COMMUNITY DRIVEN SUSTAINABLE DEVELOPMFNT: EXPLORING THE UTILIZATION OF NATURAL CAPITAL

ByElias Darlington Anzaku, Ph.D

Department of Economics,Nasarawa State University, Keffi.

ABSTRACTCommunity driven sustainable development has been undermined over the years due to lack of a blend of all forms of capital. There has been the neglect of the application of natural capital in determining the natural income and this had consequences for sustainable development drive in most communities. In unveiling these findings, this study utilized dialectical analysis in issues surrounding community driven sustainable development. The deductions portend that sustainable development should involve all forms of capital and natural capital should form a strong basis to transform other forms of capital that will collectively drive the process of sustainable development. The application of best practice experience of Suledo forest community and the HASHI project in Tanzania and people’s communes of china is recommended as policy option for most communities and countries.

INTRODUCTIONGoing by the experience of colonial and traditional economies, many developing

countries were unable to reach their economic growth target as the levels of the living conditions of their people have remained unchanged. There has been wide spread absolute poverty, increasingly inequitable distribution of income, rising unemployment, inequality, hunger, diseases, mass illiteracy and ignorance and absence of access to basic needs and economic opportunities, all premised on their activities. These are conditions under which most communities have operated and need to be leveraged into a sustainable development path.

Since development is directed at achieving sustained pattern of growth of income per capita to enable an economy expand its output, it portends to how much of real goods and services are expected to be available to the average citizen for consumption and investment in a community. The stress is the redistribution from growth over the years, which is yet to achieve any improvement in the community in terms of reduction in poverty, inequality and unemployment. Most communities have been left with these characteristics and have been plummeted into underdevelopment. Underdevelopment is indeed a real fact of life for more than 3 billion people in the world and this construe a state of mind as well as state of national poverty (Perkins et al 2001, Todaro and Smith, 2011).

Hence, community driven development programmes amidst abundance of natural resources must be directed at unveiling these lags that hampered sustainable growth and development over the years. Most interestingly, the yawning gap between the natural resources availability and its utilization to attain the needed sustainable development of most communities in developing economies have been of concern for which this study intends to unveil.

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THEORETICAL ISSUESThe theory of sustainable development rests on a pattern of development that

permits future generations to live as well as the current generations, generally requiring at least a minimum environmental protection (Todaro and Smith, 2011). Clearly, sustainability entails meeting the needs of the present generation without compromising the needs of future generations (World Commission on Environment and Development, 1987, United Nations Development Program, 2007, World Resources Institute, 2005). Sustainable development portends producing economic infrastructure and opportunities and all output of the economy that are required now and could be retained and maintained continually for the felt needs generations. The process of sustainability demonstrates that the past and current productive output links the future output in a sustained pattern. Generally, a development process is sustainable where the stock of overall capital assets remains constant or rises over time (Pearce and Warford, 1993, Lele, 1991, Taylor, 1996). In considering the overall capital assets, natural resources and other forms of capital must be taken into account as substitutes at a limited scale and degree.

A common feature that can exemplify sustainable development is premised on the fact that future development and overall quality of life are essentially dependent on the quality of natural resources and environment. Hence, the natural resources base of a nation and the quality of its air, water and land represent a common feature that run across for all generations (Daly, 1996, Diamond, 2005, Sen, 2001, Todaro and Smith, 2011). To destroy these endowments indiscriminately in the pursuit of short - term economic goals, will alienate both the present and future generations from the development process.

In retaining sustainable development basis, it is imperative to factor into policy making natural resources economics that encapsulates the preservation or loss of valuable natural resources. This will facilitate a regeneration of resources that are equal or greater to replace depleted ones. Sustainability of resources is guaranteed in this process of regeneration on the overall capital assets.

Clearly, the overall capital assets that are required to sustain economic growth and development are broken into the core areas of manufactured capital assets-machines, factories, roads; human capital - knowledge, experience, skills; and natural capital - forests, fisheries, soil quality, water range and mineral deposits. Given these features, sustainable development entails that the overall capital assets should not be decreasing and that the correct measure should capture manufactured capital assets and natural capital excluding their depreciation.

Indeed, in the prevalence of using consumption levels in most communities, with increasing population growth, the realization of sustainable development is posed with a major challenge. A disturbing phenomenon has often been presumed on the realistic and viable expectations about sustainable standards of living that are required to effect radical and early changes in production and consumption patterns in the communities so as to attain sustainable development.

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METHODOLOGYThis study utilized dialectical approach in appropriating a detail analysis of the

issues surrounding community driven sustainable development. It delved into the ingenuity of the sustainable development and the interacting forces that drive and sustain the community and a country’s development in all phases of human development. Inferences were drawn from the abstraction of the interconnection between and within phenomenon of sustainable development and the application of natural resources.

Deduction was drawn based on espoused interconnection on the implosive and explosive modes of development that warrant sustainability in an economy.COMMUNITY AND SUSTAINABLE DEVELOPMENT

An abundance of natural resources in a community should be an advantage to its economic development. Where a community is able to exploit its natural resources such as soil, climate, natural forests, fisheries and mineral deposits to generate income in all the stages of its development, it has a prelude for its sustained transformation. If a community saves a large share of the income generated, the natural wealth thereof can be converted into human made capital in terms of educated workforce, roads, power, telecommunications system, productive agriculture, modern industry, growing cities and other assets prevalent in developed countries (Perkins et al, 2001, Taylor, 1996).

Any resources rich countries have relied heavily on their resource base to fuel sustained economic growth and development. The task is not the availability of resources, but how can communities manage their resources to use them productively in the short run and convert natural wealth into sustainable economic growth and development in the long run. A community’s valuable natural resources also include the environment which comprised of its air, water, diversity of biological species and natural surroundings. Clearly, to a larger degree, all economic activity utilizes the environment. This could be as a dump for waste products, and equally environmental damage can have substantial effects on the health and welfare of the people (Perkins, et al, 2001, Solow, 2001, World Resource Institute, 2005, United Nations Development Program, 2007). Moreover, soil erosion, water and air pollution and deforestation can cause substantial economic losses to a variety of economic programmes in a community. Equally, natural resources and wildlife have certain common intrinsic value beyond their relationship to economic activity and people’s welfare in each community.

The fundamental issue here is how to contain with the real cost of environment management and preservation. We must make hard choices in order to sustain growth and development as natural resources are being depleted. Blending development and environmental goals will help reduce environmental degradation that can cover lower production cost; and directly impact positively in improving economic output and sustained welfare for the people and their communities. For instance, in a community, reduced air and water pollution can help in supporting tourism, fisheries development and improved agricultural yield.

Developing technologies that harness renewable sources of energies and developing alternative materials can smooth out production and consumption that are sustainable within the communities. Natural resources have cumulative effects that are

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irreversible and required adequate planning and harnessment to achieve sustainable development.

NATURAL RESOURCES UTILISATION AND SUSTAINABLE LIVELIHOOD IN COMMUNITIES.

Indeed, the bulk of the economically active population in the emerging developing communities, depend on agriculture, hunting, fishing, mining and forestry activities to leverage their livelihoods. The income from these and other economic activities are essentially required to leverage the majority of the poor out of poverty.

Indeed, access to the benefits of utilizing natural resources in most communities is often highly inequitable and in certain circumstances, this does narrow. In many communities, the poor have been losing control of some of their natural resources including forests, fields, fishing areas to new private property rights arrangement or corrupt public land speculators. This trend is being widely resisted by most communities and their supporters in Multilateral and Bilateral agencies, Non - governmental Organizations and Community Development Associations. Currently, the bulk of the rural people who lacked access to adequate farmland and other resources to facilitate their earnings to sustain meaningful livelihoods in respective communities, have witnessed low gains (Todaro and Smith, 2011).

Of course, the main thrust of bourgeois economist approach to sustainability in most communities, is that, within a single community, properly working markets constitute the most effective mechanism available to promote efficient resource utilization, reduce environmental degradation and generate sustainable development. This is a neo - liberal prescription which supposed that when competition is developed amongst private producers that is anchored on free markets, it is more likely to champion rapid economic transformation than an economy that favoured government intervention and popular participation. When market prices sway from scarcity values, this lead to private agents to make decisions that maximizes their profits which denied spread of benefits and welfare to the poor and the community as a whole. Popular participation and collective decisions are jettisoned, which often affects sustainability.

An interesting perception of this analysis, is premised on market conditions that have externalities that involve costs borne by the population at large, which does not affect individual producers and benefits that accrue to the society, are not captured by the private producers. Indeed, the most crucial externalities are those caused by the depletion of natural resources and environment (Perkins, et al, 2001). Where resources are depleted at rates faster than they can be replenished by human - made capital, sustainable development is rarely achieved since allocation of natural resources by the market are inefficient for a rural community in most developing countries.

Clearly, for resources to be utilized and attain sustainable development in a rural community, this must relate to benefits as the amount of resource products that a user is allocated are related to local conditions and to rules requiring labour, materials and financial inputs. The HASHI project and Suledo forest community in Tanzania have clear success story of community driven natural capital project. A blend of these inputs

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have created euphoria that allowed the resources to be utilized to attain current consumption without compromising future generation of income and consumption.

The fact remains that as development proceeds, there are generally greater opportunities and incentives for individuals to appropriate common property for their own use, which requires increased vigilance and external support to contain continual generation of income and consumption within the community.Hence, any benefit borne by an individual economic unit, is as a direct consequence of another’s behaviour, and this mechanism hastens the process that paved way for any economy to triumph. The test practice is glaring with the people’s communes of china, where collective decisions have promoted sustained output produced in the communities and which guaranteed both their current and future expansion and needs.

NATURAL CAPITAL AND COMMUNITY SUSTAINABILITYMost communities and their governments aim to increase income as rapidly as

possible over long run. But how do they ensure that economic development does not depend unsustainably on the consumption of natural resources and other manufactured capital? In this exposition, this can be explained in terms of the liberal markets for individual resources which include mineral deposits, forests, fisheries, water and rangeland. If a government wished to monitor and tract the development process towards its sustainability, it needs to examine the application of natural capital along with other resources.

Natural capital is a necessary resource to evaluate economic growth models associated with the development process. In this process, natural capital consists of the value of a country’s existing stock of natural resources which include forests, fisheries, mineral deposits, water, rangeland and environment. Natural capital through natural growth of renewable resources and investment in discovering of new reserves, can be augmented, just as investment augments the stock of manufactured capital. Essentially, it depletes in the process of production while goods and services are being produced.

Natural capital can be measured just as manufactured capital is measured as the cost of investment. We illustrate for instance, that if a firm cost N300million to build and equip, that is, the value of the capital stock reflected in the national accounts. In any particular year such as 2010, the gross capital stock of a country is the sum of such investments over the previous several years, with each year’s investment adjusted for inflation. Since the capital stock wears out in the course of production, the stock is depleted each year by a percentage usually referred to as depreciation. Hence, each year, the starting capital stock is raised by the value of investment and lowered to calculate the net capital stock. Thus, if the economy is to grow sustainably, net capital stock must grow at the same rate.

Certainly, there is no analogous way of measuring and valuing natural capital. We apply the process of valuing manufactured capital to natural capital since capital of any sort produces goods and services that can be consumed in the future. Thus, a measure of the net benefits from producing these goods and services is the difference between their market price and the cost of the other inputs such as materials and labour used to produce them. Capital in this process is valued as the sum of the future benefits,

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discounted by the appropriate interest rate. This is inferred as the net present value as the future stream of value added by capital. In essence, the capital is valued as the net present value of the stream of value added by the capital.

This same mechanism is applicable in the valuation of natural capital. In this case, if a forest is harvested, the log have a market value that is determined by their price less the cost of harvesting the materials, wages and the minimum necessary return to manufactured capital; implying the opportunity cost of manufactured capital engaged in logging. Indeed, the cost of harvesting implies their resource rent in the formation and valuation of natural capital. Thus, the market price of timber will vary depending on the quality and volume of the timber estimated from the characteristics of the forest resources and logging practices (Perkins et al, 2001). From this, the value of the forest resources can be calculated as the discounted present value of the future resource rents, applying the current interest rate; whereas the annual depletion of the forest is reflected as the change in this present value.

However, the application of this approach to fisheries, water supplies, mineral deposits and soil fertility is quite direct. But clearly, the valuation of clean air and water and other environmental amenities is not so easy to compute. This is because, the physiological impact of particular pollutants on human welfare is complex, indirect and has admixture of comprehension and application as many of such impacts have no market values. It is clear for instance, that pollution and dumping have cumulative, non linear effect that cannot easily be quantified and estimated as the case of Koko dumping in Lagos in 1986. It is glaring that climate change due to-carbon emissions into the atmosphere cannot be easily estimated especially the greenhouse effect. This will only be appreciated with collective efforts and understanding of economists and scientists about the costs of environmental degradation, which can make valuation of natural capital to be unified to marketable resources. Such marketable resources will then include fish, timber, minerals and water supplies.

Thus, sustainability can involve the depletion of natural resources and the eventual decline of farming, fishing, forestry, mining, petroleum and other sectors that depend on natural resources. When these industries decline, others grow, including manufacturing, finance, transportation, telecommunication, trade, health, education and other services. This transformation process do reflect the thinking about development, particularly, when it starts from the natural resource base, the net benefits from the primary sector, which provide much of the finance for secondary and tertiary industries as well as for research and development of new technologies that will enhance productivity and transformation of the communities. This is the oil producing communities of Nigeria.

Examples are also evidenced in mono cultural resource rich economies of Kuwait and Brunei that depend heavily on oil export for the transformation of their resource rents from oil revenue in bonds and stocks in the international capital market, and in industries of other countries. Brunei, for instance, invested in cattle ranching in Australia and hostels in United States of America over the years in anticipation that when oil runs out, they can live on their investments sustainably. They have impliedly

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become rentier economies that step them on the path of sustainability in the absence of oil.

Indeed, if the population is growing and a society wants its income per capita to grow as well, then it becomes necessary to invest more than resource rents to continually increase the total capital stock. Within this framework, some communities can choose to accelerate resource depletion in favour of investment in other industries and can equally do it sustainably by investing resource rents productively. But most important of, is the community participation in pulling resources together and promoting current consumption as well as smoothing out sustaining investment, savings and consumption for the future.SUSTAINABLE RESOURCES AND NATIONAL INCOME

The total capital assets that construe sustainable resources include manufactured capital, natural capital, and human capital. Sustainable development requires that these total capital assets should not be declining and that sustainable net national income (NNI) constitutes the amount that can be consumed without decreasing the capital stock (Todaro and Smith, 2011). Hence, sustainability requires the transformation of natural into manufactured capital which can be reflected in the national accounts (Perkins et al, 2001, Lutz, 1993).

In determining the sustainable national income, we consider the Net National Product (NNP) that is equal to Gross National Product (GNP) less the depreciation of manufactured capital (Dm). The equation is stated thus:NNP = GNP – Dm………1

Where NNP is net national product, GNP is gross national product and Dm is depreciation of manufactured capital. We add depreciation of natural capital to equation one and state the equation as:NNP = GNP - Dm – Dn……..2

Where NNP is sustainable national product, Dm is depreciation of manufactured capital assets; Dn is depreciation of natural capital consisting of the monetary value of costs of activities to avoid environmental degradation. But we must also reflect NNP as an appropriate measure of the total resources available for consumption once allowance has been made for the consumption of capital. Since GNP consists of consumption (c) and national saving (s), this is reflected in the equation as:NNP = C + S - Dm – Dn………3From equation 3, so long as savings equals or exceeds depreciation, consumption is less than net national products, this can be sustained indefinitely. In essence, the stock of capital together with labour produces NNP each year; where enough production is sustainable.Where there is a measure of the stock of natural capital, its annual depletion (Dn) can be estimated and reflected in the NNP. This entails an adjustment which is reflected in the computation of NNP and referred to as adjusted net national product (ANNP). This ANNP is stated in equation 4 below as:ANNP = GNP - DM - DN = C + S - DM - DN ……..4

This ANNP has the same implication as NNP. Hence, where enough resources are saved each year to take care of depreciation from manufactured and natural capita,

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the economy can sustain its level of development. This is premised on the fact that net saving (NS) must be greater than O, to retain the basic sustainability criterion. This criterion is stated as:NS = S-Dm- Dn……..5

Indeed, the measurement of natural capital depletion is still afresh, this should be considered as highly appropriate for most developing economies. The standard depreciation for manufactured capital (Dm) for developing economies has been estimated on approximation; and with an allowance for natural depletion would entail an improvement on current estimates of national product and which ought to lead to better policy.

Currently, the United Nations and the World Bank are encouraging countries to start keeping resources and environmental accounts as satellites to their standard national income accounts (Lutz, 1993, World Resource Institute, 2005, United Nations Development Program, 2007). With time and experience, resource and environmental capital will be carefully integrated in the computation of national income of most economies.CONCLUSION AND POLICY IMPLICATION

From our analysis so far, it is glaring that communities such as people’s communes of China have lived and depended heavily on natural capital for subsistence and attendant transformation. Incomes accruing from these activities were quite vital to rid the people out of poverty and their communities out of stagnation. Fundamentally, access to these resources were inequitable and in most communities, the very poor lost control of some of the natural resources to new private property rights arrangement. Efforts to attain sustainable development was slim as demonstrated in the analysis so far. What is required as policy to address the unsustainable development challenges in most communities posed by the findings is to design a pro - poor governance policy with the right and appropriate empowerment of the people and their communities to assert their resolve and leverage them from their traditional lifestyle. This requires mobilization and training that will help them blend scientific management with traditional community practices.

The sustainability of community driven development may equally require a transfer of financial and manufactured capital from the industrial communities to emerging ones in return for the preservation of natural capital that will benefit both communities. The sustainability of the development of the poorer communities will, to a large extent depends on the willingness of the industrial communities to effect this transfer. This requires that increased efficiency and greater sustainability in resource and environmental management in the communities will have to be undertaken by all stakeholders.

To achieve sustainability in the transformation of traditional community into a modern one, the empowerment of women becomes imperative. The empowerment of women in their communities is often a key aspect of programme success and sustainability. The best practice approach is glaring in the Suledo Forest Community and the HASHI project in Tanzania, where local efforts by women to reduce poverty through the conservation and sustainable use of biodiversity, was applauded and recognized by

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United Nations Equator Price. Government in many developing countries can study this initiative and adopt it to promote their communities driven sustainable development.

REFERENCESDaly, H.E. (1996). Beyond Doubt: The Economics of Sustainable Development.

Boston : Beaken Press.Diamond, J. (2005). Collapse: How Societies Choose To Fail or Succeed. New York:

Penguin Books.Lele, S.A. (1991). Sustainable Development: A Critical Review. World Development,

Vol. 19, PP.607 -621.Lutz, E. (1993). Towards Improved Accounting For The Environment.

Washington, D.C. : world bank.Myint, H. (2001). International Trade and the Domestic Institutional Framework, In

Meier, G.M. and Stiglitz, G.E. eds. Frontiers of Development Economics: The Future in Perspective. Washington D.C.: World Bank.

Pearce, D.W. and Warford, J.J. (1993). World Without End: Economics,Environment and Sustainable Development - A Summary. Washington, D.C.: World Bank, P.2.

Perkins, D.H., Raderler, S., Snodgrass, D.R., Gills, M. and Roemer, M. (2001). Economics of Development. Fifth Edition. New York: W.W. Norton and Company Inc.

Sen, A.K. (2001). What is Development? In Meier, G.M. and Stiglitz, G.E. eds. Frontiers of Development Economics: The Future in Perspective. Washington, D.C.: World Bank.

Solow, R.M. (2001). Candidate Issues in Development Economics. In Meier, G.M. eds. Frontiers of Development Economics: The Future in Perspective. Washington D.C.: World Bank.

Taylor, L. (1996). Sustainable Development:An Introduction. WorldDevelopment, vol.24, Pp. 215 - 225

Todaro, M.P. and Smith, S.C. (2011). Economic Development, Eleventh Edition. London: Pearson Education Limited.

United Nations Development Program (2007). Human Development Report, 2007 - 2008. New York: Oxford University Press.

World Commission on Environment and Development (1987). Our common Future. New York: oxford university press, P.4.

World resource institute (2005). World Resources 2005: The Wealth of The Poor - Managing Ecosystems to Fight Poverty. Washington, D.C.: World Resource Institute.

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KARL MAX AND THE CONCEPT OF SOCIALISM

ByUsen Smith, Ph.D

Department of Political ScienceFederal University, Wukari, Taraba State

AbstractThis word has so many colours given by many scholars. In any case, it is known to be an economic and political system based on collective or state ownership of the means of production and distribution-although, like capitalism, the system takes many and diverse forms. After two hundred years of socialist thought, the collapse of the Soviet Communism has broken the grip of the Marxist-Leninist imprimatur on the provenance of this concept. However, the concerns that have been addressed by those who espoused or eschewed the cause still remain. Socialism as a doctrine, or some would say a Utopia, is generally agreed to have been spawned as a reaction to capitalism. The Durkeimian version was rooted in the desire simply to bring the state closer to the economy, society closer in the realm of individual activity, and sentient parts to each other, in this way the pathologies of capitalism, including anomie would be mitigated and eventually relieved. Socialism was a cry of pain which did not demand equality of condition but simply genuine equality of opportunity. The imposition of the former, Durkheim agreed, would destroy the conditions for a healthy society and society could not demand that which was against its interest for survival. However, Karl Marx’s views on the future and the advent of communism have the most pervasive in their influence on the definition of the latter, if not the spirit of socialism. For Marx, socialism implied the abolition of markets, capital, and labour as a commodity. This paper will expatiate more on the ideas of Karl Marx about the concept.

Introduction The origins of twentieth-century socialist movements are to be found in nineteenth-century Europe. Socialism emerged as a reaction to the excesses of the industrial revolution and the free enterprise system that classical liberals championed. Over the course of the nineteenth century, the spread of manufacturing in Britain, France, Germany, and other countries rapidly blighted the cities and countryside with grimy factories and squalid slums. For much of the century, governments did virtually nothing to regulate working hours, safety standards, or child labor. Business owners were free to deal with their work force as they wished. Health care and unemployment insurance either did not exist at all or were grossly inadequate. The vast majority of the working class, lacking basic educational opportunities, faced a desperate future with scant hope of improving their lot. Peasants who owned little or no land of their own labored under similarly arduous circumstances for their landlords. These conditions spawned several variants of socialist ideology. In the first half of the nineteenth century a number of socialist thinkers devised elaborate plans for replacing the free enterprise system (capitalism) with an entirely different economic system in which the workers, or the people as a whole, would collectively own the factories, farms, mines, and other productive enterprises. Common ownership of productive enterprises (or “communism”) would thus replace private ownership. While the schemes proposed by these imaginative thinkers

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differed in detail, they agreed on one essential point: Capitalism was an exploitative and unstable economic system that had to be replaced by a more humane society based on the values of equality and community. These thinkers came to be known as utopian socialists, a term that derived from Sir Thomas More’s design for an ideal society in his book, Utopia, published in 1516. Efforts to establish ideal socialist communities largely failed in Europe, however, and in some cases their adherents journeyed to the United States, creating utopian societies in Texas, Indiana, New Jersey, and other states. Most of these experiments also proved short-lived.1

A more enduring approach to socialism was elaborated by Karl Marx. Marx was significantly influenced by the utopian socialists, but in the course of his long career as an ideological theorist he developed a far more complicated system of thought that incorporated elements of philosophy, history, economics, sociology, and political theory. Marx turned out to be the principal intellectual source of twentieth-century socialism. But his complex ideas were interpreted in different ways by his contemporaries and subsequent generations. In its original nineteenth-century conception, therefore, socialism was understood as a political and economic system in which private enterprise (capitalism) is abolished and replaced by some form of common ownership of factories, farms, and other productive enterprises. Marxism Summarizing Marx’s thought is no easy task. One cannot convey some of the essential points of Marxism without underestimating its complexity, ambiguity, and internal inconsistencies. Marx was born in Germany in 1818. After spending a year studying law at Bonn University in 1835 - 36, he moved to Berlin and became attracted to the ideas of one of the most influential figures in modern philosophy, Georg Wilhelm Friedrich Hegel (1770 - 1831). Marx was particularly intrigued by Hegel’s philosophy of history.Hegel maintained that human history has an identifiable direction and purpose. He argued that the long term progression of history moves in accordance with a process he called the dialectic. For Hegel, the dialectic meant that history advances through recurring clashes between opposing forces. Conflicting religious beliefs, philosophical ideas, forms of government and society modes of artistic expression: Over thousands of years, these and other elements of the human drama were always and everywhere in contention. The progress of humanity from one historical epoch to the next thus always involved conflict. Hegel termed these ongoing conflicts “contradictions.” Marx was captivated by Hegel’s vision of the dialectical process of history. But as an atheist, Marx could not accept Hegel’s assumption that God presided over the dialectical process. Hegel was a philosophical idealist in the sense that he believed in spiritual, or “ideal,” forces like the deity But Marx was a philosophical materialist who rejected spiritual essences, for materialists, human beings and the ideas they create are purely material substances. Economics and Class Conflict as the Motive Forces of History Marx moved to Paris and began his first major treatise on political economy in 1844. 2 In these early manuscripts Marx concluded that economic factors constitute the primary material sources of human action. Private property, in particular, stood out as a principal cause of alienation, which Marx described as “the self-estrangement of man from himself.” He reasoned that as long as there is private ownership of productive enterprises, the workers are engaged in producing objects that do not belong to them. Their employers sell these commodities and pocket the profits, remunerating the workers with wages barely sufficient to keep them alive. The workers

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are therefore “alienated” from the very products of their labor. The only way out of this inhuman predicament, Marx announced, was communism, the common ownership of productive enterprises. Over the next several years Marx was to refine his central notion that the principal motive forces in society and politics are economic in nature. He was joined in this endeavor by Friedrich Engels (1820-1895), the son of a wealthy German industrialist, who had become a socialist in his youth. The two became life-long collaborators: Marx was the creative thinker while Engels contented himself with popularizing his friend’s more abstruse ideas. One of their most famous tracts was the Communist Manifesto, written in 1847 at the request of a group of German communists and published the following year. In this and subsequent works, Marx developed two critical ideas that defined what dialectical materialism meant in practice.3

The first of these ideas was the notion that economic relations condition everything else that happens in human affairs, including the type of government a country has as well as its prevailing beliefs and social conventions. For Marx, economic determines, or at least significantly influences politics. In essence, whoever controls a nation’s economy also controls its political system. Thus the state is always manipulated by those who possess economic power.4

The second idea that was critical to Marx’s concept of dialectical materialism was class conflict. Marx maintained that whenever there is private ownership of the “means of production” (factories, the land, technology, and the human labor force), social classes come into being. The relationships between the main social classes under conditions of private property, in Marx’s view, are invariably antagonistic. “The history of all hitherto existing society,” he and Engels wrote in the Manifesto, “is the history of class struggles.” Thus in the ancient world, the slave-master class and the slave class were locked in hostile confrontation, In nineteenth-century Europe, wherever capitalism was the dominant mode of production, the capitalist confronted the working class. When referring to the capitalist class in the industrializing countries, Marx used the term bourgeoisie. The term derived from bourg, the old German and French word for “town” or city.” (Industrial capitalism in Marx’s time was largely an urban phenomenon.) The bourgeoisie consisted of entrepreneurs who owned and factories and other productive enterprises, together with other private business people who stood to profit from providing their services in a free enterprise economy: bankers, lawyers, accountants, and the like. Marx used the term proletariat when referring to the industrial working class, which consisted mainly of factory laborers. This term came from the Latin proletarius, referring to a member of the non-property-owning lower class of ancient Rome. In Marx’s conceptualizations these two classes were destined to clash, much like the “contradictions” in Hegelian philosophy. True to the laws of the dialectic, the bourgeoisie creates the very class that will destroy it. By building factories, the capitalists in effect create the working class. “What the bourgeoisie therefore produces, above all,” Marx colorfully wrote, is its own gravediggers.” As industrial capitalism matures, he believed, the contradictions inherent in the relationship between bourgeoisie and proletariat inevitably intensify. The rich grow richer while the poor get poorer. The most successful capitalists drive their competitors out of business, a process Marx called monopolization. As consequence, the bourgeoisie shrinks in size, concentrating society’s wealth in very few hands. The middle class, consisting of small, independent property owners -

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shop owners, artisans, small farmers, and the like - are also victimized by the relentless pursuit of capitalist competition. Crushed by aggressive large-scale businesses, the middle class literally disappears, sinking into the working class. As the ranks of the proletariat swell beyond the capitalist system’s ability to employ them, the unemployed grow into a vast “reserve army of the proletariat” that Marx called the lumpenproletariat, the “proletariat in rags.” Meanwhile, the capitalist elite uses its control over the state to reinforce its subjugation of the proletariat. For Marx, the state is always an instrument of class domination. “Political power”, says the Manifesto, “is merely the organized power of one class for oppressing another.” In capitalist societies, “The executive of the modern state is but a committee for managing the common affairs of the bourgeoisie.” In Marx’s view, electoral democracy in capitalist societies is a sham that holds out no hope for the working class; it is nothing more than a “bourgeois democracy,” thoroughly manipulated by the capitalist class for its own benefit. Legislatures, political parties, politicians - all do the bidding of the captains of industry. Britain, where Marx lived from 1849 until his death in 1883, impressed him as a prime example of such a capitalist dominated parliamentary system. Eventually, the proletariat comes to comprise the vast majority of the population wherever advanced capitalism has developed to its full potential. Only about 10 percent of the population ends up owning private businesses. Under these circumstances, the capitalists are outnumbered. Time is then ripe for revolution and socialism. The Socialist Revolution In the Manifesto, Marx and Engels declared that the capitalist bourgeoisie is destined to be overthrown in a working-class revolution. Reduced to a small minority of the population, the bourgeois class is incapable of holding back the mounting tide of proletarian resentment. The proletariat, imbued with growing “class consciousness,” undertakes “the forcible overthrow of all existing social conditions” in a spontaneous revolutionary outburst. Through the dialectical clash of bourgeoisie and proletariat, humanity is then “lifted up” to the higher historical plane of communism. Once installed in power, Marx and Engels predicted, the working class dismantles the entire capitalist system. Private ownership of the means of production is forever abolished, the capitalist “expropriators” are expropriated. The workers themselves take possession of factories, farms, and other productive enterprises, reorganizing economic life for the benefit of the people as a whole. With the dissolution of private property and its transformation into “the property of all members of society,” all class distinctions then cease to exist. The economic exploitation of one class by another is no longer possible. The proletariat scrupulously refrains from setting itself up as a new dominant class. Communism, in Marx’s grand vision, is a truly classless society. Most important, Marx and Engels affirmed that the abolition of private property is accompanied by the abolition of the “bourgeois” state. Indeed, the seizure of state power will be the first task of the revolutionaries. Having captured the main institutions of government, the proletariat then uses its command of the state to wrest all economic power from the bourgeoisie. In pursuing this task, the workers might have to establish a temporary “dictatorship of the proletariat,” but its term would be brief, probably no more than a year. In fact, once the capitalists have been deprived of their economic power, government itself ceases to exist as a political institution. The state, as Engels put it, simply dies out. While there

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may still be an “administration” in communist society to take care of basic services, the state is no longer an instrument of class domination, It has no real political power. By abolishing private property, the victorious working class abolishes class conflict; and by abolishing class conflict, which is the driving force of politics, it abolishes politics itself. Under communism, in other words, private property, social classes, conflict, the state, political power, and even politics itself all disappear. While politics withers away in communist society, economic conditions vastly improve. Marx and Engels prophesied that the great mass of the population would respond to their newfound freedom with a tremendous burst of creativity and productive energy. Although everyone would be expected to work, they would work for society as a whole, not for greedy capitalists. The result would be a superabundance of socially useful goods from which everyone would ultimately benefit. Marx and Engels thus portrayed socialist society (that is, communism) as an idyllic utopia. In Hegelian terms, communism was Marx’s vision of the final stage in the long dialectical march of human history. Beyond a few generalities about a classless, stateless society, however, the two founding fathers of modern socialist ideology had very little to say about how communism would actually work. They left no blueprint indicating how the socialist economy would be organized. Nor did they outline a communist “constitution,” since there would be no politicized government. They assumed that, without any class conflicts to divide them, the people themselves would find ways to manage their common affairs harmoniously.Scientific SocialismIn the Manifesto, Marx and Engels proclaimed that the destruction of capitalism and the victory of the proletariat were inevitable. For Marx, the inevitability of socialism was ordained by the immutable laws of history, whose secrets he believed he had discovered. Just as Charles Darwin had discovered the laws of biological evolution, Marx maintained that he had uncovered the laws governing humanity’s social evolution. On these grounds, Marx always insisted that his theories of dialectical materialism were scientific. So conceived, history was the source of communism’s legitimacy. Accordingly, Marx asserted that the entire course of humankind’s historical development, from the most primitive pre-industrial societies to the highest stage of communism, was governed by the laws of economic determinism. These laws, moreover, were immutable; no one could change them or get around them. Both Marx and Engels believed that, as a general rule, industrial capitalism was a necessary precondition to the construction of a successful socialist society over the long term. They did not believe that predominantly agricultural societies were ripe for socialist development, and so they dismissed peasants as incapable of mounting a true socialist revolution. Only the industrial working class had the class consciousness necessary to create a stable and enduring socialist society. Consequently they predicted that socialist revolutions would occur only in advanced capitalist countries such as Britain, France, and Germany. In their view, nineteenth-century Russia was an unlikely candidate for revolution. Russia’s population consisted overwhelmingly of impoverished peasants, not industrial workers, and its capitalist bourgeoisie had not yet formed itself as a dominant class.5

These “scientific” predictions would prove wrong. In actual fact, the proletarian revolutions Marx and Engels foresaw as imminent in Britain, France, and Germany in the 1840s never took place in these countries. Communist revolutions did not occur until the twentieth century. Ironically, they triumphed in precisely those countries where industrialism and capitalism were

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largely undeveloped and where a modern bourgeoisie was weak or absent, Countries such as Russia, China, and Cuba were predominantly agricultural societies when the communists came to power. The triumph of what came to be known as Soviet-style communism (or Marxism-Leninism) in these countries represented only one strand of Marx’s legacy however. In another irony of history, the advanced capitalist societies of Western Europe, which Marx’s “laws” regarded as primed for revolution, did not experience socialist revolutions. Instead, they developed socialist movements that combined socialist economics with ballot-box democracy, a combination known as social democracy. Soviet-Style CommunismCommunism triumphed in Russia in 1917 under circumstances significantly different from those predicted by Marx and Engels. Russia was still an overwhelmingly agricultural society in 1917. Furthermore, Marx had depicted the revolution as a largely spontaneous upheaval carried out by the masses; he did not portray it as an organized conspiracy led by a handful of revolutionary leaders. But communism came to Russia as a well-orchestrated coup d’ètat engineered by a highly centralized political party, the Bolsheviks. It was this party, which soon came to be known as the Communist Party that defined the essence of Soviet-style communism. The party’s principal creator was Vladimir llyich Lenin (1870-1924). An avid student of Marx’s writings from his teenage years, Lenin placed his own stamp on the Marxist tradition by adapting its core ideas to Russia’s specific conditions. Lenin’s single most important contribution to Marxist theory, as expostulated in the 1902 pamphlet What Is to Be Done? Burning Questions of Our Movement, was the notion that the industrial working class in modern Russia and Europe was not capable of launching a spontaneous mass revolution on its own; it had to be led to socialism by a party of professional revolutionaries. Experience had already shown that, instead of risking a potentially disastrous uprising, most workers were content to form trade unions and to seek negotiated compromises with their capitalist employers. But trade unionism, argued Lenin, amounted to acceptance of capitalism; only capitalism’s complete destruction could liberate the workers from exploitation. If the workers would not destroy capitalism on their own a “party of a new type” would have to be formed whose primary task would be to organize and carry out a violent revolution at the first sign of weakness in the capitalist ruling class, This would be the “vanguard of the proletariat,” acting as its organizational weapon.”6

For Russia’s rulers, that critical moment of weakness occurred amid the turmoil of World War I, with minimal resistance Lenin’s Bolsheviks, organized into a small militia, seized official buildings that had been abandoned by an unpopular government in November 1917. In a brutal civil war that extended into 1921, the Bolsheviks finally vanquished all their opponents. From that point onward, Russia’s Communist Party monopolized power in what subsequently became known as the Soviet Union (or USSR, the Union of Soviet Socialist Republics). The key idea of Leninism is the primacy of the Communist Party. It is the party that leads the revolution; it is the party that governs the country once the revolution has eliminated its foes. Lenin’s definition of the “dictatorship of the proletariat” was distinctly different from Marx’s conception of a temporary government in the hands of the masses, “The dictatorship of the proletariat,” Lenin affirmed, “is the dictatorship of the party.” Far from being a temporary phenomenon, the (Communist Party exercised dictatorial rule over the Soviet Union until December 1991, when its power collapsed and the USSR disintegrated.

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For much of its reign, the party leadership utilized all the coercive mechanisms at its disposal to enforce its will, at times resulting to mass murder. Joseph Stalin (1878 -1953), who succeeded Lenin following a power struggle within the party hierarchy, brutalized Soviet society by imprisoning millions in concentration camps, killing the cream of the party elite, and intimidating workers, peasant’s intellectuals, and others into submission through the unremitting use of violence. His successors were not as murderous as Stalin on a mass scale, but until the late 1980s they did not shrink from using severe coercive measures to ensure compliance with their dictates. In another sharp departure from Marx’s tenets, Soviet rulers erected a powerful state to undergird their dominance. Instead of dying out, the state swelled into a gargantuan bureaucratic arm of Communist Party rule. The Soviet state was a highly politicized state, moreover; it consisted of party and governmental institutions that joined in propagandizing the population, repressing dissent, and implementing policies over which the people had little or no influence. Its top officials constituted privileged elite who enjoyed benefits denied to the mass public. This enormous governing apparatus also planned and operated virtually all economic activity in the USSR, presiding over a centrally planned economy.At no point in its history did the Soviet Union approach the stateless, egalitarian utopia that was Marx’s conception of communism. The USSR was called “communist” only because it was governed by the Communist Party. The same can be said for other “communist” countries that came into being after the USSR. These included China, where the Chinese Communist Party took power in 1949 following a long civil war Poland, Hungary, and other Central and East European states on which the USSR imposed Communist Party rule after World War II; Cuba, where Fidel Castro’s communists won a revolutionary struggle in 1959; and others such as North Korea and Vietnam. All were the heirs, not just of Marx, but also of Lenin. Hence twentieth-century communism, defined in terms of Communist Party dictatorship, was rooted in the ideology of Marxism-Leninism (see the figure).

KARL MARXCommunism(Marxism-Leninism) Social Democracy

Politics: Communist Party dictatorship Politics: DemocracyEconomics: Centrally planned economy (state control).

Economics: Until World War II, favoured state workers’ ownership of most of the economy; after World War II, favoured mixture of private enterprise and welfare state.

Where: Russia/Soviet Union, 1917-91; Central and Eastern Europe, 1945-90; China since 1949; North Korea since 1945; Vietnam since 1954/73; Cuba since 1959.

Where: Western Europe.

FIGURE I Legacies of Marxism

Today, the states that still claim to be communist - China, Cuba, and North Korea - are attempting to evolve to meet the demands of living in a capitalist world economy. China has gone furthest in adopting capitalism, even while the Communist Party retains control of the political system. Cuba, still governed by the Castros (Fidel’s brother Raul is now the leader), has become more friendly to foreign investment and trade, even though the United States

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refuses to deal with the country in most ways. North Korea has made the least progress in adapting to capitalism and remains a largely closed off society, a pariah in world politics. Social DemocracyThe second main inheritor of Marx’s legacy was social democracy, which .is a combination of economic socialism and political democracy. One of the chief incubators of the social-democratic tradition was the Social Democratic Party of Germany (known by its German initials as the SPD). Founded in 1875, the SPD’s backbone was the German working class, a disparate mass of mostly blue-collar workers. Deprived of economic and political power by the kaiser’s authoritarian regime, Germany’s workers looked mostly to the SPD to win them a share of participation in the affairs of government. The ballot box became their main political weapon. Most German workers shunned the path of revolution, sharply contradicting Marx’s predictions of an inevitable proletarian uprising.One SPD leader, Eduard Bernstein (1850 - 1932), drew the implications of this contradiction between Marxist theory and working-class practice with bold clarity. His book Evolutionary Socialism, published in 1898, was a point-by-point refutation of key tenets of Marx’s thought. For Bernstein, the immediate aim of the socialist movement should not be to mount a violent revolution but to promote democracy. Bernstein defined democracy as “the absence of class government,” and he advocated universal suffrage, proportional representation, equal rights for all citizens, and parliamentary control over legislation. He emphatically rejected both the kaiser’s militaristic dictatorship and Marx’s “dictatorship of the proletariat.” And he regarded compromise and moderation as indispensable elements of democratic government. As to socialism, Bernstein conceived of it as a “cooperative society” organized for the benefit of the whole population and guided by the principle of majority rule. Over the next several decades, the SPD’s commitment to political democracy intensified. The party was a mainstay of democratic government during Germany’s ill-fated Weimar Republic (1918 - 33), which died an early death at the hands of Adolf Hitler and the Nazis. After World War II a revived SPD became one of the two largest parties in West Germany, a status it still enjoys today in unified Germany. Meanwhile, starting in the 1950s, the SPD began retreating from its earlier commitment to economic socialism. It accepted private enterprise and the market as the principal mechanisms of economic production. It has sought to promote the interests of the working class and other constituents by working within the capitalist system through democratic processes. Other social-democratic parties emerged in the industrialized nations of Europe and have undergone a roughly similar historical evolution. They include Britain’s Labour Party, France’s Socialist Party, Scandinavian social-democratic parties, and numerous others. Like the SPD, most social-democratic parties in today’s industrially advanced democracies accept private enterprise and the market economy. Today, social democracy in most democracies is practically indistinguishable from American social liberalism, though many European social democrats favor a larger welfare state than do most U.S. liberals. The United States never developed a successful social-democratic party that favored the state’s takeover of factories and other productive enterprises.7 Socialism in the Developing World The varieties of socialism are multiplied when we look at socialist ideas in the developing countries. In Asia, Africa, the Middle East, and Latin America, various forms of socialism have

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been articulated and adapted over many decades to fit social and economic conditions that are quite different from those that prevailed in nineteenth- or twentieth century Europe. In most instances, these variants of socialism emerged in countries with little or no industrialization. A proletariat in the European sense has been either very small or nonexistent. Not surprisingly, some of the most creative socialist theorist and political activists in the less economically advanced part of the world did not base their ideas on Marxism but instead on local traditions and circumstances. One of the most influential Third World socialists was Julius K. Nyerere (1922-99), the principal theoretician of what became known as “African socialism.” A British educated Christian from Tanzania, Nyerere rejected Marx’s notions of class struggle and devised a Tanzanian variant of socialism rooted in long-standing tribal customs that emphasized the individual’s responsibility to the community and the community’s responsibility to care of the individual. Out of this tradition he derived the concept of ujamaa, or “familyhood”. Under Nyerere’s leadership as president of Tanzania for more than 20 years, the government abolished private ownership of land and instituted a system of communally owned rural property, touting self-reliance as the country’s main economic goal.8 Several African states embarked on roughly similar paths in l960s and 1970s. Over time, however, most of them including Tanzania, were forced by economic realities to curtail or abandon their lofty goals of agricultural self-sufficiency and full economic equality. Most have reintroduced market economic mechanisms. Another source of non-Marxist concepts of socialism was the Middle East. Initially, the Muslim Brotherhood, founded in Egypt in the 1920s, had socialist leanings. A coup involving Colonel Gamal Abdel Nasser deposed the king of Egypt in 1952 and installed a new regime led mainly by military officers. Nasser elaborated a form of “Arab socialism” that placed heavy emphasis on governmental direction of the economy. These measures were accompanied by efforts to anchor the ideology of Arab socialism in the religious traditions of Islam.9 Similar concepts of Arab socialism were elaborated in the I960s in Syria, Iraq, and Libya. As in Nasser’s Egypt, they tended to emphasize the state’s responsibility for guiding the economy. They also went hand in hand with strong authoritarian governments. The popularity of socialism in the Middle East has waned in recent decades, however, in part because of pressures from the United States and international financial institutions to open these economies to market forces and in part because of the collapse of the Soviet Union, which was an occasional ally of several states in the region.

In Latin America, socialist movements have frequently tended to have a Marxist background. Some have been Soviet-oriented Communist Parties, some have espoused violent revolution of one kind or another (at times with the support of Fidel Castro’s communist regime in Cuba), and still others have been social democratic in orientation. One notable example of a radical social democrat was Salvador Allende, who was elected president of Chile in 1970. Allende’s Socialist Party was committed to democracy but was equally committed to redistributing the nation’s wealth from the rich to the poor and to nationalizing large privately owned corporations, including copper mines owned by U.S. companies. Although Allende was not a Soviet-style communist, Chile’s Communist Party was part of his governing coalition. Irked by Allende’s socialist economic policies and his friendly gestures toward the Soviet Union and Castro’s Cuba, the Nixon administration conspired with Allende’s domestic opponents to

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undermine his government. In 1973, a military coup led by Gen. Augusto Pinochet and abetted by the CIA ousted the socialist coalition. Allende was killed in the assault, and democracy itself was extinguished in Chile for the next 16 years.Conclusion Since the collapse of communism in the Soviet Union and East Central Europe, and the failure of socialist economies in the developing world, socialism seems to have receded as a major ideological force around the world. Whether economic and social conditions will lead to its revival some day is an open question.

ReferencesOn Utopian Socialism, see Edmund Wilson, to the Finland Station (Garden City, NY: Doubleday, 1940), Robert Heilbbroner: The World’s Philosophers, 7th ed; (New York Simon and Schuster, 1999); Charles Nordhoff. The Communistic Societies of the United States (New York Hillary, 1960, first published in 1875).Economic and Philosophic Manuscripts of 1844, excerpted in Robert Tucker ed: The Marx-Engels Reader (New York, W.W. Norton, 1974) pp. 53-103.Manifesto and the Communist Party in Tucker, the Marx-Engels Reader pp. 331-62.“The Mode of production of economic life conditions the social, political, and intellectual process in general” from a contribution to the critique of political economy in Tucker. The Marx-Engels Reader, pp. 4 see also Melvin Rader, Marx’s Conception of History (New York: Oxford University press, 1979.Engels “On social Relations in Russia” (1875), in Tucker. The Marx-Engels Reader pp. 333-34.V.I. Lenin , What Is To Be Done? In the Lenin Anthony, ed, Robert C. Tucker (New York, W.W. Norton, 1975) pp. 12-114.Berntein wrote that the United States “apparently contradicts everything that the socialistic theory has hitherto advanced.” In 1906, a prominent German sociologist addressed this curiosity.Julius Nyerere, Ujamaa-Essays on Socialism (London, Oxford University Press, 1968).Abdel Moghny Said, Arab Socialism (London, Blandford Press, 1972).

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AN ASSESSMENT OF SELECTED GOVERNMENT POLICIES ON EMPLOYMENT GENERATION IN NIGERIA

BY

Aikor, Shirgba TimothyDepartment of Business Administration

Nasarawa State University, Keffi

ABSTRACTThis paper assessed selected government policies on employment generation in Nigeria with emphasis on National Directorate on Employment (NDE) and Public Private Partnership (PPP). Narrative Textual Case Study (NTCS) is the methodology adopted for the study. The paper discovered that, despite all the efforts put in by government to generate employment, unemployment has continued to rise in Nigeria. The researcher upon review of relevant works discovered that, lack of infrastructure; inadequate funding, loan diversion, inconsistent government policies and lack of continuity of policies due to regime change, corruption, poor monitoring of programmes and absence of long-term funds are the factors affecting employment generation policies in Nigeria. It therefore recommends a declaration of state of emergency on infrastructure, fight against corruption and a total overhaul of the existing government programs on employment generation and relevant laws to overcome the unemployment challenge.Key words: policy, Government Employment policy, Employment Generation.

