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    JOURNAL OF ECONOMICS AND FINANCIAL STUDIES

    A PUBLICATION OF

    THE DEPARTMENTS OF ECONOMICS &

    BANKING AND FINANCE,

    ADEKUNLE AJASIN UNIVERSITY, AKUNGBA AKOKO

    A..O. SALAMI, Ph.D: EDITOR-IN-CHIEF

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    First Published in Nigeria

    By The Editorial Board,

    Journal of Economics and Financial Studies,

    Departments of Economics and Banking and Finance,Adekunle Ajasin University, Akungba Akoko ,Nigeria.

    JOURNAL OF ECONOMICS AND FINANCIAL STUDIES

    ISBN: 978-35786-7-4

    First Published in 2004

    Volume 1, Nol June 2004Volume 1, No 2 Dec. 2004Volume 2, No 1 June 2005Volume 2, No 2 Dec. 2005

    Printed by: LOGOS-UNIVERSAL PUBLISHERS INC, .Suite E8Oluwatobi Shopping Complex Akure, Ondo State

    Nigeria.

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    EDITORIAL BOARDAdeleke Salami Ph. D Editor-in-ChiefA.S.Bakare Ph.D Associate EditorT.M. Obaniyi Ph.D Associate EditorJ.A. Familoni Ph.D Associate EditorSola Ibironke Secretary

    EDITORIAL ADVISORY BOARDProfessor A.U Inegbenebor - Department of business

    Administration,Professor Ode-ojowu - University of Benin, Benin City.Professor Dayo Philip - Department of Economics,

    University of Jos, Jos.Professor Adedoyin Soyibo - Department of Agricultural

    EconomicsUniversity of Ibadan, Ibadan.

    Professor J.C. Umeh - Department of AgriculturalEconomics University of

    Agricultural, Markurdi.Professor Aderinola Esan - Department of Agricultural

    Economics,Federal University OfTechnology, Akure

    Dr. E.O Ogunleye - Department of Economics.University of Ado-Ekit, Ado-EkitiNigeria.

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    JOURNAL OF ECONOMIC AND FINANCIAL STUDIES

    VOLUME 3 DECEMBER, 2006 NUMBER 1

    LIST OF ARTICLES AND AUTHORS

    The Socio-Economic Impacts Of Globalisation In Nigeria...... 1Fasunwon Adebayo Folorunso

    Public Policy And Its Implementation The Federal Ministry Of Education In

    Perspective...... 10Ekhator, Victor Eghe And Uduezue, Stella N. (Mrs.)Inflation And Money Supply Nexus In Nigeria............................... 24

    Ogunmuyiwa, M. S And Oke, B. OInformal Cross-border Primary Commodity Trade Observations In WesternMiddle Belt Of Nigeria And Benin Republic. Fatai Oletubo 37 Analysis Of Nigeria's Cocoa And Cocoa Products Exports (1970-2002)O. A. Salami 48 Private Investment And Nigeria's Economic Development: Principles,Reflections And Policy Issues R .o.c. Somoye And I.a.o. Bakare 65Problems And Prospects Of The Informal Financial Market In Nigeria

    Adetiloye K.A 80Globalisation And Politico-economic Crisis: Nigeria And South Africa InPerspective. Folorunso S, Aluko. 96 Cooperative Societies And Agricultural Production In Osun State, South WestNigeria. Ademola A. Azeez 112National Economic Empowerment And Development Strategy(Needs): Prospects And Challenges For Nigera. J. A. Bamiduro...... 123

    And . S. T. BabatundeNigerian Economy: Growth And The Role Of Stock Market..................... 136Obamiro, John KoladeFinancing Strategies For Small Scale Industries............................... 148Foluso Aribaba

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    Journal of Economics and Financial Studies 123

