ABSTRACT
Economist and Policy maker
researchers had long believed that devaluation is one of the effective tools
for improving the economy. This is because devaluation is expected to expand
domestic Production, Promoting exports and replacing imports and as a result
generating more jobs. But this is not so in the Nigeria experience. The rate of
devaluation in the economy is great as many sector of economy has been
attacked, many project were embarked upon but few were completed, many
exporters have exported almost all the goods in the economy to the outside
nation to the extent that such goods becomes more expensive than their imported
counterparts, there is increase in national debt and unemployment.
As a result of this, the researchers
aimed to embark on this project purposely to highlight those effects of
devaluation of a thing on the overall Nigeria economy.
In the course of this research, a
number of textbook and journals on devaluation were reviewed. The literature
Review exposed the researchers to the beneficial effects of devaluations,
reasons for its adoption, unemployment issues and others. Also, a number of
copies of questionnaire were administered to elicit more facts. Questionnaires
was employed to gather all the required relevant data from both the general
public and importing and exporting firms. The data collected were analyzed and
interpreted. Finally, Conclusions were drawn based on the data collected and
analyzed with a view to offer enabling suggestions and recommendation that will
aid the problem of unemployment, poverty and devaluation of naira
TABLE OF CONTENT
Certification
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
1.0
Introduction
1.1 Background
to the Study
1.2 Statement
of the Problem
1.3 Significance
of the study
1.4 Scope
of the study
1.5 Limitation
of the study
1.6 Definition
of terms
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
2.1 Capital
Flight due of naira devaluation
2.2 Theoretical
issues in national Economic Management
2.3 The
market mechanism and the economy
2.4 Keynesian
Demand management
2.5 The
idea of Economic deregulation
2.6 The
philosophy of guided deregulation
2.7 Preliminaries
of guided deregulation
2.8 Era
of financial system deregulation (1986
to date)
2.9 How
the world Bank sold out Nigeria
2.10 Nigeria stabilization and
structural Adjustment programmes Economic Stabilization Act of 1982
2.11 Definition of devaluation
2.12 Currency devaluation
2.13 Bastardization of the Naira
2.14 Circumstances leading to
Devaluation
2.15 Reason for Devaluation
2.16 Importance of Devaluation
2.17 Effects of Devaluation
2.18 Other effects of Devaluation
2.19 The Nigeria Socio –Economic
Predicaments
2.20 Current issues the proposed Naira Re-
Denomination
CHAPTER THREE
3.0 Introduction
3.1 Research
Design
3.2 Population
for the study
3.3 Sampling
Techniques
3.4 Research
Instrument
3.5 Procedure
for data Collection
3.6 Statistical
Analysis
CHAPTER FOUR
4.0 Introduction
4.1 Method
of Data Analysis
4.2 General
Public Questionnaire (Section A)
4.3 General
Public Questionnaire (Section B)
4.4 Imported
and Exporter Questionnaire (Section A)
4.5 Importer
and Exporter Questionnaire (Section B)
4.6 Analysis
of Questionnaire
CHAPTER FIVE
5.0 Introduction
5.1 Summary
of the study
5.2 Conclusion
5.3 Recommendation
5.4 Suggestions
CHAPTER ONE
INTRODUCTION
From time immemorial and since the
emergence of nation states governments and policy makers have been seriously
concerned with economic growth and development of their geo – political
territories. As civilization unfold and political sovereignty defines the
boundaries of each nation or country, the guest for national development as an
index of total emancipation and economic sovereignty becomes the focal point of
all nationals. With the advents of economics as a separate fixed of study and
the subsequent industrial revolution in western Europe board national
development objectives emerged which ever since here became the target of every
nation
These board economic development
objectives whenever in contempary times define the direction of economic
policy objectives of every country, Nigeria
inclusive are:
-Stable price level
- High level employment
- Favourable balance of payment
- High and sustainable rate of
economic development.
Nigeria all along was Agriculture – based
until when petroleum was discovered in Nigeria. With the discovery of petroleum, drilling and mining became a
prominent of sector the economy. The
sector has since then been accounting for a Significant proportion of the
country’s export earnings Agriculture on the other hand, though seriously
declining in terms of export earning, it still provides employment for high
proportion of the population.
Apart from the discovery of out of
all, the attempt to develop the modern sector seriously affected the
Agricultural in Nigeria.
The modern sector is the target of young school leavers. The curricula of the
school provides skills needed in the modern sector alienating the school
leavers from the Agriculture Sector. The result was a decline in Agriculture
output both inform of food items and raw material that should have fed the
modern sector.
The modern sector predominantly
concerned with processing pf raw materials and production of a few consumer goods
for domestic markets depending sector arose from the devaluation of the naira.
Such problems include, capacity utilization, fall in domestic demand and
smuggling.
