ABSTRACT
This research is based on the
government polices on non-oil export [agriculture] and the growth of the Nigeria
economy. The main objective of this research is to examine government policies
on non-oil export [agriculture] on the growth of secondary data which were
collected from the Central bank of Nigeria statistical bullet ions.
The ordinary least square regression technique was employed in the analysis of
the data.
The empirical
result reveals that the oil export and non-oil export are able to explain 90.2%
and 73.3% of the total variation in the level of gross domestic product
respectively. Also agricultural export, oil export, non-oil export and tariff
are all positively related to gross domestic product and are able to explain
87.6% of any systematic variation in gross domestic product. It was concluded
that non-oil export, oil export and agricultural export has a significant
impact on the growth of the Nigerian economy.
It was
recommended among others that the need for local sourcing of raw materials and
input through agriculture should be intensified; Agricultural activities should
be encouraged and improving the technological and infrastructural development
and there should also be stable political and economic environment for the
attraction of foreign capital and technology and periodic review of export
policy packages.
TABLE OF
CONTENTS
TITLE PAGE………………………………………………………i
CERTIFICATION……………………………………………….iii
DEDICATION…………………………………………………….iv
ACKNOWLEDGEMENT………………………………………...V
ABSTRACT……………………………………………………...vii
TABLE OF
CONTENTS…………………………………….….ix
CHAPTER ONE…………………………………………………
1
INTRODUCTION…………………………………………..1
1.1 BACKGROUND TO THE
STUDY……………….1
1.2 STATEMENT OF THE
PROBLEM……………….9
1.3 OBJECTIVES OF THE
STUDY…………………13
CHAPTERTWO…………………………………………………22
LITERATURE REVIEW…………………………………22
2.2 PROMOTION OF THE EXPORT IN
NIGERIA.23
2.3 NIGERIA FIRMS NON OIL EXPORT INVOLVEMENT AN ECONOMIC
TRANSFORMATION PARADIGM………………30
2.4 CHALLENGES OF EXPORT BUSINESS IN
NIGERIA……………………………………………..41
2.5 EXPORT PROMOTION AND
GLOBAL
ECONOMIC
CRISIS………………………………50
2.6 ANALYSES OF GOVERNMENT
POLICIES AND
NIGERIAN FIRMS EXPORT MARKETING
STRATEGY…………………………………………67
2.7 TECHNOLOGY RELATED FACTORS AS DETERMINANTS OF EXPORT POTENTIALS OF
NIGERIAN MANUFACTURING FIRMS………………………………………………………78
2.8 EXPORT DIVERSIFICATION AS A
PROMOTION
STRATEGY FOR INTRA ECOWAS TRADE
EXPANSION………………………………………………86
2.9 FOREIGN DIRECT INVESTMENT, NON-OIL
EXPORTS, AND ECONOMIC GROWTH IN
NIGERIA:
A CASUALITY ANALYSIS
CHAPTER THREE……………………………………………93
3.1 THEORETICAL FRAMEWORK AND METHODOLOGY………………………………….93
·
RESEARCH METHODOLOGY………………..98
·
METHOD OF
DATA ANALYSIS……………..100
CHAPTER
FOUR……………………………………………..101
4.1 DATA PRESENTATION, ANALYSIS AND INTERPRETATION
OF RESULT……………………………………………101
4.1 DATA PRESENTATION…………………………101
4.2 ANALYSIS…………………………………........
4.3 PRESENTATION AND INTERPERPRETATION OF REGRESSION OF
RESULT…………………………………………………..107
CHAPTER FIVE……….……………………………………..122
SUMMARY, CONCLUSION AND RECCOMMENDATIONS
5.1 SUMMARIES OF FINDINGS…………………122
5.2 CONCLUSION………………………………..…123
5.3 RECOMMENDATION……………………………124
BIBLIOGRAPHY………………………………………127
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The agricultural sector in Nigeria was a
source of foreign prior to the discovery of oil in commercial quantity. Then Nigeria was reckoned with the production and
export of groundnut, cocoa, rubber, and other agricultural crops in Nigeria. The
discovery of oil at large exploration in the 1970s turned the tide against the
agricultural sector in favor of the oil sector. For instance, as at 2000, oil
and gas exploration accounted for more than 98% of export earnings and about
83% of federal government revenue (Export Import Bank,2009).The oil sector also
accounted for more than 40% of the Gross Domestic Product (GDP) in Nigeria and
about 95% of the foreign exchange earnings. Despite this seemingly high revenue
from oil sector, the paradox of it that over 70% of the Nigeria population is
engaged in either informal sector or in agricultural production (Olaitan ,
2006).