    NATIONAL ECONOMIC EMPOWERMENT AND DEVELOPMENTSTRATEGY (NEEDS): PROSPECTS AND CHALLENGES FOR

    NIGERIAN INDUSTRIAL AND SOCIO- ECONOMIC EMANCIPATION.DR. J. A. BAMWURO AND DR. S. T. BABATUNDE

    ABSTRACT

    Government, from time to time, embark on social, economic and politicalreforms as ways of demonstrating its relevance in the everyday lives of the

    citizens. These activities continue to be of interest to experts andcommentators in order to ensure that programme goals are properly definedand desired ends are pursued with single- minded devotion. The papertherefore takes a critical look at the NEEDS programme of the OlusegunObasanjo administration with a view to examining its motivations, prospects,and its challenges. At the end, the paper submits that the NEEDS analysismust be more realistic in the definitions of its philosophies and operationalmode, if it will realize its industrial and socio-economic emancipation goals.

    J. A. Bamiduro and S. T. Babatunde are Lecturers in theDepartment of Economics University of Ilorin in Ilorin, Kwara State

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    Introduction

    There has been radical and conscious effort by the Nigerian government toimplement series of economy reforms that will touch all the facets of the economy inorder to be in tune with the policy of globalization.

    After 20 years of military rule, Nigeria become a pariah nation. The economywas in decay. Macroeconomic indicators flashed deep red. Inflation, interest rates andthe naira exchange rates were unsustainable and the unemployment rate astounding.Industrial capacity utilization was less than 30%. Education has not faired any better

    with dilapidated schools and estimated 60% of Nigerian children out of school androaming the streets. The state power agency was all but decrepit and producing lessthan 2000 megawatts of electricity for over 120 million people. Coupled with this, thepublic sector was riddled with ineptitude and corruption. Nigeria tottered under anexternal debt of over $30 billion and not surprisingly, wallowed at the bottom of theUNDP Human Development Index.

    In Nigeria, the government has come with various economic reforms to turnthe economy around and has called it many names which include StructuralAdjustment Programme (SAP), removal of subsidies in agriculture, deregulation offinancial sector, privatization programme, deregulation of upstream and downstreamoil sector and of recently the National Economic Empowerment And DevelopmentProgramme - which is the focus of this paper.

    The wide ranging economic and social reforms initiatives from an ambitiousprivatization scheme, to growth and anti- corruption programmes notwithstanding,these nuggets of achievements tend to pale against the black boulders of challengesfacing the country, in particular, the endemic poverty.

    Economic deregulation, according to Ibiyemi (2003), is the deliberate andsystematic removal of regulatory controls and operational guidelines in theadministration and pricing system in the economy. Again, Nickels, et al (1999 130),defines deregulation as the government withdrawal of certain laws and regulationsthat seem to hinder competition but alleviate poverty.

    In acknowledgement of this reality to contain the caustic impact of poverty onNigerians, the present government recently launched a comprehensive, home grownand poverty alleviation programme - NEEDS.

    Before we go on with the motivations for NEEDS however, we shall discuss theconcept of development. Development has been variously defined. For

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    instance, the Oxford Advanced Learners Dictionary (1989:562) seesdevelopment in terms of the unfolding and "bringing out of the latentcapabilities" of anything. It is seen as "a state in which anything is in vigorouslife or action". Babatunde (2003:199) observes that "development involves theprogressive unfolding of the potentials contained in something" so that it couldreach a "well - grown condition, a state in which that thing is in vigorous life oraction". Adesina (1984) has earlier on thus correctly observed that;Development has come to mean the gradual expansion of available facilitiesand resources both quantitatively and qualitatively so as to bring to a fuller,

    better and greater state (p.2)Two broad perspectives of the concept of national development arerecognized. The first one equates national development with socio - economicdevelopment. This perspective examines it in terms of economic growth,attainment of economic targets and increase in Gross National Product(GIMP) or Gross Domestic Product (GDP). This perception is considered to benarrow. The second attitude to national development is to see it in a broaderlight in which national development is seen as a nationwide "continuouspromotion of the well being and security of persons in such a way that theyare constantly able to optimize the realization of their individual potentials"(Oyelaran: 1990:20). In this wise, national development involves the action ofthe human resources on the natural resources "to produce goods necessary

    to satisfy the economic needs of the community" (Chumbow 1990: 67). Thiskind of development is called "total human development" (Bamgbose,1991:44). Bamgbose adds that:

    In this model of development, the emphasis is on a full realization ofthe human potential and a maximum utilization of the nation's resources forthe benefit of all. (p. 44)

    Schumacher (1973) (in Bamgbose, 1991:43) emphasizes the primacyof man as the source of all economic development. Man is said to provide theprimary resource, and "the key factor in all economic development comes outof the mind of man". He argues further that although poverty may be traced tomaterial factors, e.g. lack of wealth, capital or infrastructure, those factors aresecondary. "The primary causes of poverty are really deficiencies in

    education, organization and discipline". (Bamgbose, 1991:44). In this regard,

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    he submitted, "Development cannot be created, bought, ordered ortransferred. The crucial factors have to become a property of not just a few butof the whole society." Schumacher concludes that,

    Economic development is something much wider and deeper thaneconomics, let alone econometrics. Its roots lie outside the economic sphere,in education, organization, discipline, and, beyond that, in politicalindependence and a national consciousness of self reliance... It can succeedonly if it is carried forward as a broad, popular "movement of reconstruction"with emphasis on the full utilization of the drive, enthusiasm, intelligence, and

    labour power of everyone (190-1). This suggestion is the path capable ofleading to national growth and development.Ansre (1976): (in Bamgbose, 1991:43), posits four elements relevant

    to an overall national development:(i) Economic development,(ii) Politico-judicial development,(iii) Socio-economic development, and(iv) Intellectual and educational development.The mid-wifery role of language in this is obvious because the

    discussion centers on wealth-getting and wealth- sharing. Wealth-getting andwealth- sharing involve interaction at various levels, with diverse tongues in amultilingual context and factors. Language is thus the natural bridge among

    these factors so as to enhance information dissemination, intellectualdevelopment and socio-cultural interaction. It is only an informed populacethat can be easily mobilized to operate the socio-political and economicmachinery for development.

    This paper is therefore pre-occupied with the examination of NEEDS'objectives and the modus operand! in terms of the potential it has forrealistically developing Nigerians. The paper is thus divided into five parts.Part I examines past national economic reforms and the implementation ofderegulation policy in Nigeria from conceptual and theoretical angle, Part IIreviews the NEEDS strategies. Part III briefly discusses the challenges ofNEEDS while part IV brings out the benefits in terms of social economicupliftments. The final part contains the conclusion and policy options and

    recommendations, which should assist in alleviating the suffering of thepeople.

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    PAST NATIONAL ECONOMIC REFORMSNigerians received the news of NEEDS with mixed feelings: a sigh of

    relief and deep skepticism. This is because over time Nigerians have had tomake sacrifices in the name of economic reform programmes. They havebeen forced to swallow bitter pills as a result of various economic and socialprescriptions but the people's ill health has become acute and Nigeria'seconomic condition progressively worsened. By the mid 1980s Nigeria'seconomic problem which began in late 1970s reached a crisis proportion. Theproblem included growing unsustainable fiscal deficit, declining agricultural

    produce, low and falling capacity, and under-utilization in the manufacturingsector and rapid inflation in rate. Egbon (1997) found out that "there existsserious capacity under-utilization in the manufacturing sector, especially theSMEs as a whole. It is more chronic in some industrial branches especially inthe capital goods sub-sector. Bamiduro (2002) corroborated Aigbokhan (1989)pre-sap unweighted capital utilization levels (at the industry wide level) to be69.5%, 60.3%, 57.0%amd 54.8% for 1983, 1984, 1985 and 1986 respectively.But in 1988 and 1989 (post-sap) years, the capacity utilization ratios were35.3%and 36.6% respectively. In 2002 the ratio stood at 33%.

    The above problem resulted into fallen national output, highunemployment and a depressed standard of living for the citizenry. Thereforesome stringent policies and measures were adopted between 1982 and 1985

    to address these problems but were unsuccessful. Take poverty for instance,according to Federal Office of Statistics (FOS) the proportion of the totalpopulation of Nigerians living in poverty shot up by 66 percent (67 millionpeople) in 1996 from 28 percent in 1980 while the proportion of the extremepoor (people living in less than N6000 a year) literally exploded to 29 percentin 1996, from 6 percent in!990.

    The structural adjustment programme (SAP) implemented between1986 and 1992 did not impact positively on the poor neither did it deliversuccour to the needy in the country; instead, poverty doubled. In the samevein, the National development plans or the rolling plans and other povertyalleviation programmes helped to ease the paths of poverty and disease.

    The objective of SAP was to restructure and diversify the productive base

    of the economy in order to lessen its dependence on the oil sector and on

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    imports, to achieve fiscal and balance of payments viability over time, lay thebasis for sustainable non oil sector with minimum inflationary growth amongothers. Has the policy manifestation of the poor performance of the pastdevelopment programme. Let us examine two sectors that were deregulatedas a result of the structural adjustment programme:

    Manufacturing sectorThe sector has been very vibrant and performed creditably well at the

    outset, but after the introduction of SAP in 1986, government started to

    remove various supports given to the sector; thereby creating series ofproblems. These problems ravaged such sectors as the automobile, textile,beverages, household items to mention just a few.

    Prior to the introduction of the economic reform called SAP, the textileindustry had 45 companies but now it has reduced to 8 companies. In theautomobile industry almost all the automobile plants established (such asPeugeot Automobile of Nigeria (PAN), Volkswagen of Nigeria (VON), LeylandNigeria Limited have been grounded which resulted into a huge loss of job,reduction in the Gross Domestic Product (GDP) and importation of secondhand vehicles, parts and spare parts christened "Tokunbo" to the detriment ofthe local plant. The government through the unpopular economic reform ofSAP destroyed the manufacturing sector by importing all sorts of goods like

    textile, leather, etc.

    Agricultural SectorThe agricultural sector was also among the sectors that were

    deregulated. The government wanted to encourage mechanized farming butended up killing the smaller and local farmers through their policy ofwithdrawal of subsidies in fertilizer and farming equipment and chemicals - liketractors, pesticides, insecticides, etc. In many cases, the equipment and thefertilizer were not available and where they were available, they were notmade available on time and did not meet the farming period. The governmentnow appears to have realized her mistake of neglecting the sector all in thename of deregulation. It is hoped that the realization will not be a mere lip

    service such that declarations will be translated to real positive results on thevarious categories of farms.

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    OBJECTIVES OF NEEDSNEEDS is different from the other economic programmes that had

    come before it in many positive respects. National Economic EmpowermentDevelopment Strategy seeks to achieve poverty alleviation and economicrevivalism by stimulating the well acknowledged creative energies of the vastmajority of the population. Obviously, there are four clear goals of NEEDS.They arei. The creation of wealth

    ii. Generation of employmentiii. Reduction of povertyiv. Re - orientation of values

    The objectives have informed the policy thrusts of the government andare part of a grand reform agenda which is encapsulated in its far reachingeconomic programme.

    NEEDS sets clear but ambitious macro - economic targets for Nigeria.Real Gross Domestic Product grew 8.6% in 2003; it is expected to grow fivepercent in 2004, six percent in 2005 and 2006 and seven percent in 2007.See Table 1.

    A steady five percent annual reduction in the incidence of poverty isprojected over the five year period 2003 - 2007.

    In the generation of employment, NEEDS commits all stakeholders,particularly the Federal government, to creating a minimum of one million newjobs from 2003 to 2004 and two million yearly from 2005 to 2007.

    In the re - orientation of values, Nigeria expects tourist visitors everyyear in number by 10 percent year on year up to 2007.

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    Table 1 - Selected Targets under NEEDS

    2003 2004 2005 2006 2007

    MACROECONOMIC TARGETS

    Real GDP (Growth Rates %) 8.6 5 6 6 7

    Oil Sector (% growth) 15 0 0 0 0

    Non - oil sector (% growth) 5.83 7.27 8.54 8.34 9.52

    Percentage Reduction in Poverty (%) 5 5 5 5 5

    Minimum No. or New Jobs created

    (millions) - 1 2 2 2

    Growth in Real Per capita

    consumption (%) - 2 2 2 2

    Inflation Rate (%) 11 10 9.5 9.5 9

    SECTORIAL TARGETS

    Growth in Agriculture (%) 7 6 6 6 6

    Manufacturing sector Growth (%) - 7 7 7 7

    Manufacturing capacity utilization (%) 53 - - 70

    Tourists visitors to Nigeria

    (Annual growth rate %) - 10 10 10 10

    SOCIAL SERVICES

    Education Adult Literacy Rate (%) 57 - - - 65

    Health - - -

    HIV/AIDS Prevalence rate (%) 6.05 - - - 5

    Immunization coverage (%) 39 - - - 60

    Access to safe water (%) 64.1 - - - 70

    INFRASTRUCTURE

    Power Generation (MW) - 4,000 5,000 7,000 1,000

    Roads (Rehabilitation

    & New roads) 3,000 3,500 3,500 4,000 4,000

    Source: NEEDS; Nigeria Grand Reform Agenda

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    THE NEEDS STRATEGIESFour key strategies are detected which will drive the NEEDS

    programme as follows:Public sector reform is the most publicized aspect of NEEDS, largely

    because of the large size of the civil service and the over arching importanceof government and its institutions in Nigerian life as the main source ofeconomic patronage.1. NEEDS seeks to enthrone a more professional public service that is

    able to deliver more value. The strategy here is to restructure, trim and

    etrain the civil service as the main engine of service delivery bygovernment. It also aims to eliminate waste and inefficiency and freeup resources for investment in infrastructure and social services bygovernment.

    2. NEEDS sees rapid growth of a resilient and competitive private sectoras a key component of a sustainable reform programme. The strategyis to diversify the economic base and reduce the relative dominance ofthe oil sector; put the informal sector in the mainstream while theirlinkages to the rest of the real sector is strengthened and generallycreate a vibrant private sector that can respond to the rigours ofmarket forces as its engine of growth.

    The NEEDS document articulates the strong commitment of

    the federal government to a programme of collaboration with andstrengthening of the private sector. Therefore, the NEEDS aims to alterthe strategy for industrial development and make it less import-dependent, more local resource - based and more related to localresearch and development, particularly in the area of small mediumenterprises (SMEs).

    3. Economic empowerment of indigenous SME businesses throughpatronage of their products by improved tendering and procurementprocesses that stipulates minimum levels of local content.

    4. Streamlining processes at the Corporate Affairs Commission throughreduction of forms, review of stamp duty procedures and the tie - in ofname regulation with other intellectual Property Rights protection.

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    THE CHALLENGES FACING NEEDSThe National Economic Empowerment and Development Strategy is

    relatively well positioned in terms of framework and the definition of theNigerian essence as basis for plan articulation and implementation. However,a key requirement to success is integrity. Integrity helps an organization to wintrust and credibility. Integrity is the key to getting Nigerians to be involved inand support the NEEDS programme. This is crucial because Nigerians havewatched how several other programmes have been highly orchestrated in thepast only to bubble like foam and disappear as quickly as it rose without

    making any discernible impact on the Nigerian socio - economic and politicalterrain. As such, the agency must be seen to perform in the relevant areas ifNigerians are to have any confidence in it.

    In addition, the document rotes that Nigerian faces the threat of notmeeting the Millennium Development Goals (MDG) if further major steps arenot taken. For instance, unemployment is still high (at 10.8% or 6.4 millionpeople were unemployed in 2003, it has clearly been rising since then). TheGDP average growth rate of about 3.6 percent is still lower than the minimumof 5 percent required to prevent poverty from worsening and the 7 percentneeded to meet the MDG target of halving the incidence of poverty by 2015.

    All these point to the low level of human development and low utilization of theenormous human potentials in Nigeria for development. In view of the

    challenges above, we make the following recommendations to ensure theeffective achievement of NEEDS objectives.

    RECOMMENDATIONSIn this respect therefore, NEEDS has to face the task of ensuring total

    human development. This is largely because development has its rootsoutside the economic sphere (Schumacher, 1973, in Bamgbose, 1991). Ascited earlier on, Schumacher (1973: 190-1) adds that its roots is "in education,organization discipline, and in political independence and national consc-iousness". The implication is either that NEEDS should broaden its fun-damental consideration or admit that the task of economic development andempowerment should involve other agencies. The involvement is such that

    there will be a goal-directed networking and collaboration with other para-statals, agencies and ministries concerned with education, communication,

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    enlightenment and national re - orientation. In this way, a realistic holisticdevelopment can be achieved. It should be noted that true developmentsubordinates the interest of capital or technology to the people's interests.When the people at the grass roots are adequately involved in decision-making, they are made to have a stake, not only in the decision made, but inthe nation as a whole.

    Grassroots' mobilization has its roots in proper communication andeducation. It is only an informed public that can participate in developmentefforts. Sympathetic repotting and adequate information can create a climate

    of hope and confidence and can generate effective support for governmentand her programme. Information aimed at development towards apredetermined direction is targeted at influencing attitudes. In this casecommunication is being used as an instrument of social change: bringingabout a climate for development rather than bringing about changes directly.The latter is not usually successful because the people only wake up to seechanges imposed on them and, the people are thus almost inadvertentlyworking to return to the pre-change status quo. It is almost as strange to themas suddenly dressing up a dog with beautiful attire! The dog will continue tobehave strangely until the attire is removed.

    In the former, however, there is a conscious effort to involve the peoplethrough a horizontal give-and-take (not top-down) communication process.

    Where this is properly worked out, questions arise from the grassroots andthrough effective interaction, the people are mobilized and sensitized towardsproviding answers to these questions. The atmosphere advocated here doesnot need any long speech for the people to see government presence in theirlocality in the relevant educational institutions and infrastructure! facilities (e.g.good roads, potable water scheme, electricity, communication networkingfacilities, etc). The attitude of government nowadays is like that of theproverbial sage; he is the only depository of wisdom, the people must alwayslisten to him, they have nothing but thanks to give in return.

    Aside of the communication process, the public sector has to betransformed into an efficient and responsive instrument for delivering servicesto the people. Presently, the public sector has largely become a ghost of what

    it should be. Several "ad hoc" agencies and parastatals have beenempowered by the political gladiators to take over the statutory duties of thepublic sector.

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    This duplication, largely to satisfy political cronies, rabble - rousers and powermongers must stop if the public sector is to perform its statutory duties ofstandard control and custodians of landmarks in the democratic dispensation.It is when the public sector performs its duties that the private sector can beempowered to become competitive and thus lead the growth process.

    Anything outside of this only puts the national economic and socio - politicaldevelopment process in a swivel chair, or even a rocking chair - there ismovement alright, but it is movement on one spot!

    Discipline is one of the crucial roots of economic development andempowerment. Corruption and fraud arise out of indiscipline and selfishness.

    As such, corruption and fraud must be ruthlessly dealt with and infrastructuredecay reversed. The war against corruption must be total and comprehensive,not in the present selective way. The weak and vulnerable groups must bestrengthened and value orientation of the people reshaped to de - emphasizerent - seeking, over dependence on government, promote hard - work,entrepreneurship, discipline, honesty and respect for traditional values.

    CONCLUSIONOne crucial need of the hour in Nigeria is economic empowerment and

    development. If this programme will not run like most other such laudableprogrammes in Nigeria, concerted efforts must be made to put the challengesraised in the foregoing and the subsequent recommendations in perspective.It is high time Nigeria stopped a cyclic movement in our developmental efforts.

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