INTRODUCTION

Unemployment and poor job quality of employment remains a pressing issue worldwide. Global vulnerable employment accounts for 1.5 billion people, or over 46 per cent of total employment. In both Southern Asia and sub-Saharan Africa, over 70 per cent of workers are in vulnerable employment. There are limited contributory social protection schemes, this result to low productivity and highly volatile earnings. In addition, there are also significant gender gaps in job quality (Uwazie, 2016). According to Stevenson and Gumpert (2016), Women face a 25 to 35 per cent higher risk of being in vulnerable employment than men in certain countries in Northern Africa, sub-Saharan Africa and the Arab States. The unemployment situation has the capacity to return emerging economies to austerity accompanied by intensified risks of social unrest. The ‘working poor’ phenomenon is also prevalent as employment quality at the lower end of the earnings spectrum has also begun to fall. In 2015, about 327 million employed people were living in extreme poverty (those living on less than US$1.90 a day in PPP terms) and 967 million in moderate or near poverty (between US$1.90 and US$5 a day in PPP terms). This represents a significant reduction in extreme poverty compared with the levels in 2000, but the improvements since 2013 have been more limited (especially within the least developed

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countries). Furthermore, the number of employed persons living in moderate and near poverty has increased since 2000(Okojie, 2014). Ashike (2015) collaborates this that, the working poverty is on the rise in Europe. There is a shortage of decent jobs globally; more workers may give up looking for work, and the number of working-age individuals who did not participate in the labour market has increased (Cazes and Verick, 2015). The current slow growth in the global economy and the prospect of lower long-term growth have many negative implications; fall in the working-age population and labour force participation, rising inequality, vulnerable employment and poor job quality among others.

As the world economy continues to weaken, posing significant challenges to enterprises and workers, there is growing need to bring about a paradigm shift in the world economy where governments across the globe continuously search for new strategies and/or improved methods of resuscitating the ailing economies so as to maintain a healthy economic indicators such as employment, education, inflation, balance of payment etc. This situation (economic weakening) has caused a further increase in global unemployment such that in year 2015, the number of unemployed people was 197.1 million (Onyekeya, 2015). It is evident that, the increase in the number of jobseekers occurred mainly in emerging and developing countries. The employment situation in Latin America, Africa as well as some Asian countries (especially China) and a number of oil exporters in the Arab States region is expected to have worsened if urgent action was not taken (Onyekeya, 2015). In most developed economies, there is moderate job growth, especially in the United Kingdom, Canada, United States and some Central and Northern European countries. However, despite recent improvements, unemployment rates remain high in Southern Europe and it tended to increase in those developed economies most affected by the slowdown in emerging Asian economies (Baldmin & Teulings, 2016)

Sound government policies beget a vibrant economy and subsequently economic growth that eventually lead to economic development of any nation. There are global efforts at addressing the employment challenge; Access to education, training skills (vocational and technical) is the strategy adopted by some European Countries, same as the investment initiative designed by the European Commission (Zhu, 2015). In the same vein, the North African countries have skills acquisition and foreign funding support through Development partners to boost employment. In Latin America and the Caribbean, fiscal policies are adopted to regulate employment, for example, public expenditure on Active Labour Market Policies has increased in most countries in the region for which information is available. In most of the countries in the region, expenditure on ALMPs has largely outpaced public spending on unemployment insurance (Cerutti, Fruttero, Grosh and Rodriguez, 2014). China regulates employment through international trade, just like USA. For example, China is the main trading partner for the region. However, China has been gradually moving away from a reliance on manufacturing towards a focus on services sectors and consumption; this has reduced its demand for raw materials. The consequent slowdown in international trade with China therefore has the capacity to worsen the sub-Saharan Africa region economy considerably. To address these shifts in the international environment, the continent (Africa) needs to diversify and move into higher value-added activities in manufacturing (ILO, 2015). Some countries adopt labour market tightness partly contributing to widespread pay increases, which are also beneficial to workers. Minimum wage policies and increases have made a particularly important contribution to unemployment control

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(Baldwin et al, 2015). For example, Myanmar implemented its first minimum wage in 2015, to improve workers' incomes while establishing itself as an alternative garment manufacturing destination in the region, and Cambodia, Indonesia and Viet Nam all implemented significant increases in minimum wages in some sectors or regions. (Koroma, 2012).

Policy makers in Nigeria recognized the importance of job creation for full employment quite early such that, the First National Development Plan (FNDP) of 1962 - 1968 provided for the ‘development of employment opportunity’ as one of its cardinal objectives. The subsequent National Development Plans were no exception. Specifically, the Second National Development Plan included the ‘reduction of unemployment’ as part of its key focus. This strategy to achieve this was through industrialization as contained in the National Industrial Policy to create more employment opportunities. The 3rd National Development Plan and the 4th provided for “reduction in the level of unemployment” (Momoh, 2012). The Agricultural or primary produce was essentially the main source of employment generation during this period. According to Gbande (2015), 70 percent of Nigerians are employed in agriculture.Between 1980 and 1985, employment had expanded covering the public, private and services sectors of the economy (Masari, 2014). Unfortunately, in between same period and specifically from 1982, there emerged a gradual contraction in employment opportunities due to fall in global crude oil prices and the neglect of agriculture, resulting to reduction in foreign exchange earnings (Gbande, 2015). This resulted to a drop in government revenues. The manufacturing sector was affected due to shortage of imported spare parts and general challenge to international trade. The oil crisis that reared its head at the time culminated into the retrenchment of workers in both the public and private sectors. Some policies like multiple taxes and Structural Adjustment Program (SAP) by the Gen. Babangida administration resulted to large scale unemployment. SAP further worsened the situation with the devaluation of the naira, which weakened our currency in international trade. All these caused many Nigerians particularly the youth to be thrown out of their jobs (Mbah and Agu, 2013). Meanwhile, the National Population was growing rapidly, this coupled with expansion in educational facilities resulting to more youths being graduated from higher institutions yearly, the rapid increase in youth graduation further worsened the unemployment situation as many graduates go about looking for jobs (Masari, 2014). The persistence of this unemployment challenge made government to look the way of direct and indirect policies that could generate employment to meet the growing young population. The continued rise in unemployment rate in the midst of policies aimed at creating more jobs to curb unemployment problems is a concern that demands to assess. The main objective of the study is to assess the effect of selected government policies on employment generation in the Nigeria. The specific objectives are; examine the contribution of the National Directorate of Employment (NDE) to employment generation in Nigeria, and to assess the extent to which Public Private Partnership influence employment generation in Nigeria. The study is limited to the period 1980 – 2018 for analysis. This is because, the unemployment challenge in Nigeria started at about 1980, when crude oil prices started falling, making it a good base year for the study. It is important to note that, there may be several factors responsible for the failure of government employment generating policies. However, this

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study limits itself to determining the extent to which the selected policies proved effective and their contribution to full employment in Nigeria.The methodology adopted for this research is Narrative-Textual Case Study (NTCS), this is a social science oriented methodology that is usually adopted for research in cases of sustainable development, under this method, and secondary data is sourced, reviewed and analyzed. The researcher here relied on data from secondary sources like journal articles, government gazettes, publications, International Labour Organization (ILO) reports, government bulletins and interactions with people. The collated literature is reviewed, findings outlined and recommendations suggested.STATEMENT OF THE PROBLEMIn Nigeria, despite the formulation and implementation of government unemployment intervention programmes among other employment generation policies, unemployment has continued to rise (Otti, 2014). According to International Labour Organization (ILO), unemployment is one of the biggest threats to social stability in many countries. Nigeria’s unemployment crisis is more serious when compared with her counterparts in the continent. Recent statistics by the World Bank (2015) has put the unemployment rate in Nigeria at 22 percent, while the youth unemployment rate is 38 percent. The report shows that the bracket age of 15-35 years old account for close to 60 percent of the Nigeria’s population and 30 percent of the work force. The report also indicates that approximately 4 million people entered into the labour market every year (Matanmi, 2016). In response to these challenges, successive governments in Nigeria introduced various intervention policies geared towards economic growth with rich employment generation opportunities, however, the unemployment from the researchers’ observation is still high despite the numerous policies, it is as a result of this that the researcher is motivated to conduct a study to “assess the effect of selected government policies on employment generation in the Nigeria”.REVIEW OF RELATED LITERATUREConceptual FrameworkConcept of Government Policy.Nations are always faced with several problems be it political, economic, religious, cultural, employment or socio economic. Nigeria as a nation is faced with similar challenges. In such instances, governments formulate policies aimed at dealing with the prevailing specific circumstance. Government Policy is therefore defined as a “Political decision taken to implement programmes to achieve societal goals” (Cochran, 2015) policy can also be defined as “what government does, why they do it and what difference it does make” Dye (1995).The terms policy is viewed differently by researchers from various perspectives. In the view of Isimoye (2012), “it is government programmes of action”, while Obasi (1998) see policy as “a pattern of resources allocation represented by projects and program designed to respond to perceived public problems or challenges requiring government action for their solution”. Ikelegbe (2006) define policy as “integrated course and programs of action that government has set and the frame work or guide it has designed to direct action and practices in certain problem area”.On the other hand, the International Labour Organisation (2015) defines Government policy on employment as “A vision and a practical plan for achieving a country’s employment goals”. Government Employment policy is not just a job creation programme, but it takes into account a

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whole range of social and economic issues. It affects many areas of government; not just the areas in charge of labour and employment but every part of the economy(Berry, 2013) Government employment policy brings together various measures, programmes and institutions that influence the demand and supply of labour and the functioning of labour markets. Therefore, a government employment policy incorporates issues of social protection, hence, the premise of a government employment policy is to promote productive employment through a multi-pronged employment generation strategy to become more employment intensive (Teal, 2014).Dimensions of Government Employment policyA study carried out by Okojie (2014) highlights the dimensions to Government Employment policy as follows: I)Promote the goal of full employment as a priority in national, economic and social policy, and to enable all men and women who are available and willing to work, to attain secured and sustainable livelihood through full productive and freely chosen employment and work; ii) Stimulate economic growth and development, eradicate poverty, and improve the levels of living by minimizing the rates of unemployment and underemployment, optimizing the utilization of labour and human resources and protecting areas in which Nigeria is well endowed. Furthermore, to promote the development of relevant manpower/human resources that will continually meet the needs of the nation; iii) Highlight the multi-sectoral character of employment generation and the collective responsibility of key stakeholders through harmonized efforts toward achieving this goal; iv) Design strategies that will promote skills and competencies for those in the formal and informal sector especially in rural areas; v)Promote conducive and enabling environment to enhance the growth of the private sector and transformation of the informal sector into formal sector; vi) Enhance the integration of migrant labour on employment outcomes in the Nigerian labourConcept of Employment GenerationEmployment generation is the process whereby the labour force is engaged in productive activities in the economy. Full employment is the most desired employment condition in the economy; however, this is a ruse in developing countries like Nigeria, because it is a dream that is yet to be achieved. Beveridge (1994) defined full employment as situation where there are more jobs than men. Full employment does not mean that everybody in the labour force is employed. A condition of full employment can be said to exist if the number of unfilled vacancies is equal to the number of people who are out of work (Hanson, 2013). In any dynamic economy, some unemployment rate of 4 and 5 % will be compatible with the aims of full employment. Unemployment has been the problem that is beleaguering Nigeria and has been given the stakeholders (government, employers of labour) sleepless night. In fact unemployment has become a “living challenge” in the Nigerian economy. Accordingly Global Employment Agenda (GEA) was developed by the International Labour Organization (ILO 2003a) as response to this concern and as a strategy in meeting the goal of production and decent employment.The GEA recognizes that employment generation is fundamental in poverty reduction and the fight against social exclusion. The main aim of the GEA agenda is to “place employment at the heart of economic and social policies “of national governments. ILO sees GEA as part of broader goals of promoting employment generation. In addition to the above concern, the global

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economic and financial crisis that started in 2004 aggravated the employment situation and revealed the underlying job deficits. Dimensions of Employment GenerationThere are three major sources or types of employment generation; Public sector employment, private sector employment and informal sector employment.

Public Sector: this is employment provided by government at both national, states and local authorities. In addition government comes up with policies on employment generation that emphasizes the provision of a favourable environment for private investment and job creation. The government shall protect and assist vulnerable groups through adequate safety net, such as the special compensatory.

Private sector: It is the private sector therefore, which should play the leading role of investing in the productive enterprise that provide increased employment and generate incomes. This calls for national promotion of an “enterprises culture” which will induce self-reliance, risk taking, and a national environment that rewards effort and initiative. Individuals, groups, and the community at large, in line with decentralization and participatory development, also have important responsibility for employment creation. Consequently, individuals and groups should be ready to create their own jobs. There will be the need to move from a culture of “job seekers” to “job creators” and self-employment.

Informal Sector

The term was first coined in Ghana in the study of income and employment opportunities of Ghana by Hart (1971). ILO (1972) used the description in its report on employment mission to Kenya. Fashola & Akano (2013) describe informal sector operators as “enterprises” distinguished by the following characteristics: Small-scale of operation in respect of capital and turnover; ownership of the enterprise by a family (or close relations); relatively low level of education of the owner of the enterprises; small number of employees, if any, apart from relations; predominant use of local resources; labour intensive and primitive technology; ease of entry and unregulated perfectly competitive market structure; skills acquired mainly informally or on the job and low labour productivity. Informal sector is the highest employer of labour in sub Saharan Africa, most underemployment occur in this sector. It is virtually not regulated and their operations not documented.

Selected Government policies on Employment Generation (1980-2018)

National Directorate of Employment (NDE)Sometime in 1986, the National Manpower Board was directed to conduct a sample survey of the unemployed youth, the result was frightening (some 2million unemployed youths) and this led to the inauguration of Chukwuma Committee in the same year to devise some strategies to combat the surge of mass unemployment that was emerging in the country (Nzenwa, 2000). In order to reduce the unemployment, the Babangida administration in 1986 established the National Directorate of Employment (NDE) as part of Federal Government’s effort towards encouraging the survival and development of small-scale or self-employment (Entrepreneurship) for the main aim of addressing the surging unemployment particularly among the youths in Nigeria. The NDE mandate was very specific and its programmes were

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consciously charged with the provision of skills and loans to enable young graduates set up their own businesses. Under the programme, the beneficiaries who are the small business owners enjoy low taxes, free technical advice and other support services provided by the Federal Government to enhance employment generation in an effort to alleviate unemployment problems in the nation. The programmes so far have the highest number of small-scale businesses throughout the country. (Ogundele, 2016).The NDE is self- enterprise, which includes self-employment and self-reliance instead of wage employment. The NDE vision is pursued through policy planning and 4 major programmes; Rural Employment Promotion; Vocational Skills Development; Special Public Work and Small Scale Enterprise (OKENWA, 1999). Oyemomi (2009) in his study based on the data collated show that, a total of 4,400,396 people benefited from various NDE programmes in 30years since establishment. This large number would have joined the swelling ranks of the unemployed without the presence of the NDE. The importance attached to NDE in Nigeria can be seen from the fact that with the end of the military rule in 1999, the programme was given legal backing, with its continued existence guaranteed by its enabling ACT, CAP250 of the laws of the Federal Republic of Nigeria (NDE, 2016). Public Private Partnership (PPP) and Employment Generation Public Private Partnership so far has no one single or concise definition. Accurately defining PPP is problematic because by nature it is a contextual concept, responding to the institutional, legal, investment and public procurement settings of different jurisdictions, also considering the contextual nature of individual agreements (Colverson, 2012; Khanom, 2010). Colverson (2011) and Turley & Semple (2013) sees PPP as a generic term used to describe a myriad of structures that facilitate the participation of the private sector in the provision of public infrastructure and services.Osehobo (2012), relates that PPPs are contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility. Adebisi and Oni (2012) adds that PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. To Adom, Naude, and Goedhuys (2011) PPP refers to a specific type of arrangement that involves a long-term agreement between a private sector party and a government in which the private sector party designs, builds, finances and operates public infrastructure in exchange for some form of payment.

Salami(2013) has been able to identify some of the employment generation opportunities associated with PPP as follows: i)The general construction works in all PPP projects including housing require the services of experts like engineers, builders, unskilled workers, suppliers, sub-contractors etc., the multiplier effect of this on employment is overwhelming. For example, because of the port concession a 1.6km dual carriage road had to be constructed in Apapa leading to employment of workers, ii) There is general employment for the day to day activities

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of the institutions so run under PPP, hence the need to employ, iii) The involvement of the private sector in public services through Public-private partnership concept will help to increase the volume of investment. The concession of the ports gave rise to investment opportunities in the areas of channel management, pilotage and towage services, independent power project, information and communication technology (ICT), Greenfield port development and many more as a result of PPP (Habib, 2012). iv) the revenue realizable from fees and development levies can be ploughed back by government in providing social safety nets and other social utilities in health, education, water supply, energy, infrastructure etc. v) the training in skills acquired by the workers in PPP projects help for self-employment and self-reliance when out of work and finally, PPP is all about closing infrastructural deficits in the country and the relevance of infrastructure particularly energy and roads to employment generation through SME activities cannot be overemphasized.3.0 Empirical ReviewAdom, Naude and Goedhuys (2011) carried out a research to find out the impact of NDE on employment generation in Nigeria, a case study of Ondo state. The descriptive research design was used while data was collected analysed using simple descriptive table and Pearson product moment correlation. The findings revealed that there was awareness of NDE in the state among the youths as they are often publicized, however, the program has not achieved the expected impact among the indigenes in the areas of poverty reduction, increase in the number of micro and small business and the reduction in youth restiveness in the state, the study concluded that there is a gap between government claims and the reality on ground in the area of study.

Adebayo (2016) carried out a study on Entrepreneurship Development in Nigeria. The aim or objective of the study was to identify the causal factors that militate against the effectiveness of government efforts at entrepreneurship development. The study findings show that, the treatment of all small businesses and entrepreneurial development as one same concept constrains the development of entrepreneurship in Nigeria. It canvasses for a distinctive categorization to distinguish entrepreneurial firm from non-entrepreneurial small businesses. The research methodology adopted is descriptive survey.

Adeyemi (2014) carried out a research on assessment of entrepreneurship education as a government policy and employment generation among university graduates in Nigeria with the aim of investigating the impact of entrepreneurship education on employment generation and the effect of entrepreneurial skills acquisition on entrepreneurial performances. Survey research design methodology was used. The data was analysed using t-test and Pearson Product Moment Correlation. The result showed that 82.6% of respondents agreed that entrepreneurial education empowered them to start a business of their own and that skills acquired improved their performance by 61.4%. The study concluded that, increased entrepreneurial education and training had led to increased employment generation among university graduates in Nigeria.

.Afolabi (2016) examined the performance of NDE as well as assesses the trend in unemployment rate at pre- and post-establishment of the programs in Nigeria. The methodology used is descriptive survey. The study find out that many unemployed graduates do not have the opportunity to participate in the NDE programme. And the programme is

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bedeviled by insufficient funds, political interference, corruption and lack of access to credit facilities. The study advised government to stop political interference and to improve funding to the agency.

Carlo (2013) examined the contribution of NDE in facilitating youth employment through skill development and job creation in Lagos State. Descriptive survey methodology was used for this study. The findings of the study revealed that 4,188 graduates registered with the job centre of the NDE in Lagos and 341 of the number were employed representing 8.1 percent. The findings further revealed that NDE produce appropriate skills, however, the pace of NDE is slow in meeting the demands for skills development among graduates in Nigeria.

Agbanus (2012) examined the viability of PPP in the Nigeria railway transportation sector. The researcher contextualized the framework of the study on new public management rooted in the system of mixed economy with emphasis on use of economic markets as a model for resource mobilization and utilization. It prescribes BOT model of concessioning for the resuscitation of the Kafachan-Makurdi-Enugu- Port Harcourt rail line. The study identified the need to develop a robust National Infrastructure Master Plan (NIMP) and a consistent programme of capacity building in the area of manpower development as a way out of the challenges to be addressed by Government for a successful implementation of the policy. The study adopted the descriptive/analytical approach to collate data. However, the study failed to state the economic viability of the project in terms of haulage and other forms of patronage like movement of petroleum products and employment generation.

Agboola (2014) examined the effect of ethnic, communal, religious, social and political conflicts the social economic development of the nation as conflicts destroy foreign direct investment, breeds unemployment and obstruct economic growth. The study further intends to seek for ways to term the tide of social conflicts in our hostile communities through public private partnership. The study finds the use of social marketing communications and conflict resolution strategies appropriate to be implemented to gauge social conflicts thereby boosting employment generation, ameliorating youth unemployment, social conflicts and violence. Desk research based methodology was adopted for this study. The study failed to suggest the model it will use and how social marketing can be attractive to warrant investment.

Olayinka (2014) undertake a research to analyse empowerment of domestic skills through supply chain integration in construction process. Using a case of a company called Multinational Construction Corporation (MCC) which plays a dominant role in the construction industry throughout developing countries. The study benchmarked that with an increase in construction activities, local economy is considered more beneficial for employment opportunities and knowledge transfer. Data was collected covering the period 1999-2014 and analysed. The findings of the research show that major infrastructures that were delivered by MCC are procured through PPP initiatives. The trendy among the models adopted was the Build Operate and Transfer where most of the risks are borne by the private sector. The study further revealed that local contractors are unable to compete in the market due to poor work ethic and the challenge of contemporary issues. These constraints constitute a stumbling block to use of local skills thus hampering employment generation. The study therefore advocate for decision

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making model that promotes sustainable infrastructure delivery beyond 2015. The BOT model can be adopted for the main jobs while, other models like lease or franchise that are convenient for local content businesses with less cumbersome processes can be used. The study failed to state the methodology adopted. Employment generation has so many variables affecting it and such variable must be considered when analyzing studies like this.

Theoretical FrameworkSocial Contract TheorySocial contract theory is the binding force of mutual rights and duties between state and the society. The theory emphasizes the state-society pact or relationship which exist inform of a contract. Generally, social contract theorists advance the view that the state or, more precisely, civil society is the product of a contract, a covenant, an agreement, or a compact. Its earliest recognizably modern form dates back to Thomas Hobbes and continues through John Locke, Baruch Spinoza, Samuel Pufendorf, Jean-Jacques Rousseau (and others) to Immanuel Kant; whilst John Rawls stands out among its contemporary proponents, not only for resurrecting it from the disrepute into which it fell after Kant but, perhaps more importantly, for incorporating into it some key elements for its adaptation to the contemporary requirements of the state and citizenship (Lessnoff, 1990). Contracarianism and Contractualism are often generally used as synonymous terms for social contract theories, the central idea of which is that ‘the legitimacy of the state and/or the principles of sound justice derive their legitimacy from a societal agreement or social contract’. However, the two terms are also sometimes distinguished respectively as the Hobbesian model, and the Kantian interpretations of the justifiably problem, which is a central issue in the modern conceptualizations of the theory (Fukuyama, 2004). To explicate the idea of the Social Contract Theory, Rauscher suggests five variables into which contractual approaches may be analysed, namely:i)The nature of the contractual act ii)The parties to the act, iii)What the parties are agreeing to, iv)The reasoning that leads to the agreement , v) What the agreement is supposed to show.

The Social Contract Theory exist in the natural law theories, for example in the medieval Aristotelianism of Thomas Aquinas and in the modernized natural law theories of Johannes Althusius and Hugo Grotius. The element of contract in Aquinas’ theory derives from his views on the basis of moral obligation, which according to him is located in man’s nature. The basis of moral obligation in social contract theory is found, first of all, in the very nature of man. Built into man’s nature are various inclinations, such as the preservation of his life, the propagation of his species, and, because he is rational, the inclination toward the search for truth. The basic moral truth is simply to ‘’do good and avoid evil’. As a rational being, then, man is under a basic moral obligation to protect his life and health and general wellbeing. Secondly, the natural inclination to propagate the species forms the basis for the union of man and wife, father and son etc. and thirdly, because man seeks for truth, he can do this best by living in peace in society with his fellow men who are also engaged in the quest (Haider, 2011). To ensure an ordered society, human laws are fashioned for the direction of the community’s behavior. Civil society and human laws thus become logically imperative for man’s pursuit of full self-realization. For Aquinas, human laws are statutes of government and they derive from the general precepts of natural law, which he conceives of as ‘nothing else than the rational

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creature’s participation of the eternal law’. this theory expressed the obligation of the government to her citizens to guarantee their welfare to satisfactory level, therefore, it is the responsibility of the government to formulate and implement the laws and articulate policies that can help to maximize the welfare of her citizenry and in return the citizens have the responsibility of operating within the ambit of the constitution and living up to the expectations required from then (Kaplan, 2013).The researcher aligns with social contract theory for the obvious reason that employment is a social issue and a major challenge to every government of a nation. It is the responsibility of every state to make full and decent employment available for the working population and social protection for all the vulnerable members of the society. The provision of employment is therefore a social contract between the state and the working population. The presence of unemployment, underemployment and working poor is a breach against this contract.

Findings and RecommendationsGovernment policies on employment generation are faced with some challenges, these challenges affect their operations and, in effect, service delivery.

i) Odey and Okoye (2004) lists some of these challenges to include: inadequate funding and late release of funds from the Federation Account, managerial deficiency, policy distortions and corruption

ii) Another study by Amupitan (2011) lists other challenges to include: inadequate monitoring, loan diversion, poor cooperation from states and local governments, low access to ICT and training and late repayment of loans.

iii) In the case of PPP in Nigeria, the policy is faced with various challenges ranging from financial limitations, dominance of public companies, corruption, inability of private companies to access local currency and affordable long term loan (Dabak, 2014).

iv) Other challenges include, the inability of Nigeria banks due to its size to cope with long term loan for PPP projects and even when such loans are available the interest rates on them will be too high to cope with, coupled with lack of expertise of banks officials in project financing (Okpara, 2012)

v) Lack of continuity in administrative policies by political office holders over the years and premature termination of concession right by government (Afolabi, 2011).

In order to overcome these challenges, it is recommended that;i) Government should provide adequate funding and release same to employment

generation agencies to avoid a slur in their operations. Anti-corruption measures should also be introduced to reduce corrupt practices.

ii) There should be adequate monitoring to avoid diversion of loan and ensure prompt repayment. States and local government should be encouraged to make their commitment timely.

iii) Affordable long-term loan should be made available to PPP programs to overcome the challenge of lack of funds. The Federal Government should designate the Urban

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Development Bank and fund it properly to liaise with international financial institutions to access affordable long-term loans.

iv) PPP contractual agreement terms should be made very clear and unambiguous to avoid public sector dominance and interference.

v) There should be continuity of government policies by building institutions instead of regimes to avoid truncating the smooth running of such policies when there is change in government regime.

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A DUTCH DISEASE IN AFRICA; THE CASE OF CRUDE OIL AND AGRICULTURE IN NIGERIA

Mela Tersoo, Department of Economics, Taraba State University, Jalingo

Kwen Solomon SooterFirst Bank of Nigeria, PLC

Unum Dooshima JenniferUniversity of Mkar, Mkar

Abstract This article researched “A Dutch Disease in Africa; the case of crude oil and Agriculture in Nigeria”. The main objective of the article is to unveil how the over reliance on crude oil since its discovery in Nigeria led to the neglect and stagnation of agriculture and the consequences on the country. The article showed that the contribution of agriculture to GDP as well as the share of agriculture to foreign exchange drastically reduced especially during the oil boom period of 1970s showing neglect and a shift of attention and resources from agriculture to the booming oil industry which is not sustainable and cannot fight unemployment as the article suggests. The article recommends a complete diversification of the economy, provision of agricultural loans to willing farmers to boost the agricultural sector and engender export to avoid too much dependence on oil whose prices are volatile and also called for restructuring to empower states to tap the numerous untapped resources of the country aside oil.Keywords: Dutch Disease, Agriculture, oil and Nigeria

1.0 IntroductionThe abundance of crude oil in a country is supposed to be an advantage in the

progression towards economic growth and development since crude oil is a major tradable commodity in the international market and by simple reckoning should be a plus for countries that have large reserves. Very unfortunately, this is not always the case with countries that are highly endowed

with oil and other natural resources, instead of being a blessing, the availability of cheap foreign exchange from natural resources (crude oil) cause a serious neglect and stagnation of other sectors of the economy as a result of a drift of factors of production from other important sectors like agriculture and manufacturing to the oil (booming) sector on the one hand and on the other hand by over valuing the currency of the country in question, culminating into complications economists refer to as Dutch Disease.

Originally coined in 1977 by The Economist, the term Dutch Disease referred to the shrinking of the manufacturing sector of the Netherlands due to the discovery and exploitation of natural gas deposits in the 1960s. It is now extended to mean the detrimental effects of the

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discovery of any valuable natural resource that causes decline in other sectors of a nation’s economy. Generally, Dutch disease affects the economy of a country in two ways: firstly by causing a resource movement effect from one sector of the economy to another, and secondly, by inducing a spending effect that appreciates the real exchange rate of the country’s currency.

Historically, several oil producing countries of Africa have been trapped in the Dutch Disease which has hindered the diversification of their economies and has made them mono cultural- depending on a single resource for foreign exchange. The danger has been the inability to withstand the shocks of oil price volatility characteristic of world oil market (see Erling 2009, Gylfasson 2008, Mohammed, Pavar and Hassan 2008). The dependence on a single resource for foreign exchange and budget financing has also led to external deficit budgeting which has led several countries of Africa into perpetual debtors to European creditors who seek to dictate for their debtors.

In Nigeria, since the discovery of oil in commercial quantities in 1958, oil has gradually displaced agriculture as the pride of the nation and has become the heartbeat of the nation albeit in an unhealthy manner. According to World Bank (1975), in the 1960s, Nigeria was listed as a leading exporter of major cash crops in the world, while exporting over three hundred thousand tonnes of her cash crops. Progressively, Nigeria began to steer away from agriculture to crude oil exploitation. According to Gbadebo (2008), the oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil. In 2000 oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue.

Oil dependency, and the allure it generated of great wealth through government contracts, spawned other economic distortions. The country's high propensity to import gulped roughly 80% of government expenditures. Cheap consumer imports, resulting from a chronically overvalued Naira, coupled with excessively high domestic production costs due in part to erratic electricity and fuel supply pushed down industrial capacity utilization to less than 30%. Many domestic manufacturers, especially pharmaceuticals and textiles, lost their ability to compete in traditional regional markets.

Nigeria’s dependence on oil is particularly worrisome for three reasons; firstly because oil is a nonrenewable resource which stands the danger of exhaustion with time and dependence on it is very precarious and secondly, growth in technology is promising possibilities of moving away from crude oil as a major source of energy in the world which signals great danger for oil depending nations. Thirdly, the oil sector is capital intensive in nature and has limited labour absorption ability. For a labour surplus country like Nigeria, concentrating on this sector cannot help to ameliorate growing unemployment which is threatening security and peace of Nigeria. These problems can be resolved only if Nigeria resorts to Agriculture which has a lot of potentials and serves as the greatest employer of labour in Nigeria and also serve as a big source of raw materials for Nigeria’s infant industries and also create forward and backward linkages. It is against this backdrop that the researcher wishes to research “A Dutch Disease in Africa; the case of crude oil and Agriculture in Nigeria”.

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2.0 Dutch Disease and Declining Agriculture in NigeriaThe reduction in agriculture and deindustrialization that follows the discovery of Crude oil and other natural resources in a country epitomize resource curse also known as Dutch disease. According to Nina and Pang (2007) Nigeria’s oil wealth did not bring respite to the undergrowth in the non-oil part of the economy due to the unavoidable outcome of the resource wealth or due to ill patterned policies of subsequent administrations in governance.

Before and even after independence, Nigeria was known for the export of major cash crops in the international market with Agriculture as the chief foreign exchange earner. Agriculture also served as a supplier of the raw materials needed for industrialization and food security was guaranteed. The discovery of petroleum in commercial quantities started signaling trouble for the country with the abandoning of agriculture which was now considered a less lucrative sector occasioned by the oil boom which presented petroleum as a very juicy sector which was however not going to remain lucrative. Agriculture was progressively looked down upon as a dirty job by many and by others as a thing for only villagers at subsistent level. The contribution of the sector to total export earnings waned progressively and reached its worst in the 1970s when that of oil was peaking as shown below

Figure1: Diagram Showing the Contribution of Petroleum and Agriculture to GDP in Nigeria over yearsOver the years several authors have attributed the decline in Nigeria’s agricultural production to the neglect of the agricultural sector as a result of the oil boom (Abdullahi, 1981; Okojie, 1991; Osuntogun et al, 1997; Asiabaka and Owens, 2002; Walkenhorst, 2007; Sekumade, 2009; Chuk-wuemeka and Nzewi, 2011; Izuchukwu, 2011).

Although Nigeria experienced an increase in its crude oil export sector, this increase which ought to generate economic growth did not last neither did it impact any significant effect in changing the economic prosperity and structure of the economy. By all standards, the Nigerian economy experienced growth without development especially when resources and riches displaced and diminished the agricultural and manufacturing sector, a symptom of the Dutch Disease.

The periods of booms in the oil sector are always followed by drastic fall in Agricultural export in Nigeria. In the 1970s for instance when the price of crude oil peaked, the agricultural sector was almost grounded as shown by sharp fall in the export of agricultural products that were hitherto major export commodities for Nigeria. Agricultural export contributed only a negligible percent to foreign exchange earning all through the boom years and started peaking after the boom. In essence, years of boom in the oil sector correlate negatively with agricultural

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output and export which we can infer that concentration on the oil sector stagnates agriculture in Nigeria as shown by the Diagram below.

Figure 2: Diagram showing agricultural export in Nigeria during the oil boom of 1970s and beyond

3.0 Literature Review on Dutch DiseaseOil- and gas-led development does not provide sufficient job opportunities to meet the

demands of many oil exporting countries’ growing and youth-laden populations. The oil and gas sector tends to employ comparatively small, often imported labour force. While oil and gas wealth may facilitate the development of energy-intensive industries like aluminium smelting, these linked industries are usually capital-intensive and do not employ many workers. For oil exporters in regions with large youth bulges, like Africa and the Middle East, a failure to provide meaningful opportunities to work and support families has been and will continue to be met with social unrest, radicalization, and often heavy-handed government responses (Urdal 2006, Nordas and Davenport 2013). Low prices and declining revenues will leave oil- and gas-exporting countries with fewer sticks and carrots to pacify restive populations. As ongoing conflicts in Niger Delta, Libya and Syria make clear, the confluence of oil and gas dependence and minimal employment prospects for young people is a combustible mix. A long-term solution to the problems of youth unemployment and lack of opportunity will require growing the non-resource economy.

Erling, (2009) says that the crude oil resource may be disadvantageous since oil prosperous countries perform less well than non-oil states, this abundance may trigger off displacement of a growth essential for the agriculture or manufacturing sector leading to Dutch Disease.

olusi and olagungu, (2005) noted that before the 1970s we had a primary agricultural produce sector in Nigeria that was very strong which was our main source of exports and ever since then this has earned the reputation of being our chief earner in our exports until crude oil was found, this led to current state of doldrums in which agriculture has been underutilized due to high dollar denominated proceeds from crude oil.

According to Gylfasson (2008), many nations that are blessed with natural resources have shown great imbalance in their macroeconomic performance over the years than other nations which are not natural resources abundant. Over a period of thirty years starting from 1965 through 1998, oil prosperous nations had an average per capital GNP growth ranging from

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(-1%,-2%,-3% and -6%) respectively for countries like (Iran, Venezuela, Libya, Iraq and Kuwait, Qatar) who are members of OPEC (World Bank, 2000).

Stijins (2003), emphasized that dependence of countries on a single major tradable resource is very dangerous as it causes “deindustrialization” in the developed Countries and “stifles growth of Agriculture” in the Less Developed Countries if the Dutch Disease takes effect.

Abdullahi, (1981) observed that Nigeria can no longer produce enough food for its fast growing population neither could the (then) agricultural system cope with the increasing demands of the agricultural raw materials to keep the country’s oil mills, textile and other agro-based industries operating at full capacity let alone have surpluses for export.

Comparative cross-country studies on economic performance have shown that abundance of natural resources, particularly resources such as solid minerals and oil, can lead to undesirable economic consequences, such as slow or negative economic growth, inflation, low savings, high unemployment, export earnings instability, corruption, poverty, and low levels of human development. Resource curse is also connected with political regime types, with many cross-country analyses showing that resource rich countries are less likely to be democratic, especially in the case of oil.4.0 Prospects of Agriculture in Nigeria

Agriculture is the largest sector of the Nigerian economy with GDP contribution of about 40%. Research shows that Nigeria has over 80 million hectares of arable land NBS (2015). This accounts for about 23% of arable land across all of West Africa. The necessary key for successful reform is to turn agriculture into a business that makes money, with a focus on investments as opposed to aid and development. Prospect for the agricultural sector is very bright, owing to the growing demand for food driven by a large population and growing incomes as well as higher prices due to demand in the international market. At current only 70% of Nigeria’s arable land is cultivated hence there are chances of increasing agricultural productivity. The Buhari led administration has also reiterated its concern towards resuscitating the sector via various schemes aimed at encouraging farmers. The Federal Government, through the Ministry of Agriculture announced a supportive programme towards creating a Nigerian agricultural sector worth $256 billion by 2030. By this gesture, government intends to stop food importation valued at over ₦1 trillion annually and ensure a massive growth in the sector, in partnership with the private sector. As against the annual loss of funds to importation, ₦350 billion would accrue to the nation’s economy by the end of 2017 following the import substitution policy for Rice, while the substitution of wheat flour content in bread with cassava flour is estimated to generate over ₦60 billion.

Currently, Nigeria is rolling out an ambitious reform programme across its agricultural sector aimed at cutting the country’s dependency on food imports, creating jobs and generating growth. The reforms such as the move to privatize the procurement and distribution of fertilizer and seeds have resulted in more private sector participation as well as increase in foreign direct investments. The key to unlocking the growth potential of agriculture in Nigeria is to improve the lot of small scale farmers.  Empowering the millions of small holder farmers who have access to millions of hectares will ensure they have access to appropriate inputs, sufficient financing that will significantly boost productivity. The key model developed to this effect is

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the Agricultural Franchise Model. This makes the small holder farmer a franchisee of a larger farm, with access to all the necessary inputs. This model stands to minimize the risks associated with investing in the sector and thereby stimulates the financial sector to invest in the Nigerian Agricultural Sector.

5.0 Summary and RecommendationsThis article looked at Dutch Disease in Africa with Nigeria as a case study. The article considered how Nigeria’s dependence on crude oil has led to decline and stagnation of the Agricultural sector in terms of the sector’s contribution to Nigeria’s GDP and foreign exchange earnings. The article explained the effects of the Dutch Disease in Nigeria and several other countries and postulated that dependence on crude oil is particularly dangerous for Nigeria given that she is labour surplus and oil sector is capital intensive hence not a very good sector for ameliorating unemployment challenge which ranks top among the country’s challenges. The prospects of the agricultural sector are bright and the sector is capable if given adequate attention and investment to regain its lost glory as the pride of the nation. The article found that oil booms correlate with neglect of agriculture in Nigeria and elsewhere and recommended as follows;

A complete diversification of the economy by the federal government with attention on sectors that are labour intensive in nature like Agriculture to achieve employment generation on the one hand and foreign exchange via export of agricultural commodities on the other.

The government should ensure adequate provision of agricultural loans for youths willing to go into farming of cash exportable crops to boost export and better Nigeria’s balance of trade and hedge against too much dependence on crude oil.

Several other sectors and mineral resources exist in Nigeria that can fetch huge revenue in form of foreign exchange for Nigeria. This article recommends the restructuring agitated for by states to empower them tap the several untapped Nigerian resources to boost revenue and take off too much dependence on oil.

ReferencesAbdullahi, A. (1981). The Problems and Prospects of the Green Revolution for Agricultural and

Rural Development of Nigeria: Technical and Environmental Perspectives. In Abalu, G.O.I., Abdullahi, Y. and Imam. A. M. (Eds). The Green Revolution in Nigeria? Proceedings of a National Seminar organised by the Department of Agricultural Economics and Rural Sociology, Ahmadu Bello University and held in Zaria, Nigeria from September 21st – 24th. pp 1-11

Asiabaka, C. C. and Owens, M. (2002). Determinants of Adoptive Behaviors of Rural Farmers in Nigeria. Proceedings of the 18th AIAEE Annual Conference Durban, South Africa.

Chukwuemeka, E. and Nzewi, H. N. (2011). An empirical study of World Bank agricultural development programme in Nigeria. American Journal of Social and Management Sciences 2(1): 176-187

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Izuchukwu, O. (2011). Analysis of the Contribution of Agricultural Sector on the Nigerian Economic Development. World Review of Business Research (1) 1: 191 – 200

Nordas, R, and Christian D. 2013. Fight the Youth: Youth Bulges and State Repression. American Journal of Political Science 57, no. 4: 926–40.

Okojie, C. (1991). Achieving Selfreliance in Food Production in Nigeria: Maximising the Contribution of Rural Women. Journal of Social Development in Africa 6 (2):33-52

Olusi, J. O. and Olagunju, M. A. (2005). The Primary Sec-tors of the Economy and the Dutch Disease in Nigeria. The Pakistan Development Review 44 2: 159-175

Osuntogun, A., Edordu, C.C. and Oramah, B. O. (1997). Potentials for diversifying Nigeria's non-oil exports to non-traditional markets. AERC Research Paper 68. Nairobi: African Economic Research Consortium

Sachs, J.D, Warner, A. and M Warner (1995). Natural resource abundance and economic growth. National Bureau of Economic Research, Working Paper No.5398.

Sekumade, A. B. (2009).The effects of petroleum dependency on agricultural trade in Nigeria: An error correlation model-ing (ECM) approach. Scientific Research and Essay 4 (11): 1385-1391

Stijns, J. (2001). “Natural Resource Abundance and Economic Growth Revisited,” Development and Comp Systems 0103001, EconWPA.

Urdal, H. (2006). A Clash of Generations? Youth Bulges and Political Violence. International Studies Quarterly 50, no. 3:607–29.

Walkenhorst, P. (2007). Distortions to Agricultural Incentives in Nigeria. Agricultural Distortions Working Paper 37. Washington DC: World Bank

World Bank (1975), Africa Development Indicators. www.worldbank.org.

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IMPACT OF CAPITAL MARKET ON ECONOMIC GROWTH OF GHANA AND SOUTH AFRICA: EVIDENCE FROM PANEL ECONOMETRIC ANALYSIS

By1Auwal Abubakar Muhammad, 2Bello Malam Saidu Ph.D and 3Muhammad Aminu Aliyu

1, 3Department of Economics, Faculty of Social and Management Sciences,

Bayero University Kano, Nigeria2Department of Economics & Development Studies,

Faculty of Arts and Social Sciences,Federal University, Dutse, Jigawa State, Nigeria.

Abstract:This research analyzes the impact of capital market on economic growth of Ghana and South Africa using time series data from 1980 to 2014. The methodology used is panel estimation comprising of pooled ordinary least square (OLS), fixed effect and random effect techniques. The result from the pooled OLS reveals that stock market capitalization, value of traded stock, number of listed securities are statistically insignificant and stock market turnover ratio was found to be statistically significant which implies countries have common market structure. The result of the fixed effect and random effect models confirms the existence of static interdependencies among countries which suggest the evidence of spillover effect among the countries. Also, three dummies were constructed to account for country specific effect; the finding reveals that there is evidence of country specific effect. However, the result of the Hausman test suggests that the appropriate model to be used is the random effect model. Finally, the problem of capital market is the domination by a single sector and it is the stock of this sector that account for greater percent to GDP, which are not listed in the stock market, hence a mismatch between the actual performance of the capital market and economic growth. Therefore, the policy makers and regulatory bodies should formulate and implement policies that will attract investors and avail the real sectors of the economy the much needed resources for production, distribution and exchange.

Keywords: Capital Market Indicators, Panel Data, Economic Growth, Ghana and South Africa.

1. IntroductionThe role of long term capital in enhancing economic growth and development among African countries cannot be over emphasized. Most policy makers recognize that a well-organized capital market is crucial for the mobilization of financial resources for long term investment. To a great extent, capital market development in relation to economic growth has continued to draw attention in economic literature (Anyanwu, 1998). The emerging market has also attracted and embraced the attention and the interest of international investors, thus increasing capital inflow (Edame and Okoro, 2013). Several empirical studies have been conducted on the impact of capital market on economic growth. However, while some scholars have argued in favor that capital market leads to economic growth, others have argued otherwise. Rowland (2016) explains capital market as an important tool for enhancing economic growth through formation

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and allocation of long term capital and avails listed companies ample platform for long term finance needed for expansion and increased sustainable output capacities. Meanwhile, Schumpeter (1911) a well-functioning financial system provides intermediation services to business activities that spur technological, innovative and productive activities that increase real sector growth. Worthy, to mention, experience from the recent global financial crisis has shown that an economy with a weak monetary institution is bound to collapse.

However, in spite of numerous efforts made to improve the Financial System by the Central Monetary Authorities of some African countries, yet the level of Financial Intermediation is still weak in these countries. This is a serious impediment towards attaining high level of growth, development and productivity especially in developing economics of the world. More so, contribution to the literature on the impact of Capital and Economic Growth on African Countries Nexus are numerous but more effort is still needed to re-examine how capital market affects the development of African countries.

Numerous studies conducted on capital market and economic growth (e.g. Aboundu, 2010). Stock Market Development and Economic Growth: The case of West African Monetary Union. (Collins 2012) why African stock market should formally Harmonize and integrate their operations. (Jonathan 2011). Determinant of venture capital in Africa: Cross Section evidence. (Abidemi and Nosakhae 2013) financial openness and capital Market Development: Empirical view of selected West African countries. (Eugene 1991); Efficient Capital Market II; (Christopher – Gan et al 2013) an empirical Cross-section analysis of stock returns on the Chinese. (Stephen 1989) Efficient Capital Market and Martingales. (Kapingura and Makhatha – Kos 2014); The Causal relationship between the Bond Market Development and Economic Growth in Africa: case study of South Africa. (Roger 1983); Materiality and the efficient capital market model. (Solomon 2013); the allocation and monitoring role of capital markets: International evidence. (Daniel 2014); Stock Market Integration in West African Monetary Zone: A linear and Non-linear Cointegration approach; (Ifuero and Abudu 2013); Stock market and Economic Growth in Ghana, Kenya and Nigeria.

Despite many empirical works, there has been no Unanimous agreement to how Capital Market affects economic growth; this has resulted in different views on how to accelerate economic growth through capital Market studies. This study is aimed at contributing to this debate through panel data analysis on selected African countries by employing the fixed effect model, random effect model and pooled OLS model in order to determine how capital market variables affects economic growth in Africa and This has open spaces for empirical and further theoretical research gap that warrant a conscious research of this nature.

Therefore, the broad objective of the study is to examine the impacts of capital market on economic growth on selected African countries using panel data. Other specific objectives include: To evaluate the performance of capital market in relation to economic growth in Africa; to examine the nature of cross section dependence among the countries under studies; to determine the nature of heterogeneous relationship among the variables used in the study.

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2. Literature ReviewCapital Market has important and strategic functions for providing risk capital for long term structures that ensures the liquidity and stability of the financial system. From an empirical point of view a number of studies on capital market and economic growth have been carried out from different angles. Schumpeter (1911) maintained that a well-functioning financial system provides intermediation services to productive business activities that spur technological, innovative and productive activities that increase real sector growth. With respect to capital market development in Ghana is a study put forward by Emmanuel (2016) the study is aimed investigating the macro economic factors that influence capital market development in Ghana. Multiple linear regression technique was employed, however findings reveal that capital market development is positively influenced by gross capital formation and GDP but negatively influenced by treasury bills rates.