The vast employment opportunity and the
quest towards diversification of the revenue by the federal government and
development agencies have shifted attention towards the informal and
agricultural sector. For example ,to sustain the agricultural production in
Nigeria, the World Bank developed a project called Agricultural Development
Projects (ADPs) which was designed to enhance the production of agricultural
outputs in Nigeria .As at the year 1989 ,the ADPs were situated in 19 states in
Nigeria as at then .The efforts of the ADPs
were geared towards enhancing agricultural productivity (World
Bank,2001).There have been other national programmes established to boost
agricultural production in Nigeria .Notable among them was the Agricultural
Credit Guarantee Scheme Fund (ACGSF) in 1977.
The ACGSF has lofty aims especially the
need to make the agricultural sector lucrative. However, it has not lived up to
its bidding, which calls for empirical assessment with a view of understanding
the resultant effect from the huge investment from the government into the
sector. This is germane given the increase in the capital base of the fund from
a start-up capital ₦100million to a current capital base
of ₦6billion in 2006.Thus, there is need to investigate if this
huge investment put in place to encourage agricultural production has actually
had significant impact on export especially non-oil export, which the
agricultural constitute a sizeable proportion. This is the main motivation for
this study.
In Nigeria, apart from the crude oil
production, agricultural products account for the major source of non-oil
export revenue. This especially in the cash crop production likes rubber,
cocoa, cotton, timber and so on.
Nigeria has achieved some
appreciable economic growth in recent times. A number of explanations of this
observed trend have attempted in different academic papers. Non-Oil exports
performance has only improved considerably during this period. Several factors
appear to have contributed to this phenomenon including a rapid improvement in
trade liberalization, concerted efforts to diversify the productive base of the
economy and a substantial increase in Foreign Direct Investment (FDI) inflows
into the country. Arguably, FDI is a one of the most important strategies for
the promotion of economic growth and development in poor
developing countries .FDI can serve as an engine growth and development for developing
countries by increasing the opportunity for their integration into global
financial and capital flows, expand employment and export base, generate
technological capability building and efficiency spillovers to local firms as
well as establish investment arrangement that increase the potential of host
countries for economic growth.
Expectedly, the
role of exports in economic performance of developing countries has become one
of the more intensively studied topics in recent years. The major impetus of
most studies on this relationship is the export-led growth (ELG) hypothesis
which intensively represents a dominant explanation in this context. The ELG
hypothesis states that the growth of exports has a favorable impact on economic
growth. However, the empirical evidence on the casual relationship between
exports and growth is mixed. In particular, available time series studies fails
to provide uniform support for the ELG hypothesis while most cross-sectional
studies provide empirical evidence in support of the hypothesis. The
liberalization process in developing countries has increased not only trade but
also FDI flows. Thus, FDI has become an important link in the export-growth
relationship.
Over all,
empirical evidence in the last few decades indicates that FDI flows have been
growing at a place far exceeding the volume of international trade between 1975
and 1995,the aggregate stock of FDI rose from 4.5% to 9.7% of world GDP with
sales of foreign affiliates of multinational enterprises substantially
exceeding the value of world exports (Barrel and Pain,1997).The United Nations
Conference on Trade and Development, UNCTAD(2007) reports that FDI flows to
Africa has increased from $9.68billion in 2000 to $1.3trillion in 2006.The
UNCTAD World Investment Report 2006 shows that FDI inflow to Nigeria, who
received 70% of the sub-regional total and 11% of Africa’s total. Out of this
Nigeria‘s oil sector alone receive 90% of the FDI inflow.
The performance
of the Nigeria
non-oil export sector, as pointed out earlier, has however been relatively
impressive in recent times. For example, the International Monetary Fund (IMF)
2008 is of the view that the robust non-oil sector growth in the 2007 fiscal
year had offset the drag from a decline in oil production in Delta, thus
boosting growth in the Nigeria
economy.
Aggregate
output growth measured by the Gross Domestic Product (GDP), according to the
Central Bank of Nigeria (CBN) 2007, economic report for third quarter of 2007,
was estimated at 6.05percent, compared with 5.73percent in the second quarter.
The growth was driven by the non-oil sector which was estimated at
9.47percent.This growth was driven mainly by major agricultural activities yam,
Irish and sweet potatoes, groundnuts and maize.
The favorable
economic environment has made countries in SSA increasingly attractive as
destination for private capital inflows.Net private capital inflows reached
record in levels in 2007, led by strongly FDI inflows. However, the bulk of FDI
is still focused on a few countries and targeted mainly at extractive
industries, particularly the petroleum sector, based on evidence from
cross-border mergers and acquisition related inflows. But deposit outflows from
some oil exporters notably Libya, Nigeria and Russia displayed some of the
highest correlations, while for others including Saudi Arabia and other Middle
Eastern Oil exporters, the correlations were only modest Libya, Nigeria and
Russia also accounted for one-half for all deposit out-flows accounted for
one-half of all deposit out-flows from oil-exporting countries, and in each of
these countries deposit out-flows accounted for one-half or more of total gross
capital outflows. These huge capital outflows are linked mainly to extractive
FDI and calls to question the ability of FDI to drive growth effectively in
this country.
