills were identified  as needed ingredients for the continuity of industries. The findings from the study necessitated certain recommendations which suggests that the world bank should be ready to aid Nigerian (via its loans) industrialization along Nigerian’s line of development. Also, the proper management of existing industries cannot be ruled out at it will  ensure proper and positive lingage effects.     Furthermore, adequate awareness need to be created among industrialists of available world bank credits, while improvement need also to be made on existing infrastructure by the government.

 

CHAPTER ONE

    INTRODUCTION

Nigeria, forty-six years after the attainment of political independence is not yet economically independent. But economic independence as we know is a necessary pre-requisite to political freedom. As our finance Minister aptly puts it, “Now that the political independence of Nigeria has been assured, the vital concern is to secure the rapid development of the machinery to enable us to assume our responsibilities to safeguard our economic freedom”.  Since the era of the oil boom in the 1970’s, Nigeria has been a victim of monolithic economy and since then  has been enjoying what is termed as “petro-Naira” without adequately evolving a sound policy that will put the nation’s economy on a firm foundation for steady growth.

Though, the country recognised the importance of establishing industries to ensure a diversified economy, the mineral oil assumed greater and greater prominence over the year as a crucial production and dynamizing sector. This was to the detriment of the other sectors of the economy, and given the fact that the revenue got from it was not properly appropriated but on white elephant projects. This phenomenon has been described by the World Bank as the “Outch disease”.

The oil glut in 1978 fired the first warning shot, while the weakening of the international oil market clearly spelt out the consequence of total dependence on one commodity – oil. The declining extent of earnings from crude oil arising from the fall of prices plunged the Nigerian economy into a crises of recession. Nigerian’s production was pegged by OPEC just as prices tumbled from a height of about 840 per barrel in 1981/82 to less than $15 in 1957, export earning collapsed from $23 billion to around $6 billion.

There was need therefore to augment foreign exchange earnings from oil through an aggressive expansion of non-oil export. This will lead us to best and effective way of solving the problem; this solution is “industrialization” which stands as the main emphasis in this research work which is not justified just because it ensures diversification of the economy, but because it also accelerates the economic development of a country.  In fact, the basic premise is that, if a country wishes to accelerate the overall rate of economic development, it must have manufacturing production arising faster than the overall rate of growth of the Gross National Product (GNP) and this has to be reflected in an increasing dominating role of manufacturing industry in the total economy. So important are industries that they have become the major indices for classification of nations in terms of levels of development. No wonder then why industrialization forms the centre prices of the development programmes of most third world nations (including Nigeria).

Generally, therefore, the transformation of an economy from pre-modern to modern depends on the development of the manufacturing sector.

On the other hand, Finance is the life blood of every business organization. Every business enterprise whether big or small, newly formed or an already existing one requires funds without which it cannot operate. In other words, there can be no investment without funds and it is a vital ingredient for the establishment and running of industries. Capital formation is basically  a two phased process which includes savings and investment in which banks (including the World Bank) stands in between. The traditional macro-economic role of banks is “financial Intermediation”, which entails the mobilization of funds from savers and then transfers them as credit to investors.

It is basically based on this that we shall examine the extent of the bank’s (World Bank’s ) contributions as well as the roles they are supposed to play in the industrial development of Nigeria. We shall also analyse the necessity of industrialization and the factors that have impeded the nation’s rapid industrial development in exception of inadequate finance.

In conclusion, the researcher suggests remedies and recommendations to problems encountered in the process of industrialization as well as suggesting solutions for enhancing active participation of the bank to rapid industrialization of the country.

 

AN APPRAISAL OF THE ROLE OF THE WORLD BANK IN THE INDUSTRIAL DEVELOPMENT OF NIGERIA

 

1.2   STATEMENT OF THE PROBLEM

That industrialization of a truth is the catalyst of economic prosperity for many nations in the twentieth century can no longer be disputed. It has been a much emphasised development strategy in Nigeria as in many other countries even see industrialization as providing the basic means of overcoming their economic backwardness.

While the exact relationship between industrialization and economic development has been a controversial issue in the economic literature, not many economists doubt the capacity of industry for rapid growth and in turning sharply the table of economic progress.

To the less developed countries like ours, the high level of industrialization and rapid economic growth of the advanced countries taken account of and are making frantic efforts towards attaining it too, through several industrial policies aimed at encouraging both individuals and the public/government to establish industries. However, the greatest obstacle to rapid industrial development in Nigeria has been identified to be; inadequate finance. Abdulkadir, (1984) pointedly  puts it that “if the country’s industrial aspirations   are to be achieved, the provision of adequate finance should be accorded high priority. But regrettably, Nigerian industrialists have been badly starved of this very important ingredient for both the establishment and maintenance of industry(ies).

This exists in the following forms:

  1. Inadequate initial capital for take off.
  2. Inadequate funds for maintaining existing industries.
  • Insufficient funds for expansion.

The lack of funds by industrialists has greatly denied the nation of many opportunities of achieving development industrially or industrialization which it (Nigeria) has always longed, hoped and craved for. Considering the enormous importance attached to industrialization in our economic development, any problem militating against its achievement should be of interest to us. the question therefore is: To what extent has the World Bank helped?

 

AN APPRAISAL OF THE ROLE OF THE WORLD BANK IN THE INDUSTRIAL DEVELOPMENT OF NIGERIA

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