Devaluation refers to the process of
reducing the value of a currency in terms of other currencies. The prime
objective of devaluation in an economy operation within the existing
international economy order is the substainment of the exchange rate of the
local currency at a rate which keeps the balance of payments at equilibrium. As
devaluation has to do with substainment of the exchange rate of local currency
at a rate which keeps the balance of payments at equilibrium. As devaluation
has to do with sustaining desirable exchange rate, it is therefore patients to
examine the Nigeria
experience in devaluation if we are to look at the exchange rate polities in Nigeria. The
devaluation had tremendous negative
effects in several sectors of the economy.
Theoretically, devaluation is
expected to expand domestic production, promoting exports and replacing imports
and as a result generating more jobs. But this is not so in the Nigeria
experience. The evidence so far in the implementation of the structural
adjustment programmes (SAP) and devaluation in Nigeria pointed to increasing
unemployment in spite of the enormous resources the government had been putting
into employment creating activities.
BACKGROUND TO THE STUDY
The drive toward economic development
and growth has however failed to yield the excepted result in many nations
because of the three attendant problems which had frailed this economics.
In the experience of some nations it
has been inevitable while other arose due to lack of proper management of
resource and factor endowments. Whatever the cause, the problem of inflation,
unemployment and poverty continue to task the best of all economic polices and
development planning with little rewarded success.
Inflation in the simplest form has
been defined as a high persistent rise in the general price of commodities and
factors of production.
Thus, during inflationary period,
money income rise on average as fas as the money prices of commodities
(Lipseyi, 1983) changes in the price level brought about by inflationary
pressure in the economy have become a matter of services concern because.
1. Assessing the effects of inflation and
hence making a national assessment of the harms it does depends significantly
on other variables like demand, cost level of money supply and others in the
economy.
2. Inflation influences the allocation of
resources by changing relative prices (including relative wages) of ten in
haphazard fashion.
3. Inflation re-distributes wealth from
lenders to borrowers.
4. Inflation reduces the living standard of
those on fixed income
5. Inflation is a major cause of arbitrary
and sometimes socially destructive redistribution. The continued erosion of the
purchasing power pf fixed money income is tragic to those who suffer it and as
such is one of the many services redistributions effects of inflation
STATEMENT OF THE PROBLEM
In line with the recent trend,
various discussions on the attainment of full employment, price stability and
poverty seem to have different meaning to different people. The problems that
informed me to carry out this study can be summarized below:
i. The
devaluation of naira and its effect on the economy.
Ii The extent to which these problem affect
the Gross Domestic Product (GDP)
Iii The
measures to solve these economic problems
Iv The
effect of devaluation on the local market.
Furthermore, one of the aftermath
effect of devaluation of the naira is the Balance of Payments Deficit.
Balance payments is a summary of a
country’s financial transactions with the rest of the world. It is a systematic
records of all payments to and receipts from foreign countries during a
specific time period, usually a year.
A balance of payment deficit is when
the total of payments and transfers to foreign countries exceed total receipts
from foreign countries.
The balance of payment deficit
therefore had led to the following problems in Nigeria.
1. Poor Performance of non-oil exports:-
Over the past 20yrs the share of non-oil sector made essentially of the
agricultural and manufacturing sectors, has been very low, less than 10percent on the average. This
unimpressive performance was due majorly to neglect of the agricultural sectors
of the economy in favour of non –existing white collar urban jobs.
Moreover, most of the Nigeria
industries have not been able to penetrate foreign market because they are high
– cost producers using crude methods and techniques of production as compared
with cost saving highly developed mass production technology of the developed
countries.
The division of Nigeria balance
of payment into out and non-oil sector underscores the relative importance of
crude petroleum in the Nigeria
economy.
2. High debt service payment:- The
oil glut of 1978 caused a considerable fall of the prices in international oil
market and a sharp decline in government revenue, especially foreign exchange
earnings. Inability to settle imports bills and the desire to increase the productive
base of the Nigeria economy made it expedient for the government to borrow for
balance of payments support and project financing this in turn led to the
promulgation of Decree No 30 of 1978, authorizing the federal Government to
raise external loans up to a maximum of N5 billon.
But contracts of external debt
require that a proportion of export earnings set aside to meet debt obligations.
This obviously constitute a major “conduct pipe” for the outflow of scare
foreign exchange, and hence, a principal sources of balance of payments deficit.
3. Low Level of Foreign Direct Investment
Direct investment has remained very
low in Nigeria.
This may be largely due to frequent change of industrial polices, instability
in foreign exchange rates and interest rates, rising inflation, and long drawn
crisis – ridden programme of transition of democratic governance – all
combining to render the country’s investment climate hostile to inflow of
foreign investment capital.
In relation to the above, the
following are also contributing factors:
1. The
technology progress in the developed countries
2 Low level of receipts from the
provision of international services and income
3. Import substitution and
industrialization and
4. Expansionary fiscal and monetary polices.
SIGNIFICANCE OF THE STUDY.