It is not worthy
however, that despite the observe increasing inflow of FDI, there has not been
any satisfaction attempt to access is contribution to Nigeria (non-oil) export
performance, a major channel through which FDI affects economic growth. This
call for empirical investigation and the question here now are, can we find
evidence to support the (non-oil) export led growth in Nigeria? What vital role does FDI
play in the ELG relationship if it exists? Are there any casual relationships?
Or what are the dynamic interaction among (non-oil) export, FDI and economic
growth in Nigeria?
1.2 STATEMENT OF
THE RESEARCH
Nigeria as a developing
country has been grappling with the realities of developmental process not only
politically and socially but also economically. In the 1960, agriculture was
the mainstay of the economy and the greatest forging exchange earner. However,
this prime position occupied by agriculture was overtaken by oil sector by the
mid-1970s.In the circumstances, Nigeria export earnings increased from ₦339.4 million in
1960 to ₦14.077million in 1980.The mono-culture nature of the
economy makes Nigeria’s export earnings susceptible to the vicissitudes of the
international oil market. The intrevent weakness in the economy manifested with
the oil glut. This therefore calls for the need to increase the Quantum of
non-oil export as well as diversify export in the light of vagaries of oil
fortunes decline of external receipt from about 26billion in 1980 to about
6.5billion in each of 1987 and 1988,Geroid,(1976).
However, the
study(NEPC 1996),also noted inspite of the countries product advantage and
various export potential some exporting firms have problems of what product to
offer for export, how to source/manufacture to which market to export,
considering the competition that exists in foreign markets. How to finance
export and cope with the country export procedures and documentations?
Another problem associated with the
country’s product exporting is the consumer perception of made–in-Nigeria goods
by local and foreign consumers. It is argued that a nation without a pride is a
nation which has not discovered itself. Iwok (1996) remark that such lack of
pride in home made goods is an indication of immaturity and under development.
I see the possession of great pride in home made goods as a pre-requisite and
sustenance of economic progress by any developing country. Today a nation can
earn the highest level of respect and good image by possessing pride in its
goods; it must determine its destiny by developing pride in its goods.
The first step in
enhancing Nigerian firms ‘product advantage in export marketing is to overcome
the age-old colonial mentality of assigning superiority to foreign made goods
and regarding Nigerian product as inferior. We cannot convince other countries
as to quality of our product made in Nigeria. This is because Nigerians
themselves ought to be sales men in terms of the support they give to
made-in-Nigeria goods”.Nwakanma(1986) asserts that with adequate research on
the products, diligence and painstaking care in handling of the products
especially with respect to the aesthetic quality, physical appearance
,beautiful designs, packaging and labeling, made-in-Nigeria goods will have
enhanced comparative advantage in terms of perception, market opportunities and
competition in the world market.
Domestic
competition encourage firms to explore foreign markets when they face stiff
competition in local markets(1970) and Cavusgils (1984),similarly found that
some companies see export as a way of relief in a very competitive market. It
was also argued that Turkish manufacturers initiated export because of
competitive pressures and saturation of domestic market rather than
differential advantages (Karafakioghi and Harcar (1990).In the same lightproof
(1982) found that competition in European market had an advantage because
competing firms and importers had credit extension as their government provided
incentives for the manufacturing of consumer and industrial goods. Competition
was also found to differ across nations as it had sometimes hindered or
frustrated firms export marketing Rosenbloons and Larsen (1991).
The researcher
tends to find solutions to the following problems:
i. What are the
need of government policies on non-oil export (Agriculture) and the growth of Nigeria economy?
ii. What are the constraints towards non-oil
export on the growth of Nigeria
economy?
iii. How can government policies aid exports in Nigeria?
1.3 OBJECTIVES
OF THE STUDY
Some economists
do not see this as the only means for a concerted export drive. This is the
controversy that existed between in-ward looking and out-ward looking (Autarky
and Open) strategies of development, delinking and complete Autarky have been
considered as viable alternative development strategies by those not in favor
of international exchange. The Nigeria
approach to development as however encompassed the integration of her economy
with world economy and the acceptance of international economy.
According to Morton and Tullock
(1978).International trade brings gains to nation whether rich or poor and that
it acts as a stimulus to growth. Some observers through accepting the above
assertions are of the view that the growth is in-significant among the
developing countries for the reason that they are less developed and lack responsiveness
to market opportunities and dynamic influences of international trade that is
characterized of developed market (Basile, R.2001).
Others hold that
the reason for limited gain from international trade by less developed
countries is the inadequacy of market opportunities. They point to the slow
growth of export earnings from many primary commodities the rest attendance in
less developed countries, current degrees of specialization in such export and
difficulties of obtaining access to overseas market for a more diversified
range of export product.
Although the
level of development and growth of export trade is below the desired one as a
result of the mono-cultural nature of the Nigeria economy to those of other
countries in recent times (Elbadawi I.2001).
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