Likewise, Micheal (2014) examined the how stock market development promotes economic growth in Ghana. The study made use of bound testing approach to cointegration and granger causality test. However, findings reveal that there is a negative statistically significant long run between stock market development and economic growth. The study therefore concludes that stock market development has not promoted economic growth in Ghana. With allusion to bank competition, stock market and economic growth in Ghana is a study put forward by Stephen et al (2011) attempted to investigate the relationship between bank competition and economic growth. Time series data was used between 1992-2009 using econometrics techniques of Granger causality, Autoregressive distributed lag (ARDL) and dynamic ordinary least square methods. Their findings reveal that there is a disproportionate response of economic growth to stock market development in Ghana. Outstanding contribution was made on the existing literature on stock market but however, the study did not integrate stock market variable such as number of listed securities, market index and turnover ratio in Ghana for these are important variables that need to be included for robustness of the result.

Another fundamental empirical area of concerned is the capital market restructuring in South Africa. Henry and Pumela (2006) made a brilliant review on the restructuring process of the market in South Africa. Their study employed a descriptive approach to find out the operation of the market after restructuring. Their work reveals that, there was a substantial improvement on the operations of the market after the restructuring of its operations. The restructuring process became imperative in South Africa in order to address the issue of liquidity, information efficiency, and low transaction cost, external efficiency, value of traded, volume of traded and number of deal. However the restructuring of the market is a step to promote efficiency but yet the market is operating below expectation.

On contrary, a critical study on the impact stock market development on economic growth in South Africa is an onward study by Nomfundo (2013). The study made used of quarterly data ranging from 1990-2010. However, econometric models was employed using co integration approach, Granger causality and vector error correction model to test the direction of relationship for the variables used in the model and to capture both the longrun and shortrun dynamics. Generally, the findings reveal that the extent to which the stock market development

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impact on economic growth in South Africa is weak. The weak contribution of the market implies little influence to GDP.

In another aspect, Kapingura and Makhetha (2014) examine the causal relationship between bond market development and economic growth in Africa, a case study of South Africa. Their study employed econometrics analysis using co integration and pairwise granger causality. Findings from the study reveals that real economic activity measured by GDP is influenced by development of the bond market in South Africa. Similarly, Gabriel and Hlanganapai (2014) explore how stock market liquidity impact economic growth in South Africa. However, the study employed an econometrics techniques and time series data ranging from 1995-2010. Their findings reveal that stock market liquidity impact positively on economic growth South Africa.

In another development, Jalloh (2015) elucidate how stock market capitalization influences economic growth in Africa. The study drew a large sample size across fifteen African countries. However, dynamic panel estimation approach was employed with a view of identifying how stock market capitalization influences economic growth in Africa. The result from the study reveals that raising stock market capitalization has significant impact on economic growth in Africa. Furthermore, the findings indicate that raising stock market capitalization by a marginal average of 10% induces growth on average by 5.4% for the countries under study. Jalloh (2015) made a brilliant contribution on how stock market capitalization influences economic growth in Africa using panel data but however, the study fail to incorporate other important stock market variable such as money supply, market index and interest rate.

Presently, analyzing through most empirical literature on capital market and economic growth nexus reveals an inconclusive result among economist and policy makers. Indeed, these inconclusive results motivated the need for more investigation into the impact of capital market on economic growth in Africa using panel data.

Concept of Capital MarketAccording to Jhingan (2004) the capital market is a market which deals in long term loans. It supplies industries with fixed and working capital and finance medium term and long term borrowings of the central, states and local governments. Thus the capital market comprises the complex of institutions and mechanisms through which medium term funds and long term funds are pooled and made available to individual business and governments. Also, Al-Pari (2007) pinpointed that capital market are market for trading long term debt securities such as debentures, unsecured loan stock and convertible bonds, government bonds and other public securities such as Treasury bill and stocks. He further wrote that, capital market is subdivided into primary and secondary market. The primary market or new issues market provides the avenue through which government and corporate bodies raise fresh funds through it issuance of securities which is subscribed to by the public or a selected group of investors. The secondary market provides an avenue for sale and purchase of existing securities.

The capital market has been identified as an institution that contributes to the socio-economic growth and development of emerging and developed economics. This is made possible through

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some vital roles played, such as channeling resources, promoting reforms to modernize the financial sectors, financial intermediation capacity to link deficit to surplus sector of the economy, and a veritable tool in the mobilization and allocation of savings among competitive uses which are critical to the growth and efficiency of the economy (Pat and James, 2010).

Capital Market and Economic GrowthWith respect to investment decision, investment climate and capital structure of firms in an economy is well explained using Efficient Market Hypotheses (EMH) by Fama (1965). Purport that financial markets are efficient when prices on traded assets that have already revealed all known information and therefore are unbiased because they represent the collective beliefs of all investors about future prospects. Previous test of the EMH have relied on long-range dependence of equity returns. It shows that past information has been found to be useful in improving predictive accuracy. However, this statement tends to invalidate the EMH in most developing countries. Equity prices would tend to exhibit long memory or long range dependence, because of the narrowness of their market arising from immature regulatory and institutional arrangement. They noted that, where the market is highly and unreasonably speculative, investors will be discouraged from parting with their funds for fear of incurring financial losses.

The capital market also provides an avenue for growing companies to raise capital at lower cost. In addition, companies in countries with developed stock market are less dependent on bank financing, which can reduce the risk of a credit crunch. The capital market therefore is able to positively influence economic growth through encouraging savings among individuals and providing avenues for firm financing (Charles& Charles, 2007).

Based on the performance of capital market in accelerating economic growth, government of most nations tends to have keen interest in its performance. The concern is for sustained confidence in the market and for a strong investor’s protection arrangement. Economic growth is generally agreed to indicate development an economy, because it transforms a country from a five percent saver to a fifteen percent saver. Thus it is argued that for capital market to contribute or impact on the economic growth in Nigeria, it must operate efficiently. Most often, where the market operate efficiently, confidence will be generated in the minds of the public and investors will be willing to part with hard earned funds and invest them in securities with the hope that in future they will recoup their investment (Ewah et al, 2009).

Challenges Faced by Capital Market in AfricaThere exist numerous of trading related issues that adversely affect capital markets development in Africa. One major area of interest is that of market manipulation by dealing firms. In most of these markets, financial institutions like commercial banks do have subsidiary dealing firms that trade in the market. In many cases, these banks provide loans to their customer to buy their own shares which normally result in an astronomical increase in the prices of these shares. Some of these banks’ shares prices have increased more than three folds within the course of two years after been floated. Thus manipulation form the demand side through margin trading has resulted in an incorrect pricing of shares in these markets. With the recent financial crisis and banks

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wanting to retrieve their loans from their customers amounted to a massive dumping of shares in the markets.

Another challenging issue faced by the Capital Markets in Africa is the prevalence of macroeconomic instability. The existence of high rates of inflation in the economies of the Africa posed serious threats on the development of the capital markets. High rates of inflation affect investment in the capital market by distorting the investment decision process which in turn affects the demand for the securities traded in the capital market. This is because, high inflation rates implies a falling real returns from investment which adversely affect the level of investment.

The existence of high fiscal deficit may also affect the development of capital markets in Africa. High fiscal deficits means that government may either impose high taxes to finance the deficit or increase domestic borrowing. Increasing the tax burden to finance the deficit adversely affects the savings rate and hence investment in the capital market. On the other hand an increase in domestic borrowing to finance the deficit may lead to an increase in the rate of interest. If the government offers a high interest rate than returns from capital market investment, then investors will prefer to buy government loans than capital market instruments, thereby reducing activities in the capital market.

Another challenge faced by the Capital Market it the reluctance by many private companies to seek funding from the capital market. The owners of most private companies are reluctant to go public in order to seek funding from the capital market for fear of losing control of their companies. This has seriously affected the development of capital market activities as owners of many private companies refuse to list their companies thereby limiting the numbers of companies listed on the Stock Exchange.

3. Methodology3.1 Sources of DataThe Data are annually periodic data and span through (1988 - 2014); they are collected from World Bank Data Bank, Central Banks and IMF Data Bank.

3.2 Model SpecificationThe model is hinge on past studies; Demirgue-Kunt and Levine (1996); Levine and Zervos (1996); Demirgue-Kunt et al (1996); CudiTuneer and Alovsat (2001); Ariyo and Adelagun (2005); Ifuero and Abudu (2013); Romer, (1989); King and Levine,(1993); Pangano, (1993); and Jalloh (2015); who have investigated the linkage between Stock Market and Economic Growth. The functional form of the model is given as;

GDP¿=f (MC¿TVL¿ STO¿ LS¿ωt ε¿)……………………… (1)Where; GDP = Gross Domestic Product, MC = Stock Market Capitalization, TVL = Value Traded, STO = Turnover Ratio, LS = Number of Listed Securities, Wt = Country-specific effect at time t, α0…α6 = Parameters, t = Current period, i = individual observation, e = Error term in the model.

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The model to be estimated can be seen in the context of panel data. Thus, the study will use the i. The pooled Ordinary least Square model, ii. fixed effect model (FE), andiii. Random effect model (RE).

In a panel data set, a given sample of   individuals is observed at different time periods and thus provides multiple observations on each individual in the sample.

γ=α+xβ+μ …………………………………………………. (2)

Where; denotes log of gross domestic product and  is a vector of determinant of capital market growth. Furthermore, assume that there are data for individuals at time periods. If is constant for all cross-section units, then the data set is called a balanced panel. Otherwise the panel is unbalanced.

3.3 Specification of Fixed and Random Effects Regression ModelsSuppose we have an economic relationship that involves a dependent variable, Y, two observable explanatory variables and one or more unobservable confounding variables. We have panel data for Y, and the panel data consists of N-units and T-time periods, and therefore we have N times T observations. The classical linear regression model without the intercept is;

γ¿=β1 x¿1+β2 x¿2+μ¿ ……………………………… (3)For i = 1, 2, …………..….., N and t = 1, 2, …….., T

Where; is the value of Y for the ith unit for the tth time period; is the value of for the ith unit for the tth time period, is the value of for the ith unit for the tth time period, and is the error for the ith unit for the tth time period. The fixed effects regression model, which is an extension of the classical linear regression model is;

γ¿=β1 x¿1+β2 x¿2+V i+ε ¿……………………… (4)

Where; = + . We have decomposed the error term for the classical linear regression model into two components. The component νi represents all unobserved factors that vary across units but are constant over time. The component represents all unobserved factors that vary across units and time. We assume that the net effect on y of unobservable factors for the ith unit that are constant over time is a fixed parameter, designated. Therefore, we can rewrite the fixed effects model as;

γ¿=β1 x¿1+β2 x¿2+∝1+∝2+…+∝n+ε¿……………… (5)

We have replaced the unobserved error component with a set of fixed parameters, + … + one for each of the N units in the sample. For example, represents the net effect on y of unobservable factors that are constant over time for unit one. These N fixed parameters control for the net effects of all unobservable factors that differ across units but are constant over time.

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Intuitively, we are using each unit as a control for itself. This is because variation in y over time cannot be explained by factors that vary across units, but don’t vary over time.

3.4 EstimationTwo alternative but equivalent estimators can be used to estimate the parameters of the fixed effects regression model. 1) Least squares dummy variable estimator. 2) Fixed effects estimator. The least squares dummy variable estimator involves two steps. In step 1, we create a dummy variable for each of the N units in the study. These N dummy variables are defined as follows.

If K ≠ i If K= i

In step 2, we run a regression of the dependent variable on the N dummy variables and the explanatory variables, and using the OLS estimator. That is we estimate the following linear regression model using the OLS estimator.

γ¿=β1 x¿1+β2 x¿2+∝1 D1¿+∝2 D2¿+…+∝n D nit+ε ¿¿ ¿……… (6)We obtain estimates of the N fixed effects constant parameters and the two slope parameter. The estimate of the constants and slope parameters are unbiased in small samples. The estimates of the slope parameters are consistent in large samples with a fixed T as N. However, the estimates of the constant parameters are not consistent, with a fixed T as N. This is because as we add each additional unit we add a new parameter. In general, the larger the T, the better the estimate of the constant parameter, because of this, when T is small many researchers viewed the intercept parameters as controls, and ignores the actual estimates.

4. Results and Interpretations In order to assess the impact of capital market and economic growth, data on key variables of interest including stock market capitalization, stock market turnover ratio, value of traded stock and number of listed securities were collected from a cross section of two countries with well-functioning capital market over the period of 1980-2014. The choice of selecting these countries to be included in the analysis was purely based on availability of data on relevant variables required to carry out the estimation of the specified model. On that note, the countries from which complete data on relevant capital market variables were Ghana and South Africa as earlier noted in the methodology section. These countries pose wide market structure among African countries. Therefore, studying their capital market structure will enable us make vital generalization on other African countries.

In addition, the result of the pooled OLS shows that the parameters of the model confirm to the apriori expectation and the explanatory variable is best explained by the dependent variables. The R² is approximately 92% which elucidates the joint significance in explaining the independent variables which are captured by GDP while 8% explains other factors not captured in the model. Therefore the model is a good fit. Also, the coefficient measures the unit change in growth associated with a unit change in the parameters that indicate stock market capitalization, stock market turnover ratio, value of traded stock, number of listed securities and gross domestic product. However, value of traded stock and number of listed securities were

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statistically significant while stock market capitalization and stock turnover ratio were found statistically insignificant. This findings conversely disagrees with the study of Mohtadi and Agarwal (2004) and Jalloh (2015) who argued that there is a positive and significant relationship between stock market capitalization and economic growth. On that note, the implication of the significant increase in value of traded stock implies that more volume of transaction is recorded in the capital market. Imperatively to mention, Economic growth relies heavily on the substantial volume of transaction in the market in order for African countries to compete globally. Therefore, the market still has a lot to deal with in terms of the operation and activities in order to compete with developed countries. Additionally, the consequence of the result is that an increase in value of traded stock and number of listed securities will significantly increase GDP while an increase in stock market capitalization and turnover ratio will insignificantly affects GDP.

The result of the pooled OLS further explains that when all the variables in the model are held constant, there will be a positive variation to a tune of 1.2 in GDP. Therefore, the result from this finding indicates that these countries have common capital market structure that may be similar to each other. Thus, countries exhibit somewhat similar pattern of stock market.

The result of the fixed effect and random effect model where country specific effect is considered is reported accordingly. The parameters in the model bears expected signs. However, in the fixed effect model, all the explanatory variable are statistically insignificant except number of listed securities which was found to be significant while under the random effect model all the explanatory variables are statistically significant except stock turnover ratio which was found to be insignificant under the random effect model. The result confirms the existence of static interdependencies among countries which suggest the evidence of spill over transmission on any economic policy that might be raised up by policy makers from any of these countries either positively or negatively may likely affect any of these countries.

Nevertheless, from the result of the Hausman specification test, the individual unobserved country specific effects are correlated with the explanatory variables, suggesting that random effect is preferable to the fixed effect model for the levels regression estimates. Hence, for the level estimates and generalize our result, we only consider the result from the random effect model to make policy recommendations. This finding is similar with the study of Kaunyangi and Tabitha (2015) who examined the effect of macroeconomic variables on stock returns in east African community stock exchange market. Though, their study link macroeconomic variable with stock returns on east Africa but revealed that the appropriate model to be used in modelling the macroeconomic variables on stock returns in east Africa is the random effect model.

On this note, the evidence of the negative relationship on some capital market variables, i.e. stock market capitalization and turnover ratio indicates a drawback of this market to GDP of Ghana and South Africa. According to Abudu (2013) the fall of the market is hampered by many factors which if not properly addressed squarely the market may likely collapse completely. Furthermore, the negative contribution of this market to GDP is not ordinary but

49

due to many factors mitigating against the ability of the market to attract considerable level of investment and maintain investors’ confidence which if not properly tackled will create a great loss to GDP of these countries. More so, the domination of this market by single sector and the stock of the sector that account for greater percent to GDP are not listed in the domestic stock market of these countries, thereby capable of causing a mismatch between actual performance of the market and gross domestic product.

5. Conclusion and Policy RecommendationsThis study examined the economic impact of capital market on economic growth of Ghana and South Africa from 1980-2014. Capital market of the countries was proxied by stock market capitalization, value of traded stock, number of listed securities and stock market turnover ratio, while economic growth was proxied by the growth rate of gross domestic product for the two countries under study. Panel estimation was adopted using pooled (OLS), the result confirms the existence of economic spillover effect among countries and further indicates that stock market capitalization, value of traded stock and numbers of listed securities were found to be statistically insignificant. The signal from this finding is that capital market as part of the financial sector of these countries is contributing below expectation to Gross Domestic Product.

Based on the foregoing, there is need for policy makers and regulatory bodies to formulate and implement sound economic policies which by so doing will attract investors and avail the real sector of the economy much needed resources for production, distribution, exchange and encourage listing of companies in the Stock market. Also, government need to wake up from its inactivity at the macroeconomic level by ensuring sound financial policy measures and regulatory framework to ensure effective and sustainable development of the capital market with a view of enhancing its contribution towards economic growth. Likewise, an enabling environment towards sound security system should be created to facilitate further increase in domestic and foreign investment in order to strengthen capital market indices since so doing ultimately translate growth to the economy. Finally, future research should focus on Wald test, Sargan- Hansen test and include variables such as liquidity that is the money supply M2, interest rate and stock market index in assessing the impact of capital market on economic growth in Africa.

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EXAMINING THE EFFECTS OF ECONOMIC FREEDOM ON ECONOMIC GROWTH

By

1Gbatsoron Anjande (Ph.D) and 2Yahaya Salihu Emeje (Ph.D)

1DEPARTMENT OF ECONOMICS,BENUE STATE UNIVERSITY, MAKURDI

2DEPARTMENT OF ECONOMICSTARABA STATE UNIVERSITY, JALINGO

AbstractEconomic freedom has some consequences on how an economy operates. The study explored how the different components of economic freedom affect the growth rate of GDP. Using the ordinary least squares, the study found out that, unemployment and literacy have negative effect on the growth rate of GDP. A one per cent increase in unemployment, for instance, slows down GDP growth rate by −2.08 per cent. While a one per cent increase in literacy rate reduces GDP growth rate by -0.65 per cent. Property rights, business freedom, and freedom from corruption also affect growth of GDP negatively. However, Fiscal Freedom, Government Spending, Labor Freedom, Monetary Freedom, Trade Freedom, Investment Freedom, and Financial Freedom have positive impact on the growth of GDP.

Keywords: Gross fixed capital formation, Index of economic freedom, Literacy rate, Freedom from corruption score, Fiscal freedom score, Government spending score, Business freedom score, Labour freedom, Monetary freedom score, Trade freedom score, Investment freedom score, Financial freedom score

JEL Classification: O40, O47

IntroductionIn his words Hayek (1944) said that economic freedom which is the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right. We can therefore say that economic freedom is the condition in which individuals can act with autonomy while in the pursuit of their economic livelihood and greater prosperity. Any discussion of economic freedom has at its heart reflection on the critical relationship between individuals and the government.

In an economically free society, each person controls the fruits of his or her own labor and initiative. Individuals are empowered—indeed, entitled—to decide for themselves where to live and work. They have the right to own property and dispose of it as they choose. Individuals

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succeed or fail based on their individual effort and ability. The institutions of society do not discriminate against—or in favor of—individuals based on their race, ethnic background, gender, class, family connections, or any other factor unrelated to individual merit. Government decision-making is characterized by transparency and openness, and the light of opportunity replaces the shadows where discrimination can be most insidious. The power of economic decision-making is widely dispersed, and the allocation of resources for production and consumption is on the basis of free and open competition so that every individual or firm has a fair chance to succeed.

The key ingredients of economic freedom are personal choice, voluntary exchange, freedom to compete, and protection of persons and property. When economic freedom is present, the choices of individuals will decide what and how goods and services are produced. Of course, individuals will often find it attractive to engage in exchange activities that are mutually advantageous. Personal ownership of self is an underlying postulate of economic freedom. Because of this self ownership, individuals have a right to choose—to decide how they will use their time and talents. On the other hand, they do not have a right to the time, talents, and resources of others. Thus, they have no right to demand that others provide things for them. (Gwartney and Lawson, 2002)Gwartney and Lawson ,(2002) insist that institutions and policies are consistent with economic freedom when they provide an infrastructure for voluntary exchange, and protect individuals and their property from aggressors seeking to use violence, coercion, and fraud to seize things that do not belong to them. In this regard, the legal and monetary arrangements are particularly important. Governments promote economic freedom when they provide a legal structure and law enforcement system that protects the property rights of owners and enforces contracts in an even-handed manner. They also enhance economic freedom when they facilitate access to sound money. In some cases, the government itself may provide a currency of stable value. In other instances, it may simply remove obstacles that retard the use of sound money that is provided by others, including private organizations and other governments. The aim of this paper is to find the effects (if any) of economic freedom on economic growth.

Economic Freedom and its Measurement Clearly, economic freedom is complex and multidimensional. This makes it difficult to quantify. Any good measure of economic freedom should be based on objective quantifiable data and transparent procedures. The subjective views of the researchers should not influence the rating of any country. Thus a diverse set of objective variables should be employed and they must provide a good measure of cross-country differences in size of government, access to sound money, openness of international trade, and regulation of capital markets.

To understand the concept of economic freedom and its measurement, let us draw analogy to the concept of gross domestic program. In macroeconomics, students sometimes have difficulty grasping the enormity of the concept of Gross Domestic Product (GDP). Economists have devised a definition, “the market value of all final goods and services produced in a nation in a year,” and some insanely large number like “N14 trillion.” But what does it mean? To most people, it is just a number. To make it seem more concrete, let us imagine a long printout with

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everything produced in Nigeria this year: 10 million refrigerators, 1.2 billion haircuts, 2,430 major league football games etc. Then imagine the same printout but with naira values instead of quantities: N200 billion worth of refrigerators, N12 billion in haircuts, N2 billion in ticket sales at major league games etc. Finally imagine adding up all the numbers. Slowly it dawns on us what we are talking about. Clearly, the total production of the Nigeria is a big, multidimensional thing, and GDP boils it down to a single, mind-bogglingly huge number. Why do we go to so much trouble to measure GDP? The simple answer is that we want to know how much we have produced this year relative to last year. We also want to know how much we’ve produced (per person) relative to other countries.Despite the fact that GDP is a single number, we know that it represents a multidimensional thing, and we worry about the ability of the number to tell us anything useful. We wonder, for instance, whether today’s number is comparable with yesterday’s or if Nigeria’s number is comparable with Ghana’s for instance. Because these questions and others are important to us, we persevere, doing our best to adjust for price changes over time and purchasing power parity difference among countries. The bottom line is that unless we take the time to measure GDP, we simply cannot address many of the questions that economists are interested in.

Now consider the concept of economic freedom. It is not too difficult to come up with a quick, working definition such as “the ability of individuals to consume, produce, and voluntarily trade with others without interference” that would satisfy most people. Sen (1999), for instance, would probably not be one to agree with this definition as he prefers a definition of freedom based on positive rights. Economists would probably agree that freedom is an economic good in the sense that people prefer more of it to less, all things being equal. We may be interested in a number of questions about this economic freedom thing: How much freedom do we have? Are we more or less free than we used to be? Are the South Africans, for instance freer than we are? Do societies with more economic freedom perform differently than those with less?

More than anyone else, Friedman (1962) was responsible for elevating the concept of economic freedom to our minds. Milton and Rose (1980) argued that happiness and equality are by products of economic freedom. According to them, economic freedom preserves the opportunity for today’s disadvantaged to become tomorrow’s privileged and, in the process enables almost everyone, from top to bottom, to enjoy a fuller and richer life.

In this paper, to measure economic freedom, we utilize the Economic Freedom of the World (EFW) Index compiled by The Heritage Foundation. The Economic Freedom of the World index is designed to measure the consistency of a nation’s institutions and policies with economic freedom. The key ingredients of economic freedom are: Rule of law (property rights, freedom from corruption); limited government (fiscal freedom, government spending); Regulatory efficiency (business freedom, labour freedom, monetary freedom); and Open markets (trade freedom, investment freedom, and financial freedom). These cornerstones underpin the design of the EFW index. Put simply, institutions and policies are consistent with economic freedom when they provide an infrastructure for voluntary exchange and protect individuals and their property from aggressors.

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Economic Freedom and Economic Growth In recent times, mathematical and formalization revolution has taken over the economics profession, especially, in the mid-twentieth century, and untidy concepts like institutional arrangements and entrepreneurship gave way to the new “science” of development economics. Development and growth economists (e.g., Solow 1956 and Lucas 1988) modeled entire economies as if they were production functions: output is a function of inputs. It is certainly true that increasing inputs should increase output ceteris paribus, but there was little discussion about what was being held constant. While the model was eventually extended to include technological progress, and later human capital (e.g. Mankiw, Romer, and Weil 1992), the implicit assumption was that labour and capital would always be combined in the most efficient way possible; that is, the models assumed that countries were always functioning on their production possibilities frontier.

Another line of reasoning, mostly associated with Jeffrey Sachs (2001), is that geographic/locational factors such as a temperate climate and ease of access to markets are critically important for the achievement of high-income levels and growth rates. In contrast, tropical climatic conditions both erode the energy level of workers and increase the risk of disabling and life-threatening diseases such as malaria. As a result, worker productivity and the general level of development are retarded in tropical areas.

However, a casual look at the real world revealed problems with these theoretical perspectives. Research by Lawson (2008) and Gwatney and Lawson (2009) show that countries that appeared to have high levels of inputs in terms of natural resources, such as Argentina, did not necessarily perform very well. High investment rates in the centrally planned economies likewise did not generate rapid economic development. On the other hand, the strong economic performance of resource-poor and tropical Hong Kong and Singapore appear anomalous. It seemed obvious to anyone who cared to look that the real world pattern of economic development was based on more than just the available quantities of resources and technology or location. Nevertheless, development economics continued to recommend building roads, schools, bridges, airports, factories, etc. without regard to whether those input investments were likely to be productive in the context of the institutions in place.

Economic growth is primarily the result of gains from trade, capital investment, the discovery of improved products, lower-cost production methods, and better ways of doing things. However, numerous studies have shown that countries with more economic freedom grow more rapidly and achieve higher levels of per-capita income than those that are less free. Similarly, there is a positive relationship between changes in economic freedom and the growth of per-capita income (see Ayal and Karras. 1998; De Haan and Sturm 2004.; De Haan and Sturm.2000; De Vanssay and Spindler, 1994; De Haan and Sierman, 1998; Carlsson and Lundström 2002; Altman 2008, Fredrik, and Lundström 2002, Morris 2008; de Haan et al. 2006; Gwartney, Lawson, and Block 1996).

Meanwhile many other scholars argued that economic freedom would lead to ruin. Harrington (1962), Galbraith (1967), and Thurow (1980) all argued forcefully that the United States should

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reject economic freedom in favor of greater government taxation, regulation, and industrial planning to solve various social problems like poverty, inequality, slow growth, and business cycles. The free market, in their eyes, is the source of much misery, and thus, aggressive government action is required to rein in the destructive forces of the market. Other studies have also yielded insignificant (or even negative) effects of select categories of economic freedom on growth for example Sala-i-Martin (1997).

Though the body of literature may generally disagree on whether economic freedom leads to growth or on which components of economic freedom tend to impact economic performance the most, the general consensus is that on balance higher levels of economic freedom are indicative of a country’s economic success. Even Morris (2008) one of the more critical researchers on the subject and a proponent of “big government”, conceded that “at a most general level the evidence supports the hypothesis that Economic Freedom is economically important to the determination of per capita income.” Since Adam Smith, economists have fervently argued that freedom to act in a competitive market is a central component for economic progress. This paper explores whether economic freedom can lead to higher levels of growth rate of gross domestic product (ggdp) by looking at the different components of economic freedom.Model SpecificationThe model is adopted from Jason (2011) with modifications. As a benchmark, we first show the basic relationship between economic growth and our main variables (unemployment rate, investment/GDP ratio (capital) as proxy for growth rate of capital stock, literacy rate culture and overall index of economic freedom). To do so, we employ ordinary least squares (OLS) estimations on our dataset. The regression is identified as:

………………… (1)

Where is the growth rate of GDP for country and is the different combinations of

our main variables ( ).

We write the model in full taking the log of which will simplify the interpretation of the model in that it will allow us to see the percentage effects of each independent variable on the growth rate of GDP, rather than forcing the analyst to attempt to conceptualize significance of varying amount of impacts on the ggdp. The model is as follows:

……………… (2)

Where, is the growth rate of GDP for country , is rate of unemployment for

country , is gross fixed capital formation as a share of GDP for country as proxy for

growth rate of capital stock, is the literacy rate for country , is the overall

index of economic freedom for country , is the intercept, are unknown

parameters and is the stochastic error term. It is presumed that unemployment rate, gross fixed capital formation as a share of GDP (capital), and literacy rate are variables that were expected to

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have a significant impact on growth rate of GDP that were not included as part of the calculation underlying the overall freedom score.

To analyse the effect of all the individual components of economic freedom, we expand equation (2) to include all the different components of the overall economic freedom. Thus, the following model is produced:

………3

where, is property rights score for country , is freedom from corruption score for

country , is fiscal freedom score for country , is government spending score for

country , is business freedom score for country , is labour freedom for country

, is monetary freedom score for country , is trade freedom score for country

, is investment freedom score for country , is financial freedom score for country . A detailed description of the variables is found in appendix I.

A priori ExpectationIt is expected that the inclusion of individual components of economic freedom as opposed to an overall measure will increase the model’s explanatory power. The basic macroeconomic model for GDP indicates that if something leads to increase in consumption, investments, government spending, or net exports, it will probably have a positive relation to GDP growth rate. Consequently, any positive change in the components of economic freedom that will influence consumption, investment, government spending, and net exports will lead to growth in GDP since GDP = C + I + G + X, where C is consumption, I is investment, G is government spending, and X is net exports.

Sources and Methods of Data CollectionThe data on capital (gross fixed capital formation as a share of GDP) were retrieved from the World Bank, while data on unemployment came from the The Heritage Foundation and International Labour Organisation where data was not available from the Heritage Foundation, the data on literacy rates was collected from “The World Factbook” published by the Central Intelligence Agency. The scores relating to economic freedom were all gathered from The Heritage Foundation’s 2016 Index of Economic Freedom. The data were collected for 135 countries.

Summary StatisticsThe means, standard deviations, minimum observations, and maximum observations for the variables are summarized in table I1:Table I Summary Statistics

1 Growth rate of GDP (ggdp) is also included in the table, though it is not a variable included in the aforementioned models. The summary statistics for growth rate of GDP may provide more useful information than the summary statistics of the log of growth rate of GDP (though both are included).

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Variable Obs Mean Std. Dev. Min. Max.ggdp_i 135 3.634074 2.689869 -6.8 10.3unemp_i 135 8.325185 6.290976 .3 31overall_i 134 59.01567 9.235408 29.8 87.8capital_i

135 23.87026 8.656398 6.897342 54.09993

literacy_i 135 83.88667 18.62846 19.1 99.9Pty_i 134 35.63433 19.07072 5 90Corrupt_i 135 38.53481 14.04573 11 84fiscal_i 135 79.30815 10.31006 46 99.9govt_i 135 68.2 20.83226 0 95.2bus_i 135 61.21481 13.51276 20 95labour_i 135 57.85407 14.16195 20 90.7monetary_i 135 74.54222 8.781081 33.8 88.3trade_i 135 74.98815 10.66972 47.8 90Investment_i 135 52.85185 22.18932 0 90fin_i 134 46.1194 17.16398 10 80lggdp_i 126 1.182644 .7623984 -2.302585 2.332144

Empirical Analysis and ResultsThe results of equation 2 show that, the data does not fit the model well as R2 is only 0.1760 as seen on table II below. This means that only about 18 per cent of variations in GDP growth rate is explained by the model’s independent variables. The results further indicate that the overall coefficient of economic freedom is significant at 5% level implying that economic freedom has some positive impact on economic growth. This agrees with the authors cited in the body of the work who agree that there is a positive relationship between changes in economic freedom and the growth of GDP. The results further show that gross fixed capital formation as share of GDP (capital) has a positive impact on growth rate of GDP, however, unemployment rate and literacy rate do have a negative impact.

Table II: Results of estimates of equation (2)

Variable

Coefficient

Unemp. -.0145602( .0100018)

Capital .0314956 (.0075682)

Literacy -.007497 (.0036242)

Overall .0011261 (.0075452)

Source: Author’s computations from stata 10

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It is important to note that, the usefulness of this model will be ascertained when the assumptions associated with the Classical Normal Linear Regression model have been proven to be true. Before testing these assumptions, I would like to perform the OLS regression according to equation (3). This will give us the ground to prove whether equation (3) which includes the 10 specific indices of economic freedom will prove more useful in determining the effect of economic freedom on growth rate of GDP than equation 2. The OLS results are shown in table III below:

Table III: Results of estimates of equation (3)VARIABLE COEFFICIENTunemp_i -.0072222

(.0104558)capital_i .0275707

(.007674)literacy_i -.0031277

(.0046049)pty_i .0072323

(.0072323)corrupt_i .0019392

(.0095944)fiscal_i .006838

(.007358)govt_i .008452

(.0037799)bus_i -.0063573

(.007016)labour_i .0011324

(.0050281)monetary_i .0255736

(.0103533)trade_i .0009967

(.0094344)investment_i -.0081787

(.0053493)fin_i .0061364

(.0069998)

Source: Author’s computations from stata 10

As shown in table III above, the regression in the expanded equation (3) resulted in increased explanatory power of the model as R2 increased to 0.3043 meaning that more than 30% of variations in growth rate of GDP is explained by the independent variables as compared to 18% in equation (2). However, it is pertinent to note that this comparism may not be completely true as R2 increases with addition of new variables to the model. It will therefore, be more useful to

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compare the adjusted R2 of the two equations because it does not tend to increase simply because additional explanatory variables are added (in fact, the adjusted R2 will only increase if the square of the t-statistic of an additional added variable is greater than one). Thus the adjusted R2 for equation (2) is 0.1486 while that of equation (3) is 0.2228. This definitely shows that equation (3) is preferable to equation (2).

To validate this assertion, I will perform the chow test on equation (3) to test whether all the economic freedom indices are equal to each other. If I find that they are equal to each other, it would mean that perhaps the impacts of all ten economic freedom indices are the same, and thus equation (2) should be adopted to prevent unwanted noise in the model. On the other hand, if they are found to have different effects (that is, they are not equal) then equation (3) should be adopted. The result of the chow test is shown in table IV below:

Table IV: Chow Test for Equivalent δ’s in Equation (3)( 1) bus_i - pty_i = 0 ( 2) bus_i - corrupt_i = 0 ( 3) bus_i - fiscal_i = 0 ( 4) bus_i - govt_i = 0 ( 5) bus_i - labour_i = 0 ( 6) bus_i - monetary_i = 0 ( 7) bus_i - trade_i = 0 ( 8) bus_i - investment_i = 0 (9) bus_i - fin_i = 0 F( 9, 111) = 2.45 Prob > F = 0.0110

The chow test above produced a chow statistic of 2.45 distributed as an F-statistic with 9, 111 degrees of freedom, prompting us to conclude that the different components of economic freedom have different effects on the growth rate of GDP. These results are also consistent with the hypothesis that economic freedom is multidimensional in nature, and cannot be codified with a single variable. Thus adoption of equation (3) is paramount here.Next we test whether the error terms are normally distributed. The skewness/Kurtosis tests for normality show that the error terms are normally distributed. This is confirmed by the Shapiro-Wilk W test for normal data (see Appendix II output F). Table V: Skewness/Kurtosis tests for Normality

……….Joint……..Variable Obs Pr (Skewness) Pr (kurtosis) Adj

chi2(2)Prob>chi2

error 125 0.000 0.000 33.03 0.0000

White’s test for homoskedasticity shows that the data is homoskedastic, the Breusch-Pagan / Cook Weisberg test for heteroskedasticity proves otherwise. However, a graphical

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representation of freedom from corruption and residuals is indicative of a heteroskedastic data. I therefore run the OLS by using robust standard errors to generate heteroskedasticity-robust t-statistics.

Relationship between Freedom from Corruption and Residuals 1.59563 + | * | | | * * | * ** ** R | *** * * ****** * * e | ** * * * * *** * *** * s | * * * * ******* ** * ** * * i | * * * * *** * * * * * ** d | * * ** ** ** * u | * ** ** * * a | * * ** l | * s | * * | * * | * | * | | -2.85458 + * +----------------------------------------------------------------+ -.137826 Linear prediction 2.61123

To resolve the problems resulting from heteroscedasticity, I run the variance weighted least squares regression (VWLS). The much lower standard errors provided by VWLS regression (Table VI) is evidence that the standard errors of the OLS estimates were inflated due to heteroscedasticity.

Table VI Variance-weighted least-squares regression VARIABLE COEFFICIENTunemp_i -.0210325

(.003223)capital_i .0305342

(.0024309) literacy_i -.0065206

(.0016242) pty_i -.0089028

(.002789)

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corrupt_i -.0000332(.0034922)

fiscal_i -.0065022(.0027973)

govt_i .0089842 (.0013197)

bus_i .0076654 (.0025164)

labour_i .0010547(.001864)

monetary_i .0161179 (.0043909)

trade_i .0025549 (.0032755)

investment_i -.0118628 (.0020899)

fin_i .0087934 (.0027137)

Further, I proceed to test for multicollinearity. The correlation matrix produced from Stata show that generally, the correlations between the independent variables appear to be relatively low except in a few cases. The high correlation between certain variables e.g. between corruption and property, and between financial freedom and investment freedom, etc. is an indication that the data is multicollinear. Multicollinearity increases the probability of an incorrect sign in the model even though it is not a violation of the basic assumptions associated with the Classical Normal Linear Regression Model.

Table VII: Correlation matrix

| litera~i pty_i corrup~i fiscal_i govt_i bus_i labour_i moneta~i trade_i invest~i fin_i-------------+--------------------------------------------------------------------------------------------------- literacy_i | 1.0000 pty_i | 0.2970 1.0000 corrupt_i | 0.3379 0.8519 1.0000 fiscal_i | 0.2332 0.0285 -0.0010 1.0000 govt_i | -0.3864 -0.1764 -0.2954 0.2834 1.0000 bus_i | 0.5331 0.5940 0.6025 0.2937 -0.1630 1.0000 labour_i | 0.1894 0.2971 0.3116 0.2968 0.0626 0.4566 1.0000 monetary_i | 0.0639 0.4771 0.4076 -0.0391 -0.0410 0.2862 0.1370 1.0000 trade_i | 0.5262 0.5316 0.5800 0.1275 -0.2846 0.5597 0.2629 0.3963 1.0000investment_i | 0.1435 0.6245 0.5581 -0.0156 -0.0823 0.4585 0.2359 0.6160 0.5848 1.0000

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fin_i | 0.3014 0.6817 0.5790 0.1773 -0.0757 0.5314 0.2556 0.5335 0.6290 0.8020 1.0000

Even though the problem of multicollianirity exists, we can see that the variables with high correlation measure different aspects of economic freedom. Consequently the elimination of either of these variables could potentially result in omitted variable bias.

Discussion of ResultsFrom all the tests conducted, the results were found as follows:Table VIII: Regression Results for Equation (3)Variable OLS Robust VWLSunemp_i -.0072222

(.0104558) -.0072222 (.0092576)

-.0210325(.003223)

capital_i .0275707 (.007674)

.0275707 (.0065449)

.0305342 (.0024309)

literacy_i -.0031277 (.0046049)

-.0031277 (.0061202)

-.0065206 (.0016242)

pty_i -.0058656 (.0072323)

-.0058656 (.0067232)

-.0089028(.002789)

corrupt_i - .0019392 (.0095944)

-.0019392 (.0077721)

- .0000332 (.0034922)

fiscal_i .006838 (.007358)

.006838 (.0076752)

.0065022(.0027973)

govt_i .008452 (.0037799)

.008452 (.0036795)

.0065022(.0013197)

bus_i -.0063573 (.007016)

-.0063573 (.0070988)

- .0076654 (.0025164)

labour_i .0011324 (.007016)

.0011324 (.0048146)

.0010547 (.001864)

monetary_i .0255736 (.0103533)

.0255736 (.0141364)

.0161179(.0043909)

trade_i .0009967 (.0094344)

.0009967 (.008077)

.0025549(.0032755)

investment_i .0053493 (.0053493)

.0081787 (.0053732)

.0118628(.0020899)

fin_i .0061364 (.0069998)

.0061364 (.0080135)

.0087934(.0027137)

Source: Author’s computations using stata 10

Because the data were found to be heteroskedastic, I used both OLS robust and VWLS regression to correct for problems in the regular OLS regression. The results are presented in table VIII above. In Table VIII above, the VWLS regression is preferable as it reduced the standard errors and increased the significance of the estimators. As seen from Table VIII, the variables unemployment and literacy all have slope coefficients negative. This means that their

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growth has negative effect on the growth rate of GDP. A one per cent increase in unemployment, for instance, slows down GDP growth rate by −2.08 per cent. While a one per cent increase in literacy rate reduces GDP growth rate by -0.65 per cent. Capital has a positive slope, meaning that a one per cent increase in capital stock increases GDP growth rate by 3.10 per cent.

The following components of economic freedom have negative slope coefficients: property rights, business freedom, and freedom from corruption. This means that for each additional calculated unit of property rights, growth rate of GDP reduces by −0.89 per cent. While an increase in freedom from corruption reduces the growth rate of GDP by −0.003 per cent.

The components of economic freedom that influence growth of GDP positively are: Fiscal Freedom, Government Spending, Labor Freedom, Monetary Freedom, Trade Freedom, Investment Freedom, and Financial Freedom. Monetary freedom seems to have the greatest positive influence on GDP growth rate. Each additional calculated unit of monetary freedom leads to a GDP growth rate of 1.62 per cent. Whereas an additional calculated unit of investment freedom will generate a 1.19 per cent growth of GDP. From the analysis there is the issue of whether the indices of economic freedom are simply correlated with GDP growth rate or actually drive growth of GDP; the causal relationship is not conclusively determined (though intuition does underlie the argument that the relationship is causal in nature). I conclude that Fiscal Freedom, Government Spending, Labor Freedom, Monetary Freedom, Trade Freedom, Investment Freedom, and Financial Freedom are economic freedom indices associated with higher levels of GDP growth rate; property rights, business freedom, and freedom from corruption have the opposite relationship.

Appendix I: Description of VariablesVariables Description of variablesLog(ggd) Log of Growth rate of gross domestic product

ggdpoverall Unemp

Growth rate of gross domestic product

is the overall index of economic freedom for a country

Unemployment rate; or the percent of the labor force that is not employed

Capital gross fixed capital formation as a share of GDP for a country as proxy for growth rate of capital stock

Literacy Literacy rate; generally defined as % of population over 15 that can read/write

Pty Property rights; the ability to own private property that is secured by the state

Corrupt Freedom from corruption; measures perceived corruption of public officialsFiscal Fiscal freedom; the extent of the tax burden imposed by the government

Govt Government spending; the level of government expenditures

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Bus Business freedom; ability to start, operate, and close a business

Labour Labor freedom; the absence of government intervention in the labor market

MonetaryTradeInvestmetfin

Monetary spending; the level of inflation or price controls

Trade freedom; absence of barriers affecting imports and exports (e.g. tariffs)

Investment freedom; measures constraints on the flow of investment capital

financial freedom score for a country is a measure of banking efficiency as well as a measure of independence from government control and interference in the financial sector.

Source: Author’s compilation

Appendix II: Stata 10 Output(I) Output A: OLS for (2)regress lggdp_i unemp_i capital_i literacy_i overall_i

Source | SS df MS Number of obs = 125-------------+------------------------------ F( 4, 120) = 6.41 Model | 12.7903339 4 3.19758348 Prob > F = 0.0001 Residual | 59.8643733 120 .498869778 R-squared = 0.1760-------------+------------------------------ Adj R-squared = 0.1486 Total | 72.6547073 124 .585925059 Root MSE = .70631------------------------------------------------------------------------------ lggdp_i | Coef. Std. Err. t P>|t| [95% Conf. Interval]-------------+---------------------------------------------------------------- unemp_i | -.0145602 .0100018 -1.46 0.148 -.034363 .0052426 capital_i | .0314956 .0075682 4.16 0.000 .0165111 .0464801 literacy_i | -.007497 .0036242 -2.07 0.041 -.0146726 -.0003213 overall_i | .0011261 .0075452 0.15 0.882 -.0138129 .0160652 _cons | 1.101813 .4880762 2.26 0.026 .1354556 2.06817------------------------------------------------------------------------------

(II) Output B: OLS for (3)

Source | SS df MS Number of obs = 125-------------+------------------------------ F( 13, 111) = 3.73 Model | 22.1056257 13 1.70043274 Prob > F = 0.0001 Residual | 50.5490816 111 .455397131 R-squared = 0.3043-------------+------------------------------ Adj R-squared = 0.2228 Total | 72.6547073 124 .585925059 Root MSE = .67483------------------------------------------------------------------------------

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lggdp_i | Coef. Std. Err. t P>|t| [95% Conf. Interval]-------------+---------------------------------------------------------------- unemp_i | -.0072222 .0104558 -0.69 0.491 -.027941 .0134966 capital_i | .0275707 .007674 3.59 0.000 .0123641 .0427772 literacy_i | -.0031277 .0046049 -0.68 0.498 -.0122526 .0059972 pty_i | -.0058656 .0072323 -0.81 0.419 -.020197 .0084657 corrupt_i | -.0019392 .0095944 0.20 0.840 -.0170727 .0209511 fiscal_i | .006838 .007358 0.93 0.355 -.0077424 .0214184 govt_i | .008452 .0037799 2.24 0.027 .0009618 .0159421 bus_i | -.0063573 .007016 -0.91 0.367 -.02026 .0075454 labour_i | .0011324 .0050281 0.23 0.822 -.0088312 .011096 monetary_i | .0255736 .0103533 2.47 0.015 .0050578 .0460895 trade_i | .0009967 .0094344 0.11 0.916 -.0176981 .0196915investment_i | -.0081787 .0053493 -1.53 0.129 -.0187786 .0024213 fin_i | .0061364 .0069998 0.88 0.383 -.0077341 .020007 _cons | -1.675088 .9466999 -1.77 0.080 -3.551037 .2008613------------------------------------------------------------------------------(III) Summary StatisticsVariable | Obs Mean Std. Dev. Min Max-------------+-------------------------------------------------------- ggdp_i | 135 3.634074 2.689869 -6.8 10.3 unemp_i | 135 8.325185 6.290976 .3 31 overall_i | 134 59.01567 9.235408 29.8 87.8 capital_i | 135 23.87026 8.656398 6.897342 54.09993 literacy_i | 135 83.88667 18.62846 19.1 99.9 pty_i | 134 35.63433 19.07072 5 90 corrupt_i | 135 38.53481 14.04573 11 84 fiscal_i | 135 79.30815 10.31006 46 99.9 govt_i | 135 68.2 20.83226 0 95.2 bus_i | 135 61.21481 13.51276 20 95 labour_i | 135 57.85407 14.16195 20 90.7 monetary_i | 135 74.54222 8.781081 33.8 88.3 trade_i | 135 74.98815 10.66972 47.8 90investment_i | 135 52.85185 22.18932 0 90 fin_i | 134 46.1194 17.16398 10 80 lggdp_i | 126 1.182644 .7623984 -2.302585 2.332144

(IV) Output C: Chow Test for Equivalent δ’s in Model 2 ( 1) bus_i - pty_i = 0 ( 2) bus_i - corrupt_i = 0 ( 3) bus_i - fiscal_i = 0 ( 4) bus_i - govt_i = 0 ( 5) bus_i - labour_i = 0 ( 6) bus_i - monetary_i = 0

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( 7) bus_i - trade_i = 0 ( 8) bus_i - investment_i = 0 ( 9) bus_i - fin_i = 0

F( 9, 111) = 2.45 Prob > F = 0.0110

(V) Output D: Variance Inflation Factors Variable | VIF 1/VIF -------------+---------------------- pty_i | 5.12 0.195493 corrupt_i | 4.72 0.211686 fin_i | 3.91 0.255644investment_i | 3.57 0.280391 trade_i | 2.55 0.392577 bus_i | 2.53 0.395910 literacy_i | 2.05 0.487558 monetary_i | 1.75 0.571567 fiscal_i | 1.59 0.627797 govt_i | 1.59 0.629374 labour_i | 1.33 0.752856 unemp_i | 1.22 0.821951 capital_i | 1.13 0.886760-------------+---------------------- Mean VIF | 2.54 unemp_i | 1.22 0.821951 capital_i | 1.13 0.886760-------------+---------------------- Mean VIF | 2.54

(VI) Output E: Variance-weighted least-squares regression Number of obs = 125Goodness-of-fit chi2(111) = 523.55 Model chi2(13) = 773.71Prob > chi2 = 0.0000 Prob > chi2 = 0.0000------------------------------------------------------------------------------ lggdp_i | Coef. Std. Err. z P>|z| [95% Conf. Interval]-------------+---------------------------------------------------------------- unemp_i | -.0210325 .003223 -6.53 0.000 -.0273494 -.0147156 capital_i | .0305342 .0024309 12.56 0.000 .0257697 .0352988 literacy_i | -.0065206 .0016242 -4.01 0.000 -.009704 -.0033373 pty_i | -.0089028 .002789 -3.19 0.001 -.0143691 -.0034365 corrupt_i | -.0000332 .0034922 -0.01 0.992 -.0068777 .0068114 fiscal_i | .0065022 .0027973 2.32 0.020 .0119849 .0010196

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govt_i | .0089842 .0013197 6.81 0.000 .0063975 .0115709 bus_i | .0076654 .0025164 3.05 0.002 .0027334 .0125974 labour_i | .0010547 .001864 0.57 0.572 -.0025987 .004708 monetary_i | .0161179 .0043909 3.67 0.000 .007512 .0247239 trade_i | .0025549 .0032755 0.78 0.435 -.0038649 .0089747investment_i | .0118628 .0020899 5.68 0.000 .0159589 .0077666 fin_i | .0087934 .0027137 3.24 0.001 .0034746 .0141122 _cons | -.3021091 .3727086 -0.81 0.418 -1.032605 .4283864------------------------------------------------------------------------------ (VII) Output F: Skewness/Kurtosis tests for Normality ------- joint ------ Variable | Obs Pr(Skewness) Pr(Kurtosis) adj chi2(2) Prob>chi2-------------+--------------------------------------------------------------- error | 125 0.000 0.000 33.03 0.0000

(VIII) Output G: Summary of Residuals Residuals------------------------------------------------------------- Percentiles Smallest 1% -2.094316 -2.854575 5% -1.32812 -2.09431610% -.7200979 -1.791522 Obs 12525% -.2289779 -1.595174 Sum of Wgt. 125

50% .0879621 Mean 4.92e-10 Largest Std. Dev. .638477875% .4316497 .946958790% .5622088 .9568821 Variance .407653995% .7877051 .9645367 Skewness -1.39962699% .9645367 1.595628 Kurtosis 6.56652

(IX) Output H:Shapiro-Wilk W test for normal data

Variable | Obs W V z Prob>z-------------+-------------------------------------------------- error | 125 0.90258 9.704 5.102 0.00000

(X) Output I: White's test for Ho: homoskedasticity against Ha: unrestricted heteroskedasticity

chi2(104) = 98.66

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Prob > chi2 = 0.6295

XI Output J: Cameron & Trivedi's decomposition of IM-test

--------------------------------------------------- Source | chi2 df p---------------------+----------------------------- Heteroskedasticity | 98.66 104 0.6295 Skewness | 12.82 13 0.4621 Kurtosis | 2.28 1 0.1312---------------------+----------------------------- Total | 113.75 118 0.5934---------------------------------------------------XII Output K:Breusch-Pagan / Cook-Weisberg test for heteroskedasticity Ho: Constant variance Variables: unemp_i capital_i literacy_i pty_i corrupt_i fiscal_i govt_i bus_i labour_i

monetary_i trade_i investment_i fin_i

chi2(13) = 44.34 Prob > chi2 = 0.0000

_cons | 1.439712 3.070968 0.47 0.640 -4.645617 7.52504------------------------------------------------------------------------------

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Ayal, E.B and G. Karras. (1998). “Components of Economic Freedom and Growth: An Empirical Study,” Journal of Developing Areas, 32: 327–338.

Carlsson, Fredrik, and Susanna Lundström. (2002) “Economic Freedom and Growth: Decomposing the Effects.” Public Choice 112.3-4: 335.

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De Haan, Jakob, and Clemens L J Siermann. (1998) "Further Evidence on the Relationship between Economic Freedom and Economic Growth." Public Choice 95: 363–380.

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De Haan, J. and Sturm, J. (2004). “Economic Freedom and Economic Growth: A Robust Relationship?” Mimeo.De Haan, Jakob, Susanna Lundström, and Jan-Egbert Sturm. (2006). Market- Oriented

Institutions and Policies and Economic Growth: A critical survey. Journal of Economic Surveys 20(2): 157–81.

Friedman, Milton and Rose Friedman. (1980). Free to Choose: A Personal Statement. New York: Harcourt Brace Jovanovich.

Friedman, Milton. (1962). Capitalism and Freedom. Chicago: University of Chicago Press.

Friedrich A. Hayek (1944). The Road to Serfdom Chicago, Ill.: University of Chicago Press.

Galbraith, John Kenneth. (1967). The New Industrial State. Boston: Houghton Mifflin Co.

Gwartney, J.D., R.A. Lawson, and W. Block. (1996). Economic Freedom of the World: 1975–1995. The Fraser Institute, Vancouver.

Gwartney, James and Robert Lawson. (2009). Economic Freedom of the World: 2009 Annual Report. Vancouver: Fraser Institute.

Harrington, Michael. 1962. The Other America: Poverty in the United States. New York: MacMillan Co.

James Gwartney, Robert Lawson, (2003). The concept and measurement of economic freedom. European Journal of Political Economy Vol. 19, 405–430.

Lawson, R. (2008). On the Methodology of the Economic Freedom of the World Index. In King Banaian and Bryan Roberts, eds. The Design and Use of Political Economy Indicators. New York: Palgrave Macmillan.

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Milton Friedman (1982) Capitalism and Freedom. Chicago: University of Chicago Press, p. 13.

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Sen, Amartya. (1999). Development as Freedom. New York: Alfred A. Knopf Inc.

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ASSESSING THE EFFECTS OF MICROFINANCE BANK LOAN ON POVERTY ALLEVIATION IN NIGERIA: A CASE STUDY OF ZION MICROFINANCE BANK,

MAKURDI, BENUE STATE.

BYApeh, Ajene Sunday Ph.D

Department of Economics and Management Science,Nigeria Police Academy, Wudil, Kano, Nigeria

Onoja, John2

Department of Economics Nasarawa State University, Keffi

Abstract

The study examined the impact of microfinance bank loans on poverty alleviation in Nigeria. The main aim of the study was to assess the impact of Zion microfinance bank loans on poverty alleviation in Makurdi LGA of Benue State. The problem is that despite the unflinching commitment of the Central Bank of Nigeria to the reduction of poverty through the formulation and implementation of a functional Microfinance policy framework, the number of beneficiaries of microfinance banks is still an insignificant proportion of the people in need of microfinance services. In view of this the study assessment the extent to which microfinance has been able to reach the poor and that constitute the problem of this study. The study therefore used employment generation, investment and people standard of living as macroeconomics variables to measure the impact of Zion MFB s loans on of poverty and also to determine the challenges facing access to such loans. The study adopted a survey design and a Pearson product moment correlation coefficient(r) to determine the extent of the impact of Zion microfinance banks on employment generation, investment and people standard of living. The findings of the study revealed among others that: (i) there was a significant positive relationship between Zion microfinance bank loans and employment generation in Makurdi LGA of Benue State. This implies that if the loans giving to customers, more jobs and employment opportunities will be provided. (ii) The findings from hypothesis two on the extent of relationship between microfinance bank loans and investment showed that there was a significant positive relationship between microfinance bank loans and customers level of investment in the study area. That is the level of investment will increase if more loans are made available to customers in the state. (iii) The findings also revealed that there is a significant positive relationship between microfinance bank loans and customers standard of living. That is, if microfinance bank loans issued out more loans to customers, the standard of living of people will significantly improved in the state as more will be able to meet up with their basic needs. The study therefore concluded that; Zion microfinance bank loans have positive impact on poverty alleviation in Makurdi LGA of Benue State. The study recommended amongst other that: (i) Zion Micro finance banks should be motivated to give more loans to customers as this will create multiplier effect on the economy. (ii) There is a need to establish more microfinance

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banks in Makurdi Local Government so as to promote and develop the entrepreneurial skills which further generate growth and development.

1. IntroductionPoverty is a global phenomenon with over 2.8bn of the world population living below the poverty live out of which 1.1billion live on less than US$1.00 per day (CBN,2009). This prompted the international community to declare the Millennium Development Goals (MDG) aimed at reducing incidence of poverty globally by half by 2015 (CBN, 2009)

The National Bureau of Statistics distributed the Nigerian population into extremely poor, moderately poor and non-poor. The proportion of the core poor increased from 6.2 percent in 1980 to 29.3 percent in 1996 and then came down to 22.0 percent in 2004. For the moderately poor, the picture was quite different as the proportion recorded increased between 1980 and 1985 from 21.0 percent and 34.2 percent respectively. It went down between 1996 and 2004, from 36.3 percent to 32.4 percent. On the other hand, the proportion of non-poor was much higher in the country in 1980 (72.8 percent) compared to 1992 (57.3 percent) and 1996 (34.4 percent). Although it rose to 43.3 percent in 2004, it dropped to 31 percent in 2010. (NBS, 2010).Poverty reduction has been an important development challenge over decades. One of the identified constraints facing the poor is lack of access to formal sector funds to enable them to take advantage of economic opportunities to increase their level of output, hence move out of poverty. However, the increasing level of acceptance of microfinance among the various groups of stakeholders worldwide becomes necessary because it is a powerful tool to fight poverty (Annibale & Bob, 2006). This has become more imperative in view of the limited capacity of the formal banking sector in providing financial services to the vast majority (about 65%) of the Nigeria population considered poor but economically active (CBN 2010). Despite the unflinching commitment of the Central Bank of Nigeria to the reduction of poverty through the formulation and implementation of a functional Microfinance policy framework, the number of beneficiaries of microfinance banks is an insignificant proportion of the people in need of microfinance services. The problem therefore, is that in view of the limited number of microfinance in Nigeria, has microfinance banks been able to impact on employment generation, investment and standard of living and poverty reduction in Makurdi. L.G.A? The rest of the paper is organized as follows. Section 2, examine the concepts of poverty, microfinance, the theory underline the microfinance and the overview of the microfinance activities in Nigeria, Section 3 is devoted to the methodology followed by section 4 where the empirical result was estimated and section 5 is devoted to recommendations and conclusion of the study2: Conceptual Framework2.1: PovertyPoverty is the multidimensional term, therefore has no single definition. It engulfs both economic and social dimensions some of which are not easily quantifiable. Ravallion (2004) in Osuala (2009) refer to poverty as a lack of command over basic consumption needs, that is, a situation of inadequate level of consumption; giving rise to insufficient food, clothing and shelter. Aluko (2002) & Sen (2007) defined poverty as lack of certain capabilities, such as being

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able to participate with dignity in societal endeavors. Chambers in Osuala (2009) insisted that the poor are poor because they are poor, “their poverty condition sinter-lock like a web to trap people in their deprivation. Poverty is a strong determinant of others. The causes of poverty are many and must be attacked from all fronts to save the poor from the poverty trap” .According to Meyer (2001), historically poverty was viewed largely as a problem of the poor earning too little income, consuming too little to attain a socially acceptable standard of living and possessing too few assets to protect themselves against unforeseen problems.

Englama and Bamidele (2013) aptly summarized the definition of poverty, in both absolute and relative terms as a state where an individual is not able to cater adequately for his/her basic needs of food, clothing and shelter, meet social and economic obligations; lacks gainful employment, skills, assets and self-esteem; and has limited access to social and economic infrastructures. In other words, the poor lacks basic infrastructure such as education, health, potable water, and sanitation, and as a result has limited chance of advancing his/her welfare to the limit of his/her limited access to social and economic infrastructures”.

Olowoni (2014) defined poverty as a poor economic condition characterized by low calorie intake, poor housing, inadequate health facilities, low income, unemployment and underdevelopment. Ekong (2001) viewed “poverty as a concept that has defied universally accepted and objective definition or assessment because it is not only an expression of life situation, but equally a state of mind and a perception of self in the complex web of social relation.”

The Central Bank of Nigeria(2014) views poverty as “a state where an individual is not able to cater adequately for his or her basic needs of food, clothing and shelter; is unable to meet social and economic obligations, lacks gainful employment, skills, assets and self-esteem; and has limited access to social and economic infrastructure such as education, health, portable water, and sanitation; and consequently, has limited chance of advancing his or her welfare to the limit of his or her capabilities”. Narayan (2000) systematically defined poverty when he said that “don’t ask me what poverty is because you have met it outside my house. Look at the house and count the number of holes. Look at my utensils and the clothes that I am wearing. Look at everything and write what you see. What you see is poverty”.2.2: Microfinance

Irobi (2008) defined microfinance as the provision of financial services such credits (loans), savings, micro-leasing, micro-insurance, and payment transfers to economically active poor and low income household to enable them engage in income generating activities or expand/grow the small businesses.

Robinson (2001) defined microfinance as the supply of loans, savings and other basic financial services to the poor. Microfinance is the provision of financial services such as credit (loans), savings, micro leasing, micro-insurance and payment transfers to economically active poor and low income households to enable them engage in income generating activities or expand/grow their small businesses.Otero (2009) defined microfinance as “the provision of financial services to low-income poor and very poor self-employed people”. These financial services includes; savings and credit. It also includes; other financial services such as insurance and payment services. Schreiner and Colombet (2001) defined microfinance as “the attempt to improve access to small deposits and small loans for poor households neglected by banks.” Therefore in line with this study,

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microfinance involves the provision of financial services such as savings, loans and insurance to poor people living in both urban and rural settings who are unable to obtain such services from the formal financial sector2.3: An overview of Microfinance activities in NigeriaThe practice of microfinance in Nigeria is culturally rooted and dates back several centuries. The traditional microfinance institutions provide access to credit for the rural and urban, low-income earners. They are mainly of the informal Self-Help Groups (SHGs) or Rotating Savings and Credit Associations (ROSCAs) types. Other providers of microfinance services include savings collectors and co-operative societies. The informal financial institutions generally have limited outreach due primarily to paucity of loanable funds.In order to enhance the flow of financial services to Nigerian rural areas, Government has, in the past, initiated a series of publicly-financed micro/rural credit programs and policies targeted at the poor. Notable among such programs were the Rural Banking Programme, sectorial allocation of credits, a concessionary interest rate, and the Agricultural Credit Guarantee Scheme (ACGS). Other institutional arrangements were the establishment of the Nigerian Agricultural and Co-operative Bank Limited (NACB), the National Directorate of Employment (NDE), the Nigerian Agricultural Insurance Corporation (NAIC), the Peoples Bank of Nigeria (PBN), the Community Banks (CBs), and the Family Economic Advancement Programme (FEAP). In 2000, Government merged the NACB with the PBN and FEAP to form the Nigerian Agricultural Cooperative and Rural Development Bank Limited (NACRDB) to enhance the provision of finance to the agricultural sector. It also created the National Poverty Eradication Programme (NAPEP) with the mandate of providing financial services to alleviate poverty.Microfinance services, particularly, those sponsored by government, have adopted the traditional supply-led, subsidized credit approach mainly directed to the agricultural sector and non-farm activities, such as trading, tailoring, weaving, blacksmithing, agro-processing and transportation. Although the services have resulted in an increased level of credit disbursement and gains in agricultural production and other activities, the effects were short-lived, due to the unsustainable nature of the programs.Since the 1980s, Non-Governmental Organizations (NGOs) have emerged in Nigeria to champion the cause of the micro and rural entrepreneurs, with a shift from the supply-led approach to a demand driven strategy. The number of NGOs involved in microfinance activities has increased significantly in recent times due largely to the inability of the formal financial sector to provide the services needed by the low income groups and the poor, and the declining support from development partners amongst others. The NGOs are charity, capital lending and credit-only membership based institutions. They are generally registered under the Trusteeship Act as the sole package or part of their charity and social programs of poverty alleviation. The NGOs obtain their funds from grants, fees, interest on loans and contributions from their members. However, they have limited outreach due, largely, to unsustainable sources of funds.

2.4: Theoretical frameworkThe study is hinged on Esusu credit scheme in Nigeria. Esusu is a revolving loan scheme in Nigeria and entrenched in most West African countries operating as an informal micro-credit programme. The groups are voluntarily formed to operate the revolving schemes. Members

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make fixed contributions of money at regular intervals. At each interval, one member collects the entire contributions from all. Every member takes a turn until the cycle is completed, and then it starts again. For people who take their turn late, esusu functions as a savings mechanism. The esusu are very strong programme that have assisted the target group to alleviate poverty, particularly among market women in rural/urban markets. Each esusu’s group has a recognized leader and Esusu are often used as a model by NGOs trying to establish microfinance programme in urban setting in reducing poverty2.5: Empirical Literature ReviewA review of microfinance literatures has shown disparity in perception by scholars on this subject. While some relay microfinance as an instrument that empowers the poor, others negate this opinion; conceptualizing microfinance has a social liability. Jegede, Charles. A. Kehinde, James, Akinlabi, Babantunde & Hamden (2011) studied the impact of Microfinance on Poverty Alleviation in Nigeria: An Empirical Investigations’. The empirical relationship between microfinance loan disbursement and poverty alleviation was tested by employing chi-square test, F-test and T-test. The method employed in the study is the descriptive survey method because the study involved collecting data from rural communities members of microfinance institutions (MFIs) with a view to determine whether or not microfinance contribute to poverty reduction by increasing their income and welfare. The findings revealed that there is a significant difference between those people who used microfinance institutions and those who do not use them. There is a significant effect of microfinance institutions in alleviating poverty by increasing income and changing economic status of those who patronize them. The study concludes that microfinance institution is indeed a potent strategy of poverty reduction and a viable tool for purveying credit to the poor. Godwin (2010) studies the critical factors that cause poverty in Nigeria and investigate the extent to which microfinance institutions have helped in the alleviation of poverty. The researcher adapts the data on reasons for poverty generated by National Bureau of Statistics and employed the methods of factor analysis and regression analysis on a quadratic equation model in explaining the variations between the two variables. The result of the analysis identifies five factors: low profit, prices of commodities are too high, hard economic times, lack of finance to start or expend their business, and business not doing well, as critical factors causing poverty. The analysis also reveals that the impact of microfinance on poverty in Nigeria can be explained in two phases. The first phase, the take-off stage, sees poverty as increasing though at a decreasing rate as microfinance credit increases .In the second phase, precisely starting from the year 2001, persistent increase in microfinance credit reduces drastically the poverty index in Nigeria. Thus, currently, microfinance credit lowers poverty in Nigeria. Michael (2011) researched on the impact of micro finance on poverty reduction in Ghana: a case study of First Allied Savings and Loans Limited. The objective was to find out the role of microfinance in poverty alleviation and also aims at identifying or examining the effectiveness of microfinance and its challenges. The research design was survey research which employed both quantitative and qualitative tools of analysis. The survey revealed that microfinance and microfinance institutions play a crucial role in reducing poverty in the country. The result also showed that microfinance and institutions despite its importance is faced with lots of challenges, some of them include loan recovery as most customers default. Another challenges faced by

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microfinance institutions in the country is inadequate capital to sustain and cater for the growing number of clients.

Shah (2010) conducted a research on Microfinance and Poverty Reduction: Evidence from a Village Study in Bangladesh. The objective of the study was to evaluate the competing claims on the impact of microfinance programs on multidimensional poverty; a village study in Bangladesh was conducted where three microfinance programs had been operating for more than five years. A chi-square test was used in analyzing the quantitative and qualitative data generated. The study found that microfinance has resulted in a moderate reduction in the poverty of borrowers, as measured by a variety of socio-economic indicators, but has not reached many of the poorest in the village. To make microfinance a more effective means of poverty reduction other services such as skills training, technological support, education and health related strategies should be included with microfinance.3.0: RESEARCH METHODOLOGY

The study adopted a survey design. The study was confined to Zion bank Makurdi, Benue state and restricted to its activities in the provision of loans to customers. The population of the study was made up of all customers (300) who have account with Zion Micro-finance bank in the study area. A sample of 200 customers representing the total population of customers for the study was selected from the area. This represent 66.7% of population of 300 customers who have account with Zion Microfinance bank is ideal. This method was adopted since the target population was homogenous and the selection of this sample served as representative of the total population.

The research instrument for data collection was a self-structured questionnaire titled Impact of Micro -finance bank on poverty alleviation in Makurdi. A total of 200 copies of the questionnaire were administered to the respondents of which 160 were returned. It was made up of 16 items divided into two sections, designed to find out the respondents’ views on the Impact of Micro finance bank on poverty alleviation (See Appendix, A). It was divided into two clusters. Cluster ‘A’ contained items 1-6 which sought to elicit information on the personal data of the respondents. Cluster B’ contained items 1-16 which sought to elicit responses on the “Impact of Micro finance bank on poverty alleviation in the study area. A 3-point rating scale with the response mode of “a large extent (TLE) = 3”, “Little extent (LE) = 2”, “Not at all (NAA) = 1” were used to weigh the answers of the respondents on the two clusters of the study.

The completed questionnaire were collected, coded and analyzed. The descriptive statistics such as tables and simple percentages were used to answer the research questions and Pearson product moment correlation coefficient(r) and t- distribution were used in testing the hypotheses at 0.05 level of significance.

DATA PRESENTATION AND ANALYSIS

This section deals with results and Discussion of the findings4.1 RESULTS4.1.1: Descriptive Analysis Table 1: Socio-Demographic Variables of the Respondents

Statement of Items Frequency Percentage (%)

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Gender:Male 100 62.5

Female 60 37.5Total 160 100.0

Age:18-25 years 30 18.826-40 years 40 25.041-60 years 70 43.861 years &Above 20 12.5Total 100 100.0

Level of Education:Primary 45 28.1Secondary 55 34.4Tertiary 60 37.5Total 160 100.0

Employment Status:Employed 25 15.6Unemployed 50 31.3Self-employed 85 53.1Total 160 100.0

Residential Status:Personal House 50 31.3Family House 49 30.6Rented House 61 38.1Total 160 100.0

Source: Field survey data, 2018

Table 1 revealed that 62.5% of the respondents were male, while 37.5% were female. This implies that majority of the respondents were male. The findings revealed that 18.% were aged 18-25 years,25.0% were 26-40 years,43.8% were 41-60 years and 12.5% were 61 years and above. This means majority of the respondents were 41-60 years.Moreso,28.1% primary school holders,31.3% were secondary holders ,while 53.3% were have attained tertiary level of education. This implies that most of the respondents have tertiary level of education. Furthermore, the results revealed that 15.6% were employed, 31.3% were unemployed and 53.1% were self-employed. The implication of this is that most of the respondents were self-employed, while very few were employed with the government. Similarly, 31.3% have their personal houses, 30.6% were staying in family houses and 38.1% were staying in rented houses respectively. This implies that most of the respondents were in rented houses. Research Question One: What is the impact of Zion microfinance bank loan on employment generation in Makurdi LGA of Benue State?Table 2: Impact of Zion microfinance bank loan on employment generation

Statement of Items To a large extent

To a little extent

Not at All

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Microfinance bank loan provides job 120(75.0%)

30(18.8%)

10(6.2%)

Microfinance bank loan help in reducing youth unemployment

90(56.3%)

44(27.5%)

26(16.2%)

Microfinance bank loan promotes self-reliance 125(78.1%)

13(8.1%)

22(13.8%)

Microfinance bank loan encourages people to expand their business

124(77.5%)

20(12.5%)

16(10.0%)

Source: Field survey data, 2018

Table 2 revealed the that 120 or 75.0% of the respondents said microfinance banks loan to a large extent have help in generating employment by providing jobs,30 or 18.8 percent said they have to a little extent while 10 or 6.2% said they have not at all. Moreso,56.3% said to a large extent they have helped in reducing the rate of youth unemployment ,27.5% said to a little ,while 16.2 % said they have not at all.Similarly,78.1% said they help in promoting self-reliance to a large extent,8.1% said to a little extent and 13.8% said they have not at all,77.5% said to a large extent they have led to business expansion,12.% said to a little extent they have while 10.0% said they have not at all. Based on the findings, it implies that microfinance bank loans have helped in employment generation in the area. Research Question Two: What is the extent of the impact of Zion microfinance bank loan on investment in Makurdi LGA of Benue State? Table 3: Impact of Zion microfinance bank loan on investments

Statement of Items To a large extent

To a little extent

Not at All

Microfinance bank loan provides financial resources for investments

135(84.4%)

13(8.1%)

12(7.5%)

Microfinance bank loan promotes savings habits 125(78.1%)

26(16.3%)

9(5.6%)

Microfinance bank loan encourages small business activities

132 (82.5%)

20(12.5%)

8(5.0%)

Microfinance bank loan enhances higher productivity

143(89.4%)

9(5.6%)

8(5.0%)

Source: Field survey data, 2018

Table 3 showed that 84.4% of the respondents said microfinance banks to a large extent have provided financial resources for investments, 8.1% they have to a little extent and 7.5% said they have not at all.Also, 78.1% said the banks to a large extent have helped in promoting savings habits, 16.3% said they have to a little extent, while 5.6% said they have not at all. The result showed also that 82.5% said they banks to a large extent have encouraged small business activities, 12.5% said they have to a little extent, while 5.0% said they have not at all.Moreso, 89.4% said to a large extent the bank loans have enhance productivity to a large extent, 5.6% said they have to a little extent and 5.0% said they have not at all. Thus, the implication of these is that microfinance bank loans have helped in promoting investment as a way of alleviating poverty in the stud area.

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Research Question Three: What is extent of the impact of Zion microfinance bank loan on standard of living in Makurdi LGA of Benue State? Table 4: Impact of Zion microfinance bank loan on people standard of living

Statement of Items To a large extent

To a little extent

Not at all

Microfinance bank loan raises people welfare 133(83.1%)

14(8.8%)

13(8.1%)

Microfinance bank loan helps in reducing the poverty level in the state

124(77.5%)

25(15.6%)

11(6.9%)

Microfinance bank loan helps in reducing the consequences of high cost of living

131(81.9%)

20(12.5%)

9(5.0%)

Many families have access to micro-credit which help them to meet their basic needs

95(58.8%)

44(27.5%)

22(13.8%)

Source: Field survey data, 2018

The findings from Table 4 revealed that 83.1% of the respondents were of the view that microfinance bank loans have helped in raising the welfare of people in the area to a large extent, 8.8% said to a little extent, while 8.1% said they have not at all.Moreso,77.% said to a large extent the loans help in reducing poverty,15.6% said they do to a little extent and 6.9% said they do not at all. Similarly, 81.9% said to a large extent they help in reducing the consequences of high cost of living, 12.5% said they do to a little extent and 5.0% said they do not at all. Furthermore, 58.8% said to a large extent micro-credit help customers to meet up with their basic needs, 27.5% said they do to a little extent and 13.8% said they do not at all. This means that microfinance bank loans help in alleviating poverty by improving the standard of living of people in the area.Research Question Four: What are the challenges facing access to Zion microfinance bank loan in Makurdi LGA of Benue State? Table 5: Challenges facing access to Zion microfinance bank loans

Statement Items To a large extent

To a little extent

Not at All

Lack of collateral security affects access to microfinance loans

105(65.5%)

32(20.0%)

23(14.4%)

High interest rates discourages customers from accessing microfinance bank loans

98(61.3%)

52(32.5%)

10(6.3%)

High rate of illiteracy/ignorant limit access to microfinance bank loans

169(68.1%)

14(8.8%)

37(23.1%)

Corruption and low demand for locally made goods affect customers demand for loans

114(71.3%)

40(25.0%)

6(3.8%)

Source: Field survey data, 2018

Table 5 indicated that 65.5% of the respondents said lack of collateral security that will enable customers to access microfinance bank loans to a large extent is a greatest challenge,20,0% said it is to a little extentwhile,14.4% said not at all they does not affect loan accessibility. Also, 61.3% said high interest rates on loan discourages customers to a large extent, 32.5% said it do

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to a little extent and 6.3% said it does not at all.Moreso, 68.1% of the respondents said illiteracy/ignorant limit access to loans from these banks to a large extent, 8.8% said they do to a little extent and 23.1% also said they do not at all affect access to loans. The findings showed also that 71.3% said to a large extent corruption and low demand for locally made goods to a large extent are challenges to the banks loans, 25.0% said they are to a little extent, while 3.8% said they do not affect access to loan at all. This implies that all the factors are barriers to customers’ access to loans from the banks. 4.1.2 Test of HypothesisHypothesis One: There is no significant relationship between Zion microfinance bank loan and employment generation in Makurdi LGA of Benue StateTable 6: Pearson product moment correlation coefficient(r) of impact of microfinance bank loan on employment generation

Variable X SD N r-cal. Α P DecisionM/loan 1.31 0.58

160 .894 .05 .000 SignificantEmployment 1.36 0.71

p<.05

Source: Computation from SPSS package version 23.0

Table 6 revealed that r(160 =0.894, p=.000),which means that p<0.05.Since the probability value(p-value) is less than 0.05,we reject the null hypothesis and conclude that there is a significant positive relationship between microfinance bank loans and employment generation in Kaduna North LGA .Thus, Ho is statistically significant at 0.05 level.

Hypothesis Two: There is no significant relationship between Zion microfinance bank loan and investments in Makurdi LGA of Benue StateTable 7: Pearson product moment correlation coefficient(r) of impact of microfinance bank loan on investments

Variables X SD n r-cal. Α P DecisionM/Loan 1.23 0.57

160 .931 .05 .020 SignificantInvestments

1.25 0.53

p<.05Source: Computation from SPSS package version 23.0

The findings from table 7 showed that r(160=0.931,p=.000),which implies also that Ho is rejected since p<.05 used as the level of significance. Thus, we conclude that there is a significant positive relationship between microfinance bank loans and customers level of investment in the study area. That is the level of investment will increase if more loans are made available to customers in the state.

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Hypothesis Three: There is no significant relationship between Zion microfinance bank loan and improvement in people standard of living in Makurdi LGA of Benue State

Table 8: Pearson product moment correlation coefficient(r) of impact of microfinance bank loan on standard of living

Variables X SD N r-cal. Α P DecisionM/Loan 1.25 0.59

160 .417 .05 .020 SignificantStandard of living 1.43 0.57

p<.05

Source: Computation from SPSS package version 23.0

Table 8 showed that r(160=0.417,p=.020),which means also that p<0.05.Based on this, we reject the null hypothesis and conclude that there is a significant positive relationship between microfinance bank loans and customers standard of living. The implies that with the introduction of microfinance bank loans, the standard of living of people had improved in the state as more now have access to such loans which help them to meet up with their basic needs. Hypothesis Four: There is no significant difference between the opinion of male and female respondents on the challenges facing access to Zion microfinance bank loans in Makurdi LGA of Benue StateTable 9: Independent t-test result difference in the opinion of male and female respondents on challenges facing access to microfinance bank loans

Gender n X SD Df. t-cal. Α P DecisionMale 100 2.49 1.67

158 4.999 .05 .120 SignificantFemale 60 2.60 1.56

p>.05

Source: Computation from SPSS package version 23.0

Table 9 showed that t(158=4.999,p=.120),which means p>.05.Based on this, we failed to reject the null hypothesis, that the Ho is accepted and the conclusion therefore is that there is no significant difference between the opinion of male and female respondents on the challenges facing access to microfinance loans in the state. That is, both male and female respondents agreed to a large extent that the factors identified are the major challenges customers faced when trying to access the loans from these banks.

4.2 Discussion of The findings

The study examines the impact of microfinance bank loans on poverty alleviation in Makurdi LGA of Benue State. The study therefore use the employment generation, investment

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and people standard of living as macroeconomics variables to measure the impact of Zion MFB s loans on of poverty and also determined the challenges facing access to such loans. The findings revealed the following: The findings from research question one which aims at determining the impact of microfinance bank loans on employment generation in the state revealed that 75.0% of the respondents said microfinance banks loan to a large extent have help in generating employment by providing jobs, 18.8 percent said they have to a little extent while 6.2% said they have not at all. More so, 56.3% said to a large extent they have helped in reducing the rate of youth unemployment ,27.5% said to a little ,while 16.2 % said they have not at all.Similarly,78.1% said they help in promoting self-reliance to a large extent,8.1% said to a little extent and 13.8% said they have not at all,77.5% said to a large extent they have led to business expansion,12.% said to a little extent they have while 10.0% said they have not at all. This findings support the view of Irobi (2008) that microfinance banks provides services such as credit(loans),savings, micro-leasing, micro-insurance an payments transfers to economically active poor and low income households to enable them engage in income generating activities.

The findings from research question two which focuses on the impact of microfinance bank loans on investments revealed that 84.4% of the respondents said microfinance banks to a large extent have provided financial resources for investments, 8.1% they have to a little extent and 7.5% said they have not at all. Similarly, 78.1% said the banks to a large extent have helped in promoting savings habits, 16.3% said they have to a little extent, while 5.6% said they have not at all. The result showed also that 82.5% said they banks to a large extent have encouraged small business activities, 12.5% said they have to a little extent, while 5.0% said they have not at all. More so, 89.4% said to a large extent the bank loans have enhance productivity to a large extent, 5.6% said they have to a little extent and 5.0% said they have not at all. This is in line with Lashley (2004) that microfinance banks provide small loans (micro-credit) to the poor to help them engage in productive activities or grow their small businesses which serve as sources of employment. The findings from research question three on the impact of microfinance bank loans on people standard of living showed that 83.1% of the respondents were of the view that microfinance bank loans have helped in raising the welfare of people in the area to a large extent, 8.8% said to a little extent, while 8.1% said they have not at all.Furthermore,77.% said to a large extent the loans help in reducing poverty,15.6% said they do to a little extent and 6.9% said they do not at all. Similarly, 81.9% said to a large extent they help in reducing the consequences of high cost of living, 12.5% said they do to a little extent and 5.0% said they do not at all. Furthermore, 58.8% said to large extent micro-credit help customers to meet up with their basic needs, 27.5% said they do to a little extent and 13.8% said they do not at all. The findings from research question four revealed that 65.5% of the respondents said lack of collateral security that will enable customers to access microfinance bank loans to a large extent is a greatest challenge,20,0% said it is to a little extentwhile,14.4% said not at all they does not affect loan accessibility. Also, 61.3% said high interest rates on loan discourages customers to a large extent, 32.5% said it do to a little extent and 6.3% said it does not at all. More so, 68.1% of the respondents said illiteracy/ignorant limit access to loans from these banks to a large extent, 8.8% said they do to a little extent and 23.1% also said they do not at all affect access to loans. The findings showed also that 71.3% said to a large extent corruption and

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low demand for locally made goods to a large extent are challenges to the banks loans, 25.0% said they are to a little extent, while 3.8% said they do not affect access to loan at all. In recognition of these challenges, Mahajan (2005) opined that micro-credit cannot by itself promote economic growth and in reality it is barely adequate as an instrument for poverty alleviation. The findings from hypothesis one which aims at examining the extent of relationship between microfinance bank loans and employment generation revealed that r(160 =0.894, p=.000),which means that p<0.05.Since the probability value(p-value) is less than 0.05,we reject the null hypothesis and conclude that there is a significant positive relationship between microfinance bank loans and employment generation in Makurdi LGA .Thus, Ho is statistically significant at 0.05 level. This implies that if the loans giving to customers Increased, more jobs and employment opportunities will be provided. This agreed with Shastri (2009) that microfinance banks provide credit, savings, repository and financial resources to low income earners or poor households to create and expand their economy and to improved their standard of living. The findings from hypothesis two on the extent of relationship between microfinance bank loans and investment showed that r (160=0.931, p=.000), which implies also that Ho is rejected since p<.05 used as the level of significance. Thus, we conclude that there is a significant positive relationship between microfinance bank loans and customers level of investment in the study area. That is the level of investment will increase if more loans are made available to customers in the state. This contradicted the findings of Scully (2004) that microfinance banks services and loans do not reach the poorest of the poor. The findings from hypothesis three which aims at determining the extent of relationship between microfinance bank loans and people standard of living revealed that r(160=0.417,p=.020),which means also that p<0.05.Based on this, we reject the null hypothesis and conclude that there is a significant positive relationship between microfinance bank loans and customers standard of living. That is, if microfinance bank loans issued out more loans to customers, the standard of living of people will significantly improved in the state as more will be able to meet up with their basic needs. Buttressing this, Khander (2005) microfinance banks programmes have a sustainable impact in reducing poverty among the beneficiaries, especially female entrepreneurs and it has positive spill over effects at the village level The findings from hypothesis four which aims at examining the extent of difference between male and female respondents opinion on the challenges facing access to microfinance bank loans revealed that t(158=4.999,p=.120),which means p>.05.Based on this, we failed to reject the null hypothesis, that the Ho is accepted and the conclusion therefore is that there is no significant difference between the opinion of male and female respondents on the challenges facing access to microfinance loans in the state. This means that, both male and female respondents agreed to a large extent that the factors identified are the major challenges customers faced when trying to obtain loans from microfinance banks. Buttressing this Madheswaran and Dharmadhikary (2001) opined that strict repayment requirements and penalties for delay deter the poor from obtaining micro-credit scheme from microfinance banks 5.2: Conclusion This study concludes that microfinance schemes have the potential to alleviate poverty especially in increasing level of income and reducing vulnerability. This is because

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microfinance has become an important permanent feature of financial landscape and poverty alleviation strategy in developing economies. A robust economic growth cannot be achieved in any economy without strategy that focuses on poverty eradication, empowerment, and promoting access to credit facilities. However, the gains of microfinance are dependents on the presence of certain success imperative. Similarly, the research is convinced that microfinance serves the poor. This is because it empowers the poor people by increasing their access to factors of production, increase market share of privileged as well as minimizes risk by moving to expand their market satisfaction of the customers. 5.3: Recommendations for policyBased on the findings of this study the following recommendations are made: (i) There is a need to establish more microfinance banks in Makurdi Local Government so as to promote and develop the entrepreneurial skills which further generate growth and development.(ii)Tradition, custom and values of the beneficiaries greatly affect the smooth running of the scheme. Thus, the study recommended that reorientation of the beneficiaries should be employed as this will help in reducing the problem of patronization.(iii) The strength and performance of the bank could be enhanced if room is given for complains as regards to the problems beneficiaries are facing and preferential treatment should be ruled out by the institutions for the sake of better performance and future of the poor. The development of appropriate policy and strategy for poverty reduction and improvement in standard of living of people especially the poor requires a good understanding of the nature and dimension of poverty.(iv) Since poverty reduction exercise in Nigeria has been constrained by lack of capital, microfinance development could be a constructive strategy to alleviate poverty. Provision of microcredit and savings facilities empowers the poor and enables them participate in economic activities which is expected to improve their wellbeing and help them acquire assets. Subject to this notion, government is expected to promote microfinance process through prerequisite policies, provisions of inducements and institutional framework that fosters linkages.

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Englama, A. & Bamidele, A. (2013). Measurement issues in poverty. In Poverty Alleviation in Nigeria, Selected Papers for the 2012 Annual Conference of the Nigerian Economics Society (pp. 141-156)

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INVESTMENT IN HUMAN RESOURCE DEVELOMENT; A ROADMAP TO ENHANCING GROWTH IN THE NIGERIAN ECONOMY

James Hantsi Landi Ph.D & Jessica John Alhassan

Department of Economics,Faculty of Social Sciences,

University of Jos, Jos-Nigeria.

ABSTRACTThe crucial role that human resource development plays in the growth of an economy cannot be overemphasized. This is because human resource development equips human beings with the needed capacity and capabilities which are essential for nation building. However, in Nigeria, investment in human resource development has been on the decline despite growing population, hence leading to the dearth of critical skills, knowledge and experience. As a result, physical and material resource whether indigenous or imported cannot be effectively mobilized and utilized to bring about meaningful growth in the economy. The basic objective of this study is thus to examine the impact of investment in human resource development on enhancing economic growth in the Nigerian economy. In order to achieve this objective, secondary data on government expenditure on health (GEXH), government expenditure on education (GEXEDU), labour force (LF), and gross capital formation were employed as the independent variables while real gross domestic product (RGDP) as a proxy for economic growth as the dependent variable. The study adopted the method of Ordinary Least Squares (OLS) estimation technique. All the independent variables including government expenditure on health, government expenditure on education, total labour force, and gross capital formation yielded the expected positive sign and were statistically significant, except government expenditure on health and capital gross formation which appeared insignificant. The insignificant impact of gross capital formation was attributed to poor savings, while that of government expenditure on health was attributed to the underdeveloped nature of the Nigerian health sector. The R-Squared which measures the goodness of fit is 98% implying that 98% of the systematic variation in economic growth is attributed to investment in human resource development while the F-Statistic showed that the overall model is highly significant at 5% level of significance. The study recommends amongst other things that government should increase health expenditure and channel it to the provision of adequate drugs, medical equipments, and improvement of other sound services to enhance the quality of human resources.

Key Words: Investment, Human Resource Development, Growth. Nigerian Economy

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1. INTRODUCTION The immense contribution of investment in human resource development to the growth

of any economy cannot be overemphasized. It is in fact an indispensable ingredient to the growth process of a nation. This is because human resource development equips human resources with the needed knowledge, skills, capabilities as well as the experience which are essential for nation building (Okoje, 1995). Realizing the significant role that human resources play in national growth, the Nigerian government has put in place various programs and educational reforms with the expectation of meeting the county’s need in areas of human development. Such programmes include the Universal Basic Education, Open and Distance Learning Programme and Nomadic Education. Also, to develop the health sector which is also an integral component of human resource development, government over the years has channeled funds to the sector. An example is the investment for the constructions of about 21 equipped teaching hospitals in the federation (Ngozi & Ngianga, 2011). However, these have not positively resulted in a well-developed human resource base and their contribution to nation building. The Nigerian economy is still characterized with backwardness and large number of the Nigerian population with little access to economic necessities such as education, health care services and other social services needed to develop their capacity in nation building. It is on this premise that this study examines investment in human resource development as a road map to enhancing economic growth in the Nigerian economy. The study concentrates on the period 1995-2016, and the choice of period is informed by the emphasis made by the United Nations in 1995 on the role of government in investing on capacity building in order to meet current and future economic challenges. The study started with introduction followed by literature review, methodology, data analysis and interpretation and finally conclusion and recommendations.2. LITERATURE REVIEW2.1 The Concept of Economic Growth

Basically, economic growth is referred to as an increase in national income or the total volume of goods and services produced in an economy. However, Friedman (1972) defined economic growth as a quantitative sustained increase in a country’s per capital output accompanied by expansion in its labour force, consumption, capital and volume of trade. Accordingly, Emmanuel (2000) conceptualized economic growth as the process of expanding productive output of an economy which is accomplished through effective mobilization and management of human, material, and financial resources. Nwanyanwu (2010) citing Dewett posited that growth is the quantitative increase in economic variables normally persisting over successive periods and that the determinants of economic growth are: availability of natural resources, the rate of capital formation, capital-output ratio, technological progress, dynamic entrepreneurship and other factors. Also, Jhingan (2012) posited that economic growth involves not only more output but also greater efficiency, that is, an increase in output per unit of input. In effect, it is the productive capacity of an economy which in turn produces goods and services for human consumption. Notwithstanding, Haller (2012) saw economic growth as the process of increasing the sizes of the macro-economic indicators especially the GDP per capita, in an ascendant but not necessarily linear direction, with positive effects on the economic-social sector. Positive economic growth is recorded when the annual average rhythms of the macro-indicators are higher than the average rhythms of growth of the population. However, for the purpose of this research, the definition given by Nwanyanwu (2010) is adopted as the working

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definition. This definition is adopted because it captures all factors responsible for growth enhancement in an economy, in which the human resource is essentially inclusive. 2.1.2 The Concept of Human Resource Development

The concept of human resource development has been a focus of academic inquiry as no country has achieved sustainable economic growth without the commitment to developing its human resources (Dauda, 2010). Human resource development development as asserted by Meier and Rauch (2000) involves the empowerment of people to identify their potentials, enlarge their capabilities and enable them to participate actively in the development process of the economy they inhibit. Accordingly, human resource development is associated with investment in man as productive agent and his development (Jhingan, 2012). This portrays man as a major player in nation building. And his ability to participate efficiently in nation building is hinged on his development through education, training, as well as health improvement. Harbison, (1973) aptly summarized the importance of human resource development in an economy by stating that;

“Human resources constitute the ultimate basis for the wealth of nations. Other resources are passive factors of production, human beings are the active agents who accumulate capital, exploit capital resources, build social, economic and political organization and carry forward national development. Clearly a country which is unable to develop its human resources will be unable to develop anything else”

Human resource development according to Peters (2008) extends over several issues including education and health, nutrition, employment, sanitation, sports, culture, housing and communications. It can thus be deduced that human resource development relates to the provision of social services as well as opportunities to put human resources to work, both of which are intrinsically Linked with the growth objective of a nation. UNDP (2010) expressed that education is fundamental to enhancing quality of life and ensuring social and economic progress. Education thus plays a critical role in the ability of the human resources to mobilize all other factors of production and efficiently engage them in economic activities to ensure sustainable growth and development. However, for the purpose of this research, the definition given by Harbison (1973) is adopted as the operational/working definition. The definition is adopted because the study is in concurrence with the fact that a country which is unable to invest in the development of its human resources and efficiently utilize them in nation building will not be able to achieve anything else, thus making the enhancement of economic growth difficult.2.2 THEORETICAL FRAMEWORK2.2.1 Human Capital Development Theory.

Human capital development theory rests on the assumption that formal education is highly instrumental to improving the productive capacity of a population (Becker, 1993). The theory emphasizes how education increases the productivity and efficiency of workers by increasing the level of cognitive stock of economically productive human capability, which is a product of innate abilities and investment in human beings. The provision of formal education is seen as equally or even more worthwhile than that of physical capital (Psacharopouls & Woodhall, 1997). Filtz-enz, (2000) in his book, “The ROI of Human Capital” quoted Shultz’s description of human capital;

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“Consider all humans ability to be either innate or acquired through education. Every person is born with a particular set of genes which determines his innate ability. Attributes of acquired population quality which are valuable and can be augmented by appropriate investment will be treated as human capital.”

Becker (1962) in his contribution went further to expand human capital theory with his research on relationship between earning and human capital. He asserted that the ability of humans to be productive determines the level of their wages. The ability of humans according to Becker is however influenced by education investment and on- the -job -training. The theory thus stresses the significance of education, training and retraining as well as health care in an economy. It concludes that investment in human beings will lead to greater economic output. 2.2.2 The Endogenous Growth Theory.

The exogenous growth theory emphasizes on stock of human capital and technical progress resulting from investment rate, as sources of long-run growth in an economy. Romer (1990) identifies human capital along with the existing stock of knowledge to produce new knowledge/idea. To Romer, ideas are more important than natural resources in the process of economic growth. The Romer model can be explained in terms of the following production function;ΔA = F (KA, HA, A) Where; ΔA = Increase in technology, HA = Amount of human capital employed in research and development new technology, KA = Amount of capital invested in producing the new technologyF = Production function for technology A = Existing technology. The production function shows that technology is endogenous when more human capital is employed for research and development of new technology or ideas, then technology increases by a larger amount i.e ΔA is greater. If more capital is invested to invent new technology then technology also increases by larger amount i.e ΔA. Further, existing technology ‘A’ also leads to production of new technology. This production of new technology, knowledge or idea for economic growth can be increased through the use of human capital, physical capital and existing technology. To this effect, Benhabib and Spiegel (1994) viewed stock of human capital to determine the ability of an economy to develop and assist technologies as well as bring about Long-run economic growth.

2.3 EMPIRICAL LITERATUREOn the empirical front, Dauda, (2010) carried out an empirical investigation between

investment in education (a key component of human resource development) and economic growth in Nigeria using annual time series data from 1977 to 2007. The paper employed analytical tools such as unit–root tests, Johansen co-integration tests and error correction mechanism. The empirical results indicated a Long-run relationship between investment in education and economic growth. All variables used including gross fixed capital formation and educational were statistically significant (except labour force). The study thus recommended concerted effort towards increased investments to the educational sector should be made so as to move the economy to higher levels of productivity through the labour force. Also, Amassoma & Nwosa (2011) examined the casual relationship between human capital investment and economic growth between the period of1970 and 2009. Using a Vector Error Correction test

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and Pairwise granger causality test, The Findings revealed no causality between human capital development and economic growth. and also a mismatch with the labour force. Hence the study recommended increased budgetary allocation to the education and health sector and also the need for policy makers and employers of labour to update information on the real labour market value of different qualifications so as to enable adequate planning for human resource development. Godfree (2014) examined enhancing sustainable economic growth and development through human capital development in Nigeria. Primary data were collected through structure interviews from 296 respondents via questionnaire. The survey research design was used to collect data for the study. Data were collected and analyzed using simple percentage, mean score and chi-square. Results from the findings revealed that Human capital development plays a critical role in economic growth. The study concludes that investment in human capital development will enhance and sustain economic growth in Nigeria. Notwithstanding, the study recommended among other things that more priority be given to human capital investment and should be the responsibility of all and sundry and not government/organizations alone. Jaiyeoba (2015) examined the relationship between human capital investment and economic growth in Nigeria using annual time series data from 1982 to 2011. The paper employed the OLS technique. Empirical findings revealed that there is a long-run relationship between government investments in educational sector, health sector and economic growth. The study thus recommended among other things that in order to accelerate growth and liberate the Nigerian economy from poverty, the government should put in place policies geared towards appropriate channeling of funds to further improve the education and health sector of the economy. Lusting (2006) also examined a direct relationship between health (a critical component of human resource development) and economic growth in Mexico. Annual time series data from the period of 1970-1995 were collected in this regard. He used life expectancy and mortality rates for different life age groups as health indicators. Findings from the work indicated that health is responsible for approximately one-third of long-term growth in Mexico. Hence recommending that adequate health facilities be put in place so as to ensure good health, which according to him is highly valued throughout the world. Yaroson, V. E., Esew. N.G. &Abdul-Kadir, A.B. (2017) examined the impact of corruption on human resources development. They tested the corruption –human capital nexus using multivariate regression for a period from 1996-2014 employing secondary school enrolment and Human Development Index as proxies of human capital development, while the Transparency International Corruption Perception Index as measure of corruption. They found that corruption is major deterrent to human capital development in Nigeria when school enrolment rates are used as the dependent variable. However, corruption has no statistically significant impact on human capital development when mortality rates per 1000 births are employed as a dependent variable. Given the importance of education in human capital development they recommended the need to curb corruption for effective human capital development. Osoba, A.M. & Tella, S.A. (2017) also looked into the interactive effect of the relationship between investment components and economic growth in Nigeria for a period from 1986- 2014. Employing the Modified Ordinary Least Square technique, established that there was a positive and significant relationship between the interactive effect of human capital component and growth in Nigeria. The study concluded with a recommendation that government should increase allocation to education and

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health, increase availability of health facilities and retraining of teachers for improving standard of human capital for sustainable economic growth.

2.4 SUMMARY AND RESEARCH GAPHaving a recast into the findings, most literatures support the notion that investment in human resource development is fundamental to economic growth in both developing and developed countries. The gap observed is the span of study. Most studies were carried out years back from now, away from recent economic changes. Hence given that the economic system is dynamic due to working of the system and government policies which might have influenced the impact of human resource development on economic growth in recent times, the research work intends to take the time period further to 2016. 3. METHODOLOGY 3.1 MODEL SPECIFICATION

To examine the nexus between Investment in Human Resource Development and economic growth in Nigeria, variables including government expenditure on health (GEXH), expenditure on education (GEXEDU), Labour Force (LF) and Gross Capital formation (GCF) were employed as the explanatory or independent variables while Real Gross Domestic product (RGDP), proxy for Economic growth is the explained or dependent variable. The functional form of the model is expressed as ;RGDP=f (GEXPH, GEXPEDU, LF, GCF)……………………………..…. (1)The stochastic form of the model is as follows GDP = Bo + B1GEXPH+ B2GEXPEDU + B3LF + B4GCF + µ …………..…… (2)

Since the variables have different units of measurement with government expenditure on health and Gross capital formation measured in percentage while Real GDP, and expenditure on education measures in billion. Equation 2 is transformed into a log linear form as follows:LogRGDP = Bo + B1LogEXPH+ B2LogGEXPEDU + B3 LogLF + B4logGCF + µWhere:RGDP =Real Gross Domestic ProductGEXPH = Government expenditure on healthGEXPEDU = Government Expenditure on education LF =Total Labour ForceGCF = Gross capital formation µ= stochastic or Error TermBo, = Constant or Intercept of the regression lineB1, B2, B3, B4, = Coefficient of the parameter estimates Apriori Expectation:

The apriori expectation is that, the coefficients B1, B2, B3, B4 are all expected to be positive that is, B1, B2, B3, B4 > 0. This portrays a positive relationship between dependent variable and the independent variables.

3.2 METHODOLOGY AND SOURCES OF DATA

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This study adopted the method of Ordinary Least Square (OLS) estimation technique. It is adopted because it has the Best Linear Unbiased Estimator (BLUE). It has a minimum variance as compared to other Linear Unbiased Estimators. Annual time series data on all the study variables covering the period 1995 to 2016, sourced from CBN bulletin were used. The period 1995 was deliberately chosen to cover government expenditure on human resource development since the emphasis made by the United Nations in 1995 on the role of government in economies on investing on capacity building in order to meet current and future economic challenges.4. PRESENTATION AND DISCUSSION OF RESULTS4.1 UNIT ROOT TEST The unit root test was conducted to examine the order of integration of the variables in the model. The tests were performed on all series using the Augmented Dickey-Fuller Unit root test. The results are presented in table 1 below; Table 1: Augmented Dickey Fuller (ADF) Unit Root test ResultsVariables ADF

StatisticCritical values

Order of Integration

P-value Remark

GDP -3.638833 -3.020686 1[1] 0.0143 Stationary GEXPH -5.083359 -3.020686 1[1] 0.0034 StationaryGEXPEDU -4.314240 -3.020686 1[1] 0.0006 Stationary LFGCF

18.65616-5.839716

-3.012363-3.673616

1[0]1[1]

0.99990.0008

StationaryStationary

Source: Author’s Computation from Eviews. 7The unit root test results reported in table 4 revealed that, LF though not significant but stationary at level 1[0]. On the other hand, GDP, GEXPH, GEXPEDU and GCF were not stationary at level. However, they became stationary at first differencing 1[1] given a 5% levels of significance. The probability values also reflected the stationarity of variables at first difference because the values are all significant at 5%. In conclusion, we do not reject the null hypothesis of the presence of unit root.

4.2 JOHANSEN CO-INTEGRATION TEST The Johansen co-integration test is used to determine whether long run equilibrium relationship exist among the variables. The result is shown in the tables below: Table 2: Co-Integration test Unrestricted Co-integration Rank Test (Trace)

Hypothesized Trace 0.05No. of CE(s) Eigen value Statistic Critical Value Prob.**

None *  0.946737  113.0391  69.81889  0.0000At most 1 *  0.782443  54.38888  47.85613  0.0108At most 2  0.542455  23.88300  29.79707  0.2054At most 3  0.297804  8.245399  15.49471  0.4395At most 4  0.057037  1.174555  3.841466  0.2785

 Trace test indicates 2 co-integrating eqn(s) at the 0.05 level

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 * denotes rejection of the hypothesis at the 0.05 level **MacKinnon-Haug-Michelis (1999) p-values

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Unrestricted Co-integration Rank Test (Maximum Eigen value)

Hypothesized Max-Eigen 0.05No. of CE(s) Eigen value Statistic Critical Value Prob.**

None *  0.946737  58.65024  33.87687  0.0000At most 1 *  0.782443  30.50589  27.58434  0.0205At most 2  0.542455  15.63760  21.13162  0.2467At most 3  0.297804  7.070844  14.26460  0.4808At most 4  0.057037  1.174555  3.841466  0.2785

 Max-eigenvalue test indicates 2 co-integrating eqn(s) at the 0.05 level * denotes rejection of the hypothesis at the 0.05 level **MacKinnon-Haug-Michelis (1999) p-values

Source: Author’s computation from Eviews 7. From Table 2, Trace test indicates 2 Co-Integrating equation(s) at the 0.05 level of

significance. Similarly, the Maximum Eigen values also revealed two (2) Co-Integrating equations also at 5% levels. Therefore, the null hypothesis H0 is rejected indicating that the variables are Co-Integrated. Hence there exist a long run relationship among the variables. A long-run estimation of the series according to Greene (2002) will produce reliable estimates. 4.3 GRANGER CAUSALITY TEST To examine the direction of causality between the dependent variable and the independent variables, the Granger Causality test was used. The result is shown in the table below; Table 3: Pairwise Granger Causality TestsSample: 1995 2016

 Null Hypothesis: Obs F-StatisticProb. 

 GEXPH does not Granger Cause GDP  20  5.37543 0.0174 GDP does not Granger Cause GEXPH  0.76190 0.4840

 GEXPEDU does not Granger Cause GDP  20  0.62680 0.0577 GDP does not Granger Cause GEXPEDU  2.84006 0.0900

 LF does not Granger Cause GDP  20  35.2861 2.E-06 GDP does not Granger Cause LF  4.13514 0.0371

 GCF does not Granger Cause GDP  20  1.55892 0.2426 GDP does not Granger Cause GCF  1.20058 0.3284

Source: Author’s computation from Eviews. 7 The causality test in table 3 above shows that Government Expenditure on health

granger cause GDP that is, it causes GDP to change since the P-value (0.0174 < 0.05) but GDP does not granger cause Government Expenditure on health since (0.4840> 0.05) (Unidirectional relationship). Similarly, GDP granger cause Total labour force (0.0371 < 0.05) but labour force does not granger cause GDP (Unidirectional relationship). Capital gross formation and GDP

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expresses no causal relationship within the study period since the probability values are insignificant at 5% levels that is, greater than 0.05. 4.4 ODINARY LEAST SQUARES (OLS)The OLS method will be used for this research work to test the explanatory power of the variables because it has the Best Linear Unbiased Estimates (BLUE), that is, it is linear, unbiased and has a smallest variance as compared with all other linear unbiased estimators. (Koutsoyiannis, 2003). The following result was obtained;Table 4: OLS Results

Variable CoefficientStd. Error t-Statistic Prob.  

C 1.651890 6.355816 0.259902 0.7981LOG(GEXPH) 0.099804 0.073707 1.354069 0.1934LOG(GEXPEDU) 0.185998 0.066750 2.786503 0.0127LOG(LF) 1.443841 0.434371 3.323983 0.0040LOG(GCF) 0.057682 0.047112 1.224353 0.2375

Source: Author’s computation using Eviews 7.R-squared (R2) =0.982892 F-statistic (Anova) = 244.1652 Prob(F-statistic) = 0.000000 Durbin-Watson statistic = 1.522228The estimated regression line is presented as follows:GDP=1.651890 + 0.099804GEXPH +0.185998GEXPEDU + 1.443841TLF + 0.057682GCF

The OLS regression estimates revealed that the constant or intercept of the regression line is insignificant and placed at 1.651890 implying that regardless of the influence of independent variables (GEXPH, GEXPEDU, LF and GCF), Economic growth (GDP) remained fixed at 1.651890. The insignificance of the constant term explained how indispensable the independent variables are as far as growth of the Nigerian economy is concerned. In other words, there cannot be any significant improvement in the level of economic growth of Nigeria without investment in human development. The result revealed that a unit change in Government expenditure on health led to an increase in GDP by 0.099804. This positive impact concurs with the apriori expectation of a positive relationship but the value is statistically insignificant at 5% level of significance. This could be attributed to the underdeveloped nature of the health sector of the Nigerian economy. The result shows that a unit increase in government expenditure on education led to 0.185998 increases in GDP and the value is statistically significant at 5% level of significance. The result also show that a unit increase in labour force brings about an increase GDP. The value was statistically significant at 5% level of significance. Also, the result revealed that a unit change in gross capital formation led to an increase in GDP by 0.057682. This is a positive relationship, but the value is statistically insignificant at 5% level of significance. This could be attributed to relatively poor savings and high consumption habit. From the result, the value of R2 reveals that about 98% of variation in GDP (economic growth) was explained by changes in EXPH, EXPEDU, LF, and GCF during the period 1995 to 2016. Considering that economic growth is caused by several other factors, about 2% is caused by variables outside the model. The F-test reveals that the overall model is significant at 5% level of significance, indicating that investment in human resource development is indeed a roadmap to enhancing growth in Nigeria.

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5. SUMMARY, CONCLUSION AND RECOMMENDATION The impact of investment in human resource development on economic growth has

been discussed in this study. The study met the apriori expectation and showed that government spending on human resources increases capabilities of the human resources hence contributing positively to economic growth. Thus, the study rejects the null hypothesis and accepts the alternative hypothesis concluding that investment in human resource development is an important medium for enhancing economic growth. Based on the result of this study, the following recommendations are made:

i. Government should increase health expenditure and channel it to the provision of adequate drugs, medical equipment and other sound development projects so as to enhance the quality of the human resources. This can be done through good administration, strategic planning and management in the health sector.

ii. On education, the government should endeavor to meet the 26% UNESCO benchmark. But government alone does not fund education anywhere in the world. Hence, avenues such hiring of school facilities, donations from endowment, alumni associations, parents-teachers association and establishment of community banks should be explored. This will better the capacity of the human resources to further enhance growth.

iii. The government should enhance interest to encourage savings as well as improve infrastructural development in order to provide an enabling environment for increased investment. This will enhance efficiency of the labour force as well as pave way for investment which will boost capital formation.

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APPENDIX IDATA PRESENTATION Table; GDP(constant prices), Expenditure on Health, Expenditure on Education, Total Labour Force and Capital Formation from (1995-2016).YEAR GDP

Constant(LCU)GEXPH % of total EXP

GEXPEDU(N’Billon)

LF of total population

GCF% of GDP

1995 20236715708300.00 6.089088 223774100 33417326 7.0657561996 20174494087100.00 6.089088 278435400 34343507 7.2899241997 21181948915400.00 6.089088 285482600 35194224 8.3567641998 21775521442700.00 6.089088 248014300 36095012 8.601611999 22366866252100.00 4.455085 223987300 36972865 6.9941082000 22472938336300.00 5.928725 342022300 37946736 7.0178812001 23668070182400.00 4.497756 340363800 38875613 7.5798682002 24712084188700.00 3.727967 450664900 39626299 7.0099232003 25647349633900.00 5.890572 509967100 40482284 9.9040542004 28302923550900.00 8.816364 662893800 41221986 7.393372005 37851134166500.00 7.298046 840849700 42063952 5.4589962006 39154979623600.00 8.647691 1196690000 43250245 8.2658652007 42369981241000.00 9.193356 1314125000 44459832 9.2496372008 45263172340100.00 7.627458 1639735000 45659878 8.3234772009 48101292603600.00 7.366418 1316803000 47008096 12.088162010 51436836336000.00 5.715746 2970410000 48330258 16.55522011 55469350300000.00 7.421925 3305684000 49706559 15.53394

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2012 58180351900000.00 7.430042 3728857000 51167238 14.162542013 60670050500000.00 6.477161 4158514000 52600554 14.168732014 63942845600000.00 8.172918 4669330000 54199112 15.083532015 67977459000000.00 6.24 3956580000 55784248 14.827182016 69780692720000.00 4.46 3677300000 57352350 11.9

Source: CBN Statistical Bulletin, Various issues, 2016. WDI, 2016.

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APPENDIX IIOrdinary Least Squares (OLS) RESULTS

Dependent Variable: LOG(GDP)Method: Least SquaresDate: 04/25/18 Time: 23:45Sample: 1995 2016Included observations: 22

Variable CoefficientStd. Error t-Statistic Prob.  

C 1.651890 6.355816 0.259902 0.7981LOG(GEXPH) 0.099804 0.073707 1.354069 0.1934LOG(GEXPEDU) 0.185998 0.066750 2.786503 0.0127LOG(TLFC) 1.443841 0.434371 3.323983 0.0040LOG(GCF) 0.057682 0.047112 1.224353 0.2375

R-squared 0.982892     Mean dependent var 31.21310Adjusted R-squared 0.978866     S.D. dependent var 0.452594S.E. of regression 0.065796     Akaike info criterion -2.407800Sum squared resid 0.073595     Schwarz criterion -2.159836Log likelihood 31.48580     Hannan-Quinn criter. -2.349387F-statistic 244.1652     Durbin-Watson stat 1.522228Prob(F-statistic) 0.000000

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INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) DISCLOSURES AND FINANCIAL PERFORMANCE: FOCUS ON DEPOSIT MONEY BANKS IN NIGERIA

ByD.O. Gbegi Ph.D

Department of Accounting and Business AdministrationFederal University of Kashere, Gombe State.

J. F. Adebisi Ph.DDirector General

Nigerian College of Accountancy, Kwall, JosAnd

D. T. LakaDepartment of Accounting and Finance

University of Agriculture, Makurdi.

AbstractThe study examined International Financial Reporting Standards (IFRS) disclosure and financial performance of Deposit Money Banks (DMBs) using ratios computed from secondary data obtained from annual financial reports for the period 2007 to 2016 and tries to ascertain whether IFRS disclosure enhances or reduces financial performance by comparing financial results pre and post IFRS of selected DMBs. Paired sample t-test was carried out on data to compare pre and post IFRS disclosure. Findings indicate no significant difference of mean of Return on Assets, Return on Equity, Return on Investment and Earnings per Share in the two periods implying that IFRS adoption does not impact on reported performance. The research recommended that the international business and accounting professional communities should set up standards in such a way that will enjoy global appeal, and adopt a consistent set of global financial standards which would curb unwholesome accounting practices, eliminate the inconsistencies in financial reporting methods across countries, jurisdictions and regional borders, and overcome the widespread poor corporate governance practices that prospectively lead to poor financial performance of deposit money banks in Nigeria.Keywords: IFRS Disclosure, Financial Performance, Return on Assets, Returns on Equity, Return on Investment and Earnings per Share

INTRODUCTIONThe imperatives of globalization have not only increased the integration of national economies and financial markets into a global market, but have also necessitated the need for global standardization of financial reporting methods and practices. The community of international accounting professional bodies and business leaders in 1973, started the process of developing a single uniform set of international accounting standards and reporting framework that will enjoy a global appeal. This single global reporting framework is perceived as a means of enhancing firm performance and good corporate governance (Herbert, Ene and Tsegba, 2015). Prior to convergence to one set of uniform accounting standards in the 1980s, corporate financial reporting followed national standards, in which each country developed and adopted its own financial reporting standards. In Nigeria for instance, the Nigerian Accounting Standards Board

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(NASB) was responsible for developing, issuing and regulating of accounting standards since 1982 till July 20th, 2011 when the Financial Reporting Council Bill was signed into law. The reasoning of the international business and accounting professional communities in setting up standards that will enjoy global appeal, was that the adoption of a consistent set of global financial standards would curb unwholesome accounting practices, eliminate the inconsistencies in financial reporting methods across countries, jurisdictions and regional borders, and overcome the widespread poor corporate governance practices that prospectively lead to poor corporate financial performance.It is a general notion that organizations exist to maximize profits (in the short term) or wealth (in the long-term), based on this premise, any decision taken by organizations’ managers are expected to enhance shareholders’ wealth in the long-term. Jensen (2001) opines that wealth maximization does not imply maximizing shareholders’ wealth alone; it extends to maximising the stakes of other financial claimants like the debt and warrant holders. According to Jensen (2001), an organization must not only have a score card, it must also make clear the way to measure ‘better’ as against ‘worse’. The benchmark for measuring ‘better’ as against ‘worse’ is the increase in the stockholders’ wealth. It is in the light of the foregoing assertion that the adoption and disclosure of IFRS in any jurisdiction is expected to create either in the long term or short-term, an increase in stockholders’ wealth. Hence the common benefits ascribed to international harmonization and adoption of a single set of accounting standards (IFRS). The benefits ascribed to the adoption of IFRS are many and have been continually debated by several scholars of accounting. The adoption of IFRS arguably leads to “more accurate, comprehensive and timely financial statement information” (Ball, 2006); reduction in adverse selection arising from information access differential among users of financial statements that may likely spur reduction in the cost of equity; better comparability of financial statements and much more, transparency in reporting; reduction in information processing cost leading to market efficiency; removal of barriers to cross-border acquisitions and divestitures, leading to increased takeover premiums; finally, better accounting quality and value relevant information resulting from less earnings management and more timely loss recognition (Daske and Gebhardt, 2005; Ball, 2006; Barth et al., 2008; Chua and Taylor, 2008; Gebhardt and Novotny-Farkas, 2010; Lee et al., 2013). The banking sector in Nigeria forms one of the pillars of economic development. It intermediates funds between the surplus and the deficit economic units, thus stimulating and promoting investments and economic growth and development. It follows that increase in investment in the banking sector will lead to improved performance of the economy. However, for any meaningful investment to occur in the banking sector, quality accounting information regarding share price and other performance indicators are essential. Investors, who are usually different from the management of the investments, only rely on the information supplied by management in the financial statements, in assessing the risk and value of a firm before deciding either to invest or to disinvest. The ability of the financial statement to effectively and satisfactorily guide investors on their investment decisions depends on the ability of financial statements to project the performance of the bank based on prescribed indices.This study aims to investigate whether significant difference exists among financial ratios prepared from IFRS financial statement and Nigeria GAAP financial statement of Money deposit Banks in Nigeria in order to ascertain whether financial ratios prepared from IFRS

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financial statement show higher performance than those prepared from Nigeria GAAP. This will help confirm whether significant change in the financial statement variables impacts on the performance assessment (using financial ratios) of the DMBs.

The hypothesis put forward to be tested in this study is:Ho: there is no significant difference between financial performance ratios computed under NGAAP and those computed after IFRS disclosure.LITERATURE REVIEWTheoretical ReviewThis paper adopts the value maximization theory for situating the study. The value maximization theory holds that the single objective of a firm’s existence is to maximize profits in the short run and maximize shareholders wealth in the long run (Jensen, 2001). The theory therefore explains that all the activities of organization are profit-seeking. The theory explains further that the long run wealth maximization does not portend the maximization of shareholders’ wealth alone but also the maximization of other financial claimants like debt and warrant holders. It is therefore argued in this study that the essence of the Money Deposit Bank’s disclosure of IFRS financial statements is to maximize firm’s value. Capital needs theory holds that companies that have some growth opportunities in the capital market seek external financing opportunities from the capital market (Core, 2001). This, they achieve by issuing more share or borrowing from external parties. Therefore, such finance requires some kind of competition among these companies in order to obtain corporate capital as cost-effectively as possible under the conditions of uncertainty by disclosing more information to outside investors in order to inform them about the corporate position and to increase the certainty of their future cash flow (Alberti-Alhtaybat, Hutaibat and Al-Htaybat, 2012).International Financial Reporting Standard (IFRS) are standards, interpretation and the framework adopted by International Accounting Standards Board; International Financial Reporting Standards are products of private sector initiatives towards the harmonization and internationalization of financial reporting in response to the demands of business globalization and regional convergence (Abata, 2015). The International Accounting Standards Committee (IASC) is a body of professional accounting bodies of independent countries, formed in June 1973 by the International Federation of Accounting, produced the first set of international standards known as the International Accounting Standard (IAS) between 1973 and 2001. After a change in nomenclature in 2007 from IASC to IASB, the IASB published its standard in a series of pronouncements called the International Financial Reporting Standards (IFRS). The IASB also adopted the body of standards issued by IASC, and those standards continue to be designated “International Accounting Standards (IAS)”.IFRS are a single set of high quality, understandable standards for general purpose financial reporting which are principles-based in contrast to the rule based approach. IFRS comprise of four types of documents: IAS (41); IFRSs (18); the Standing Interpretation Committee Statements, SICS (II); and the International Financial Reporting Issues Committee Statements, IFRICS (18). IFRSs are designed to encourage professional judgment and discourage over reliance on detailed rules.

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The adoption and implementation of International Accounting Standards were more through persuasion and never mandatory on any country’s professional accountancy bodies who are members of these board. These standards have the problem of automatic adoption and by all countries on account of differences in background and tradition of countries, differences in the needs of, and by various economic environment and the perceived challenges to sovereignty of states and enforcing standards (Abata, 2015).Essentially, however, the adoption of IFRSs gives a positive signal of higher quality accounting and transparency (Tendeloo and Vanstraelen, 2005) and would also lead to lower information asymmetry and cost of capital (Leuz & Verrecchia, 2000). Hence, it would be easier for firms implementing IFRSs to obtain debt and equity capital. The provision of quality accounting disclosures would tend to reduce the opportunities for earnings manipulation and enhance the stock market efficiency (Leuz, 2003). The higher disclosure requirements and financial reporting quality that stem from IFRSs implies that the adoption of IFRSs gives a positive signal to investors as information asymmetry and agency costs tend to diminish (Tarca, 2004). Other explanatory proxies of the adoption of IFRSs relate to high profitability, as well as a positive impact on adopters’ stock returns and other stock-related financial performance measures. The response of the stock market to the implementation of IFRSs would be associated with the contribution of IFRSs compared to the domestic GAAP.

International Financial Reporting Standard (IFRS) Adoption in Nigeria Prior to IFRS adoption in 2012, the Nigerian Accounting Standards Board (NASB) (now, Financial Reporting Council of Nigeria, FRC) issued Statements of Accounting Standards (SAS) to guide financial reporting in Nigeria. The defunct NASB was the Federal Government agency statutorily charged with the responsibility of developing and issuing SAS. The SAS, which had many similarities with IASB standards, were governed by Nigeria’s GAAP. The defunct NASB derived its powers from Section 335(1) of the Companies and Allied Matters Act (CAMA), 1990 until the enactment of the Nigerian Accounting Standards Board Act No. 22 of 2003. The Nigerian GAAP consisted of Companies and Allied Matters Act, as amended 2004; SAS issued by the NASB, Other local legislations and industry-specific guidelines such as Banks and Other Financial Institutions Act (BOFIA), Prudential Guidelines issued by the Central Bank of Nigeria, Insurance Act, and Securities and Exchange commission (SEC ) Rules (Herbert and Tsegba, 2013). The application of these laws, rules and guidelines in accordance with international best practice was optional. From inception, the SAS were patterned after IAS except in structure. In 2007, the NASB started the process of closer harmonization with the release of SASs 25, 27, 28, 29, and 30. Altogether, the NASB issued 30 Statements of Accounting Standards (SAS) which mainly addressed financial reporting issues affecting all major sectors of the economy. However, the SAS were never reviewed or revised to match the pace with IASB pronouncements. The NASB was renamed the Financial Reporting Council (FRC) through the enactment of the Financial Reporting Council of Nigeria Act No. 6, 2011. Thus, the FRC is now a unified independent regulatory body for accounting, auditing, actuarial, valuation and corporate governance practices in both public and private sectors of the Nigerian economy. As the IFRS blaze spread rapidly across the globe, it became inevitable that the basic function of accounting standard setting was no longer tenable. National response came in the way of new legislations

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that would ensure the protection of the new global financial reporting architecture. Consequently, a number of including Nigeria, Ghana, Sierra Leone, South Africa, Kenya, Zimbabwe, Tunisia, among others adopted or declared intentions to adopt the standards. In particular, Nigeria adoption of IFRS was launched in September, 2010 by the Honourable Minister, Federal Ministry of Commerce and Industry – Senator Jubriel MartinsKuye (Madawaki, 2012). The adoption was planned to commence with Public Listed Companies in 2012 and by end 2014 all stakeholders would have complied. As at today, banking sector has fully implemented IFRS. Financial PerformanceFinancial Performance is defined as a company’s financial viability, or the extent to which a company achieves its economic goals. A survey of the literature reveals that financial performance has been basically measured in three forms: market, accounting, and survey measurements. They further explain that the first approach reflects the degree of satisfaction of the shareholders; the second captures an idea of the internal efficiency of the company; and the last provides a subjective estimation of its financial performance.Financial ratios drawn from annual financial reports have been used extensively in prior research for various purposes such as corporate predictions, acquisitions, liquidations, rating decisions, etc. Every firm is most concerned with its profitability and performance. One of the most frequently used tools of financial ratio analysis is profitability ratios which show a company's overall efficiency and performance. Profitability measures are important to company's internal and external users such as managers and owners alike. If a business has outside investors who have put their own money into the company, the primary owner certainly has to show profitability to those equity investors. Ratios have been used as a measure of performance in various instances. Studies such as Charitou, Neophytou & Charalambous (2004); Beaver, Mcnichols and Rhie (2005), Dewaelheyns and Van Hulle (2006) predicted firms’ bankruptcy using financial ratio in predicting the financial health of the sampled firms. The use of financial ratios in measuring performance is not limited to bankruptcy prediction. Rather, they have been employed in various other contexts. Liu and O’Farrell (2009) employed financial ratios in comparing the strengths and weaknesses of US firms and China firms. Prior to Lui and O’Farrell (2009), other studies have equally adopted financial ratios in just a similar context, for example Fuglister (1997), Hagigi and Sponza (1990) equally adopted financial ratios in comparing the strengths and weaknesses of US firms and Italian firms and Lui and Wei (2008), compared the financial ratios of Chinese firms and Japanese companies.

Review of Empirical worksAlthough a lot of studies have been carried out on the effects of IFRS adoption around the world in the past few years, concentration has been on value relevance of accounting information under IFRS for example, Clarkson, Hanna, Richardson & Thompson (2011); Ibiamke and Ajekwe (2017) among others; or impact of IFRS on accounting quality - Barth, Landsman & Lang (2008); Chen, Tang, Jiang and Lin (2010); Lee, Walker and Zeng (2013); Goodwin, Ahmed & Heaney (2008); or earnings quality for example, Callao & Jarne (2010) and earnings management for example Jeanjean and Stolowy (2008); Zhou, Xiong and Ganguli (2009), Umobong and Ibanichuka (2016) among others. A number of studies

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have also been conducted to examine the effect or impact of IFRS on financial performance of firms using financial ratios as proxies for financial performance.Yahaya, Yusuf & Dania (2015) examined the effects on financial statement of the adoption of IFRS in Nigeria and the impact of IFRS adoption. They found that under IFRS, important financial performance figures, such as profitability and growth, appear to be higher. They noted that given the fair value perspective of IFRS, its adoption is likely to introduce volatility in income statement and statement of financial position figures.Blanchette, Racicot & Girard (2011) examined the effects of IFRS on Financial Ratios, taking evidence from Canada. The results of descriptive statistics exhibit non-normal distribution of means and medians. They therefore conducted non-parametrical tests. They found no significant difference between medians of all ratios (Profitability, Liquidity, Leverage, Coverage), but a significantly higher volatility of all of these ratios under IFRS when compared with ratios computed under Canadian GAAP for early adopters of IFRS. The distribution of means and medians of financial ratios suggests that IFRS does not affect significantly the financial condition of companies. However, important individual discrepancies do exist in some cases.Tanko (2012) studied the effect of IFRS adoption on performance of firms in Nigeria, he measured performance of firms based on changes in identified financial ratios, testing the impact of adoption as it relates to profitability, growth, leverage and liquidity performance, the study found a low variability of earnings in the post IFRS adoption period.Abdul-Bakki, Uthman and Sanni (2014) examined the effect of IFRS adoption on the performance evaluation of selected oil companies in Nigeria, using some financial ratios selected from four major categories of financial ratios. The study was conducted through comparison of the ratios that were computed from IFRS based financial statements and Nigerian GAAP based financial statements. They concluded that IFRS compliant set of financial statements was not attributable to higher performance evaluation, through ratios, of the case firm. Rather, such disclosure could have been motivated by the capital needs theory or signaling theory.Lantto and Sahlstrom (2009) studied IFRS adoption of 91 firms listed in Helsinki Stock Exchange during 2004-2005. They focused on profitability, financial leverage and liquidity. Applying a univariate analysis and Wilcoxon test, they observed that profitability and financial leverage ratios such as Operating Profit Margin, Return on Equity, Return on Capital Employed, Gearing Ratio increased under IFRS, while liquidity ratios such as Quick Ratio and Current Ratio decreased under IFRS.METHODOLOGYThis study adopts an ex-post facto research design which is undertaken after the events have taken place and the data are already in existence. It is used in a systematic empirical study in which the researcher does not in any way control or manipulates variables because the situations necessitating the study already exist or has taken place. It is also used because of the availability of audited financial reports of companies listed on the Nigerian Stock Exchange for the period under investigation.The population of study consists of 21 Deposit Money Banks listed on the Nigerian Stock Exchange over the study period of 10 years i.e. 2007-2016. The authors adopt purposive sampling and selected a sample of 4 DMBs, based on data availability. Financial performance can be measured by two different ways: the accounting approach primarily based on financial

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ratios, or by the use of econometric techniques (Adam, 2014). This study employed the use of accounting method based on financial ratio analysis to measure, compare and analyze the performance of banks based on financial statements prepared under the Nigeria GAAP and under IFRS. The variables of the study consist of ratios such as Return on Assets (ROA), Return on Equity (ROE), Return on Investment (ROI) and Earnings per share (EPS).

Data was obtained from audited annual reports of the DMBs for five year period before IFRS (2007 – 2011) and the period during IFRS (2012 – 2016). The paired sample t- test was used to determine whether there exist, statistically significant difference in mean values performance ratios of DMBs before and after IFRS disclosure. DATA ANALYSISTable 1 Paired Samples Statistics

Mean NStd.

DeviationStd. Error

MeanPair 1 NGAAPROA 0.0250 20 0.02929 0.00655

IFRSROA 0.0220 20 0.01576 0.00352Pair 2 NGAAPROE 0.1190 20 0.08967 0.02005

IFRSROE 0.1372 20 0.10104 0.02259Pair 3 NGAAPROI 0.0069 20 0.07415 0.01658

IFRSROI 0.0258 20 0.01998 0.00447Pair 4 NGAAPEPS 1.1300 20 0.68996 0.15428

IFRSEPS 1.5878 20 1.27053 0.28410

Table 1 shows the summary of a paired samples statistics for the mean, covering a period of five years and for each category of ratio. The average ROA under the GAAP regime is 2.5% and dropped to 2.2% under the IFRS regime. ROE increased slightly from 11.9% under the Nigerian GAAP regime to 13.72% under IFRS, there was however a remarkable increase in ROI from 0.69% under GAAP to 2.58% under IFRS, this increase was also reflected in EPS as it witnessed a sharp rise from N1.13 to N1.59.

Table 2 Paired Sample TestPaired Differences

t dfSig. (2-tailed)Mean

Std. Deviation

Std. Error Mean

95% Confidence

Interval of the Difference

Lower UpperPair 1 NGAAPROA

- IFRSROA0.003 0.031 0.007 -0.011 0.018 0.426 19 0.675

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Pair 2 NGAAPROE – IFRSROE

-0.018 0.113 0.025 -0.071 0.035 -0.720 19 0.480

Pair 3 NGAAPROI – IFRSROI

-0.019 0.070 0.016 -0.052 0.014 -1.209 19 0.241

Pair 4 NGAAPEPS – IFRSEPS

-0.458 1.281 0.287 -1.057 0.142 -1.599 19 0.126

Table two shows the result of a paired-samples t-test conducted to evaluate the effect of IFRS on performance of DMBs in Nigeria. Although there was a decrease in ROA values from NGAAP (M=2.5%, SD=2.9%) to IFRS (M=2.2%, SD=1.6%), the decrease is not statistically significant [t(19)=0.426, p>0.005]. The increase in ROE, ROI and EPS from NGAAP (M=11.9%, SD=8.97%) to IFRS (M=13.72%, SD=10.1%), (M=0.69%, SD=2.0%) to IFRS (M=2.58%, SD=7.4%) and (M=113%, SD=69%) to IFRS (M=158.78%, SD=127.05%) respectively were also not statistically significant [t(19)=-0.720, p>0.005], [t(19)=-1.209, p>0.005] and [t(19)=-1.599, p>0.005] respectively.Based on the results discussed above, we accept the null hypothesis put forward which states that there is no significant difference between performance of DMBs under NGAAP and IFRS.

DISCUSSION OF FINDINGS This study examined the effect of IFRS disclosure on the performance of DMBs covering the pre and post adoption period. Although some studies have reported a significant difference in the financial ratios of the respective local GAAPs and IFRS (Lantto & Sahlstrom, 2009; Blanchette et al., 2011; Umobong & Ibanichuka, 2016 among others), the result of this study did not show a statistically significant difference in the selected performance ratios between NGAAP and IFRS. This finding agrees with that of Dimitrios et al (2013), Abdul-Bakki et al (2014), Adeuja (2015) and others. The reason for this result can be attributed to that the Nigerian GAAP has always been an adaptation of International Accounting Standards.CONCLUSIONThis study was carried out to determine the effect of IFRS disclosure on the performance of DMBs in Nigeria. The findings reveals that although there is an increase in the computed values ROE, ROI and EPS under IFRS while ROA reduced slightly, the change in each of the performance measures under pre and post IFRS adoption is not statistically significant. The hypothesis stated in this study is therefore upheld.RECOMMENDATIONSFollowing the findings in this study, it is recommended that the international business and accounting professional communities should set up standards in such a way that will enjoy global appeal, and adopt a consistent set of global financial standards which would curb unwholesome accounting practices, eliminate the inconsistencies in financial reporting methods across countries, jurisdictions and regional borders, and overcome the widespread poor corporate governance practices that prospectively lead to poor financial performance of deposit money banks in Nigeria.

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FOOD AND HOUSEHOLD FOOD SECURITY IN NASARAWA STATE: ISSUES AND CHALLENGES

ByAbdullahi Moh’d Abdul, A. H Asobie Ph.D & Yahaya A. Adadu, Ph.D

Dept. of Political Science,Faculty of Social Sciences,

Nasarawa State University, Keffi.

AbstractThe study identified factors militating against the achievement of household food security amongst various households in Nasarawa State, Nigeria. The paper utilized both the primary and secondary sources of data. The primary data relied on questionnaires. Structured questionnaires were administered to 340 households which constitute the sample size of the study. The elite theory was used as a theoretical underpinning for the study. Factor analysis was used to isolate and name the critical factors influencing the attainment of household food security in Nasarawa state. Findings revealed that economic, governance, institutional and technological constraints hindered the achievement of household food security in the study area. While the economic factors included climatic change and variability shortage of farm labour, limited access to farm land; the institutional factors were poor market access, weak support services, poor nutrition education and poor sanitation. The governance factors included political problems, rapid population growth rate and low crop yield, while the technological factors include inadequacy and lack of access to improved agricultural inputs and lack of access to labour saving devices. Despite efforts at attaining household food security in Nasarawa state, Food security is still a mirage. Therefore, governments at the local and state levels should design and implement short term and long term programmes in agriculture value chain to boost food production and productivity to enhance family income for improved household food security.

IntroductionThe concerns of the international community are well founded. For the first time, since the Food and Agricultural organization (FAO) started monitoring undernourishment trends, the number of chronically hungry people have risen over the years relative to the base period of 2007.The F.A.O estimates that, mainly as a result of high food prices, the number of chronically hungry people in the world rose by 75 million in 2007 to reach 923 million. The devastating effects of high food prices on the number of hungry people compound already worrisome long-term trends (Wiebe, 2003).

Food price increases have exacerbated the situation for many countries already in need of emergency interventions and food assistance due to other factors such as severe weather and conflict. Countries already afflicted by emergencies have to deal with the added burden of food insecurity, while others become more vulnerable to food insecurity because of high prices. Especially the poorest, face difficult choices between maintaining

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stability and putting in place policies and programmes to deal with the negative impact of high food and fuel prices on their people. Riots and civil disturbances, which have taken place in many low- and middle-income developing countries need an urgent and concrete response.

At the regional level, the largest increases in the number of undernourished people in 2007 occurred in developing countries of Asia, the Pacific and in sub-Saharan Africa, the two regions that together accounted for 750 million (89 percent) of the hungry people in the world in 2003–05. FAO estimates that rising prices have plunged an additional 41 million people in Asia and the Pacific and 24 million in sub-Saharan Africa into hunger. Together, Africa and Asia account for more than three-quarters of the developing world’s low-income food-deficit countries (LIFDCs). Africa is also home to 15 of the 16 countries where the prevalence of hunger already exceeded 35 percent, making them particularly vulnerable to higher food prices. While the numbers affected are smaller, Latin America and the Caribbean and the Near East and North Africa regions have also experienced increases in hunger as a result of rising food prices. Overall, the rising prevalence of hunger and the estimated increase of 75 million undernourished people worldwide in 2007 validate concerns about a global food security crisis (World bank, 1986 & Tollen, 2000).

In Nasarawa state, efforts at attaining food security have engaged various administrations of the state since its inception in 1996. However, this research takes particular note of the governor Aliyu Akwe Doma Administration in which very specific programmes were carried out. The provision of adequate food for the people of Nasarawa State is an objective which the state administration set for itself. It believed that in order to maintain a secure and conducive environment for the delivery of democratic dividends, the population needed to be well fed so as to turn the wheel of the economy for progress and prosperity (BAS, 2009).

Nasarawa State has a viable agricultural potential such as abundant arable land, good weather, several water sources and a vibrant human resource base. About 80% of the people in the state are mainly involved in agriculture and agriculture related businesses in the state (BAS, 2009). The majority of these are however engaged in subsistence farming which is characterized by small acreages, low technological input, low productivity and limited access to markets and farm loans (BAS, 2009). The promotion of modern agriculture and agro-business forms an important component of the socio-economic transformation programme of the state government. The main goal is to improve food security, self-sufficiency, create opportunities for gainful employment, generate income, and reduce poverty and the need to contribute to the diversification of the economy (BAS, 2009).

Agriculture featured prominently in the 13-point Agenda of the Aliyu Akwe Doma administration (2007 - 2011). The vision was to repackage the agricultural sector and make it attractive as a major economic activity of the people of the state and to attract investors and stakeholders to partner with government in developing the sector. The

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administration laid a solid foundation for the restoration of interest in agriculture among all segments of the society. Accordingly, huge resources were invested in providing a plethora of inputs such as fertilizers, improved seeds and seedlings, pesticides and herbicides, farm implements and tractors, adequate modern infrastructures and access to ready markets for the produce (BAS, 2009).

Research has identified many factors that militate against household food security Nigeria. The more serious fundamental root causes in Nigeria, Nasarawa state inclusive, have been found to involve a heterogeneous mix of factors. These include chronic poverty, rapid population growth, declining per capita food output, poor infrastructure, lack of access to appropriate technologies, limited access to land due to land tenure systems and inappropriate policies. Others include diseases, inadequate nutritional knowledge, poor water and sanitation, armed conflicts and wars. In addition, over dependence on subsistence farming with limited access to farm inputs and working capital, poor extension services and poor post-harvest processing and storage technologies result in food insecurity. Also there are the problems of limited, or lack of, access to social amenities, over dependence on oil resources as the major foreign exchange earner, poor governance, and the impact of trade liberalisation, production of biofuel as well as climate and natural disasters such as floods, drought, erosion and pests. Finally the practice of mono-cropping, lack of access to markets, the impact of petroleum price increase, desertification, socio-cultural factors such as gender inequality, urbanization and food habits are significant factors. According to our knowledge, none of these studies was conducted in Nasarawa State. Hence, the objective of the present study was to identify the factors militating against the achievement of household food security in Nasarawa State. It is hoped that the findings of this study would assist governments at the local and state levels design and implement policies and programmes that would enhance the income and standard of living of the people and improve household food security.

Theoretical Framework

The elite theory of welfare and state outcome will be adopted as a framework of analysis for understanding the class of agricultural programme and food security in Nigeria. Several scholars have contributed to the explanations and assumptions of the theory, these include, Swaan (1988) Reis and More 2005, Verse and Orreh 1985 and host of others. The central argument of the theorists are: set out below. To begin with, it is posited that every society holds a ruling minority, a group that controls and disposes the most important power sources. Not only do elites dispute (reaching different levels of conflict and violence), but new elites also enter the game through different mechanism of interaction, elite transformation and, ultimately, the connection between those instances and state outcomes.

The outcome of elite struggle led to the emergence of welfare state, a political phenomenon directly related to the state’s capacity to penetrate society as explicitly enunciated in the works of de Swaan,( 1988); Reis and Moore,( 2005); Verba and Orren,

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( 1985); Verba et al, (1987). Elite theory also deal with the question of social development and modernization in both western and non-western contexts, as in the works of Lipset and Solari, (1967); Lopez, (2013); Reis & Moore, (2005).

Furthermore state policies and programmes can be explained through elite behavior, this gives vivid analysis of the relationship between state and society on the assumption that elite action has a causal effect on such a relationship. Thus, regime types, regime change, liberalization, staleness, secularization and many other political phenomena fit within the scope of this analysis that both democracy (as the government of the people or demos) and socialism (as a classless regime) were possible outcome of elitism because society is necessarily elite driven, meaning that the majority is necessarily ruled by a minority. This notion was expressed in Pareto’s (1935) Law of Elite Circulation, in Mosca’s (1939) Notion of Political Class and in Michels’ (2009 (1915) Iron Law of Oligarchy.

This further implies that elites alternate power as a result of either peaceful or violent competition which can be achieved through material and/or symbolic resources there by occupying top of powerful organizations and movements, thus capable of affecting political outcomes both substantially and regularly (Dogan, Higley, 1998; Higley & Burton 2006: 7)

Elites in complex societies are not a homogeneous group, nor do they share the same amount of power which comes from different sources. Political elites probably constitute the most researched elites sector, each sector has a specific dynamic of elite’s recruitment, size and sub-divisions with varying aims and union. The mechanisms of elite recruitment within a single elite sector may change over time in terms of passing of a bill in parliament or the making of a given policy (Olson & Carrol, 1992; Wald, 1992).

It is also postulated that there are several models which provide a well-established typology of elite dynamics based on the capacity of elites to share interests and act cohesively, despite inter-elite disputes. Elites could be (a) disunited, (b) consensually united or (c) ideologically united. Consensual unity is associated with stable democracies, while elite disunity is associated with unstable democracies and authoritarian regimes. Ideological unity relates to totalitarian regimes, adopting Linz’s (2000) typology, where elites legitimize and submit to a highly centralized ideological command.

That elites may migrate from one type to the other (mainly from elite disunity to consensual unity), and how elite configuration emerges is an important cause of political regimes. However, two important concepts are presented by the model: elite settlements and elite convergence. The central argument here is that most democratization process in recent history, and several more in the past, are a result of elite settlements. An elite settlement is a rare event in the history of national communities, in which previously confronting elites choose to negotiate a new political order, thus recognizing each other as legitimate political actors. Thus democratic rule, be it a full democracy or an electoral

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or pseudo-democracy, is the result of an elite settlement (Higley, Burdon, 2006; Higley & Gunther, 1992).

Elite convergence often follows elite settlements. It denotes a process in which, in an unstable democracy, elites abandon radical opposition and adopt a coalition strategy in order to amplify their chances of electoral gain. Thus, previously radical elites accept the rules of the game in the legitimation of democracy and the rule of law. This process of elite convergence is often associated with the transition from an unstable democracy to a consolidated democracy where no elite group significantly challenges the regime. They argue that elites prefer to include the masses in the political game in order to prevent political and economic threats posed by non-elites. Therefore, threat perception would tend to lead to strong democracies. Meanwhile, Stevens et al. (2000) used elite surveys and came to the conclusion that, when threatened, elites tend to adopt authoritarian values. As they assume authoritarian regimes to be based on authoritarian values, threat perception would tend to lead to less democracy.

Overall, the threads among elites, state outcome and policies are heavily interconnected, most especially in underdeveloped countries like Nigeria where elites are the major determinants of state policies. What could be ‘real’ advantages of elite theory in contrast to competing theories is that it will serve as guide to understanding why certain agricultural development strategies persist. It has the capacity to give a vivid explanation and analysis of elite dominance through state policies and programmes. In fact all the state policies are outcomes of elite conflict, unity and consensus. In sum, state policies and programmes are the result of elite consensus.

Relevance of Elite Theory to the Issue of Food Security in Nasarawa State

Elites in Nasarawa state are very central to most decision making process. They are usually instrumental to the fashioning of most development programmes in the state. They have in the past and present made decisions and policies to explain the tone of government actions or inactions in the state. Such involvement has been seen in some areas like poverty reduction, water resources management, women development among others. Food security issues are not left out in the concern of elites in Nasarawa state. The political elites in the state in conjun ction with the bureaucratic elites are strongly in collaboration with the economic elites of the farmers’ Association to determine the direction of policy of food provision, access and consumption for the presumed interest of the people of Nasarawa state. The members of the state House of Assembly, the political executives and the leadership of the bureaucracy of the NADP and the Ministry of Agriculture with the active involvement of the representative or leadership of the farmers’ association play the role of policy designers for the achievement of food security in the state. Issues about quantity and quality of farm inputs leading to production of food crops and the harvest as well. In a welfare state like Nigeria, the roles of these elites cannot be under estimated, and their presence is heavily felt in the state.

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METHODOLOGY The study was conducted in Nasarawa State. Nasarawa State was situated in the North Central Zone Nigeria, and it consists of thirteen (13) Local Government areas in the states, namely Awe, Akwaga, Doma, Karu, Keana, Keffi, Kokona, Lafia, Nasarawa, Nasarawa Eggon, Obi, Wanba and Toto Local Government. The study area has a population of about (1,869,377) inhabitants and is very diverse ethnically groups. Although agriculture is the mainstay of the region’s economy, it is at a subsistence level. This can be attributed to poor access to modern inputs and credit, poor infrastructure, inadequate access to markets, land and environmental degradation and inadequate research and extension services. The primary data used in this study was obtained from a sample survey of households in three villages conducted in 2018 among the Hausa Fulani, Alago and Eggon ethnic groups in Nasarawa States. A multi-stage sampling procedure was adopted for the study. In the first stage a purposive sampling technique was used to select three ethnic groups and one village per ethnic group based on differences in language and culture. In the second stage a random sample of 120 Hausa Fulani, 108 Alago and 112 Eggon households respectively were interviewed from each village using a structured questionnaire. Thus, 340 households, out of a total of 851 households residing in the villages were involved in the study. Factor analysis was used to isolate and name the critical factors influencing the attainment of household food security in Nasarawa State, Nigeria. The factor loading under each constraint (beta weight) represents a correlation of the variables (constraint areas) to the identified constraint factor and has the same interpretation as any correlation coefficient. However, only attributes with loadings of 0.40 and above (10% overlapping variance) were considered in naming the factors. RESULTS AND DISCUSSION The results of the rotated component matrix indicating the perceived constraints to food security in Nasarawa state, Nigeria are shown in Table below. Based on the item loadings of the factor analysis, four critical factors were isolated and named. These were economic constraints, institutional constraints, governance constraints and technological constraints. The four factors represent the constraints militating against food security in Nasarawa State.

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Table 1. Factor analysis of perceived constraints to food security in Nasarawa, Nigeria. Factors 1 2 3 4Climate change and variability 0.566 0.086 -0.023 -0Low crop yields -0.012 0.132 0.428 -

0.050 Shortage of farm labour 0.550 -0.043 -0.132 0.110 Lack of access to labour saving devices -0.152 0.330 0.118 0.412 Inadequacy and lack of access to improved agricultural inputs (seeds, fertilizer, agro-chemicals and irrigation)

-0.041 0.088 0.223 -0.423

Rapid population growth 0.358 0.016 0.431 -0.301

Limited access to land 0.565 -0.134 -0.141 -0.074

Lack of education and skills 0.370 -0.318 0.050 -0.028

Poverty 0.024 0.083 -0.010 0.393 Weak support services (research, extension and finance)

-0.234 0.483 0.344 -0.167

Religious and ethnic conflicts -0.014 0.322 0.261 -0.019

High food prices 0.092 -.293 0.319 0.198 Poor rural infrastructure (roads) -0.314 0.277 -0.145 -

0.384 Political problems (corruption, collusion and nepotism)

0.070 0.013 0.507 0.202

Lack of consistent food supply -.124 0.002 0.344 0.079 Poor nutrition education 0.197 0.478 -0.133 -

0.104 Poor post-harvest processing and storage technologies

-0.100 0.393 -0.123 0.155

Chronic diseases such as HIV/AIDS 0.319 -0.011 0.156 0.001 Lack of access to clean water 0.312 0.295 0.151 0.430 Poor sanitation 0.301 0.442 -0.151 0.037 Poor health services 0.117 0.082 0.016 -

0.337 Food taboos -0.047 -0.140 0.156 0.266 Poor food habits -0.006 0.395 0.049 -

0.212 Poor health status 0.326 0.364 0.084 0.184

Government Constraints

Governance included political problems (0.51), rapid population growth rate (0.43) and low crop yield (0.43). The quality of governance influences the degree of agricultural production and food security. Governance includes the education of women and children, provision of clean water and health care and a stable functioning market system, all of which were found to be inadequate in the study area. Governance and politics in Nigeria, Nasarawa state inclusive are characterized by high rates of corruption, collusion and nepotism and this has a negative impact on agriculture, food access and utilization. It was observed that funds allocated to the agriculture sector are most often diverted into the pockets of political office holders and government officials, leaving insufficient funds for any meaningful impact on agriculture. To worsen the situation, governments in Nigeria give priority to urban areas since that is where the most influential and powerful families and enterprises are usually located. The government often neglects subsistence farmers and the rural areas in general. The more remote and underdeveloped the area, the less likely the government will be to effectively meet its agricultural and food security needs.

The rapid population growth observed in the region may affect the food security status through the impact of overcrowding on reduced per capita land availability and per capita food availability. Rapid population growth is also known to contribute to environmental degradation leading to reduced agricultural productivity. In addition, it can result in poor sanitation and the spread of disease which influences not only labour productivity and incomes, but also nutritional status. Furthermore, low yields may have occurred because of technical constraints that prevent local food producers from increasing productivity or for economic reasons arising from market conditions. For example, farmers may not have access to the technical knowledge and skills required to increase production, the finances required to invest in higher production (e.g. irrigation, fertilizer, machinery, crop-protection products and soil conservation measures) or the crop varieties that maximize yields. After harvest, farmers may not be able to store the produce or transport the produce to consumer markets. Poor governance is one of the major factors hindering the development in agricultural production leading to food insecurity in Nasarawa state, Nigeria.

Economic Constraints An assessment of the loadings indicated that economic constraints included climatic change and variability (0.57), limited access to land (0.57) and shortage of farm labour (0.55). Agriculture is the primary occupation of the population and it is rain-fed. Farmers reported that their food production system was adversely affected by variability in timing and amount of rainfall, frequent outbreaks of crop pests and diseases and heat stresses leading to low income and increases in food shortages. Climate change affects food security through exposing the population to the highest degree of instability in food production. Climate fluctuations could cause drought and floods, the dominant causes of short term fluctuations in food production and this could drastically reduce crop yield. Limited access to land could result in unsustainable practices, which lead to soil and water degradation, land exhaustion and plummeting productivity. The size of land that can be cultivated could be tied to unavailability of affordable labour supply. Therefore, shortage of labour could result in low agricultural productivity. The shortage of farm

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labour observed in the study area could be attributed to the increasing migration of ablebodied youths from rural to urban areas.

Technological Constraints Items that loaded high under technological constraints included: lack of access to clean water (0.43), inadequacy and lack of access to improved agricultural inputs (0.42) and lack of access to labour saving devices (0.41). Although farmers can access water for domestic use within a distance of lease than kilometre from their homes, the water is not clean, particularly in the household’s area where people fetch water from streams and untreated wells. Without access to clean water, optimal uptake of nourishment is likely to be hindered. In addition, farmers reported that they had great difficulty accessing agricultural inputs, especially fertilizer, agro-chemicals and improved seeds as they sometimes travelled as far as 20-25 kilometres to access small quantities of inputs; particularly fertilizer. This could be attributed to the poorly developed rural input markets in the state. Similar studies in Nasarawa state also reported that farmers have little or no access to modern inputs and other productive resources. The provision of farm inputs at the right time and at reasonable prices by governments at all levels is critical to crop productivity and food security. The finding on technological constraints concurs with other studies which reported that non-availability of improved modern technologies for agricultural production, that are time and energy saving, is one of the main constraints in agricultural production in Nasarawa State. This finding has implication for the local, state and federal governments to provide farmers with labour saving technologies at subsidized rates in order to reduce the drudgery in farming.

Institutional Constraints Institutional constraints refer to the bottlenecks or obstacles found in an organization or the shortcomings arising from the application of rules which hinder project success. The items that loaded high under institutional constraints are lack of market access (0.56), weak support services (research, extension and finance) (0.48), poor nutrition education (0.48) and poor sanitation (0.44). Lack of access to market means that farmers and communities can neither sell their surplus nor purchase food in times of shortage. This could lead to inconsistent food availability thus contributing to food insecurity. Access to markets could enable rural farmers to produce for the market, but the poor live in isolated villages that can become virtually inaccessible during the rainy seasons. Nasarawa state’s rural road network is the least developed in Nigeria and there is no credible commitment by political actors to rectify this. In addition, weak support services have a negative effect on agricultural performance and this could hinder food security. For instance, as a result of poor funding of agricultural research and lack of private sector involvement in agriculture, improvement in the development of new agricultural technologies, growth of agricultural productivity and the reduction of rural poverty have been slow. Similarly, poor funding of agricultural extension services in Nasarawa State has slowed the pace of transfer of available technologies to farmers. Furthermore, extension service in Nasarawa State has become ineffective due to the insufficient number of extension workers who are skilled in training and in the dissemination of agricultural information as well as lack of motivation for the field staff.

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Greater government funding of agriculture, particularly investment in appropriate research and extension services, could help overcome these constraints. It is important for poor households to make the optimal use of local foods and to follow healthy eating patterns, thereby promoting food security. Nutrition education helps people to make the best choice of foods for an adequate diet by providing them with information on the nutritional value of foods, food quality and safety, preservation methods, processing and handling, food preparation and eating habits. Nutrition education for women in the study area who are responsible for growing, choosing and preparing food could have an enormous impact on food security. The poor sanitation (0.44) reported by farmers could be attributed to improper disposal of household refuse. Lack of proper waste disposal could lead to poor uptake of nourishment and consequently to ill health. Extension workers should collaborate with public health officers to educate farmers on basic hygiene rules.

CONCLUSION AND RECOMMENDATIONS This study revealed that governance economic, technological and institutional, problems hindered the development of agriculture and attainment of household food security in Nasarawa State. It is recommended that policies that would mitigate these problems be formulated and implemented by the local and state governments through the extension agencies and other relevant government and non-governmental organizations. This would enable the region to provide adequate food for its teeming population and make a significant contribution to the achievement of the Millennium Development Goal of eradicating poverty and hunger in Nigeria.

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SALESFORCE RETRENCHMENT AND THE PERFORMANCE OF SMALL AND MEDIUM BUSINESSES IN BENUE STATE, NIGERIA

By

Hanmaikyur, Tyoapine (Ph.D)Department of Business Administration

Federal University of Agriculture, Makurdi

ABSTRACTThis Study Investigated the Effect of Sales force Retrenchment Downsizing on the Performance of Small and Medium Enterprises in Benue state. Descriptive research design was employed for the study while relevant Primary data was collected for analysis through the instrumentality of a structured questionnaire. The unit of analysis was Owners and/or managers of the SMEs studied or their representatives in the ministries studied who also served as respondents. The study employed a census approach to sample the entire population of all the 105 respondents from whom the needed data was collected for the study. A combination of descriptive and inferential statistics were thereafter used to empirically and statistically analyze the data collected, with the aid of Statistical Package for Social Science (SPSS) version 20. Hence the regression analysis was used to test the study hypotheses. Findings of the study revealed that a positive relationship exist between the variables studied. Based on the findings of the study, it was concluded that sales force Retrenchment Downsizing on the Performance of SMEs in Benue State of Nigeria. Particularly, Voluntary retrenchment, Compulsory retrenchment, efficiency and effectiveness based Retrenchment and Buy-out incentives retrenchment all have a positive influence on the performance of SMEs in Benue state. The study therefore recommends (among others) that owners and managers of SMEs should always plan and develop a corporate strategy with a rigorous implementation of retrenchment based on objectivity, mind preparation through counseling and training, and the effective communication of the rationale behind the retrenchment exercise to staff in order to avert the instance of hardworking and devoted staff working with apprehension.

1.1 Introduction All over the world, the business environment has become dynamic and submerged into a good number challenges including increasing competition. The development has compelled many organizations that want to survive to employ a lot of strategies including restructuring to remain competitive and relevant in the market. Many organizations are faced with the decision to downsize their workforce especially as the current challenging business environment persists. A good number of establishments are today struggling with how to best manage their most valuable resource their human resources while staying viable as a business.

For Small and Medium businesses, the capability to put in place appropriate retrenchment downsizing strategies has long been deemed a key strategic differentiator and means of achieving high and sustained performance and leverage over competitors. Organizational downsizing which is concerned with a set of activities undertaken by management of an

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organization is designed to improve organizational efficiency, productivity and/or competitiveness and overall performance has been a major effort to revitalize organizations. To have the competitive edge and satisfy customers' needs, Imam, Mashood and Muhammad, (2015) opine that organizations engage in downsizing as a strategy for shifting the organizational structure from its present to what it should be. There has been a world-wide increase in the incidences of downsizing practice across economies and across organizations in today’s business world. This has been considered as the basis for coping with increasing competition and improving their performance and competitiveness.

Firm performance considered to be a subset of the broader concept of organizational success is a fundamental feature for survival and sustainability. Performance factors have been found to spur business expansion, sales growth, customer satisfaction and return on investment in all classes of organizations especially when correctly put in place at the right time and in the right proportion. Enhancing performance through appropriate marketing practices has been confirmed to be of increasing interest to all Organizations. The success or non performance of an establishment that downsize rests in part on the nature and types of downsizing strategy they put in place for their businesses (Karlsson, 2017). Appropriate downsizing practices have a significant impact on performance variables as they interact with different components to facilitate performance. It is therefore believed that there is a strong correlation between an organizations downsizing practices and the performance of small businesses that employs it. It is based on the above background that this study was conceived to investigate the effect of sales force retrenchment downsizing on the performance of small and medium enterprises in Benue state, Nigeria.

1. 2 Statement of the ProblemThe effect of sales force downsizing on the performance of small and medium enterprises has attracted a lot of research efforts from academics however; there is no generally accepted conclusion from the numerous conclusions generated. A good number of studies including those of Kernan, & Hanges, (2002), Nixon, Hitt, Lee and Jeong, (2004) and Kalimo, Taris & Schaufeli, (2003) have examined different aspects of including its effects on individuals others have looked at aspects of decline, such as the need for increased management skills. Despite such quantum of studies, there is a noticeable dearth of comprehensive studies on the framework of downsizing and its effect on the performance of small and medium businesses especially in the study area. Beside, most studies on downsizing merely focused on antecedents of downsizing or its outcomes on victims. Overload, burnout, inefficiencies, conflict, and low morale are possible consequences or more positive outcomes may occur such as improved productivity and speed. Moreover, some downsizing activities may include restructuring and eliminating work (like discontinuing functions, abolishing hierarchical levels, merging units and redesigning tasks) which lead to some kind of organizational redesign. Regardless of whether the work is the focus of downsizing activities or not, work processes are usually influenced one way or another by downsizing. Some studies have been conducted on the effects of on individuals and groups (Gandolfi, 2018) but investigations of downsizing processes on the performance of downsizing on Small and medium businesses is very rare. Most empirical studies tend to take a static view

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of downsizing, and only a few authors have paid any attention to the processes by which downsizing can be accomplished. There is a dearth of information about expected relationships between downsizing processes and other important organizational variables like the change in organizational structure, processes and technology after the implementation of downsizing.

Some of the well-researched effects of downsizing include reduced job involvement (Gandolfi, 2018), withdrawal (Dukelow & Considine, 2016), reduced performance (Ivan, 2016) and reduced attachment with the organization (Nechieno, 2013). Downsizing has also been studied as a violation of the psychological contract (Nechieno, 2013). This study has attempted to close these identified gaps by investigating the effect of downsizing on the performance of small and medium businesses in Makurdi metropolis of Benue state, Nigeria.The study therefore formulated and tested the following hypothesis presented in its null forms.

Ho: Downsizing has no effect on the performance of Small and Medium Businesses in Makurdi metropolis of Benue state.

2.0 Conceptual clarification and review of related literature

2.1 The concept of Downsizing

Downsizing has received a great deal of attention, especially in the business press, in part because it appears to represent something of an enigma. The term describes the contemporary development of permanent job cuts motivated by an effort to improve operating efficiency, not necessarily because of declines in business. Due to the fact that downsizing eliminates redundancies and reduces employment costs, many executives believe that this practice helps firms to compete efficiently and improve profitability

There are several definitions of downsizing available in the literature. Ahmed, Kakkar and Kapil (2016) defined downsizing as cutting and removal of job-positions, which does not include the retirement or voluntary resignation. According to Siyanbola (2013), organizations downsize either by ‘need’ or by ‘preference’. The former is the classic layoff which is due to adaptation in organizational structure, culture or technological change (for example, automation), however in the latter, organizations are not financially compelled to do so, but adopted the downsizing to enhance their productivity.

The impetus of downsizing appears to be a desire to reduce costs, increase productivity and overall competitiveness. although the character of corporate downsizing may be changing from solely decreasing the number of individuals employed to changing the composition of jobs and work processes through organizational restructuring, the modern worker's employment status remains tenuous and subject to radical change. The extensive academic research in disciplines of organizational change and change management suggests that the phenomenon of downsizing

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is more than a management fad and has become a way of life for profit and non – profit organizations embracing society as a whole (Adebisi, 2014).The purpose of downsizing therefore is to provide a means to improve organizational performance. The longer-term aim could be to realize improvements related to greater effectiveness, efficiency, productivity and competitiveness. Downsizing is not an isolated event; it is a process, a subsystem interrelated with other business and management subsystems (Gandolfi and Neck 2016).

2.2.2 Origin of Retrenchment downsizingThe term 'Retrenchment' was introduced around 1988. It became a management catch-cry of the 1990's which became known as the downsizing decade. Many associated euphemisms became part of managerial lexicon in the 1990's and continued into the new millennium. A number of terms are substituted for organizational downsizing leading to mystification about the meaning, rationale, motive and purpose of downsizing. A good number of researchers including Ajede, . (2017)) tabled fifty-four terms that are associated with downsizing. Some of these euphemisms attempt to give downsizing a positive glow while some may appear hyperbolic. All these terms are not always euphemisms. There are many instances when some terms are used by design and may actually be more accurate than downsizing. Oundo, (2011) refers to it as rightsizing. '

While the impetus of retrenchment appears to be a desire to reduce costs, increase productivity and overall competitiveness, cutting costs as a principal means of improving organizational performance cannot be seen as a panacea. While retrenchment downsizing in the early stages was undertaken when organizations were in decline, later it was observed that reducing the workforce is not always a cost focused reaction to economic problems. It can also be proactive, a pivotal element to the organization's long-term business strategy. Also while initially only blue collared workers were targeted; later white collared workers also were the targets for reduction.The purpose of downsizing is to provide a means to improve organizational performance. The longer-term aim could be to realize improvements related to greater effectiveness, efficiency, productivity and competitiveness. Downsizing is not an isolated event; it is a process, a subsystem interrelated with other business and management subsystems.

2.2.3 Consequences of retrenchment DownsizingThe majority of research on downsizing has been conducted to examine and understand the consequences of retrenchment (Chirdzendan, 2017) on the individual employee as well as on the organization as a whole. Effects on the individual employee have been studied predominantly from a psychological and behavioural viewpoint with a focus on the ‘survivors’ (employees who remain in the organization after downsizing), ‘victims’ (employees who are actually asked to leave), and ‘executioners’ or implementers (managers who are involved in directly implementing the retrenchment, including asking people to leave).

2.2.3.1 Individual Consequences of Downsizing

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Even though retrenchment appears to create an illusion that some positive actions are being taken to turn around an organization, one prime casualty of the process seems to be the way in which people affected by the process are dealt with (Levitt, Wilson & Gilligan, 2017). Findings from literature on this aspect, including their coping strategies, have been summarized below:

i. The survivors: As Tripathi (2016) Commentated, a firm’s post layoff success is contingent upon the reactions of the people in its surviving workforce.” Scholars have found a number of negative responses exhibited by survivors of retrenchment. The main problems that have been identified are lowered morale, initial upsurge in productivity followed by depression and lethargy, perceived violation of the ‘psychological contract increased stress as a result of increased level of uncertainty and ambiguity, threat of job loss, denial or psychological distancing from the perceived threat ‘survivor guilt, lower commitment, increased absenteeism, turnover decreased loyalty to organization, fear of future cutbacks, stressed, demotivated, and unproductive workforce and diminishing expectations regarding future prospects in the organization.

ii. The victims: Apart from the resulting financial distress and social dissociations, a major issue for the victims is perceived violation of their psychological contract, Reisel, Probst, Chia, Maloles and König (2010), as mentioned above. This would result in an unwillingness to trust future employers and a greater tendency to work for their self-interest rather than the organization’s interest. Their overall trust in people and confidence on the top management are also found to decrease. The implication of this is that for any organizational change activity to be successful, it is essential that the existing psychological contract with the employees be renegotiated in order to help them cope better with the transition. Victims have been found to resort to a variety of coping mechanisms to deal with the drastic change.

iii. The implementers: Termed the ‘executioners’ (Afonrinwo, 2018), these top managers have been found to display various types of psychological responses including detachment, hostility, depression, absenteeism, feelings of guilt, increased stress associated with having to personally handle the laying off of previous colleagues and subordinates, and rationalization of their action by devaluing and blaming those they have laid off.

2.2.3.2 Steps to smoother Retrenchment Gandolfi and Hansson (2016); have identified seven steps to take to make a Reduction In Force (RIF) or downsizing go more smoothly.

a) Develop a careful, systematic transition plan. The plan should include: your goals and objectives; programs and services you will provide to both departing and remaining employees; and thorough consideration of how the plan will be implemented and communicated within the organization.

b) Ensure that top managers understand the visionary role they must play.

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Top managers must spearhead the downsizing plan if it is to be successful. They must explain clearly where the organization is going and provide support to middle-level managers who may have hands-on responsibility for implementing the plan.

c) Involve your personnel or human resources department. Work closely with human resources professionals to develop action plans and communication strategies.

d) Plan a communication strategy. How do you plan to “roll out” your downsizing plans? Will you downsize incrementally, or all at once? Be careful about boxing yourself in with a one-time action.

e) Communicate as much as you can, as soon as you can. Although you may be afraid of “over communicating” with employees, you need to keep in touch as RIF plans progress to create a climate of trust and to squelch the rumor mill that can imperil your plans.

f) Remember that you are changing the rules. Downsizing fundamentally changes the operating assumptions and organizational realities by which everybody in the organization has always thought about his or her job, career, peers and relationship with the organization itself. Career transition and re-employment workshops for departing employees are critical, as are team-building and change-management programs for those who remain. Indeed, extra will be needed to forge common work values and organizational goals in the new environment.

g) Communicate tough decision in a human way. Talk about people and how the organization wants to help them make successful transitions to what comes next.

2.2.4 Managing Retrenchment DownsizingThere are three organizational strategies to achieve downsizing that can be used independently or in conjunction with each other (Sherman, Bohlander & Snell, 2013). The first is the workforce reduction strategy, which focuses simply on reducing an organization's headcount. The second is the organization redesign strategy, which involves elements of de-layering, eliminating areas of work and job redesign, so that the amount of work is reduced as wealth as the organization's headcount. The third is the systemic change strategy which is a longer term approach intended to promote a more fundamental change that affects the culture of the organization through promotion of employee involvement and adherence to a continuous improvement strategy. Downsizing may be implemented solely through reducing an organization's head count or in combination" with one or more other strategies (Udokwu, 2012, Consolata, 2016).

2. 3 PerformancePerformance is a concept that is subject to open and wide variability of meanings as it is somewhat an imprecise word when it functions as a place holder in research (Folan, Braume & Jegede, 2007). The lack of consensus on the definition of the concept creates confusion and

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clearly limits the potential for a clear generalisability and comparability of research in this area (Franco-Santos, et.al 2007). Porter (2008), defines performance as the above-average rate of return sustained over a period of years. Firm performance could mean the success level of the firm in the market within which it operates. It could also be described as the ability of the firm in creating commendable profit. Venkatraman and Ramanujam, (2015), sum it as a measure of how well a mechanism/process achieves its purpose. He adds that a firm’s performance is an important dependent variable in business research. In enterprise management, Moullin (2003) defines an organization’s performance as “how well the organization is managed” and “the value the organization delivers for customers and other stakeholders. Performance also refers to the firm’s success in the market, which may have different outcomes. We can conclude that performance is the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.Firm performance is a focal phenomenon in business studies. It is also a complex and multidimensional phenomenon which can be characterized as the firm’s ability to create acceptable outcomes and actions and which has been established to directly depend on efficient marketing practices (Naelati, and SobrotulImti, 2014). Every serious business must ensure that its practices evolve to continue enhancing its performance. The performance of a firm can be viewed from several different perspectives, and various aspects can jointly be considered to define firm performance.To accurately assess how well a business is performing, Moulin, (2003) opines that one needs to develop some quantifiable measures by identifying those aspects of the business processes that need improvement and those that are working well. This can then be used to evaluate the company's productivity over a set period of time. Studies relating to both large firms and Small Enterprises constantly emphasize a positive relationship between businesses practices, management activities and performance, as it is often articulated that best business practices produce superlative business performance (Arsalan, Naveed and Muhammad 2011). Whatever the definition adopted and regardless of the size of the firm, firm performance evaluation is very crucial to ascertaining the success or failure of the firm so as to take proper actions to ensure that it clearly achieve its objectives.

2. 4 Small and Medium-sized Enterprises (SMEs)Small and Medium-sized Enterprises (SMEs) are a wide variety and heterogeneous group of enterprises and a very important business segment that provides national socioeconomic development both for developed and developing markets and economies. They embody diverse kinds of sophistication, skills, capital, growth orientation and are found in both formal and informal sectors (Folan, Browne & Jagede, 2007). They may be owned by individuals, groups, corporate organizations and government and their owners may or may not be poor (Naelati, and SobrotulImti, 2014). These classes of enterprises are found in a wide variety of industries and operate in very different markets (rural, urban, local, national, and international) and social environments (Hanmaikyur, 2015) and are drivers of economic growth as they contribute greatly to economic development of both developed and developing nations in diverse ways

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including reducing unemployment (among many others) even though they are usually characterized by lack of adequate resources, owner/manager operation, flexibility and low-tech involvement (Shehu, 2014).

Because of their unique role in economic development of nations, SMEs are globally regarded as instruments of change and a pivot of economic catalysts in almost all economies of the world. They are also important movers in the process of structural changes in both developed and developing markets and economies (Recardo & Heather, 2016) and are significant to the local entrepreneurship, innovative activities and are able to exploit opportunities.

In Nigeria, Small and Medium-scale Enterprises (SMEs) which came into the mainstream of the country’s economic activities in the 60’s owing to its obvious vital contributions plays a very important role in the process of industrialization and sustainable economic growth (Ogohi, 2014). Like in the developed countries, SMEs in the country have enabled entrepreneurship activities through which employments are constantly generated and poverty is reduced and sustainable livelihood achieved (Ogunmokun, Li & Ling-yee, 2014). These classes of enterprises make up about 97% of businesses in Nigeria and provide on average 50% of Nigeria’s employment and its industrial output (Ogohi, 2014). Government and development experts have therefore realized the fact that SMEs possess the needed catalyst to turn the economy around for good (Tripathi, 2016). However, for SMEs to effectively and continuously carry out their roles as enumerated above, they must continually perform effectively.

3.0 METHODOLOGY The survey research design method was employed for this study. The method was considered very suitable here because it maximizes the representative sampling of the population units studied. Beside, this method maximizes population generalizability.

The academic area covered by this study is the effect of retrenchment while the geographic area is the Benue state, one of the 36 states of Nigeria. The state is a local trade centre and is one of the biggest industrial and commercial settlements in the country with many small businesses.

The population of study comprise of owners and/or managers of small businesses in the state. The said population also serves as respondents for the study. Census approach to sample size determination was adopted for this study hence; all the 105 staff were sampled. Data for to this study was collected from primary and secondary sources.

3. Validation and Reliability of Instrument3.1 Validity of instrumentTable 1: Kaiser-Meyer-Olkin and Bartlett's test

KMO and Bartlett's TestKaiser-Meyer-Olkin Measure of Sampling Adequacy.

.753

Bartlett's Test of Sphericity

Approx. Chi-Square 8.819Df 10

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Sig. .005Source: SPSS Result, 2019This study’s input variable factors were subjected to exploratory factor analysis to ascertain if the constructs described in the literature are in line with the factors derived from the factor analysis. Result of the Factor analysis indicates that the KMO (Kaiser-Meyer-Olkin) measure for the study’s independent variables items is 0.753 with Barlett’s Test of Sphericity (BTS) value to be 10 at a level of significance p=0.005.Our KMO result in this analysis surpasses the threshold value of 0.50 as recommended by Hair, Anderson, Tatham, and Black (1995). It is therefore very clear that the data and sample used for this study is adequate to produce realistic result. Table 2: Component matrix

Table 2 above clearly reveals that: i. Voluntary retrenchment VORET, Compulsory retrenchment CORETS and Employee efficiency and effectiveness based Retrenchment EERET, are loaded strongly on factor 1. Training and Development also loaded strongly on factor 2 more than other variables. Only Organizational effectiveness loaded strongly on factor 3 than all other factors.

As can be extracted from the different loadings of the variables on the various components, the study’s questionnaire has strong construct validity. This may be attributed to the fact that the various variables tested for correlation were found to have a high degree of measures between the measures of the same construct, indicating that correlation exists between them. Thus the critical components in this study had content validity because an extensive review of the literature was conducted in selecting the 5 measurement items.

Table 3: Total Variance Explained

Total Variance Explained

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Rotated Component Matrixa

Component1 2 3

VORENT .760 .025 .984

CORENT.832 .893 -.003

EERENT .827 -.423 .116

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization

Source: SPSS Result, 2019

Component

Initial Eigen values Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Total % of Variance

Cumulative %

Total % of Variance

Cumulative %

Total % of Variance

Cumulative %

1 1.642 32.842 32.842 1.642 32.842 32.842 1.609 32.177 32.1772 1.311 26.213 59.055 1.311 26.213 59.055 1.307 26.137 58.3143 1.010 20.193 79.249 1.010 20.193 79.249 1.047 20.935 79.2494 .754 15.083 94.3325 .283 5.668 100.000Extraction Method: Principal Component Analysis.

Source: SPSS Result, 2019As shown in table 3 above, three components i.e component 1, 2 and 3 accounted for 79.249% of the variance of the whole variables of the study. This shows that the questionnaire for the study have strong construct validity.

Based on the above presentation, it is clear that the instrument for data collection was found to be reliable as it was consist between independent measurements of the same phenomenon. It was also found to be stable, dependable, predictable, accurate and precise of a realistic measuring instrument.

Table 4: Reliability StatisticsReliability Statistics

Cronbach's Alpha

Cronbach's Alpha Based on Standardized Items

N of Items

.898 .985 5 Source: SPSS Result, 2019

Table 5: Item-Total StatisticsScale Mean

if Item Deleted

Scale Variance if

Item Deleted

Corrected Item-Total Correlation

Squared Multiple

Correlation

Cronbach's Alpha if Item Deleted

VORENT 195.8000 662.743 .854 .096 .860CORENT 189.5333 828.838 .815 .295 .764EERENT 192.5333 619.410 .906 .444 .840

Source: SPSS Result, 2019Any adequate measurement process needs to be reliable and valid so that they can achieve realistic outcome from their research undertakings. Table 4 above presents the study’s reliability statistics which indicates that the Cronbach Alpha value is 0.898. Sekaran and Bougie’s (2010) submit that an instrument with a coefficient of 0.60 is regarded to have an average reliability; whereas a coefficient of 0.70 and above shows that the instrument has a high

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level of reliability. The instrument used in the study is reliable, since result of the test conducted shows that all item averaged 0.898, which is acceptable since they fall well above the cutoff value of 0.60.

Reliability test using Cronbach Alpha was performed to measure the internal reliability of the various variables that was used for this study. Table 5 shows that Voluntary retrenchment (VORET) has a reliability of 0.860, Compulsory retrenchment (CORET) 0.764, Employee efficiency and effectiveness based Retrenchment (EERET) 0.840. The entire construct are therefore considered highly reliable for the study.

Data for the study was collected from primary source through the use of a survey questionnaire.

3.3 Model Specification Multiple regression statistical analysis was employed to determine the effect salesforce

retrenchment and the performance small businesses in Benue state. The traditional multiple regression formula and its implicit forms are represented below:Y=β0+β1 X1+β2 X2+β3 X3+e - - - - - (1)The implicit model form of the model is as shown below:

SME Performance = f (VORET, CORET, EERET) - - - - - (2)

Retrenchment as used in this study has three dimensions including:Voluntary Retrenchment (VORET)Compulsory Retrenchment (CORET)Employee efficiency and effectiveness based Retrenchment (EERET)

The dependent variable for this study is represented by:Performance of Small and Medium Enterprises (PSMEs)The explicit form of the formula above is depicted below:PERF = b0 + b1 VORENT + b2 CORENT + b3 EERENT + e - - - (3)

Where: b0 = regression intercept

e = the random error term b1, b2, b3, b4, = the regression coefficients

e = error termapriori expectations(X1) = Voluntary Retrenchment ; a priori expectation is positive(X2) = Compulsory Retrenchment; a priori expectation is positive(X3) = Efficiency and effectiveness based Retrenchment; a priori expectation is positive

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3.4 Data Analysis TechniqueData for this study was sourced, collected, coded and analyzed using computer-based Statistical Package for Social Sciences (SPSS version 20.0 for Microsoft Windows). Various statistical methods were used in analyzing this study: percentages, frequency and tables were used to examine the respondents’ bio-data. Multiple Regressions was used to assess the nature and degree of relationship between the dependent variable and a set of independent or predictor variables. However, standard error of the estimate was used to test the 4 hypotheses for this study. Decision rule: The following decision rules were adopted for accepting or rejecting the stated hypotheses of the study: If the standard error of bi [S (bi) >1/2bi] we accept the null hypothesis, that is, we accept that the estimate bi is not statistically significant at the 5% level of significance. OrIf the standard error of bi [S (bi) <1/2bi] we reject the null hypothesis, in other words, that is, we accept that the estimate b1 is statistically significant at the 5% level of significance.

4.0 RESULTS AND DISCUSSION4.1 Analysis of Returned questionnaireA total number of 124 copies of the research questionnaires were distributed to all the sampled SMEs in Benue state in Nigeria, only 115 of them or 90.54% were actually returned while 9 of them representing 7.08% were not returned. Of the 115 questionnaires returned, 105 of them were found usable and so constituted the final sample for the research which shows a good response rate of 82. 6%. The percentage of the returned questionnaire is considered sufficient for any realistic study based on Sekaran’s (2003) argument that a 30 percent response rate is suitable for any good survey. Similarly, the response rate for the study is considered adequate going by the suggestion that a sample size should be between 5 and 10 times the number of study variable for regression type of analysis to be investigated (Hair, Ringle & Sarsedt, 2011; Pallant, 2001). Given the number of study variables, Aliyu (2014) submits that a sample of 60% is considered adequate for data analysis. Hence, 105 usable responses constituting 82.6% of the total sampled population clearly satisfies the required sample size requirement for multiple regression analysis conducts. The collected data was analysed with the aid of SPSS (version 20).

Table 4.1: Detailed Questionnaire distribution and retention

Questionnaires Items Frequency Percentage (%)Questionnaires Distributed 124 100Questionnaires Returned 115 90.5Questionnaires Rejected 10 7.87Questionnaires Analysed 105 82.6

Source; Field survey (2019)

4.2 General Individual and firms’ Demographic Information

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The table below presents the general findings of the individual respondents and firms’ demographic information.

Table 2: Demographic Characteristics of Respondents

Response and their variables Frequency Percentage

Sex MaleFemaleTotal

7734101

7634100

Age 18-2728-3738-4748 and aboveTotal

14224421101

14224420100

Marital Status

SingleMarriedTotal

3863101

3862100

Working Experience

1 - 5 years6 – 10 years11 – 15 years16 – 20 years21 Years & aboveTotal

1131281713101

11 31 29 16 12 100

Educational Qualification

Post GraduateB.Sc/HNDNCE/DiplomaO Level & BelowOthersTotal

133216318

101

133216317

100Class of Business

Small scaleMedium ScaleTotal

8912101

88 12 100

Status of Respondent

OwnerManagerTotal

8120101

81 19 100

Source: Researcher‘s Field Survey, (2019)

As is shown on table 2 above, 101 of the sampled respondents finally made it to the analysis stage. Of this number, 77 were male representing 76% of the sampled population while 34 of them or 34% are female. The finding shows that both sexes are ably represented in the survey. In the age bracket of the respondents, 14 of them are within the 18 to 27 years age bracket they represent 14% of the total respondents for the study 22 other respondents fall in the 28 to 37 years age bracket and they constitute 22% of the sample studied. In the 38 to 47 years category

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are 44 respondents representing 44 of the total sample while the remaining 21 respondents representing 20% are between 48 years and above respond to the questions put across to them. The implication of this finding is that all the sampled respondents are experienced enough to contribute to the study. In the marital status category, 38 respondents or 38% are married while the remaining 63 or 62% are single. This implies that both the married and the unmarried are well represented in the study.

Next was the respondent’s working experience. Here, 11respondents representing 11% claimed they have worked for between 1 and 5 years. In the 6 to 10 years category are 31% of the respondents which is an equivalent of 31 of them. 28 other respondents representing 29% were from the 11 to 15 years group. In the 16 to 20 years category we have 16 respondents which is equated to 16%. The last group in this category is made up of respondents that have the working experience of 20 years and above. In this group were 13 and constituted 12%. This is a proof that respondent have various working experience and are all qualified for the survey.

On Academic qualification, 13 respondents or 13% have post graduate certificates. The respondents in the Degree and HND category were 32 or 32%. In the Diploma/ NCE group are 16 or 16% of the respondents. O’level and below had 31 and 31% while those respondents with different other qualifications not specified above were 6 which accounted to approximately 6%. It is clear that all the respondents were qualified in all the conditions laid down to participate in the study.

Another characteristics investigated in the study was the type of SME studied. Here the analysis revealed that 89 of the businesses were in the small scale group and they accounted for 88% of the total businesses studied while the remaining 12 of the businesses which is an equivalent of representing 12 % were from the medium enterprises.

The study also investigated the ownership status of the respondents in their businesses. It was found that 80 respondents which equates to 81% claimed they owned the businesses studied. The remaining 21 respondents or 19% were Managers of the businesses.

4.3 Presentation of result based on specific objectiveTable 4.2.1 Effect of Retrenchment on the effectiveness of SME’s performance.

S/N ITEMS SA A UN D SDTRAINING AND DEVELOPMENT

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1. Lapses or deficiencies in performance can be remedied by proper and effective Retrenchment

3534.65

3231.68

109.90

1312.87

1110.89

2. Motivation of remaining staff after retrenchment improves organizational effectiveness and performance significantly.

4241.58

2120.79

32.97

1918.81

1615.84

3. High turn-over rate of efficiency in terms of managing cost occurs after embarking on retrenchment exercise

3938.61

4140.59

43.96

98.91

87.92

Source: Field Survey, 2019 As shown by the result of the univariate analysis above, majority of the respondents amounting to 39 (34.65%) strongly agreed that Lapses or deficiencies in performance can be remedied by proper and effective Retrenchment. Another sizable percentage of respondents (31.65%) representing 32 agreed to this statement. However, 12.87% and 10.89% of the respondents representing 13 and 11 respectively disagreed and strongly disagreed that lapses or deficiencies in performance can be remedied by proper training.

On whether Motivation of remaining staff after retrenchment improves organizational effectiveness and performance significantly, 42 of the respondents (41.58%) strongly agreed, 21 of them representing 20.79% agreed. A sizable number of the respondents 19 and 16 representing 18.81% and 15.84% respectively disagreed and strongly disagreed with the above statement. That high turn-over rate of efficiency in terms of managing cost occurs after embarking on a retrenchment, an overwhelming majority of the respondents 38.61% and 40.59% of the respondents strongly agreed and agreed to the statement. Respondents who disagreed and strongly disagreed to this statement are 9 and 8 or 8.91% and 7.92% respectively. The inference from the univariate analysis on the effect of retrenchment as a performance enhancing management process on organizational effectiveness is that retrenchment as identified by the respondents has a huge effect on the efficiency of SMEs. .

Table 4.2.2: Effect of information utilization on the effectiveness of SMEs.

S/N ITEMS SA A UN D SDB INFORMATION UTILIZATION4 Retrenchment information utilization helps

SMEs studied to build and align the capabilities, processes, attitudes, and talent needed for high performance.

3029.70

3736.63

109.90

1312.87

1110.89

5 information utilization on Retrenchment facilitate the integration and alignment of the SMEs strategy with a workable talent management strategy

1615.84

2020.79

43.96

1918.81

4241.58

141

6 Retrenchment Information utilization enables SME’s management to quickly assess and prioritize various workforce strategies, employee needs and investments

4039.60

3938.61

109.90

54.95

76.93

Source: Field Survey, 2019

As shown by the analysis of the effect of effect of Retrenchment information utilization on the performance and effectiveness of civil service, majority of the respondents numbering 37 (36.63%) agreed that that information utilization helps organization build and align the capabilities, processes, attitudes, and talent needed for high performance, 30 other respondents representing 29.70% of the total respondents agreed to the statement. 11 respondents or 10.89% of the sampled population strongly disagreed to the above statement. Examining if Retrenchment information utilization in civil service facilitates the integration and alignment of the civil service strategy with a workable talent management strategy, majority of the respondents (4.58%) strongly disagreed to the statement. However, a sizable percentage of the sampled population (20.79%) agreed while 15.84% strongly agreed to the statement.Majority of the respondent numbering 40 and 39, amounting to 39.60% and 38.61% respectively strongly agreed and agreed respectively that Retrenchment information utilization enables the civil service executives to quickly assess and prioritize various workforce strategies, employee needs and investments. 10 other respondents which is equal to 9.90% were neutral to the statement that retrenchment information utilization enables the SME management to quickly assess and prioritize various workforce strategies, employee needs and investments.

Table 4.2.3: Retrenchment Information utilization enables the SMEs to quickly assess and prioritize various workforce strategies, employee needs and investments.

S/N

ITEMS SA A UN D SD

C RETRENCHMENT AND NEGOTIATION

7 Retrenchment brings about harmonious working environment which leads to organizational effectiveness and performance

3332.67

3534.65

32.97

1312.87

1716.83

8 Employees resist Retrenchment because the visions of management were not properly negotiated with the staff.

1817.82

1918.81

54.95

1918.81

4039.60

9 When Retrenchment is neither properly negotiated nor carried out, it leads to low organizational performance.

3029.70

5049.50

43.96

109.90

76.93

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Source: Field Survey, 2019The univariate analysis of the respondent responses on the effect of negotiation on the performance of sales force shows that majority of the respondents numbering 35 (34.65%) agreed that Retrenchment brings about harmonious working environment which leads to improved performance and effectiveness in the organization. 33 of the respondents representing 32.67% strongly agreed to this statement. 17 other respondents, an equivalent of 16.83% of the of the total respondents strongly disagreed that Retrenchment brings about harmonious working environment which leads to organizational effectiveness. On the statement that Employees resist Retrenchment because the visions of management were not properly communicated to the staff; 40 of the respondents (39.60%) strongly disagreed to this statement. However, 18 and 19 of the respondents representing 17.82% and 18.81% respectively strongly agreed and agreed respectively to this statement. Majority of the respondents numbering 50 or 49.50% agreed that When Retrenchment is not properly carried out; it leads to low organizational effectiveness and performance. Similarly, 30 or 29.70% of the respondents agreed to this statement. 3.96% of the respondents were neutral to the statement, while 6.93% of the respondents strongly disagreed to the statement that when employee's retrenchment is not properly carried out, it leads to low organizational effectiveness.

Table 4.2.4: Effect of retrenchment on organizational performance and effectivenessS/N ITEMS SA A UN D SD

RETRENCHMENT AND COERCION1. The use of coercion on Retrenchment in

workplace is counterproductive and leads to negative effect on organizational performance

1312.87

3736.63

109.90

3029.70

1110.89

2. When Retrenchment instead of coercive policy is adopted by management, it leads to organizational performance and effectiveness

4241.58

1918.81

43.96

2020.79

1615.84

3. Retrenchment is important sometimes in achieving organizational performance and effectiveness especially if not subjected to coercion

76.93

3938.61

54.95

109.90

4039.60

Source: Field Survey, 2019

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Investigation on the effect of retrenchment on organizational performance and effectiveness, 37 of the respondents (36.63%) agreed to the statement that the use of coercion on Retrenchment in workplace is counterproductive in to goal of organizational performance and effective. However, 13 and 30 of them representing 12.87% and 29.70% respectively strongly agreed and disagreed respectively to the statement. Majority of the respondent numbering 42 or 41.58% strongly agreed that When Retrenchment instead of coercive policy is adopted by SMEs management; it leads to performance and effectiveness. 20 other respondents representing 20.79% of the respondents disagreed with this statement while 19 other respondents or 18.81% agreed to the statement.

An investigation on retrenchment is important sometimes to achieve organizational performance and effectiveness, majority of the respondent (39.60%) strongly disagreed to the statement while a very good percentage of the respondent 38.61% agreed to the statement. However, 4.95% of the respondents were neutral to the statement that coercion is important sometimes to achieve organizational effectiveness

Table 4.2.5: Organizational EffectivenessS/N ITEMS SA A UN D SD

SME’S EFFECTIVENESS 1. Retrenchment process that is effective,

realistic and genuine leads to trust in the workplace thereby leading to improved SME performance

3029.70

3736.63

109.90

1312.87

1110.89

2. Effective Retrenchment process facilitates the integration and alignment of the business strategy that brings about SME performance.

1615.84

2020.79

43.96

1918.81

4241.58

3. Organizational effectiveness leads to effective Retrenchment exercise that translate to enhanced SME’S performance

4948.51

3029.70

109.90

54.95

76.93

Source: Field Survey, 2019

The effectiveness of Retrenchment on SMEs performance was put across to respondents. In all, 37 respondents representing 36.63% agreed that Retrenchment process that is effective, realistic and genuine leads to trust in the workplace thereby leading to improved SME performance. 29.70% of the respondents strongly agreed to the statement. On the submission that Effective Retrenchment process facilitates the integration and alignment of the business strategy that brings about SME performance, 42 of the respondents or 41.5% of them strongly disagreed to the statement. 20 other respondents or 20.79% agreed to the statement that organizational

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effectiveness facilitates the integration and alignment of the business strategy that brings about performance.Majority of the respondents numbering 49 and 30 representing 48.51% and 29.70% respectively strongly agreed and agreed respectively that Organizational effectiveness leads to effective Retrenchment exercise that translate to enhanced SME’S performance. A negligible number of respondents numbering 7 and representing 6.93% strongly disagreed to this statement that Civil service Retrenchment process leads to organizational performance and effectiveness.

4.3 Regression Results and DiscussionTable 4.3 Regression coefficient

Coefficientsa

Model Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 6.802 9.308 .936 .371VORET .275 .285 .620 .568 .006CORET .307 .043 .279 .121 .015EERET .442 .014 .382 .295 .003

a. Dependent Variable: CSPERFSPSS 20.0 Result Output, 2019Source: Researcher’s computation, 2019.A) Effect of Voluntary retrenchment (VORET) on SME’s performanceCSPERF = 6.0 + 0.620 VORET + 0.279 CORET - 0.382 EERET - - (5) S (bi) [0.275] [0.043] [0.014] The model specification for civil service performance (CSPERF) establishes that a positive relationship exist between Voluntary retrenchment (VORET) and the performance of SMEs and the relationship is statistically significant (p<0.05) and in line with a priori expectation. This means that a unit increases in Voluntary retrenchment (VORET) will correspondingly increase the performance of SMEs by a margin of 62.0%.B) Effect of Compulsory retrenchment (CORET) on the performance of SMEs in Benue

statePERF = 6.0 + 0.620 VORET + 0.279 CORET + 0.382 EERET - - (5) S (bi) [0.275] [0.043] [0.014]

As shown by the results of the regression coefficients, a positive relationship exist between Compulsory retrenchment (CORET) and SMEs performance and the relationship is statistically significant (p<0.05) the relationship is in line with a priori expectation. This means that a unit increases in Compulsory retrenchment (CORET) will result to a corresponding increase in SMEs performance by a margin of 27.9%.

C) Effect of Employee efficiency and effectiveness based Retrenchment (EERET) on the performance of SMEs in Benue state

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CSPERF = 6.0 + 0.620 VORET + 0.279 CORET + 0.382 EERET - - -(5) S (bi) [0.275] [0.043] [0.014]

A positive relationship exists between Employee efficiency and effectiveness based Retrenchment (EERET) on the performance of SMEs in Benue state and the results is statistically significant (p<0.05) and also in line with a priori expectation. This also means that a unit increases in Employee efficiency and effectiveness based Retrenchment (EERET) will result to a corresponding increase in the performance of SMEs by a margin of 38.2%.

Table 4.3a: Model summaryModel Summaryb

Model R R Square Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1 .831a .710 .687 17.44977 1.978a. Predictors: (Constant), VORET, CORET, EERET and BOIRETb. Dependent Variable: CSPERF

Source: SPSS 20.0 Result output, 2018The coefficient of determination R2 for the study is 0.710 or 71.0%. This indicates that 71.0% of the variations in the model can be explained by the explanatory variables of the model while 29.0% of the variation can be attributed to unexplained variation captured by the stochastic term. The Adjusted R Square and R2 show a negligible penalty (0.687) for additional explanatory variables introduced by the researcher. The Durbin Watson statistics of 1.978 shows that there is a minimal degree of negative autocorrelation in the model of the study; hence the estimates of the model can be used for prediction.

4.4 Test of the study HypothesesThe test of this study is discussed in line with the formulated hypotheses of this study.4.4.1 Decision Rule for accepting or rejecting a hypotheses Based on Standard Error Test.Using Standard error test to test the hypotheses, we have the following decision rule.If the standard error of bi [S (bi) >1/2bi] we accept the null hypothesis, that is, we accept that the estimate bi is not statistically significant at the 5% level of significance.If the standard error of bi [S (bi) <1/2bi] we reject the null hypothesis, in other words, that is, we accept that the estimate b1 is statistically significant at the 5% level of significance.

Table 4.3 Regression coefficientCoefficientsa

Model Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta1 (Constant) 6.802 9.308 .936 .371

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VORET .275 .285 .620 .568 .006CORET .307 .043 .279 .121 .015EERET .442 .014 .382 .295 .003

a. Dependent Variable: OREFSPSS 20.0 Result output, 2019

H01: Voluntary retrenchment has no effect on the performance of SMEs in Benue state of Nigeria

CSPERF = 6.0 + 0.620 VORET + 0.279 CORET - 0.382 EERET - - (5) S (bi) [0.275] [0.043] [0.014]

From the regression equation (2) above we have, b1 = 0.620Standard deviation of b1 = 0.275H0: b1 = 0H0: b1= 0 ½ b1 equals 0.31Using the standard error test, S (bi) < 1/2bi above, 0.275 < 0.31. Thus, we have no option but reject the null hypothesis. That is, we accept that the estimate b1 is statistically significant at the 5% level of significance. This implies Voluntary retrenchment has no effect on the performance of SMEs in Benue state of Nigeria

H02 Compulsory retrenchment has no effect on the performance of SMEs in Benue state of Nigeria.

Recall that: PERF = 6.0 + 0.620 VORET + 0.279 CORET - 0.382 EERET - - - (5) S (bi) [0.275] [0.043] [0.014]

From the regression equation (2) above we have, b2 = 0.279Standard deviation of b2 = 0.043H0: b2 = 0H0: b2 = 0 ½ b2 equals 0.1395Using the standard error test, S (bi) < 1/2bi above, 0.043< 0.1395. Thus, we reject the null hypothesis. That is, we accept that the estimate b2 is statistically significant at the 5% level of significance. This implies that Compulsory retrenchment has no effect on the performance of SMEs in Benue state of Nigeria.

H03: Efficiency and effectiveness based Retrenchment has no effect on the performance of civil service in Benue state of Nigeria

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Recall Equation 5CSPERF = 6.0 + 0.620 VORET + 0.279 CORET - 0.382 EERET - - (5) S (bi) [0.275] [0.043] [0.014] From the regression equation above we have, b3 = 0.382Standard deviation of b3 = 0.014H0: b3 = 0H0: b3 = 0 ½ b3 equals 0.191Using the standard error test, S (b3) < 1/2b3 above, 0.014 < 0.191. Thus, we reject the null hypothesis. That is, we accept that the estimate b3 is statistically significant at the 5% level of significance. This implies that Efficiency and effectiveness based Retrenchment has no effect on the performance of SMEs in Benue state of Nigeria.

4.5 Discussion of findingsThis study was put in place to investigate Retrenchment Downsizing and the performance of SMEs in Benue state. To do justice to the study, four hypotheses were formulated and statistically tested. Multiple regression analysis was employed to determine the effect of staff retrenchment on the performance of SMEs in Benue state.

Hypotheses one was tested to know if Voluntary retrenchment has effect on the performance of SMEs in Benue state of Nigeria. Using the standard error test, S (bi) < 1/2bi above, 0.275 < 0.31. This hypothesis was rejected. The study therefore accepted that the estimate b1 is statistically significant at the 5% level of significance. This implies Voluntary retrenchment has no effect on the performance of SMEs in Benue state of Nigeria.

The second hypothesis sought to investigate if Compulsory retrenchment has effect on the performance of SMEs in Benue state of Nigeria. Using the standard error test, S (bi) < 1/2bi

above, 0.043< 0.1395. This hypothesis was accepted since the estimate b2 was statistically significant at the 5% level of significance. This implies that Compulsory retrenchment has no effect on the performance of SMEs in Benue state of Nigeria.

Next was Hypotheses No three which sought to whether Efficiency and effectiveness based Retrenchment has effect on the performance of SMEs in Benue state of Nigeria. In line with the standard error test, S (b3) < 1/2b3 above, 0.014 < 0.191, the hypothesis was rejected and the estimate b3 is statistically significant at the 5% level of significance. This implies that Efficiency and effectiveness based Retrenchment has no effect on the performance of SMEs in Benue state of Nigeria.

The coefficient of determination R2 for the study is 0.710 or 71.0%. This indicates that 71.0% of the variations in the model can be explained by the explanatory variables of the model while

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29.0% of the variation can be attributed to unexplained variation captured by the stochastic term. The Adjusted R Square and R2 show a negligible penalty (0.687) for additional explanatory variables introduced by the researcher. The Durbin Watson statistics of 1.978 shows that there is a minimal degree of negative autocorrelation in the model of the study; hence the estimates of the model can be used for prediction. Grant (2005) in his study of Guest editorial: discourse and organizational change found similar result.

5. 1 ConclusionsThis study investigated the effect of retrenchment downsizing on the performance of SMEs in Benue state. The research objectives have been achieved since, reliable, explicit, rigorous and unambiguous answers have been reasonably provided to each of the research questions in the study. Conclusion has therefore been drawn from the study based purely on the research findings. All the formulated hypotheses were empirically and statistically tested. To effectively test this hypothesis, all the relevant variables were put together and subjected to analysis through multiple regression statistical tool to ascertain the nature and level of their effect.

Similarly, the theoretical framework of this study was designed in line with the literature reviewed. Based on the findings of this study, a conclusion is made that all the research questions and research objectives were successfully answered. The theoretical framework for the study is also in line with the underpinning theories (Resource Based View and Resource Advantage) which were used to explain the framework of the study. The study serve a variety of purposes for theory, policy, and Practice just as the findings of the study have empirically and statistically proved that the most of the study hypotheses tested generally have significant positive effect on the performance of civil service in Benue state.

The findings of the study are expected to help SME operators and Managers, government and other stakeholders an empirically tested outcome on some determinants of SMEs performance so that they can understand the effects of variables under study to improve SME better. The findings would also serve as a frame of future reference to civil service managers and operators, academia, students and other stakeholders; it would equally help in making relevant recommendations.

5. 2 RecommendationsArising from the findings of this study and Consequent upon these and other issues examined in the study, the following recommendations are made.

1. The top-level management in SMEs needs to diversify in ways of utilizing their surplus staff instead of retrenchment. The top management should be aware that an imprudent implementation of retrenchment affects the morale of workers and physically and emotionally affected both the retrenched and retained staff, leading to poor innovation, poor discipline, loss of efficiency and demoralization. However, retrenching inefficient staff could be a warning to other staff to improve or face the wrath of employers.

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2. SME managers need to develop a corporate strategy imbued with a rigorous implementation of retrenchment based on objectivity, mind preparation through counseling and training, and the effective communication of the rationale behind the retrenchment exercise to staff in order to avert the instance of hardworking and devoted staff working with apprehension.

3. The ignorance of employees on their human rights, labour laws and ways to seek redress when their rights are infringed upon gives undue advantage to SME Owners and Managers. Such process should encompasses a laid down and acceptable criteria, effective mode of communication, a well-resourced training package taking into account time and age, and an effective negotiation and consensus building on the quantum of severance packages to address issues during retrenchment.

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154

SOLID MINERALS SUB-SECTOR AND ECONOMIC DIVERSIFICATION IN

NIGERIA

By

DAHIRU HUSSAINI ATTAHMinistry of Education, Lafiya.

ABSTRACTThe dwindling oil prices in the world market often expose the Nigerian economy and indeed the fiscal survival of the Federating States to the vagaries of the international political economy of oil. This is further compounded by the fact that the nation has not been able to diversify its economy to non-oil sectors especially the solid minerals sector given its abundant nature across different states of the federation. The main objective of the paper is to examine the character of the state/political and economic elites that predisposes their inability to diversify the economy via solid minerals development. Using dependency theory as the basis of analysis, the paper has found a strong positive correlation between the dependent character of the state/political economic elites and the inability of the Nigerian state to diversify its economy. The paper therefore recommends that: the nation’s economy must be diversified through complete over-hauling of the solid minerals sector, addressing both economic and non-economic challenges and the promotion of productive rather than a distributive economy as well as ensuring that Nigeria produces economic resources with which it has a cooperative advantage.Keywords: Solid Minerals, Exploration, Exploitation and Economic Diversification.

1.0 Introduction

Nigeria is blessed with huge solid mineral deposits widely

spread across different states of the federation. There are varieties of

solid minerals ranging from precious metals to various stones; much

of which are yet to be exploited. The level of exploitation, if any, is too

low in relation to the volume of deposits available in the country. The

nation is believed to house large quantities of solid minerals: large

enough for both local and international exploration, exploitation and

development.

The dominant role of oil has over the years produced a mono

product culture that is vulnerable to international oil politics and its

attendant consequences. Developing nations are therefore encouraged

to diversify their economies, because doing this would enable them to

155

benefit from certain advantages such as; attracting foreign investment,

employment generation, income generation and above all its positive

contribution to the Gross Domestic Products (GDP).

With the return to democracy in 1999 and the federal

government's efforts at re-launching of series of Economic Reform

Programmes (ERPs), economic diversification has been at the centre of

government's economic policy thrust (Federal Ministry of Information

and Communication: 2008:44). The vision “20:2020” for example had

as one of its packages; the National Minerals and Metal Policy aimed at

diversifying the major sources of revenue from the non-oil to about

50% by the year 2020 (Olumide and Akongwale;2013). The policy was

also intended to address the neglect of the solid minerals sector.

Perhaps, one may conclude that like most government's policies,

the “20:2020” vision is existing only on papers especially with the

demise of president Y ar' adua; the architect of the vision. However,

one thing that is obvious in Nigeria is that the consequences of having

crude oil as the major contributor to the economy are being felt by

governments at all levels. With the shortfall in oil price at the

international market, there was a reduction in the national budget of

2015 to N4.35 trillion (as the economy was hit by recession) when

compared to that of 2014 that stood at N4.962 trillion. State

governments' budgets across the federation were equally dropped.

More pathetic is the fact that most of the states in Nigeria can no

longer pay workers' salaries and undertake other statutory budgetary

expenditure for lack of fiscal independence. This is because the

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Nigerian economy has not been well diversified to accommodate non-

oil sectors to contribute to the Gross Domestic Product, GDP. The level

of investment in the solid minerals sector in terms of exploration and

development is far below that of oil and gas that has seen an

exponential growth since Nigeria became a petrol state (Olumide and

Akongwale, 2013).

With economic diversification and the political will to harness

these abundant mineral resources spread across the length and

breadth of its borders, the nation would benefit from these natural

endowments. The expectations are that the nation’s revenue base will

improve as a result of local and international mineral exploration,

exploitation and development thereby reducing the over dependence

on oil revenue accruing from the federation's account.

1.1 Problematique

There is a growing concern over the mono-product structure of

the Nigerian economy especially as it affects fiscal federalism.

Increasing emphasis has come to be placed on the solid minerals

sector as a vast treasure potential in the nation's quest for economic

diversification. This is borne out of the fact that the nation is heavily

endowed with commercially exploitable solid mineral resources.

Available geological evidence has shown that Nigeria has more

than 500 known deposits of 34 different solid minerals across the 36

states of federation (Obaje; 2009). Paradoxically however, the sector

has not been fully explored and exploited to bring about the needed

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resources for the development of the nation. Why is the Nigerian state

in dire need of resources for development?

This paper therefore, seeks to examine why it has not been

possible to explore and develop these solid mineral potentials that

Nigeria claims to have in abundance. What is it in the character of the

Nigerian state and its ruling elites that hinder the exploitation of these

mineral resources to the fullest and how does this predispose its

inability to diversify given the volume of these mineral resources?

In other words, is the Nigerian economy so dependent to the extent that it has

lost its autonomy and cannot diversify simply because the market forces (demand and

supply) are determined by extraneous factors? Are there evidences empirically speaking

to show that there is a relationship of causality between the dependent character of the

state and its elites and the non-diversification of the economy?

1.2 Conceptualization

Solid Minerals

Solid minerals are naturally occurring homogeneous inorganic solid

substance having a definite chemical composition and characteristics

crystalline structure, colour and hardness. They also contain inorganic

elements such as calcium, iron, potassium, sodium, or zinc that are

important to humans, animals and plants (Osei, 1990). Examples of

solid minerals are coal, baryte, gemstone, leads/zinc, gold to mention

but few.

Exploration

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Mineral exploration is the process of finding commercially viable

concentrations of minerals to mine. It is an intensive, organized and

professional form of mineral prospecting. Mineral exploration methods

vary at different stages of the process depending on size of the area

being explored, as well as the density and type of information sought.

It is used in this paper to mean the search for commercially viable

minerals spread across the nation.

Exploitation

It is used in this paper to mean a process of extracting these natural

substances from beneath the earth. Exploitation is an important stage

in the life of a miner and is the last process by which other stages

(prospecting, exploration, and development) are economically

justified. The success of every mining venture depends greatly on the

method chosen for exploitation.

Economic Diversification

Economic Diversification refers to the process in which growing range

of economic output is produced. It is also known as resource

diversification. In Nigeria, diversification involves both lateral and

structural process of economic transformation. Lateral diversification

entails the exploitation of alternative resources to crude oil such as

solid minerals and Agriculture. This is also referred to as

diversification among products, while structural diversification

addresses the imperative for massive deployment of resources for

economic development through industrial enterprises (CBN, 2003).

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There are options available for diversifying the economy. These

involve agriculture, entertainment, solid minerals, financial services,

industrialization, information and communication technology, tourism,

etc. It is important to consider individual nation peculiarities in

choosing options available. Sunday and Utting (2013:81) note that

“due to structural differences, a model that fits an economy perfectly

well may prove irrelevant in others”.

1.3 Theoretical Framework

The theoretical framework used in this paper is the dependency

theory. The paper prefers to use only this theory among many other

theories such as the theory of comparative cost advantage developed

by David Ricardo in1817, the Rentier state theory put forward by

Hossein Mahdavy in 1970and the Dutch Disease theory which

originated from Netherlands in 1960s to avoid the problem of

triangulation.

The dependency theory especially the positions of Ake (1981,

1996) Nnoli (2001), provide in-depth empirical illustrations that

explain the problem of economic diversification in Nigeria. It offers a

more concrete and logical explanation of the dependency theory in

relation to the development of states in Africa. According to Ake

(1981:55), “an economy is dependent to the extent that its position

and relation to other economies in the international system and the

articulation of its internal structures make it incapable of auto-centric

development”. To say the least therefore, African economies are

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dependence because states in Africa emerged as colonial creations

fashion-tailored by the colonial fiat and not the desires of the colonies.

This dependency manifests itself in monetary/financial system in

trade and in technology from the colonial to the post-colonial period.

Colonialism for instance produced economies in Africa that were/are

disarticulated and incoherent thereby lacking sectorial linkages (Ake,

1981).

In more concrete terms, Ake (1981:43) submits thus: “A

disarticulated economy is one whose parts or sectors are not

complementary. In a coherent economy there is regional and/or

sectorial complementarities and reciprocity. One region specializes in

agriculture while another supply the agriculture sector with

manufactured goods.”

In the same vein, colonialism in Africa was characterized by

market imperfections and monopoly which were important elements

in perpetuating underdevelopment in Africa as they encourage

reliance on a few exports thereby producing an economy that is

narrow based. It is also logical from the above for one to infer that

emerging from the colonial period the political economic elites in

Africa and in Nigeria particularly became utterly confused on how best

to administer the state and how best to manage these disarticulations

in the various sectors of the economy notably; transport, export

commodities and the manufacturing sector. Akpar (2015:78) observes

that “several parts of the economy are not complementary: for all its

oil reserves which is estimated at 60% of the total African production,

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the country imports oil refined fuel for domestic consumption… for all

its vast land and human resources, Nigeria imports rice and wheat

spending trillions of dollars”.

More importantly too, the external orientation of African

economies therefore prevent any feasible attempt at self-sustaining

growth through policies like import substitution, export promotion,

indigenization and economic diversification. ‘This brings to fore the

argument that colonial economy did not only create colonial state and

society but also laid down alien economic and political foundations

that were to serve and are still serving the interests of the colonial

masters.

Fundamentally too, the Nigerian economy is mono-cultural in

nature as it is also narrow-based. Realizing this, the Nigerian

Enterprise Promotion Decree was launched in 1973 as the first major

attempt to reduce dependence. However, the policy did not yield

positive outcome because so long as Nigeria depends wholly on

foreign technology, it cannot make any meaningful progress towards

economic independence, neither can development be achieved when

the economy is structurally linked to the western capitalism (Ake,

1981).

1.4 The Solid Minerals Sub-sector in Nigeria: An Overview

Initial mining in Nigeria started in form of artisanal mining as

commonly practiced by communities centuries ago while in search of

natural resources especially for their social and economic benefits.

This was typical of the ancient civilizations such as the Nok Culture,

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the Igbo Ukwu Bronze, the Ife and the Benin Bronze (Ogezi, 2005).

However, exploitation of solid minerals (what is also called organized

mining) began in 1902 when many European companies started to

organize mining of Tin in Jos in the North Central Nigeria in small

holdings before moving to the other parts of the nation.

In December, 1903 official geological surveys commenced when

the colonial government inaugurated the Minerals Survey Committee.

The committee was to carry out reconnaissance of the mineral

potentials of the northern and southern parts before undertaking a

more detailed and expensive task of geological mapping of the whole

nation (Obaje, 2005). The outcome of this survey has led to the

discovery of lignite in Asaba-lbusa-Ogwashi occurrences of galena,

tinstone, columbite, monazites, limestone and clays in various

locations in the south.

In the North however, significant discoveries include some

deposits of iron-ore near Lokoja, marble close to Jakura and tin in the

part or Kabba, Ilorin and Zaria. In the East, the main solid mineral was

coal in Enugu. Exploitation efforts were made with the establishment

of the Geological Survey of Nigeria. The activities of the GSN

especially during 2nd world war were mainly to search for strategic

minerals for the defense industry such as wolfrernite and tantalite

especially in the central Nigeria.

Due to inadequate capital and technical expertise on the part of

local entrepreneurs, the door became widely open for foreign

expatriates' domination of the minerals industry. Colonial authorities

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on their part made rules and regulations that exclusively reserved

mining rights to foreign companies. Consequently, foreign companies

such as the Amalgamated Tin Mines Nigeria Ltd, Gold and Base Metal

Limited among others dominated the industry mining minerals like tin,

tantalite and columbite (Raw Materials Research and Development

Council 2009).

The post war period witnessed a change in orientation which

was geared towards control and supervision in the sector leading to

the establishment of the Mineral Act in 1946. It is therefore very sad

to note that mining industry in Nigeria had no proper regulations from

the beginning so minerals were mined without recourse to safety

standards (Kalumbu, unpublished).

Realizing this, the British government set up a commission of

enquiry which recommended that independent bodies be established

to manage the sector especially as it affects government business. In

1950, by the ordinance number 29, the Nigerian Coal Corporation was

established and saddled with the responsibility to prospect, mine,

treat and market coal in Nigeria. With this, coal production attained a

peak value of about 1 million tonnes per year between 1952 to 1957

and became one of the major foreign exchange earners for the British

government (Onwughalu, 2008).

Immediately after independence there were no serious reforms

in the sector until 1972 when the federal government of Nigeria

promulgated the Indigenization Policy. The indigenization policy was a

deliberate attempt by the government to encourage indigenous

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participation and it became compulsory for Nigerians to own shares in

strategic sectors of the economy including solid minerals. The main

objective of the policy was to reverse the idea of private sector-led

development of this sub-sector. The committee on National Policy on

Solid Minerals (1995:8) stated as follows: “Concisely, the objectives of

government's mining policy would be to secure the development.

utilization and conservation of the mineral resources of Nigeria in the

best possible manner so as to achieve a long possible period of

economic benefit with no reason to assume that private investors are

the best instruments with which to achieve this.”

Under this policy, government had reversed its earlier policy of

non - involvement in the sector and became actively involved. To

further its involvement, the Nigerian Mining Corporation was

established in the same year (1972). Prior to the promulgation of the

Indigenization Decree, apart from coal, all other solid minerals were

mined by the private sector and foreign mining companies dominated

the scene due to their level of technology.

There was a paradigm shift based on government re-direction of

the Nigerian economy under the framework of the 1980s Industrial

Policy of Nigeria to encourage investment and promote a greater

private sector participation in exploration and mining operations. In

1995, the Federal Military Government under Sani Abacha took steps

to revamp the solid minerals sector by creating the Ministry of Solid

Minerals Development (which before then was the Solid Minerals

Department under the Ministry of Mines, Power and Steel) with the

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objective of harnessing the economic potentials of the Nigerian solid

minerals sector.

In 1999, with the return of the civil rule a new National Policy on

Solid Minerals was formulated and adopted with the Nigerian Mining

Corporation and the Nigerian Coal Corporation restructured for the

purpose of promoting private sector participation. At present, the

major law governing the activities of solid minerals was launched in

2007 called "the Minerals and Mining Act".

The Nigerian Minerals and Mining Act was passed into law in

March, 2007 to replace the Minerals and Mining Act No. 34 of 1999 for

the purposes of regulating the exploration and exploitation of solid

minerals in Nigeria. The Act gives the control of all the properties and

minerals to the Nigerian Federal Government and prohibits

unauthorized exploitation of these minerals. The main objectives of

this Act include:

i. To achieve sustainable increase in GDP contribution by the minerals sector;

ii. To generate quality Geoscience data; iii. To establish transparent licensing regime; iv. To formalize artisanal and small scale mining operations; v. To eradicate poverty through ASM operations: vi. To generate employment; vii. To create wealth through value addition and viii. To increase capacity of mineral based industries.

In simple terms, all lands in which minerals have been found in

commercial quantities are acquired by the Federal Government in

accordance with the Land Use Act. It also provides that in the event a

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mining lease or small scale mining lease or quarry lease is granted

over land subject to existing and valid statutory or customary rights of

occupancy, the governor of the state shall revoke such rights of

occupancy. The Minster of Solid Minerals Development is charged with

the responsibility of ensuring sustainable development of Nigerian

mineral resources and creating an enabling environment for private

investors; both local and foreign among others (section 2 of the Act).

The Minster is also empowered by the provision of the Act to regulate

determined areas eligible for the grant of an exploration or mining

lease based on a competitive bidding process.

For administrative convenience, the Act provides for the

establishment of the Mining Cadastral Office (MCO) which shall be

responsible for the general administration of mineral titles and the

maintenance of the cadastral registers. Other departments in the

ministry include the Mining Inspectorate Department (MID) and the

Minerals Environmental Compliance Department (MECD).

Despite the series of policies and reforms earlier mentioned. The

sector still witnesses abysmal performance in its sectorial contribution

to the GDP. For instance, as at 1988, it contributed 8.84% to GOP; the

maximum in the last three decades. Its contribution in 2010 was

3.59% (CBN. 2010).

1.5 Economic Diversification and Solid Minerals Exploitation in Nigeria

From pre-colonial to colonial epochs, Nigerian economy was though neither too

strong nor healthy yet it was not exclusively dependent on the production or exploitation

of only one mineral or agricultural produce, to the exclusion of other viable sources of

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income generation. Dode (2012) observes that "such was rather a diversified economic

system that to a large extent encouraged the exploitation of agriculture and mineral

resources that the nation was endowed with".

This economic posture of multi-production system in Nigeria continued on this

diversified shape until the late 1950s, when crude oil was discovered in a commercial

quantity in 1958 at Oloibiri (Bayelsa Stale). Later in 1960, Nigeria got her independence

with both agriculture and crude oil production at the centre of government economic

activities. However, shortly after independence the political-economic elites could not

sustain the tempo in diversifying the economy, hence; the early 1970s witnessed a

complete shift to oil revenue. The result is that the non-oil sector of the economy has

been neglected since then, while crude oil revenues have been mismanaged by the same

elites preventing the growth and development of the economy.

Realizing that the economy was becoming vulnerable to crises due to inherent

challenges, successive administrations embarked on a number of policies to address such

challenges. For instance, the first National Development Plan of 1962-1968, the popular

Structural Adjustment Programme (SAP) of 1986 and even vision 20:2020 were

intended to address such problems. One of the objectives of SAP was to "restructure and

diversify the productive base of the economy", with a view to reducing dependence on

the oil sector and imports. Though some efforts were made the desired aims of these

policies could not be achieved.

The Nigerian state and the political economic elites notoriously

maintain, even after independence, a carryover of the pattern of

economic production that restricts it to primary production into the

post-colonial era. The elites have little or no autonomy of economic

thoughts because of their neo-colonial structure that naturally

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predisposes them to the character of domestic parasitism (Okolie;

2015). Consequently, the impact of this dependency on the economy

becomes vicious circle of poverty, underutilization in the midst of

plenty, and underdevelopment. The proposition that dependence

affects internal politics, society and culture finds relevance in the

postcolonial Nigerian state. Dependency can be seen in virtually all

aspects of our national life. As earlier observed, several efforts to

diversify have not been possible because the economy is structurally

dependent as it creates and recreates dependent elites. A dependent

economy like ours cannot achieve an independent economic policy of

any kind since it lacks the technical wherewithal hence, diversification

policy over time has existed only on papers where successive

governments come out with different polices such as Structural

Adjustment Programme (SAP), National Economic Enhancement and

Development Strategies (NEEDS) of 2004 and the latest 'Vision

20:2020· but with no remarkable achievements.

Diversification of the Nigerian economy is needed now than in any other period

of the Nigerian economic history. This is so because there is apparent failure in the

application of certain measures such as “bail out” and borrowing to salvage the

economy. At best, these economic measures are only workable as short term solutions.

In the long-run, the vulnerability of the economy to the whim and caprice of the world

market is exposed with vigour.

Ayeni (2013) affirms that “the need for diversification of the Nigerian economy

cannot be over-emphasized especially in the wake of unstable global oil prices”. The

current state of economy is symptomatic of the consequences associated with global oil

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price instability. Price instability in global oil market distorts economic planning as

financing of plans have to come from oil. The means invariably that oil revenue slumps

would negatively affect the economy.

Diversification in Nigeria is a panacea for reducing the security problem in the

Niger-Delta and creating jobs. With over 34 different commercially exploitable solid

mineral resources spread across the country (see table below), it is feasible to achieve

diversification via solid minerals’ development. But why has it not been possible?

Outside the rentier character of the elites; what other factors constitute serious

challenges to the realization of this objective?

As noted earlier, since the state and the economy are dependent, the political

economic elites lack autonomy of thought; hence, it cannot invest in an economic

venture with long gestation period. They prefer to give this offer to foreign investors

while they talk about percentages.

The challenges faced by this sub-sector in Nigeria can be categorized in two

broad groups: the economic and the non-economic challenges. The economic challenges

include (but not restricted to): dearth of statistical data, inadequate capital, poor

investment culture among the governing elites, inadequate economic policies, obsolete

technology and decay in infrastructural facilities. The non-economic challenges on other

hand include: inadequate awareness of the mining laws, illegal mining, hostility of the

host community, exclusive powers of the federal government, inadequate legislation,

inconsistency occasioned by change in political leadership, communal land tenure

system, poor community participation etc.

For the purpose of illustration, the table below shows minerals availability in

Nigeria.

Table 1: Solid Mineral Occurrences in the Federating States of Nigeria.

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S/N Mineral Occurrences in states of Nigeria1. Tantalite Cross River, Ekiti, Kogi, Kwara, Nasarawa

2. KaolinA/lbom, Anambra, Bauchi, Bayelsa, Ekiti, Imo, Katsina, Kebbi,

Kogi, Ogun, Ondo, Plateau, Rivers.

3. Mica Ekiti, Kogi, Kwara, Nasarawa, Oyo,4. Baryte Benue, Cross River, Nasarawa. Plateau, Taraba, Zamfara

5. CoalAbia, Adarnawa, Anambra, Bauchi, Benue, Cross River, Delta,

Ebonyi, Edo, Enugu, Gornbe, Imo, Kogi, Nasarawa, Plateau.

6. Retile Bauchi, Cross River, Kaduna, Plateau,

7. Talc Ekiti, Kaduna, Kogi, Niger.8. Bismuth Kaduna

9. Gypsum Adamawa, Edo, Combe, Ogun. Sokoto, Y obe.

10. Feldspar Bauchi, Borno, FeT, Kaduna, Kogi.

11. Gold FCT, Osun, Zamfara, Kaduna, Kano, Katsina, Kebbi, Kogi, Kwara,

12. Clay In all the states of the federation

13. Silver Ebonyi, Kano.

14. Ilmenite Bauchi, Cross River, Kaduna, Plateau.

15. Limestone Benue, Cross River, Ebonyi, Edo, Gornbe, Kogi, Ogun, Sokoto.

16. Columbite Benue, Cross River, Kaduna, Kano, Kwara, Nasarawa, Plateau.17. Cassiterite Bauchi, Cross River, Kaduna, Kano, Kwara, Nasarawa, Pateau.

18. Diatomite Borno, Yobe.19. Silica Sand Delta, Jigawa, Kano, Lagos, Ondo, Rivers

20. Fluorite Bauchi, Ebonyi, Plateau, Taraba2l. Bitumen Edo, Lagos, Ondo, Ogun,22. Lead Cross River, Ebonyi, FCT, Plateau, Zamfara23. Zinc Cross River, Ebonyi, FCT, Plateau, Zamfara24. Benonite Borno, Edo, Kogi, Ogun, Ondo.25. Kyanite Kaduna, Niger.26. Iron ore Enugu, FCT, Kaduna, Kogi, Nasarawa, Zamfara.

27. Lithium Kaduna, Nasarawa, Niger, Zamfara

28. Magnesite Adamawa, Zamfara

29. Wolframite Bauchi, Kaduna, Kano, Kwara, Nasarawa, Niger, Zamfara.

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30. Phosphate Ogun, Sokoto3l. Marble Edo, FCT, Kogi, Kwara, Nasarawa, Oyo,32. Molybdenite Plateau.

33. Manganese Katsina, Kebbi, Zamfara34. Gemstone Bauchi, Kaduna, Kogi, Kwara, Nasarawa, Niger, Ogun, Oyo,

Plateau.Source: Obaje, N.G. (2009) Geology and Mineral Resources of Nigeria.

In addition to oil, solid minerals sub-sector is capable of making significant contribution

to the growth of the economy and hence the need for the political class to look in-ward rather

than engaging in a ceaseless fight over resource allocation.

1.6 Conclusion

This paper has found that, Nigeria has different kinds of solid

minerals of commercial quality and quantity which if properly

harnessed can diversify the nation economy, but, successive

governments have done little or nothing tangibly to develop this

sector with a view to diversifying it. Thus, the country cannot get

much out of its mineral resources as it has failed to develop the

sector.

Significant relationship has been established between the

dependent character of the state/political economic elites and the

diversification of the economy via solid minerals development. It is the

paper’s conclusion therefore, that, as a class, the political economic

elites in the Nigeria has consciously or unconsciously shown

preference for a distributive economy rather than a productive one. In

other words, the elites would rather struggle over allocation and

distribution of federal resources than engage in huge investment in

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other productive sectors of the economy like solid minerals,

agriculture and culture and tourism among others.

1.7 Recommendations

In the light of the foregoing, this paper offers the following

recommendations:

There is need for complete overhauling of the solid minerals

sector in Nigeria. This can be achieved through, conducting a

geological survey to ascertain the quantum of the reserves of these

mineral resources that the nation has. This can be followed by taking

a comprehensive inventory of the nation's mineral resource

potentials. Efforts should be geared towards entry into joint venture

agreement with private sector as this can serve as a tool for

revitalization of these solid mineral resources.

The ruling elites must strive to address the economic and other

challenges militating against the exploration, exploitation and

development of these resources. This can be achieved through

organizing solid minerals summit where solid mineral experts,

professionals and reputable firms can be invited to participate with

the sole of aim of addressing these challenges. Above all, there must

be the political will to do whatever is right and needful for the

development of the sector.

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among the Urban Youth in Nigeria. Journal of Contemporary Urbanology, vol.2, No.1, Pp. 76-86.

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Diversification. NEPAD-OECD Africa. Retrieved from goggle. com Dikko, L.S. (2001). Solid Minerals Financing: Intercity Bank's Perspective. A

Seminar Paper presented at Export Financing Administration and Practice in Nigeria. Held in October, 2001 at Kaduna, Kaduna State.

Federal Republic of Nigeria (1999). National Policy on Solid Minerals Federal Republic of Nigeria (2003). The 1999 Constitution Frank, A.G. (1967). Capitalism and Underdevelopment in Latin America.

New York: Monthly Rev. Press. Kalurnbu, A.M (1999). "Illegal Mining". Unpublished Conference Paper,

National Council on Solid Minerals, los, Plateau may 11th -14th Mommoh, A. and Hundeyin, E. (1999). “The Nigerian Economic Crises: A

Political Economy Critique” in Enomuo .F. (Ed) elements of politics Lagos: Malthouse

Nnoli, O. (2001). Introduction to Politics (1st Edition). Enugu: Snaap Press Ltd.

Obaje, N.G. (2009). Geology and Mineral Resources of Nigeria. Lecture Notes in Earth Sciences series: Springer

Okolie, A.M (2015). Theoretical and practice notes on the Nigerian state in state and economy. Onitsha: Book point Limited.

Onwughalu, A.P. (2008). Growing Nigeria's Economy through Minerals Raw Materials Development. (IMICON Seminar Proceedings) Feb, 2008.

Osei, Y.A. (1990). New School Chemistry. Lagos: Africana first publishers Ltd.

Oyedokun, O.M and Igonor, E. (2013). Solid Minerals Development in Parts of Southwest.

Raw, Material Research and Development and Council (2009). Retrieved from www.rmrdc.gov.ng/..... raw-materials-update/html (5th February, 2016).

Sunday, A.E, Clement, A & Utting. O. (2013). Beyond Oil: Dual- Imperatives for Diversifying the Nigeria Economy in Journal of Management and Strategy Vol.4, N03. Retrieved from http://dx.doi.org/10.S430/jms.

The National Policy on Solid Minerals, 1999.

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HEALTH PROMOTION: A VITAL TOOL FOR SUSTAINABLE DEVELOPMENT AMONG YOUTH IN PLATEAU STATE, NIGERIA

BYGEORGE SIMON GEMSON (Ph.D)

Taraba State College of Health Technology, Takum,Taraba State, Nigeria

EMMANUEL H. DA’AM (Ph.D.)Plateau State College of Health Technology, Department of Environmental Health,

Pankshin, Plateau State, NigeriaAND

JAMES ILLYA KYAMRU (Ph.D.)School of Nursing

Abubakar Tafawa Balewa University Teaching Hospital Bauchi,Bauchi State, Nigeria

ABSTRACT This study was designed to determine health promotion: a vital tool for sustainable development among youth in Plateau State, Nigeria. A Cross-sectional descriptive study design was employed for this study. The population for the study consisted of all youth in the three Senatorial District of Plateau State. One hundred and fifty (150) youth were taken as a sample size population for the study using purposive sampling technique after receiving the permission from the youth leaders to collect the data for the study. The instrument used for data collection for the study was Questionnaire. Descriptive statistics of frequencies and percentages were used to analyze the data and presented in Tables. Chi-square statistic was used to test hypothesis at 0.05 level of significance. The finding of the study revealed that there were fair and good practices by youth for health promotion activities as well as good and fair practices for health promotion life skills by youth for sustainable development in Plateau State, Nigeria. There was no significant difference in the health promotion activities practiced by youth based on age and there was significant difference in the health promotion life skills practiced by youth based on age, but there was no significant difference in the health promotion life skills practiced by youth based on gender for sustainable development. On the basis of the findings and conclusion, recommendations were made. Among them is: Workshops and seminars should be organized for youth to acquire knowledge, physical activities skills and health promotion life skills for sustainable development.

Keywords: health promotion, vital tool, sustainable development, youth

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Introduction Health promotion is now a world-wide movement concerned with improving

individual and population health. Over the past three decades, the field of health promotion has emerged as a new way of thinking about the root causes of ill health and promotion of wellness. This thinking has sparked the development of new approaches for improving the health of individual and communities. Health promotion is the process of enabling people to increase control over, and to improve their health physically, mentally and social well-being of an individual or group to identify and to realize aspirations, to satisfy needs, and to change or cope with the environment (WHO, 1986). Health promotion represents a comprehensive social and political process; it not only embraces actions directed at strengthening the skills and capabilities of individuals, but also action directed towards changing social, environmental and economic conditions so as to alleviate their impact on individual and public health (Stability Pact, 2007). Health promotion is the science and art of helping people change their lifestyles to move towards a state of optimal health which is balance of physical, emotional, social, spiritual and intellectual health through a combination of efforts to enhance awareness, change behaviour and create environment that support good health practices (Shannon, 2013).

Vital tool is a technique or procedure that can generate forces for change. Vital tool according to Lohithakshan (2007) is a procedure use to collect qualitative and quantitative information about the individual’s habits, interest, behaviour that may bring about his/her health status promotion.

There are obvious interface and interaction between health promotion and sustainable development. Sustainable development is concerned with the satisfaction of basic needs in the society and accumulation of resources and capabilities that ensure the achievement of these basic needs by placing focus on equity for the present, as well as future generations. Sustainable development can be understood from different points of view of different people. Some people see it as a journey or an ongoing process within the limits of ecological frameworks to have as good a lifestyle as possible without hurting or harming other fellow humans or living beings. Maria, Malgorzata, Sylvester and Iwona (2006) explained sustainable development as a process of seeking to meet the needs of the present without compromising the ability to meet those of the future. They further explained sustainable development as a mean of creating a proper balance between economic, social, cultural and ecological development to meet the needs of the present youth and future generations.

Youth is the time of life when one is young, but often means the time between childhood and adulthood (maturity) with the appearance of freshness, vigour and spirit. Youth is best understood as a period of transition from the dependence of childhood to adulthood’s independence. The United Nations, for statistical purposes, defined ‘youth’, as those persons between the ages of 15 and 24 years, without prejudice to other definitions by Member States (1981). It further stated that definition of youth perhaps changes with circumstances especially with the changes in demographic, financial, economic and socio-

176

cultural settings; however, the definition that uses 15-24 age cohorts as youth fairly serves its statistical purposes for assessing the needs of the young people and providing guidelines for youth development. However, African Youth Charter (2006) defined youth or young people as every person between the ages of 15-35 years which is adopted for this study.Statement of the problem

Health promotion has become a more central concern in development, both as a contributor to and an indicator for sustainable development. Health promotion is recognized as a key goal for sustainable development in the first principle of the Rio Declaration on Environment and Development, which states that “Human beings are at the centre of concerns for sustainable development. They are entitling to a healthy and productive life in harmony with nature.” The extent to which sustainable development benefits a community is closely tied to its level of health status; as health is a product of economic, social, political and environmental factor, as well as of health services. Good health enhances development through multiple pathways. This includes survival of trained labour, higher productivity among healthier workers, higher rates of savings and investment, greater enterprise and agrarian productivity and increased direct foreign investment and tourism. Children’s educational attainment is higher, which ultimately enhances productivity, lowers rates of fertility and changes the dependency ratio. In short, health is a positive economic asset for countries.

Improved health feeds sustainable development, and sustainable development feeds improved health in a virtuous cycle, supported by effective health services. Despite undoubted health advances in many areas, poor health continues to be a constraint on developmental efforts that lead to economic, political, and social upheaval, environmental degradation, uneven development or increasing inequalities as seen in unequal distribution of power, income, goods and services, inaccessible to health care, education, schools, employment that affect youth health promotion which hamper sustainable development.

However, the above situations are worrisome and unacceptable for sustainable developments which create a gap that justified this study to profound solution for improving youth health promotion to strive sustainable development in Plateau State, Nigeria.

The purpose of this study was to determine Health Promotion: A Vital Tool for Sustainable Development among Youth in Plateau State, Nigeria. Two research questions were formulated for this study and two hypotheses were postulated to guide the study and tested at 0.05 level of significance.Research questions

1. What are the health promotion activities practiced by youth for sustainable development?

2. What are the health promotion life skills practiced by youth for sustainable development?

Hypothesis1. There is no significant difference in the health promotion activities practiced by youth

for sustainable development based on age.2. There is no significant difference in the health promotion life skills practiced by youth

for sustainable development based on gender.

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Significance of the StudyThis study is significant to the youth, family members, government, non-

governmental organization and the general public for the promotion of sustainable development in Plateau State, Nigeria. Scope of the study

This study covered the three Senatorial Districts of Plateau State. It identified the health promotion activities practiced by youth, health promotion life skills practice by youth for sustainable development in Plateau State. The study also covered age and gender.

MethodsCross-sectional survey design was used for this study. The population for the study

consisted of all youth in the three Senatorial Districts of Plateau State. One hundred and fifty (150) youth were taken as a sample size population for the study using purposive sampling technique after receiving the permission from the youth leaders of the three Senatorial Districts of Plateau State to collect data for the study. The instrument used for data collection for this study was questionnaire. The reliability coefficient test of instrument was 0.75. The questionnaire consisted of three components of measures: 1) demographic information of youth; 2) health promotion activities practice by youth and 3) health promotion life skills practiced by youth.

The copies of completed questionnaires were crosschecked for completeness of the information. The data was analyzed using descriptive statistic of frequencies and simple percentages and presented in Tables. Health promotion activities practice by youth were examined by 10 items developed from the health education content covering Healthy lifestyles by WHO (2009) (regular physical activity and exercise, smoking cessation and smoke-free environment, alcohol consumption quitting, sex education, stress management and good nutrition. Health promotion life skills practice by youth were examined by 10 items developed from programme on mental health by World Health Organization (1997) (decision making, problem solving, critical thinking, interpersonal relationship, self-awareness, and regular health checkup).

The practice measurement scale by Saowance (2010) was used to interpret the results of the study ranges from 0-64 (less than 59%) as poor practice, 65- 86 (60-80%) as fair practice, and 87-92 (81-100%) as good practice. Percentage scores for correct answer were calculated and presented. The Chi-square statistic was used to test hypothesis at .05 level of significance.Results

A total of 150 questionnaires were distributed to the respondents by youth leaders who also served as research assistants and 150 were returned representing 100% return rate. The results of this study are organized and presented in two parts thus: Data answering the research questions and data testing the null hypotheses.

Table 1

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Bio-Data of Respondents (n=150)s/n Items f %

Age 15-20 28 1921-26 63 4227-32 27 1833-38 32 21Total 150 100GenderMale 52 35Female 98 65Total 150 100Educational BackgroundSSCE/NECO 105 70NCE 15 10B.Sc/B.Ed 5 3M.Ed/M.Sc 25 17Total 150 100

Table 1 presents the bio-data of the respondents. The Table shows that age bracket 21-26 (63) were the highest participants in this study followed by ages bracket 33-38 (32), 15-20 (28) and 27-32 (27) in that order. The Table further shows that females youth were the highest participants (98) in this study followed by their males’ counterpart (52). The Table also shows that majority of the participants in this study were holders of SSCE/NECO (105), those with M.Ed/M.Sc. were 25, NCE holders 15 and those with B.Sc/B.Ed were 5.Research question one.

1. What are the health promotion activities practiced by youth for sustainable development in Plateau State? Data answering this question is contained in Table 2 below.

Table 2Health Promotion Activities Practiced by Youth for Sustainable Development (n=150)s/n Items f % Decision

Physical activities1. I always participate in moderate activities such as

Walking, jogging and gardening 100 67 fair practice

2. I always participate in physical education such asSports, athlete, basketball etc. 105 70 fair practiceCigarette smoking cessation

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3. I attend cigarette smoking cessation counselingProgramme 110 73 fair practice

4. I am thinking of quitting cigarette smoking 120 80 fair practice

Alcohol consumption awareness5. I attend alcohol consumption control and prevention

Counseling programme 120 80 fair practice

6. I have stopped the consumption of alcohol 122 81 good practice Sex education

7. I am a member of peer health educators for behaviourChange for the control and prevention of HIV& AIDS 122 81 good practice

8. I always use condom any time I meet a casual friend 130 87 good practiceNutrition consumption

9. I eat a variety of vegetables and fruit 2-3 times a day 130 87 good practice

10. I try not to eat many foods and drinks that are salty,Fatty and sugary 130 87 good practice 793

Overall mean 79.3 fair practice

Table 2 above shows the overall mean score of 79.3 percent. This means that the youth have fair practice of health promotion activities for sustainable development. The Table further shows fair practice for the following individual items: I am thinking of quitting cigarette smoking (80%) and I attended alcohol consumption control and prevention counseling programme (80%), I attended cigarette smoking cessation counseling Programme (73%), I always participate in physical education such as Sports, athlete, basketball etc. (70%), I always participate in moderate activities such as walking, jogging and gardening (67%). The Table also shows good practices for these individual items; I always use condom any time I meet a casual friend (87%), I eat a variety of vegetables and fruit 2-3 times per a day (87%) and I try not to eat many foods and drinks that are salty, fatty and sugary (87%). I have stopped the consumption of alcohol (81%), I am a member of peer health educators for behaviour change for the control and prevention of HIV and AIDS (81%), Research question two

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What are the health promotion life skills practiced by youth for sustainable development Plateau State? Data answering this question is contained in Table 3 below`

Table 3Health Promotion Life Skills Practiced by Youth for Sustainable Development (n=150)s/n Items f % Decision

Decision making life skill1. Participating in decision making has an impact on some-

One’s life 125 83 good practice

2. I am always involving in community decision making 125 83 good practiceProblems solving life skill

3. I always solve problems to protect me from mental illness 125 83 good practice

4. I ensure that problems are solved to prevent communityCrisis 125 83 good practiceCritical thinking life skill

5. I always conceptualize, adapt, develop, hypothesize beforeProviding answers to issues 122 81 good practice

6. I always synthesize, unify or conceptualize ideas beforeProviding answers to issues 122 81 good practiceInterpersonal relationship life skill

7. I always help people to accomplish their task 130 87 good practice

8. I know how to get along with different people 105 70 fair practiceSelf-awareness life skill

9. I am aware of my strengths and weaknesses 120 80 fair practice

10. I go for health checkup twice a year 120 80 fair practice 811

Overall mean 81.1 good practice

Table 3 above shows the overall mean of 81.1 per cent. This means that the youth have good practices of health promotion life skills for sustainable development. The Table

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further shows good practices for majority of the health promotion life skills by youth for sustainable development. It further shows fair practices of health promotion life skills for these individual items: I am aware of my strengths and weaknesses (80%), I go for health checkup twice a year (80%) and I know how to get along with different people (70%).

Hypothesis oneThere is no significant difference in the health promotion activities practiced by youth

for sustainable development based on age. Data testing this hypothesis are contained in Tables 4 and 5 below.

Summary of Chi-square Analysis Testing the Null Hypothesis of no significant difference in the health promotion activities practiced by youth for sustainable development based on age.

Table 4 Age group Total15-20 21-26 27-32 33-37

health promotion activities

poor5 23 9 3 407.5 17.1 7.5 8.0 40.0

fair14 28 14 22 7814.6 33.3 14.6 15.6 78.0

good9 13 5 5 326.0 13.7 6.0 6.4 32.0

Total28 64 28 30 15028.0 64.0 28.0 30.0 150.0

Chi-Square TestsValue df sig. decision

Chi-Square 11.854 60.065 failed to reject

Table 4 shows the chi-square test of χ2 = 11.854 at P-value = 0.065 which is greater than P-value = 0.05, therefore we conclude that there is no significant difference between age and health promotion activities practiced by youth for sustainable development.

Summary of Chi-square Analysis Testing the Null Hypothesis of no significant difference in the health promotion life skills practiced by youth for sustainable development based on age.

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Table 5 Age group Total15-20 21-26 27-32 33-37

health promotion life skills

poor0 3 1 1 5.9 2.1 .9 1.0 5.0

fair6 4 11 11 326.0 13.7 6.0 6.4 32.0

good22 57 16 18 11321.1 48.2 21.1 22.6 113.0

Total28 64 28 30 15028.0 64.0 28.0 30.0 150.0

Chi-Square TestsValue Df Sig. decision

Chi-Square 19.458 6 0.003 fair to accept Table 5 shows the chi-square test of χ2 = 19.458 at P-value = 0.003 which is less than

P-value = 0.05, therefore, we conclude that there is significant difference between Health Promotion Life Skills and Age group of youth for sustainable development

Hypothesis twoThere is no significant difference in the health promotion activities practiced by youth

for sustainable development based on gender. Data testing this hypothesis are contained in Tables 6 and 7 below.

Summary of Chi-square Analysis Testing the Null Hypothesis of no significant difference in the health promotion activities practiced by youth for sustainable development based on gender.

Table 6 Gender Total

female Male

health promotion activities

poor30 10 4026.9 13.1 40.0

fair51 27 7852.5 25.5 78.0

good20 12 3221.5 10.5 32.0

Total101 49 150101.0 49.0 150.0

Chi-Square Tests

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value df sig. decision Chi-Square 1.543 2 0.462 fair to reject

Table 6 shows the chi-square test of χ2 = 1.543 at P-value = 0.462 which is greater than P-value = 0.05, therefore, we conclude that there is no significant difference between gender and health promotion activities practiced by youth for sustainable development.

Summary of Chi-square Analysis Testing the Null Hypothesis of no significant difference in the health promotion life skills practiced by youth for sustainable development based on gender.

Table 7 Gender Totalfemale Male

health promotion life skills

poor5 0 53.4 1.6 5.0

fair17 15 3221.5 10.5 32.0

good79 34 11376.1 36.9 113.0

Total101 49 150101.0 49.0 150.0

Chi-Square Testsvalue df Sig. decision

Chi-Square 5.704 2 0.058 fail to reject

Table 7 shows the chi-square test of χ2 = 5.704 at P-value = 0.058 which is greater than P-value = 0.05, therefore, we conclude that there is no significant difference between gender and health promotion life skills practiced by youth for sustainable development. Discussion of findings

This study described the health promotion activities practiced and health promotion life skills practiced by youth for sustainable development in Plateau State, Nigeria. Findings in Table 1 show that majority of youth in Plateau State who participated in this study fall within the ages of 21-35 years. The Table further shows that majority of the participants for this study was females. The Table also shows that majority of the participants had SSCE/NECO as their educational background while few had NCE, B.Sc./B.Ed, and M.Sc/M.Ed.

Findings in Table 2 show the overall mean score of 79.3 per cent. This means that the youth have fair practice of health promotion activities for sustainable development. The Table further shows fair practices for the following individual items: I am thinking of quitting cigarette smoking (80%), I attended alcohol consumption control and prevention counseling programme (80%) I attended cigarette smoking cessation counseling Programme (73%), I always participate in physical education such as Sports, athlete, basketball etc (70%) and I always participate in moderate activities such as walking, jogging and gardening (67%), This finding is in line with the finding of Saowance (2010) which revealed that youth who had 60-

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80% practices of health promotion activities had fair practices. The findings also shows good practices for these individual items; I always use condom any time I meet a casual friend (87%), I eat a variety of vegetables and fruit 2-3 times per a day (87%), I try not to eat many foods and drinks that are salty, fatty and sugary (87%) I have stopped the consumption of alcohol (81%), I am a member of peer health educators for behaviour change for the control and prevention of HIV and AIDS (81%), This finding is also in line with the finding of Saowance (2010) which revealed that youth who had 80-100% practices of health promotion activities had good practices.

Findings in Table 3 show the overall mean of 81.1 per cent. This means that youth have good practices of health promotion life skills for sustainable development in Plateau State, Nigeria. The Table further shows good practices for majority of the health promotion life skills by youth for sustainable development. The findings are in line with the finding of Jeanne (2013) which revealed that health promotion is a critical life skill to acquire, since health impacts on almost every facet of a person and their society depend on proper water and sanitation, policies on tobacco and substance use and control, enhancement of physical wellbeing of the learners and an integrated nutrition program for balanced diets, clean and hygienic environments and adequate physical activity. The findings further show fair practices of health promotion life skills for these individual items: I know how to get along with different people (70%), I am aware of my strengths and weaknesses (80%) and I go for health checkup twice a year (80%). This finding agrees with the findings of Vranda and Chandrasekhar Rao (2011) which revealed that life skills training is the teaching of requisite skills for surviving, living with others, succeeding in a complex society, communication, interpersonal negotiation, self-regulation and decision making for sustainable development.

Table 4 shows the chi-square test of χ2 = 11.854 with the corresponding P-value of 0.065 which is greater than 0.05 level of significance at 6 degree of freedom. The null hypothesis of no significant difference between age and health promotion activities practiced by youth for sustainable development fails to reject. This means that age groups did not differ in their health promotion activities practiced for sustainable development. This finding is in line with the finding of Pooja Y. and Naved I. (2009) which revealed that youth did not differ in their health promotion activities practiced for sustainable development according age.

Table 5 shows the chi-square test of χ2 = 19.458 with the corresponding P-value of 0.003 which is less than 0.05 level of significance at 6 degree of freedom. The null hypothesis of no significant difference between age and health promotion life skills practiced by youth for sustainable development fails to accept. This means that there is significant difference between Health Promotion Life Skills and Age group of youth for sustainable development. This finding is in line with the finding of UNESCO (2008) which revealed that youth differ in their health promotion life skills practiced for sustainable development.

Table 6 shows the chi-square test of χ2 = 1.543 with the corresponding P-value of 0.462 which is greater than 0.05 level of significance at 2 degree of freedom. The null hypothesis of no significant difference between gender and health promotion activities practiced by youth for sustainable development fails to reject. This means that there is no significant difference between gender and health promotion activities practiced by youth for sustainable development. This finding is in line with the finding of Pooja Y. and Naved I.

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(2009) which revealed that youth did not differ in their health promotion activities practiced for sustainable development.

Table 7 shows the chi-square test of χ2 = 5.704 with the corresponding P-value of 0.058 which is greater than 0.05 level of significance at 2 degree of freedom. The null hypothesis of no significant difference between gender and health promotion life skills practiced by youth for sustainable development fails to reject. This means that there is no significant difference between gender and health promotion life skills practiced by youth for sustainable development. This finding is in line with the finding of Y. and Naved I. (2009) which revealed that youth did not differ in their health promotion life skills practiced for sustainable development

References

African Youth Charter (2006). Definition of youth adopted by the seventh ordinary session of the assembly, held in Banjul, the Gambia

Ifenkwe, G.E. (2012). Mobilizing and Empowering Youths for Sustainable Community and Rural Development in Nigeria. International Journal of Academic Research in Progressive Education and Development April 2012, Vol. 1, No. 2

Jeanne, R. (2013). Life Orientation in the Health Promoting School: Conceptualisation and Practical Implication. Thesis submitted for the degree Philosophiae Doctor in Educational Psychology in the Faculty of Educational Sciences, North-West University

Maria., Malgorzata P., Sylvester Z., & Iwona S. (2011). Education for Change: A Handbook for Teaching and Learning for Sustainable Development.

M.N.Vranda & M. Chandrasekhar Rao (2011). Life Skills Education for Young Adolescents- Indian Experience. Journal of the Indian Academic of Applied Psychology vol. 37

P.M. Lohithakshan (2007). Dictionary of Education. A Practical Approach: India, Kanishka publisher.

Pooja Y. &Naved I. (2009). Impact of Life Skill Training on Self-esteem, Adjustment and Empathy among Adolescents. Journal of the Indian Academy of Applied Psychology Vol. 35, Special Issue, 61-70

Saowance, N. (2010). Knowledge, Attitude and Practice (KAP) of using Personal Protective Equipment (PPP) for chilli-growing farmers in Hua Rua sub-district, Muang district, Ubonratchathani Province, Thailand.

Shannon M. C. (2013) Examining the Effects of a Health Promotion Intervention on the Use of Stairs. Journal of Articles in Support of the Null Hypothesis Vol. 10, No. 1.

Stability Pact (2007). Health Promotion and Disease Prevention: A Handbook for Teachers, Researchers, Health Professionals and Decision Makers.

UNESCO (2008). Gender-Responsive Life Skills-Based Education - Advocacy Brief. Bangkok: UNESCO Bangkok.

Youth definition (1981). UN General Assembly Resolutions http://www.org/documents/resga.httm

WHO (1986). Ottawa Charter for Health Promotion. WHO Regional Office for Europe, Copenhagen. Health Promot. Int. 1 (4), 405.

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WHO (1997). Programme on Mental Health: Life Skills Education for Children and Adolescents in Schools Division of Mental Health and Prevention of Substance Abuse. Geneva.

WHO (2009). A Training Manual for Health Workers on Healthy Lifestyle: An Approach for the Prevention and Control of Non-Communicable Diseases.

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THE PERVASIVENESS OF POVERTY IN NIGERIA; IMPLICATIONS AND THE WAY FORWARD.

By(1)Usman Abu Tom, PhD., (2) Maikasuwa Salisu PhD, MNI and (3) Shawai Joseph

Department of Political ScienceNasarawa State University, Keffi

AbstractThe declared major goal of government in Nigeria has been to improve the standard of living of the citizens, raised the level of happiness and dignity of the citizens and provide basic economic and social infrastructures for socio-economic development. The high rate of poverty in Nigeria has become worrisome and embarrassing to most citizens as the country is been refer to in the international arena as “the capital of poverty’ in the world. The rate keeps on rising without any appreciable efforts to tackle the effects, several interventions by successive administrations have failed to yield significant results in the country’s Human Development Index (HDI) even in certain phases of economic growth. The paper therefore attempts to examine the pervasiveness of poverty within the Nigerian context and its implications. Progressive social theory was utilized as a framework of analysis which believes that the source of poverty are economic, political and social distortions as well as discrimination which limits opportunities and resources to create wealth and overcome poverty. The paper relied mainly on secondary source of information. The findings revealed that poverty is harmful to both individuals and society; the poor people have less nourishing diets; high infant and mortality rate; high underemployment and unemployment; diseases and mental illness; violent crimes; electoral violence; low participation of the poor in the electoral process and engaged in vote selling during elections, has been the implications of the pervasive nature of poverty in Nigeria. The paper therefore suggests that there is urgent need for pro-poor and bottom-top approach in tackling the menace of poverty in the country, continuity of policies and programmes with periodic changes of personnel in order to enhance programme delivery, diversification of the economy, urgent intervention in infrastructural development in both urban and rural areas and the eradication of corruption in all its ramifications.

Keywords: Poverty, Poverty Alleviation, Socio-economic development, Underemployment and Unemployment, Diversification.

IntroductionThe prevalence of poverty in developing countries of Africa, Asia and Latin America has become a major concern to scholar and public commentators in recent times. It is conventional to read elaborate literatures with various comments and wild insinuations with regards to poverty as a universal condition of the backward nations (Nigeria inclusive). It is equally crucial to point at the level of inequality in terms of development and/or underdevelopment in comparative terms; between advanced capitalist countries of Europe and America on the one hand, and those of Africa, Asia and Latin American countries on the

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other. It is argued as a matter of reality that the colonialist may have been responsible for third world maladies through the instrumentalities of colonial exploitation, domination and subjugation (Erunke and Usman 2009). It is also not out of place to decipher into the helpless situation surrounding these political entities when the colonialists are far gone several decades ago.

The high rate of poverty in Nigeria has become worrisome and embarrassing to most citizens as the country is been refer to in the international arena as “the capital of poverty’ in the world. It is a fact that Nigeria’s poverty level appears to be a domestic problem far from passing the buck on the colonialist who are not part of the executive, the parliament, judiciary and party big wigs. Poverty appears to be invented and manufactured and made in Nigeria by Nigerian political elites.

At independence in 1960, Nigeria was regarded as the promising country in the common wealth of nations ahead of India, Malaysia and Singapore. But while these countries have made appreciable progress in most indices of growth and development, Nigeria is still struggling at the bottom of the ladder with most of her citizens unable to meet their basic necessities of food, clothing, shelter and employment (Usman 2014).

Nigeria with a population estimated to be about over 180 million, is the most populated nation on the African continent. Indeed, it is very paradoxical and laughable that a country recognized as one of the richest in both human and material resources in Africa finds herself in a rather ridiculous and inglorious situation as the capital of poorest countries on earth. Nigeria ranks as the sixth largest producer of crude oil in the world with billions of dollars earned as proceeds from export of the product, Nigerians had hoped that with such vast resources, it would be possible for the country to achieve massive poverty eradication and development.

Over the years, successive administrations in Nigeria has put in place measures to curb the menace of endemic poverty. These measures do not seem to have stemmed the tide of poverty. And so the challenge of poverty along with a myriad of other challenges bedeviling the country continues to ravage many citizens of their dignity, self-esteem and even their humanity (Egwemi 2013). So much has gone wrong in Nigeria with society incapable of arresting the trend of decay, it is needless to say that apart from poverty, the country is confronted with other challenges. These challenges include endemic corruption, ethno-religious conflicts, herdsmen/farmers clashes, lack of patriotism on the part of political elites and followers and socio-economic and political underdevelopment among others.

The main focus of this paper is to analyses the state of poverty in Nigeria, despite the abundant of natural and human resources and to examine the particular problems that have shaped the manifestation of the menace of poverty in the country.

Nigeria is a developing country and the impact of poverty given its pervasiveness has been very severe on the country’s socio-economic and political well-being. Nigeria remains a

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country with high levels of poverty, deep, widespread and multifaceted in various forms. The official estimate, from 2009, was 46 percent, based on the international poverty line of 1.90 US dollar per person per day. In 2017, an estimated 49.1 per cent of Nigeria’s population lived below that poverty line (WB Group 2018). It is against this background that this paper examines the state of poverty in Nigeria and its implications. It is argued that development is not sustainable in an atmosphere of mass poverty and deprivation. The deepened economic crisis and the intensity of poverty in the country have renewed interest in the fundamentals of the development process. Development can only be attained with the formation of policies that would address the fundamental problems of the economy including poverty and hunger. Massive poverty undermines the capacity of the citizens to mobilize required resources for productive activities, it intensifies the structural distortions that created it in the first place (Usman 2014).

Conceptualizing PovertyDespite its universality poverty has no standard definition. There are various divergent views on its nature, how to determine whether it is rising or falling and the understanding of transition from being ‘non-poor’ into the poverty trap. The United Nations Department of Public Information described poverty as having various manifestation which include: lack of income and productive resources sufficient to ensure a sustainable livelihood, hunger and malnutrition, ill-health, limited or lack of access to education and other basic services, increasing morbidity and mortality from illness, homelessness and inadequate housing, wasteful environments and social discrimination and exclusion. The World Bank (2001) sees poverty as a situation of low income or inadequate income to meet the basic needs of life, categorized as primary, comprising, food, water, housing shelter, while the secondary needs include economic, social, cultural and political. It also encompasses services that includes health, education, security, liberty, freedom of expression and religion, access to productive employment, basic infrastructure etc. This categorization embraces a broader conceptualization of poverty. Essentially, poverty defines a dynamic process of socio-economic and political deprivation, which affects individuals, households or communities resulting in lack of access to basic necessities of life (Usman 2014). This is why (Sen 1987 cited in Onah 2006) argue that poverty is the lack of certain capability such as been unable to participate with dignity in society and make people lack the will to function and enjoy the core values of development and sustenance.

Indeed, poverty maybe categorized into three in terms of absolute or subsistence poverty, relative poverty and subjective poverty. Absolute or subsistence poverty refers to a situation whereby the households are unable to command sufficient income to meets and consume basic needs for food, shelter, clothing, transportation, and education. View absolute poverty as a situation of low income and consumption. Income and consumption levels are the main parameters in deriving an imaginary poverty line often used as a yardstick for measuring the minimum standard of living. Citizens are considered poor if their measured standard of living in terms of income and consumption falls below the poverty line (Anyanwu 1997).

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Relative poverty is an attempt to conceptualize poverty with respect to the living standards that prevail in a particular society. The key merit in measuring poverty in this manner is that it reflects changing perceptions of acceptable minimum living standard. Individuals in relative poverty have their resources lower than those possessed by average individuals to the extent that they are excluded from ordinary living patterns, customs and activities. Relative poverty exists when the subjective concerned are poor in relation to others.

Subjective poverty necessary requires a country to state what is actually considered the minimum adequate standard of living for a given period. This depends on individual’s views about their standard of living.

Theoretical Framework of AnalysisIt is imperative to state that the Nigerian economy has refused to respond to treatment despite several reforms by successive regimes since her independence over five decades ago. The true position is that academic explanation for the failure of the economy are blamed mainly on mis-governance, rent seeking and corruption. This has created a situation of mass poverty in the country. This paper is anchor on progressive social theory for our analysis on the nature of poverty and its implications on the nation. The proponents of this theory do not view individuals as the source of poverty but, the economic, political and social distortions as well as discrimination, which limit opportunities and resources to create wealth and overcome poverty. They argue that the economic system of capitalism created a reserve army of the unemployed and then poverty becomes an intrinsic and integral feature of capitalist society, which is a direct consequence of the inequality inherent in the class system.

The progressive social theory ascribes poverty to economic, social and political structures that make the poor fall behind regardless of how committed they may be. Another category of the system flaws associated with poverty according to Danaan (2018) relates to groups of people being discriminated against based on personal attributes such as race, gender, disability and religion, which limits their opportunities in spite of their personal capabilities.

The political economy of Nigeria has contributed seriously to the level of poverty in the country. It is a fact that there is strong correlation between the character of governance and the level of poverty in the country. Usman (2012) explain that with the emergence of oil-economy and huge oil earnings primitive capitalist accumulation intensified and the emerging business class and the bureaucratic bourgeoisie as well as the politicians became corrupt. State power and positions were now increasingly seen as the most viable and rapid avenues for acquisition of private wealth. The result and effect was low standard of living, high level of poverty and high intensity of conflict and crimes in the country.

The productive base of Nigeria’s economic is narrow, with much dependent on oil revenue and neglect of other critical sectors that should have aided in the diversification of the economy for massive job creation, expansion of markets and industrialization given her human and natural resources. Misplacement of priorities by the political leadership manifesting in wasteful spending and corruption rather than investment in other sectors of the

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economy that can enhance the standard of living of the citizens, has escalated poverty in the country.

The State of Poverty in NigeriaPoverty would be organic to any country that restricts individuals or groups access to means of production. As rightly opined by (Kwanashie 1998 cited in Usman 2014), in a situation of mass poverty a country with abundant resources like Nigeria might be incapable of transforming them into welfare advance for its citizens, for the forces which govern and determine the pattern of ownership of means of production and the forces which govern the access to the development process are important factors as they determine the structure of interpersonal and inter-group differentials in wealth and income in the nation.

Nigeria remains a country with high level of mass poverty. The poverty trend follows macroeconomic developments. Low oil prices in the international oil market had detrimental impact on the country, for economic shocks easily reflect in the reduction of welfare across the population, mainly among the less resilient groups in the bottom strata of the income distribution. Households suffer from a high degree of vulnerability and over five out of 10 persons experienced movement into and out of poverty in Nigeria during 2011-2016. This depicts that economic shocks (recession) easily manifest into the reduction of welfare across the population, mainly among the less resilient groups in the bottom of income distribution.

There is significant variation in poverty rate across Nigeria. In the northern part of the country, projected poverty rates have been increasing, this may be due to insecurity and displacement in North East, North West and North Central Nigeria with large consequences. It has led to low agricultural production, substantial disruption of basic services, damage to infrastructure, and depleted household food stocks, with several million citizens facing a food security crisis. In the southern part of the country the poverty incidence appears to have fallen drastically. This divergence in welfare trends indicates large disparities in living standards due to many factors, ranging from the availability of jobs to returns on human capital in that part of the country.

Poverty is a major challenge in Nigeria today. The phenomenon manifests in both absolute and relative terms. Studies has revealed that the incidence of poverty in terms of those who live below one dollar per day is put at between 46.0 percent at national level and 53.5 percent at international poverty line (WB Group 2018).

Studies have further discussed the multidimensional poverty in Nigeria. The Oxford Poverty and Human Development Initiative (OPHI) country briefing 2017 on Nigeria, identified three dimensions and ten indicators as the diagram below shows.

Ten Indicators

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Education Years of schoolingSchool attendance

Source: Oxford Poverty and Human Development Initiative (DPHI) Queen Elizabeth House, University of Oxford, 2017

A person is identified as multidimensional poor if he or she is deprived in at least one third of the weighted indicators. The MPI complements income-based poverty measures by reflecting the multiple deprivations the people are face at the same time. The MPI identifies across health, education and living standards, and shows the number of people who are multidimensional poor and the deprivations that they faced at the household level.

Table 1: MPI Results at the National Level

Survey

YearMultidimensiona

lPoverty Index(MPI = H×A)

Percentage of Poor

People (H)(k =

33.3%)

Average IntensityAcross

the Poor (A)

Percentage of Population:

InequalityAmong the MPI

Poor

Vulnerable to Poverty

(20%-3.3%)

In SeverePoverty

(k = 50%)

Destitute

DHS 2013 0.303 53.3% 56.8% 17.5% 32.8% 34.6% 0.297Source: Oxford Poverty and Human Development Initiative (DPHI) Queen Elizabeth House,

University of Oxford, 2017

The MPI can also be broken down by states to show disparities in poverty in Nigeria. Table 2 below shows multidimensional poverty across states in Nigeria.

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Health

Living Standard

Three Dimensions

of Poverty

Child mortality

ElectricitySanitationDrinking waterCooking fuelFloor Assets

Table 2: Multidimensional Poverty across States in Nigeria

State MPI (H×A)

H (Incidence) k=33.3%

A (Intensity

)

Vulnerable to Poverty

20%-33.3%

Percentage of Population:

Inequality among the MPI

Poor

Population share

In severe

Poverty k=50%

Destitute

Nigeria 0.303 53.3% 56.8% 17.5% 32.8% 34.6% 0.297 100%Urban 0.132 28.1% 47.0% 22.2% 10.5% – – 39.9%Rural 0.416 70.0% 59.5% 14.4% 47.7% – – 60.1%Lagos 0.035 8.5% 41.1% 20.0% 1.1% 1.3% 0.045 4.6%Osun 0.043 10.9% 39.7% 22.1% 1.5% 1.9% 0.051 1.9%Anambra 0.050 11.2% 44.5% 19.1% 2.7% 3.1% 0.131 2.4%Ekiti 0.051 12.9% 39.6% 27.0% 2.4% 2.8% 0.073 0.8%Edo 0.080 19.2% 41.5% 23.9% 4.5% 6.5% 0.078 1.7%Imo 0.083 19.8% 41.9% 24.0% 4.9% 6.2% 0.068 2.2%Abia 0.088 21.0% 42.0% 25.3% 4.8% 7.7% 0.078 1.3%Rivers 0.088 21.1% 41.6% 21.3% 4.7% 6.3% 0.073 2.8%Akwa Ibom

0.099 23.8% 41.6% 22.8% 5.2% 7.2% 0.079 2.0%

Kwara 0.099 23.7% 41.9% 23.3% 6.2% 7.0% 0.096 1.5%Delta 0.107 25.1% 42.5% 22.5% 6.6% 9.6% 0.106 2.1%FCT (Abuja)

0.108 23.5% 45.7% 14.9% 9.5% 10.5% 0.142 0.8%

Ogun 0.112 26.4% 42.5% 30.5% 5.6% 9.3% 0.073 2.5%Kogi 0.113 26.1% 43.2% 27.1% 6.4% 8.5% 0.076 1.8%Bayelsa 0.120 29.0% 41.4% 26.8% 5.9% 8.6% 0.066 0.8%Enugu 0.123 28.8% 42.6% 27.8% 6.9% 13.7% 0.093 2.1%Ondo 0.127 27.9% 45.4% 26.6% 8.2% 11.0% 0.089 2.0%Cross River

0.146 33.1% 44.2% 24.9% 9.0% 10.2% 0.106 1.8%

Oyo 0.155 29.4% 52.7% 24.7% 13.0% 14.8% 0.316 4.0%Nasarawa 0.251 52.4% 48.0% 24.9% 23.2% 26.5% 0.127 1.7%Ebonyi 0.265 56.0% 47.3% 25.1% 23.5% 26.6% 0.124 2.5%Plateau 0.273 51.6% 52.9% 22.4% 26.9% 30.5% 0.238 1.8%Benue 0.280 59.2% 47.3% 23.4% 24.8% 24.8% 0.131 3.5%Adamawa 0.295 59.0% 49.9% 20.4% 27.7% 30.1% 0.203 2.1%Kaduna 0.311 56.5% 55.1% 18.2% 34.1% 36.9% 0.267 5.2%Niger 0.324 61.2% 52.9% 16.2% 33.2% 37.8% 0.223 4.5%Borno 0.401 70.1% 57.2% 16.2% 49.3% 54.7% 0.201 3.5%Kano 0.434 76.4% 56.8% 11.9% 48.2% 50.1% 0.265 8.9%Taraba 0.448 77.7% 57.7% 13.4% 53.1% 51.2% 0251 2.1%Gombe 0.471 76.9% 61.2% 13.2% 56.1% 57.0% 0.300 1.6%

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Katsina 0.520 82.2% 63.2% 10.8% 63.7% 60.8% 0.287 4.2%Sokoto 0.548 85.3% 64.2% 8.2% 66.4% 66.8% 0.298 2.9%Jigawa 0.552 88.4% 62.4% 6.5% 68.0% 70.2% 0.270 3.7%Kebbi 0.553 86.0% 64.3% 8.7% 69.9% 71.3% 0.280 3.6%Bauchi 0.583 86.6% 67.3% 6.4% 70.7% 66.3% 0.351 3.2%Zamfara 0.605 91.9% 65.8% 5.8% 72.7% 74.1% 0315 3.5%

Source: Oxford Poverty and Human Development Initiative (DPHI) Queen Elizabeth House, University of Oxford, 2017

The table revealed the MPI value and its two components at the states level: the incidence of poverty (H) and the average intensity of deprivation across the poor (A). The fifth and sixth columns presents the percentage of the population vulnerable to poverty and living in severe poverty respectively. The seventh column presents the percentage of the population indentified as destitute, or deprived. The second to the last column present the level of inequality among the poor. The last column presents the population share of each state, which has been obtained by using the sampling weight.

As evident in the table that depicts MPI across states, Lagos state has the lowest MPI of 0.035% while Zamfara state in the North West has the highest with 91.9%. On incidence of poverty, Lagos state has 8.5% while FCT (Abuja) has 23.5%, Zamfara state with the highest in the federation with 91.9%. On the intensity of poverty, Ekiti state has the least with 39.6% followed by Osun state with 39.7%, Bauchi state in the North east has the highest with 66.3%. On the vulnerable to poverty, Zamfara state stands at 5.8%, Bauchi state 6.4%, Jigawa state 6.5% and Katsina state 10.8% while FCT (Abuja) recorded 14.9%. States in severe poverty shows Zamfara state in the North West with 72.7% followed by Bauchi state in the North east with 70.7%, Osun state in the South West recorded 1.5% and Lagos state has the least with 1.1%. On destitute, Zamfara state top the list with 74.7%, FCT (Abuja) has 10.5%, Lagos state in the South West has the least of 1.3%. Finally, inequality among the MPI poor in states shows that Bauchi state has 0.351, Zamfara state 0.315, while Lagos state recorded 0.045.

Causes of Poverty in NigeriaThe effects of poverty on the poor and the society at large are diverse and excruciating; to the extent that it deprives the individual of basic human needs such as quality food, adequate shelter, clothing, medical care, etc. It makes the citizens vulnerable, isolated, inferior, physically weak and humiliated, thus depriving them the right to exercise their full potentials for their wellbeing and growth as well as that of the entire society. This further placed the society into what (Nurkse 1953) describes, as the viscous circle of poverty defined as ‘a circular constellation of forces tending to act and react upon one another in such a way as to keep a poor nation in a state of poverty: low income results in low saving and investment in turn results in continued low income.

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Poverty undermines the ability of the citizens to harness the needed resources for productive activities. The lingering phenomenon of poverty in Nigeria is not isolated from other sub-Saharan Africa countries bedeviled by extreme poverty levels, the reasons which among other include:(a) Lack of good governance by the political class(b) Lack of critical infrastructures(c) Population explosion(d) Inadequate support for rural development in poor regions in the country(e) Neglect of agricultural sector with much focus and dependency on oil.(f) Inadequate access to market where the rural farmers can sell their farm produce.(g) Lack of storage facilities.(h) Lack of access to quality education and training.(i) Inadequate access to employment opportunities among the youth.(j) Debt overhang of Nigeria state over the years.

All these and many other factors, have not allowed the Nigerian state to effectively address the phenomenon of pandemic poverty in the country. The structure of political power in Nigeria further provides some insight into the causes of poverty. Political power in all determines how national wealth is expropriated by a small group of elite who reserve the prerogative to steal resources in the nation’s economy and consistently undermine the economy to grow through mismanagement, corruption and bad governance and this has placed the country in a circle of poverty and deprivation in the midst of plenty.

The Nigerian Government and Poverty Alleviation ProgrammesThe high level of poverty in Nigeria is real. Successive administrations have been battling with the menace of poverty. From 1972 to date, various poverty alleviation programmes have been introduced with various degrees of limited successes. In 1972, for instance, the General Yakubu Gowon regime introduced the National Accelerated Food Production Programme (NAFPP), mainly to facilitate increase farming and agricultural activities across the country. The NAFPP was viewed as a poverty alleviation strategy but with the emergence of crude oil, the thirty months’ civil war and the overthrow of General Gowon regime undermined the success of the programme.

Another stage of poverty alleviation scheme Operation Feed the Nation (OFN) came during the military administration of General Olusegun Obasanjo in 1976, aimed at providing sufficient food for all Nigerians and facilitate agricultural credit from commercial banks to farmers. In 1979, the administration of President Alhaji Shehu Aliyu Shagari came up with the Green Revolution to provide sufficient food for all Nigerians. Both programmes were both an attempts at alleviating poverty in the country through increased agricultural production.

The emergence of General Ibrahim Babangida administration on August 1985, witness the emergence of several poverty alleviation programmes and institutions created to address the menace of poverty. These include the Directorate of Food, Roads and Rural Infrastructure

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(DFRRI), National Directorate of Employment (NDE), Better Life for Rural Women, National Board for Community Bank (NBCB) and the People Bank of Nigeria (PBN). In 1994, the administration of late General Sani Abacha initiated its own poverty alleviation programme starting with the Family Support Programme (FSP) to promote the welfare of women and children, the National Commission for Mass Literacy (NAML) with the aim to promote adult literacy.

With the advent of democracy in May 29th 1999, usher in the Fourth Republic, the Nigerian government has adopted several measures to tackle the scourge of poverty. Thus, under the civilian administration of President Olusegun Obasanjo was the introduction of National Poverty Eradication Programme (NAPEP) to coordinate implementation of all Federal Government poverty eradication programmes. It stands out because it is designed to improve the skills of the less privileged in the society, which is the basis for alleviating poverty in various communities. Another programme was during President Goodluck Ebele Jonathan administration, the Subsidy Reinvestment and Empowerment Programme, popularly known as SURE-P. It encompasses expenditures in transportation, maternal and child health, employment creation, and infrastructures which would benefit the poor peope (Okonjo-Iweala 2018).

The President Muhammadu Buhari administration that came into power in May 2015 initiated the National Social Investment Programme, determined to improve the livelihood and welfare of millions of Nigerians with the payment of N5,000 stipend each to Nigerian living in abject poverty under its conditional cash transfer programme, the payment of N30,000 monthly to unemployed youth under the N-Power initiative which is designed to assist young Nigerians between the ages 18-35 to acquire and develop life-long skills for becoming change makers in the communities and to also address the challenges of youth unemployment. There is Home Grown School Feeding Programme (HGSFP) in which public primary schools pupils are fed across states in the federation. Moreso, the Government Enterprises Entrepreneurship Programe (GEEP) designed to empower traders, artisans and so on since May 17, 2017 to disburse interest free loans. The GEEP has three products which are; Market Moni, Farmer Moni and Trade Moni.

Despite wide array of programmes and policies by successive administration in Nigeria to tackle the phenomenon of poverty, poverty alleviation has remained and has been that of mixed feelings. It is a fact that these programmes and policies were well intended and well thought out, but faced with lack of proper and/or sincere implementation by the major stakeholders. There is unanimity in the view of scholars that these programmes and policies have not achieved the desire results, despite huge amount of resources committed to alleviating and eradicating poverty. This means that there is need to re-examine the reasons for the abysmal performance of poverty alleviation initiative in the country. In this view, scholars have identified some factor responsible for the abysmal performance of poverty alleviation programmes and policies. These include, but are not necessarily limited to;a. Poor design and implementationb. Policy inconsistencies and discontinuity

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c. Ineffective targeting of the poor (leading to leakage of benefit to unintended beneficiaries)

d. Overlapping of functions which ultimately lead to institutional rivalry and conflicts e. Lack of mechanism in various programmes and projects to ensure sustainabilityf. Poor funding and corruption (Aigbokhan 2008 Dauda 2017).For these reasons the intended outcomes have not been wholly achieved in the fight against poverty in Nigeria.

Implications of Poverty in NigeriaDemocracy as a liberal project emphasizes the formal, institutional and procedural elements such as a multi-party system, periodic elections, and constitutional guarantee of civil and political liberties. What it offers in substance according to (Egwu 2014), at best includes constitutional check on elected government officials and the protection of human rights. It is however weak in terms of advancing socio-economic rights and social justice even where they are formally and constitutionally guaranteed because these rights are not justiceable. The failure of liberal democracy to guarantee meaningful citizen participation and ensure the state institutions are accountable to the citizens, in terms of meeting their daily needs has given rise to concerns about ‘diminished democracy’ and ‘democratic deficits’ because of “declining patterns of participation”, the ‘hallowing out’ of politics and takeover of political process of special interests (Egwu 2014).

It is of interest to state that political power is largely an urban phenomenon, located in the urban cities and meant for the exclusive use of the political elites. Massive poverty and illiteracy did not allow most citizens participate in politicking and gaining access to power. This minority control of politics and the economy is an important factor in the explanation of the underdevelopment of Nigeria and the increased and pervasiveness of poverty.

The effects of poverty are harmful to both individuals and society. In Nigeria, some of the unfolding effects of poverty include poor people have less-nourishing diets, more birth defects, accidents, disease and reported mental illness among others. There are also more likely to be alcoholic and narcotic addicts. As such, there is higher absenteeism at work and school, lower energy levels, lower productivity and shorter lives. Moreo, high rate of mortality of the poor mainly women and children.

Another effect of poverty in the country is that poor people participate in the electoral process in much smaller numbers and are poorly organized to influence any government policies. Poverty breeds inferiority complex in the citizens and make them alien and slaves in societies in which they are ordinary major stakeholders.

Underemployment and unemployment are other effects of poverty. Unemployment is the proportion of those in the labour force (not in the entire economic active population, nor the entire population) who were actively looking for work but could not find work. Lack of

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opportunities for employment breeds vices, because out of poverty grows the greed and desperation to get rich at all cost through dubious exploitation and all sorts of illegalities among the armies of youths. Table 3 clearly shows the labour force statistics by state, Q3, 2017, it is evident from the table that the rate of underemployment and unemployment varies in states, but the aggregate for the country shows that there is a total 85,088,055 labour force population, those in full time employment stood at 51,060,936, the total unemployed plus underemployed person is 34,027,119 which is 40 percent; the unemployment rate is 18.5 percent and the underemployment rate within the said period is 21.2 percent among the age bracket of 15-35, which shows that the youth mainly falls in this categories.

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Table 3: Labour Force Statistics by State, Q3, 2017State Labour

Force Population

Work 40 Hrs +

Total unemployed + underemployed persons

UNEMPLOYMENT RATES %

Full Time Employed

Unemployment+ Underemployed Rate

Unemployment Rate %

Under Employment Rate %

Abia 1,977,464 1,033,044 895,692 45.3 28.3 16.3

Adamawa 1,489,492 894,220 515,732 34.6 6.8 27.8

Akwa Ibom 3,314,394 1,378,021 1,814,706 54.8 36.6 18.2

Anambra 3,100,597 1,861,763 916,026 29.5 13.7 15.8

Bauchi 1,881,158 1,193,101 729,777 38.8 9.1 29.7

Bayelsa 1,262,406 578,017 603,538 47.8 30.4 17.4

Benue 2,440,326 1,556,798 844,937 34.6 10.7 23.9

Borno 2,271,462 1,192,078 1,161,984 51.2 23.5 27.7

Cross River 1,799,882 1,027,841 728,995 40.5 20.3 20.3

Delta 2,938,439 1,776,035 1,115,690 38.0 18.0 20.0

Ebonyi 1,429,380 981,626 510,995 35.5 18.5 17.0

Edo 1,981,975 1,177,914 793,390 40.0 20.0 20.0

Ekiti 1,727,394 1,192,350 488,610 28.3 14.5 13.8

Enugu 2,365,690 1,515,035 889,079 37.6 20.2 17.4

Gombe 841,645 693,304 415,325 49.3 11.0 38.4

Imo 2,926,462 1,116,723 1,360,962 46.5 29.5 17.0

Jagawa 1,411,109 971,212 881,029 62.4 19.4 43.0

Kaduna 3258,609 1,233,861 1,909,675 58.6 29.0 29.6

Kano 3,713,679 1,848,522 1,903,252 51.2 19.7 31.5

Katsina 1,717,521 1,206,928 848,437 49.4 3.2 46.2

Kebbi 1,277,394 883,143 465,815 31.5 8.0 23.5

Kogi 2,320,203 812,007 996,765 43.0 21.4 21.5

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Kwara 1,511,812 1,117,600 472,728 31.3 13.3 18.0

Lagos 7,118,101 5,449,002 2,330,257 32.7 17.8 15.0

Nasarawa 1,274,025 620,393 680,131 53.4 28.9 24.4

Niger 1,809,755 1,335,464 731,264 40.4 10.6 29.8

Ogun 3,001,263 2,391,857 633,239 21.0 9.7 11.4

Ondo 2,390,328 1,455,060 824,888 34.5 15.5 19.0

Osun 2,365,622 1,198,274 449,307 19.0 5.3 13.7

Oyo 3,907,460 2,780,936 899,867 23.0 9.2 13.9

Plateau 1,942,601 934,859 935,084 48.1 25.5 22.7

Rivers 4,301,988 1,910,467 2,639,589 61.4 41.8 19.5

Sokoto 1,566,339 1,085,809 741,825 47.4 18.6 28.8

Taraba 2,165,289 1,086,659 290,358 13.4 7.2 6.2

Yobe 1,037,277 515,884 602,535 58.1 21.4 36.7

Zamfara 1,402,408 1,165,254 476,124 34.0 7.6 26.4

FCT 1,627,110 1.169,875 529,510 32.5 15.5 17.1

Nigeria 85,088,055 51,060,936 34,027,119 40.0 18.8 21.2

Source: Job Creation Survey: Labour Force Statistics, 2017.

Poverty in Nigeria tied mainly to the level of unemployment among the youths has created securities threats which has impacted greatly on national security. The securities threats associated to poverty revolves around crimes, violent, ethno-religious conflicts, terrorism, kidnapping, political thuggery, electoral violence and vote selling among others. With endemic poverty in the nation the state is graphing with the control of different types of violent dictated by hunger and demands necessitated by deprivation and deficiency. Poverty is an octopus dragging along multiple criminal and nefarious activities among the young and old, male and female folk. High rate of poverty has been blamed for civil unrest in the country, in some instances leading to group of people taking arms against the state or violent ethno-religious conflicts e.g Boko Haram insurgency in the North-east, ethno-religious conflicts in the North-Central region and the violent herdsmen-farmers clashes in most parts of the country. It should be argue that poverty is product of political instability which invariably gave rise to frequent religious and ethnic confrontation, agitation for secessionist and self determination which in recent times led to mass murder of Nigerian citizens.

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ConclusionThis paper has dealt extensively on the state of poverty in Nigeria and its implications. The incidence of poverty in a richly endowed country such as Nigeria is a paradox that has continued to astound many Nigerians and the international community. Concerted efforts at alleviating poverty only seem to aggravate the problem. It is on record that several policies and programmes have been introduced in the past by successive administrations to alleviate the unacceptable level of poverty among the citizens. It is remarked that the over-aching objective of public policies, is the improvement, eradication of poverty and hunger among the citizenry. We have only been able to reveal the pervasive nature of poverty in Nigeria and the disconnect between government efforts at poverty alleviation. Most of these poverty alleviation strategies against poverty suffered the same fate, they failed due to poor policy implementation; lack of visionary leadership and good governance. Lack of complementarities from beneficiaries; uncoordinated sectoral policy initiatives, poor human capital development; corruption and inadequate funding. There is therefore, the need for government at all levels to genuinely tackle the menace of poverty given its devastating effects on the citizens of Nigeria.

RecommendationsIn view of the pervasive state of poverty in the country, this paper therefore recommends the following:(1) It is imperative for a participatory and pro-poor approach to tackling the scourge of

poverty in Nigeria. It is the case poverty alleviation programmes in the country have not yielded the required results because the targeted poor are not carried along in the planning and execution of the programmes. The government needs to de-emphasize the top-bottom approach and focus mainly on the bottom-top approach. It is on this basis that the targeted beneficiaries can actually benefits from the programmes. Egwu, 2007 has summed up the argument for a pro-poor approach to poverty alleviation programmes as follows:

The first proposal for anti-poverty policy measures in Nigeria is to look up to the poor themselves as the major actors in the fight against poverty. This can be achieved through a participatory process in which they set the agenda, define their priorities on the basis of lived experience, and play a leading role, in monitoring and evaluating the policies and programmes of government. This requires building a critical mass from the rank of the poor and their organizations... it requires a movement of the poor, for the poor and by the poor (Egwu 2007).

(2) Agriculture should be encouraged at the rural level. Because majority of the citizens are rural dwellers that can productively make use of agricultural credit facilities to improve their living conditions. Moreso, providing basic amenities and infrastructure like good network of roads, water, electricity and promoting the establishment of agro-based industries in rural areas are imperative in poverty alleviation in the country.

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(3) The idea of creating more institutions and managed by the same politicians and bureaucrats, to further their interest in an ill conceived idea of putting a new wine in a an old wine bottle, rather there should be continuity of programmes and periodic changes of the personnel in order to enhance sufficient programme delivery on targeted beneficiaries.

(4) Those charged with responsibility of distributing programmes fund should be honest with utmost good faith to ensure the success of programmes implementation. Political office holders should use public funds judiciously to the extent that the same translates to impact positively on the citizens, poverty cannot be eradicated in an atmosphere of corruption, greed and absolute lack of political will.

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