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

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

Printed by: LOGOS-UNIVERSAL PUBLISHERS INC, .Suite E8 Oluwatobi Shopping Complex Akure, Ondo State Nigeria.

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EDITORIAL BOARD
Adeleke Salami Ph. D A.S.Bakare Ph.D T.M. Obaniyi Ph.D J.A. Familoni Ph.D Sola Ibironke Editor-in-Chief Associate Editor Associate Editor Associate Editor Secretary

EDITORIAL ADVISORY BOARD

Professor A.U Inegbenebor Professor Ode-ojowu Professor Dayo Philip Professor Adedoyin Soyibo Professor J.C. Umeh Professor Aderinola Esan Department of business Administration, University of Benin, Benin City. Department of Economics, University of Jos, Jos. Department of Agricultural Economics University of Ibadan, Ibadan. Department of Agricultural Economics University of Agricultural, Markurdi. Department of Agricultural Economics, Federal University Of Technology, Akure Department of Economics. University of Ado-Ekit, Ado-Ekiti Nigeria.

Dr. E.O Ogunleye

iv 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...... 1 Fasunwon Adebayo Folorunso Public Policy And Its Implementation The Federal Ministry Of Education In Perspective...... 10 Ekhator, Victor Eghe And Uduezue, Stella N. (Mrs.) Inflation And Money Supply Nexus In Nigeria............................... 24 Ogunmuyiwa, M. S And Oke, B. O Informal Cross-border Primary Commodity Trade Observations In Western Middle 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 65 Problems And Prospects Of The Informal Financial Market In Nigeria Adetiloye K.A 80 Globalisation And Politico-economic Crisis: Nigeria And South Africa In Perspective. Folorunso S, Aluko. 96 Cooperative Societies And Agricultural Production In Osun State, South West Nigeria. Ademola A. Azeez 112 National Economic Empowerment And Development Strategy (Needs): Prospects And Challenges For Nigera. J. A. Bamiduro...... 123 And . S. T. Babatunde Nigerian Economy: Growth And The Role Of Stock Market..................... 136 Obamiro, John Kolade Financing Strategies For Small Scale Industries............................... 148 Foluso Aribaba

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NATIONAL ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGY (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 political reforms as ways of demonstrating its relevance in the everyday lives of the citizens. These activities continue to be of interest to experts and commentators in order to ensure that programme goals are properly defined and desired ends are pursued with single- minded devotion. The paper therefore takes a critical look at the NEEDS programme of the Olusegun Obasanjo administration with a view to examining its motivations, prospects, and its challenges. At the end, the paper submits that the NEEDS analysis must be more realistic in the definitions of its philosophies and operational mode, if it will realize its industrial and socio-economic emancipation goals.

J. A. Bamiduro and S. T. Babatunde are Lecturers in the Department 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 to implement series of economy reforms that will touch all the facets of the economy in order to be in tune with the policy of globalization. After 20 years of military rule, Nigeria become a pariah nation. The economy was in decay. Macroeconomic indicators flashed deep red. Inflation, interest rates and the 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 and roaming the streets. The state power agency was all but decrepit and producing less than 2000 megawatts of electricity for over 120 million people. Coupled with this, the public sector was riddled with ineptitude and corruption. Nigeria tottered under an external debt of over $30 billion and not surprisingly, wallowed at the bottom of the UNDP Human Development Index. In Nigeria, the government has come with various economic reforms to turn the economy around and has called it many names which include Structural Adjustment Programme (SAP), removal of subsidies in agriculture, deregulation of financial sector, privatization programme, deregulation of upstream and downstream oil sector and of recently the National Economic Empowerment And Development Programme - which is the focus of this paper. The wide ranging economic and social reforms initiatives from an ambitious privatization scheme, to growth and anti- corruption programmes notwithstanding, these nuggets of achievements tend to pale against the black boulders of challenges facing the country, in particular, the endemic poverty. Economic deregulation, according to Ibiyemi (2003), is the deliberate and systematic removal of regulatory controls and operational guidelines in the administration and pricing system in the economy. Again, Nickels, et al (1999 130), defines deregulation as the government withdrawal of certain laws and regulations that seem to hinder competition but alleviate poverty. In acknowledgement of this reality to contain the caustic impact of poverty on Nigerians, the present government recently launched a comprehensive, home grown and poverty alleviation programme - NEEDS. Before we go on with the motivations for NEEDS however, we shall discuss the concept of development. Development has been variously defined. For

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instance, the Oxford Advanced Learners Dictionary (1989:562) sees development in terms of the unfolding and "bringing out of the latent capabilities" of anything. It is seen as "a state in which anything is in vigorous life or action". Babatunde (2003:199) observes that "development involves the progressive unfolding of the potentials contained in something" so that it could reach a "well - grown condition, a state in which that thing is in vigorous life or action". Adesina (1984) has earlier on thus correctly observed that; Development has come to mean the gradual expansion of available facilities and 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 are recognized. The first one equates national development with socio - economic development. 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 be narrow. The second attitude to national development is to see it in a broader light in which national development is seen as a nationwide "continuous promotion of the well being and security of persons in such a way that they are constantly able to optimize the realization of their individual potentials" (Oyelaran: 1990:20). In this wise, national development involves the action of the human resources on the natural resources "to produce goods necessary to satisfy the economic needs of the community" (Chumbow 1990: 67). This kind 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 of the human potential and a maximum utilization of the nation's resources for the benefit of all. (p. 44) Schumacher (1973) (in Bamgbose, 1991:43) emphasizes the primacy of man as the source of all economic development. Man is said to provide the primary resource, and "the key factor in all economic development comes out of the mind of man". He argues further that although poverty may be traced to material factors, e.g. lack of wealth, capital or infrastructure, those factors are secondary. "The primary causes of poverty are really deficiencies in education, organization and discipline". (Bamgbose, 1991:44). In this regard,

National Economic Empowerment and Development Strategy_____126 he submitted, "Development cannot be created, bought, ordered or transferred. The crucial factors have to become a property of not just a few but of the whole society." Schumacher concludes that, Economic development is something much wider and deeper than economics, let alone econometrics. Its roots lie outside the economic sphere, in education, organization, discipline, and, beyond that, in political independence and a national consciousness of self reliance... It can succeed only 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 of leading 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 and wealth- sharing involve interaction at various levels, with diverse tongues in a multilingual context and factors. Language is thus the natural bridge among these factors so as to enhance information dissemination, intellectual development and socio-cultural interaction. It is only an informed populace that can be easily mobilized to operate the socio-political and economic machinery 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 for realistically developing Nigerians. The paper is thus divided into five parts. Part I examines past national economic reforms and the implementation of deregulation policy in Nigeria from conceptual and theoretical angle, Part II reviews the NEEDS strategies. Part III briefly discusses the challenges of NEEDS while part IV brings out the benefits in terms of social economic upliftments. The final part contains the conclusion and policy options and recommendations, which should assist in alleviating the suffering of the people.

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PAST NATIONAL ECONOMIC REFORMS Nigerians received the news of NEEDS with mixed feelings: a sigh of relief and deep skepticism. This is because over time Nigerians have had to make sacrifices in the name of economic reform programmes. They have been forced to swallow bitter pills as a result of various economic and social prescriptions but the people's ill health has become acute and Nigeria's economic condition progressively worsened. By the mid 1980s Nigeria's economic problem which began in late 1970s reached a crisis proportion. The problem included growing unsustainable fiscal deficit, declining agricultural produce, low and falling capacity, and under-utilization in the manufacturing sector and rapid inflation in rate. Egbon (1997) found out that "there exists serious capacity under-utilization in the manufacturing sector, especially the SMEs as a whole. It is more chronic in some industrial branches especially in the capital goods sub-sector. Bamiduro (2002) corroborated Aigbokhan (1989) pre-sap unweighted capital utilization levels (at the industry wide level) to be 69.5%, 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 were 35.3%and 36.6% respectively. In 2002 the ratio stood at 33%. The above problem resulted into fallen national output, high unemployment and a depressed standard of living for the citizenry. Therefore some 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 total population of Nigerians living in poverty shot up by 66 percent (67 million people) in 1996 from 28 percent in 1980 while the proportion of the extreme poor (people living in less than N6000 a year) literally exploded to 29 percent in 1996, from 6 percent in!990. The structural adjustment programme (SAP) implemented between 1986 and 1992 did not impact positively on the poor neither did it deliver succour to the needy in the country; instead, poverty doubled. In the same vein, the National development plans or the rolling plans and other poverty alleviation 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 the basis for sustainable non oil sector with minimum inflationary growth among others. Has the policy manifestation of the poor performance of the past development programme. Let us examine two sectors that were deregulated as a result of the structural adjustment programme: Manufacturing sector The 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 of problems. 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 textile industry had 45 companies but now it has reduced to 8 companies. In the automobile industry almost all the automobile plants established (such as Peugeot Automobile of Nigeria (PAN), Volkswagen of Nigeria (VON), Leyland Nigeria Limited have been grounded which resulted into a huge loss of job, reduction in the Gross Domestic Product (GDP) and importation of second hand vehicles, parts and spare parts christened "Tokunbo" to the detriment of the local plant. The government through the unpopular economic reform of SAP destroyed the manufacturing sector by importing all sorts of goods like textile, leather, etc. Agricultural Sector The agricultural sector was also among the sectors that were deregulated. The government wanted to encourage mechanized farming but ended up killing the smaller and local farmers through their policy of withdrawal of subsidies in fertilizer and farming equipment and chemicals - like tractors, pesticides, insecticides, etc. In many cases, the equipment and the fertilizer were not available and where they were available, they were not made available on time and did not meet the farming period. The government now appears to have realized her mistake of neglecting the sector all in the name 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 the various categories of farms.

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OBJECTIVES OF NEEDS NEEDS is different from the other economic programmes that had come before it in many positive respects. National Economic Empowerment Development Strategy seeks to achieve poverty alleviation and economic revivalism by stimulating the well acknowledged creative energies of the vast majority of the population. Obviously, there are four clear goals of NEEDS. They are i. The creation of wealth ii. Generation of employment iii. Reduction of poverty iv. Re - orientation of values The objectives have informed the policy thrusts of the government and are part of a grand reform agenda which is encapsulated in its far reaching economic 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 five percent 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 is projected 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 new jobs from 2003 to 2004 and two million yearly from 2005 to 2007. In the re - orientation of values, Nigeria expects tourist visitors every year in number by 10 percent year on year up to 2007.

National Economic Empowerment and Development Strategy

Table 1 - Selected Targets under NEEDS 2003 MACROECONOMIC TARGETS Real GDP (Growth Rates %) Oil Sector (% growth) Non - oil sector (% growth) Percentage Reduction in Poverty (%) Minimum No. or New Jobs created (millions) Growth in Real Per capita consumption (%) Inflation Rate (%) SECTORIAL TARGETS Growth in Agriculture (%) Manufacturing sector Growth (%) Manufacturing capacity utilization (%) Tourists visitors to Nigeria (Annual growth rate %) SOCIAL SERVICES Education Adult Literacy Rate (%) Health HIV/AIDS Prevalence rate (%) Immunization coverage (%) Access to safe water (%) INFRASTRUCTURE Power Generation (MW) Roads (Rehabilitation & New roads) 3,000 3,500 3,500 4,000 5,000 6.05 39 64.1 57 10 10 10 7 53 6 7 6 7 6 7 11 2 10 2 9.5 2 9.5 1 2 2 8.6 15 5.83 5 5 0 7.27 5 6 0 8.54 5 6 0 8.34 5 2004 2005 2006

130

2007 7 0 9.52 5 2 2 9 6 7 70 10 65 5 60 70 1,000 4,000

7,000 4,000

Source: NEEDS; Nigeria Grand Reform Agenda

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THE NEEDS STRATEGIES Four 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 importance of government and its institutions in Nigerian life as the main source of economic 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 by government. It also aims to eliminate waste and inefficiency and free up resources for investment in infrastructure and social services by government. 2. NEEDS sees rapid growth of a resilient and competitive private sector as a key component of a sustainable reform programme. The strategy is to diversify the economic base and reduce the relative dominance of the oil sector; put the informal sector in the mainstream while their linkages to the rest of the real sector is strengthened and generally create a vibrant private sector that can respond to the rigours of market forces as its engine of growth. The NEEDS document articulates the strong commitment of the federal government to a programme of collaboration with and strengthening of the private sector. Therefore, the NEEDS aims to alter the strategy for industrial development and make it less importdependent, more local resource - based and more related to local research and development, particularly in the area of small medium enterprises (SMEs). 3. Economic empowerment of indigenous SME businesses through patronage of their products by improved tendering and procurement processes that stipulates minimum levels of local content. 4. Streamlining processes at the Corporate Affairs Commission through reduction of forms, review of stamp duty procedures and the tie - in of name regulation with other intellectual Property Rights protection.

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THE CHALLENGES FACING NEEDS The National Economic Empowerment and Development Strategy is relatively well positioned in terms of framework and the definition of the Nigerian essence as basis for plan articulation and implementation. However, a key requirement to success is integrity. Integrity helps an organization to win trust and credibility. Integrity is the key to getting Nigerians to be involved in and support the NEEDS programme. This is crucial because Nigerians have watched how several other programmes have been highly orchestrated in the past only to bubble like foam and disappear as quickly as it rose without making any discernible impact on the Nigerian socio - economic and political terrain. As such, the agency must be seen to perform in the relevant areas if Nigerians are to have any confidence in it. In addition, the document rotes that Nigerian faces the threat of not meeting the Millennium Development Goals (MDG) if further major steps are not taken. For instance, unemployment is still high (at 10.8% or 6.4 million people were unemployed in 2003, it has clearly been rising since then). The GDP average growth rate of about 3.6 percent is still lower than the minimum of 5 percent required to prevent poverty from worsening and the 7 percent needed 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 the enormous human potentials in Nigeria for development. In view of the challenges above, we make the following recommendations to ensure the effective achievement of NEEDS objectives. RECOMMENDATIONS In this respect therefore, NEEDS has to face the task of ensuring total human development. This is largely because development has its roots outside the economic sphere (Schumacher, 1973, in Bamgbose, 1991). As cited earlier on, Schumacher (1973: 190-1) adds that its roots is "in education, organization discipline, and in political independence and national consciousness". The implication is either that NEEDS should broaden its fundamental consideration or admit that the task of economic development and empowerment should involve other agencies. The involvement is such that there will be a goal-directed networking and collaboration with other parastatals, agencies and ministries concerned with education, communication,

_______Journal of Economics and Financial Studies_____133__________ enlightenment and national re - orientation. In this way, a realistic holistic development can be achieved. It should be noted that true development subordinates 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 in the nation as a whole. Grassroots' mobilization has its roots in proper communication and education. It is only an informed public that can participate in development efforts. Sympathetic repotting and adequate information can create a climate of hope and confidence and can generate effective support for government and her programme. Information aimed at development towards a predetermined direction is targeted at influencing attitudes. In this case communication is being used as an instrument of social change: bringing about a climate for development rather than bringing about changes directly. The latter is not usually successful because the people only wake up to see changes imposed on them and, the people are thus almost inadvertently working to return to the pre-change status quo. It is almost as strange to them as suddenly dressing up a dog with beautiful attire! The dog will continue to behave strangely until the attire is removed. In the former, however, there is a conscious effort to involve the people through a horizontal give-and-take (not top-down) communication process. Where this is properly worked out, questions arise from the grassroots and through effective interaction, the people are mobilized and sensitized towards providing answers to these questions. The atmosphere advocated here does not need any long speech for the people to see government presence in their locality in the relevant educational institutions and infrastructure! facilities (e.g. good roads, potable water scheme, electricity, communication networking facilities, etc). The attitude of government nowadays is like that of the proverbial sage; he is the only depository of wisdom, the people must always listen to him, they have nothing but thanks to give in return. Aside of the communication process, the public sector has to be transformed into an efficient and responsive instrument for delivering services to the people. Presently, the public sector has largely become a ghost of what it should be. Several "ad hoc" agencies and parastatals have been empowered by the political gladiators to take over the statutory duties of the public sector.

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This duplication, largely to satisfy political cronies, rabble - rousers and power mongers must stop if the public sector is to perform its statutory duties of standard control and custodians of landmarks in the democratic dispensation. It is when the public sector performs its duties that the private sector can be empowered to become competitive and thus lead the growth process. Anything outside of this only puts the national economic and socio - political development process in a swivel chair, or even a rocking chair - there is movement alright, but it is movement on one spot! Discipline is one of the crucial roots of economic development and empowerment. Corruption and fraud arise out of indiscipline and selfishness. As such, corruption and fraud must be ruthlessly dealt with and infrastructure decay reversed. The war against corruption must be total and comprehensive, not in the present selective way. The weak and vulnerable groups must be strengthened and value orientation of the people reshaped to de - emphasize rent - seeking, over dependence on government, promote hard - work, entrepreneurship, discipline, honesty and respect for traditional values. CONCLUSION One crucial need of the hour in Nigeria is economic empowerment and development. If this programme will not run like most other such laudable programmes in Nigeria, concerted efforts must be made to put the challenges raised 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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REFERENCES Adesina, S. (1984) "Growth Without Development." Inaugural Lectures, Faculty Of Education: University of Ilorin. Aigbolohan, B. E. (1989) "Capacity Utilization in Manufacturing in Bendel State, Nigeria" (Mimeo) Babatunde, S. T. and Olujide, T. M. (2003) "National Development in a Multilingual Context: The Example of Nigeria" in Olu Obafemi and Sola Babatunde (Eds.) Studies and Discourse in English Language. Ilorin: Haytee Press and Publishing Company. Bamiduro, J. A. (2002) "Analysis of the Performance of SMEs in Kwara State in Post SAP Era." An Unpublished Ph.D Thesis, Department of Business Administration, University of Ilorin. Bamgbose, Ayo (1991) Language and the Nation: The Language Question in Sub-Sahara Africa. Edinburgh: Edinburgh University Press. Chumbow, B. S., (1990) "The Place of Mother Tongue in the National Policy Of Education", in E. N. Emenanjo (ed.) Multilingualism Minority Language and Language Policy in Nigeria. Agbor: Central Books and Linguistics Association of Nigeria. P.61-72 Egbon, P. C.,(1997) "Structural Adjustment Programmes and Capital Utilization in Nigeria Manufacturing: The Case of Edo and Delta States" N.N.B. Business and Economic Review. Vol. 2. Ibiyemi, S. (2003) "An Evil Day Postponed" Financial' Standard' FS Extra 4. 52. Oct., 20 Nickels, G.W., McHugh 3. M. and McHugh S.M. (1999) Understanding Business. USA Irivin McGraw-Hill Company. Oxford Advanced Learners Dictionary (1989) Oxford: U.K. Oyelaran, 0.0. (1990) "Language Marginalization and National Development in Nigeria". In E. N. Emananjo (ed.) Multilingualism, Minority Language and Language Policy In Nigeria. Agbor: Central Books and Linguistics Association of Nigeria, p. 20-30.