The aim of this project is to
carryout a research work on the effects of devaluation of naira in Nigeria economy
This is often used in the developing
countries of which Nigeria
is a typical example to solve the following problems:
i. To
reduce large external imbalance.
ii To
correct perceived over –Valuation of the real exchange rate.
iii To
increase international competitiveness
iv To
promote export growth.
v. To
promote the activities of the local market.
The study also aim to providing solution to the sectors that have been
affected by the devaluation policy one of the solution of this problem is the
fiscal policy.
Fiscal policy is one of the means
through which the government intervene directly in the country’s economic
activities. It is the use of taxation and government expenditure to regulate
economic activity.
Fiscal policy can be used to solve
the problems of unemployment inflation, external balance (Balance of payment deficit),
for economic growth e.t.c
Fiscal Policy and Unemployment:- A
period of economic slack with rising unemployment would call for:
a. An increase in the level of government
spending through – e.g awards of contacts to improve socio –economic
infrastructures, and increased subventions to government ministries,
parasitical and agencies
b. A reduction in tax rates, especially
income tax and company tax to boost aggregate demand of private individuals and
business.
c. Tax relief and concessions, and fiscal
incentives to stimulate domestic private enterprises and to induce foreign
private investors to locate their enterprises in the country with a view to
enhancing creation of employment opportunities.
The study also highlights the
foundation of the central government in performing the following economic
functions of
Providing the legal framework and a
social environment conducive to the effective operation of the prince system.
Creation and maintenance of social and economic infrastructures
Redistribution of income
Reallocation of resources; and
Promotion of macro economic
objectives
SCOPE OF THE STUDY
The scope of this study will cover
the affected area of the Nigeria Economy on devaluation of Naira such as the
Gross Domestic Product, Gross National Product, Unemployment inflation and
poverty levels.
It will also comprise of the effect
of devaluation of Naira on the poverty level in Nigeria, the enjoyment of
economic, social and cultural right herded by the absence of the rule of low, the existence in Nigeria
of military governments, the Supervision of the constitution in favour of the
intimidation and the negative effects that widespread corruption has on the functioning of
government institutions
It will not fault to mention the
negative attitude of the government of Nigeria in respect of the promotion
and protection of human rights in general and economic, social and cultural
right in particular.
Most important point to mention is
the reform program and the structural Adjustment program. The strike actions
embarked upon by trade unions and the Hike in fuel prices if not mentioned will
not make the study a complete one.
Another major point of study is the
IMF loan itself which is an inspired attacks programme on the working masses.
It led to more fees being imposed on student combined with the cuts in funds
for education. Pensions and salaries being constantly withheld, privatization/
liquidation of public co operations and utilities intensified drastic cuts
funds meant for social service
LIMITATION OF THE STUDY
There is bound to become limitation
or another in a research of this nature. Therefore, the limitation that is
encountered during the cause of this study is hereby stated and analyzed.
Firstly, there are financial
constraints when it is to realize enough money to finance the project, obstacle in
transportation and buying of all materials necessary for use.
The political instability of the
economy also posses the problem of not able to freely more from one place to
the other because of the political unrest particularly in Ibadan.
Also the inadequate power supply also
contribute in a large extent to the inability
of getting necessary information from the internet because of constant
blackout. The Hike in the fuel price has also contributed in no small way as
there is increment in the amount paid to download information on the internet
per minute because of the exorbitant amount of money used to run the so called
internet Cafes.
The furthermore, the limitation of
combing academic studies as well as the distance to be covered also contribute
an hindrance.
Finally, the time to do justice to
the research work was too mineral to exploit all necessary material on the topic
of discussion.
DEFINITION OF TERMS
DEVALUATION:-This is the reduction of the value of the home currency in
terms of foreign currencies. It is an official decrease in the value of
country’s currency.
ECONOMIC:- This is the act of careful management of resources so as to
prevent unnecessary expenditure of is managing the little available resources
in order to achieve maximum output.
POVERTY:- Poverty is the insufficiency of means relative to human need
it is also viewed as chronic inadequate of resources of all types to satisfy
the basic human needs.
INFLATION:- This is a situation where there is increase in the value of
money or purchasing power in the circulation without corresponding increase in
production such case lead to persistence rise in the general price level.
UNEMPLOYEMENT:-This is an involuntary idleness of a person willing to work
at the prevailing rate of payment but unable to find the work. It is when those
who are capable and willing to work cannot find any befitting job to do.
NAIRA:- This is the currency that is generally acceptable as a
medium of exchange in Nigeria.
GRASS NATIONAL PRODUCE (GNP):- This is the value of monetary value of any goods and
services produced by the citizen of a country within or without the country.
GROSS DOMESTIC PRODUCE(GDP):- This is the monetary value of goods
and services produced in a given nation with a year
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment