Does Fiscal Policy Tools have the Potential to Stimulate Performance of Manufacturing Sector in Nigeria?

2020 ◽  
Vol 2 (3) ◽  
pp. 33-51
Author(s):  
Cyril Madubuko Ubesie ◽  
Amalachukwu Ananwude ◽  
Ezechi Nwanekpe Cyracus ◽  
Ebe Emmanuel
Keyword(s):  
Fiscal Policy ◽  
Power Supply ◽  
Local Governments ◽  
Capital Expenditure ◽  
Manufacturing Sector ◽  
Least Square ◽  
Federal State ◽  
Causality Test ◽  
The Poor ◽  
Sector Performance

Purpose: There is no denying the fact that the Nigerian manufacturing sector is not performing up to the expectation. The poor performance of the manufacturing sector is attributed largely to the poor state of basic infrastructures, especially power supply, and good road networks. To this end, this study examined the potential of fiscal policy to stimulate manufacturing sector performance in Nigeria. Methods: The model estimation employed the Ordinary Least Square (OLS) estimation technique, while the effect of estimation was carried out using the Granger causality test based on the data from the Central Bank of Nigeria (CBN) and Federal Inland Revenue Service (FIRS) for the period of 1986 to 2019. Results: The result of the analysis revealed that recurrent expenditure has no significant effect on manufacturing sector performance. However, capital expenditure, fiscal deficit, and the company’s income tax significantly affect manufacturing sector performance. Implications: The Federal, State, and Local governments should stop wasteful expenditure on unnecessary entertainment on meetings, seminars, workshops, foreign trips, etc. to increase spending on basic industrial infrastructures, most importantly on the power supply and road network to stimulate the manufacturing sector performance.

scholarly journals Effect of Apportioned Federal Revenue on Economic Growth: The Nigerian Experience

2019 ◽  
Vol 10 (4) ◽  
pp. 172
Author(s):  
Cordelia Onyinyechi Omodero
Keyword(s):  
Economic Growth ◽  
Local Governments ◽  
Time Series Data ◽  
Positive Impact ◽  
Negative Influence ◽  
Least Square ◽  
Series Data ◽  
Federal State ◽  
State Governments ◽  
State And Local

The major objective of income distribution to the federal, state and local governments in Nigeria is to achieve economic growth which leads to economic development. This ultimate aim of governance in Nigeria appears not to have been achieved due to alleged corruption and mismanagement of the monthly allocated funds. Thus, this study investigates the effect of revenue apportioned to the three levels of government on economic growth in Nigeria.  The study employs annual time series data which cover a period from 1981-2016 and have been collected from CBN Statistical Bulletin, 2016 edition. Ordinary Least Square (OLS) method is used to perform the multi-regression analysis with the aid of e-views version 9. The findings of the study reveal that the federally apportioned revenue to the federal government (FAFG) has a significant positive impact on RGDP while FALG has a robust significant positive impact on RGDP. The result also indicates that FASG has a significant negative influence on RGDP. This leads to a conclusion that mismanagement of funds by the state governments is a cause for concern. Therefore, the study suggests, among others, that revenue sharing formula in the country should be based more on impact of expenditure incurred on executed projects (long term and short term) by each tier of government than on any other parameter to achieve fairness and efficiency in public service delivery at all levels of governance.

An econometric analysis of electricity consumption and real sector performance in Nigeria

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Isaac Chitedze ◽  
Chukwuemeka Cosmas Nwedeh Nwedeh ◽  
Adenikinju Adeola ◽  
Donald Chidera Chidera Abonyi
Keyword(s):  
Time Series ◽  
Power Supply ◽  
Manufacturing Sector ◽  
Electricity Consumption ◽  
Policy Implications ◽  
Series Data ◽  
Real Sector ◽  
Content Type ◽  
The Real ◽  
Sector Performance

Purpose The purpose of this paper is to examine the extent at which electricity consumption (EC) has contributed to real sector performance, to identify energy-dependent sectors of the economy for appropriate sector-specific policy interventions and to avoid energy conservation policies that may retard the growth of the real sector and economic growth in general. Design/methodology/approach This paper used time series data, covering the period between 1981 and 2015. Various time series econometric analyses such as unit root test for stationarity and vector autoregressive and vector error correction models were used to establish the long-run and short-run co-integration relationship among the variables. Findings This study finds that EC displays a little and insignificant impact on manufacturing sector output, as well as agriculture and service outputs. The empirical result from causality test suggests a unidirectional causality running from agriculture to EC, as well as service sector to EC, whereas bidirectional causality runs between EC and manufacturing sector. This study therefore recommends adequate power supply to the manufacturing sector, while energy efficiency policy and regulatory reform should address agriculture and service sectors. Originality/value Few studies have examined the impact of EC on disaggregated gross domestic product. This research gap has strong policy implications on Nigerian economy as the output of real sector plays vital role in driving the economy. Given the pressing needs for Nigeria to boost real sector output and be among the world’s 20 largest economies by 2030, it becomes imperative for this sector-specific research to be conducted to ensure that sectoral purpose-driven energy interventions are formulated to address power supply challenges in the real sector.

scholarly journals Financial sector and manufacturing sector performance: evidence from Nigeria

2018 ◽  
Vol 15 (3) ◽  
pp. 35-48 ◽  
Author(s):  
Abiola John Asaleye ◽  
Joseph Ibrahim Adama ◽  
Joseph Olufemi Ogunjobi
Keyword(s):  
Interest Rate ◽  
Private Sector ◽  
Manufacturing Sector ◽  
Forecast Error ◽  
Financial Sector ◽  
Least Square ◽  
Money Stock ◽  
Market Capitalization ◽  
Long Run ◽  
Sector Performance

Nigerian economy depends on oil as the major source of revenue, failure to diversify the revenue base has raised questions about its sustainability and implication on the economy. This study uses market capitalization, broad money stock, credit to private sector, prime interest rate and deposit liability as proxies for the financial sector, while output in the manufacturing sector and manufacturing employment are used as proxies for manufacturing performance. The study examines the causal effects, shock effect and long-run impact using Granger Non-Causality, Vector Error Correction Model, and Dynamic Ordinary Least Square method, respectively. The results showed unidirectional causality, confirming the hypothesis of the ‘supply-leading view’ and ‘demand-following view’ except for market capitalization and output in the manufacturing sector, where independence was observed. The variance decomposition shows that the forecast error shock of credit to private sector and prime interest rate show more variations in manufacturing sector performance than other financial indicators. The long-run result using output in manufacturing sector as dependent variable shows a positive significant relationship with other financial sector indicators, except for broad money stock and deposit liability. This study recommended credit channel for transmission of monetary policy using interest rate to improve the performance of manufacturing sector, among others.

scholarly journals Fiscal Policy and the Nigerian Economy: An Econometric Review

2017 ◽  
Vol 12 (4) ◽  
pp. 186
Author(s):  
Anyalechi Kenneth Chikezie ◽  
Onwumere Josaphat Uchechukwu Joe ◽  
Boloupremo Tarila
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Poverty Reduction ◽  
Capital Expenditure ◽  
Government Expenditure ◽  
Unit Root Test ◽  
Least Square ◽  
Development Indicators ◽  
Integration Test ◽  
Using Data

The paper examines fiscal policy regulations as a tool for enhancing economic growth and poverty reduction in Nigeria using data covering the period 1981-2014 obtained from Central bank of Nigeria and World Development Indicators. The study employed econometric methods of Ordinary Least Square (OLS), Augmented Dickey-Fuller (ADF) Unit Root test, Johansen Co-integration test and Vector auto-regression (VAR) to analyze data empirically. Results from data analyzed suggest that tax revenue, external borrowings, government domestic debt and government capital expenditure have not contributed significantly to economic growth and poverty reduction in Nigeria. However, government recurrent expenditure was found to be statistically significant and impacted on the gross domestic product per capita during the study period. This may be attributed to the reason that recurrent expenditure has a deep rooted and faster influence on growth than capital expenditure. Capital expenditure, which is a long-term expenditure, is more prone to misappropriation and theft, and also could be less growth enhancing. The empirical result is consistent with and strongly upheld the Keynesian’s view that government expenditure causes economic growth.

Another Side of the Coin: Exchange Rate Movements and the Manufacturing Sector in Nigeria

2018 ◽  
Vol 10 (1-2) ◽  
pp. 63-79
Author(s):  
Anthony Orji ◽  
Jonathan E. Ogbuabor ◽  
Chiamaka Okeke ◽  
Onyinye I. Anthony-Orji
Keyword(s):  
Exchange Rate ◽  
Private Sector ◽  
Time Series Data ◽  
Capital Expenditure ◽  
Manufacturing Sector ◽  
Jel Classification ◽  
Least Square ◽  
Series Data ◽  
Long Run ◽  
The Impact

This study estimated the impact of exchange rate (EXCH) movements on the manufacturing sector in Nigeria over the period 1981–2016. Time series data and ordinary least square (OLS) estimation technique were employed in this study to address the specified objective. The variables analysed were EXCH, manufacturing GDP (MGDP), government capital expenditure, foreign direct investment (FDI), credit to private sector and value of imports. From the result, it is apparent that EXCH movements play a significant role in the manufacturing sector’s performance in Nigeria. Specifically, the findings showed that EXCH, government capital expenditure (GCEXP), imports and FDI were positively related to MGDP, while credit to private sector was negatively related. Among others, the study recommends that the apex bank keep a closer watch on EXCH developments in order to keep formulating up-to-date policies that will ultimately enhance EXCH stability. This will largely contribute to the development of the manufacturing sector in the short and long run. JEL Classification: D51, F31, Q24

scholarly journals IMPACT OF GOVERNMENT SECURITY EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA

2020 ◽  
Vol 7 (1) ◽  
pp. 211-225
Author(s):  
Amana Abu ◽  
◽  
Aigbedion Marvelous
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Capital Expenditure ◽  
Least Square ◽  
Series Data ◽  
Strong Impact ◽  
Causality Test ◽  
Defence Spending ◽  
The Impact ◽  
Government Security

This study is an attempt to assess the impact of government security expenditure on economic growth in Nigeria from 1986-2018. The study was carried out using time series data, and econometrics tools were used for testing and estimation. Augmented Dickey-Fuller (ADF) was used to test the stationarity, the Ordinary Least Square (OLS) and Error Correction Model (ECM) techniques were used to estimate the impact of government security expenditure on economic growth in Nigeria and the causality test was also carried out to show the casual relationship among the economic variables using Granger test. From the study’s findings, the data were stationary at various levels and the impact estimated result shows that government security expenditure has strong impact on economic growth in Nigeria given the R2 Square of 0.97. While long run result revealed that Government Recurrent Defence Spending in Nigeria (GRDEXP), Government Recurrent Internal Security Spending in Nigeria (GRISEXP) and Government Security Capital Expenditure in Nigeria (GSCAEXP) were statistically significant at 5% level of significance. Also, ECM result revealed that all the independent variables were statistically insignificant in explaining the variation in Real Gross Domestic Products (RGDP) in Nigeria except Government Recurrent Defence Spending in Nigeria (GRDEXP).Therefore, the study recommends that government should design a mechanism to ensure all monies spent in Security in Nigeria are accounted for economic growth in Nigeria.

scholarly journals REVENUE DISTRIBUTION FROM FEDERATION ACCOUNT AND MONEY SUPPLY: EVIDENCE FROM NIGERIA

10.26458/1914 ◽  
2019 ◽  
Vol 1 (1) ◽  
pp. 65-82
Author(s):  
Cordelia Onyinyechi OMODERO
Keyword(s):  
Money Supply ◽  
Local Governments ◽  
Time Series Data ◽  
Positive Impact ◽  
Least Square ◽  
Series Data ◽  
Federal State ◽  
Monetary Policies ◽  
Revenue Allocation ◽  
The Impact

AbstractMoney supply in every economy is very vital for economic growth and stability.  However, the role of revenue distribution in ensuring the success of monetary policies revolving around money supply in Nigeria cannot be over-estimated.  The study examines the impact of revenue distribution to the three tiers of government on money supply (MSS) in Nigeria.  Time series data used for the study estimation span from 1981-2016 and were obtained from CBN statistical bulletin, 2016 edition and World Bank website.  The specific purpose of the study is to establish the extent to which revenue allocation to federal, state, local governments and derivation allowance to the mineral producing states affect money circulating in the Nigerian economy.  Ordinary least square method (OLS) was employed with the aid of SPSS version 20 to test the impact of revenue distribution on money supply.  The findings reveal that revenue allocation to federal government has a significant positive impact on money supply.  Allocation to local government councils has insignificant positive impact on money supply.  On the contrary, allocation to states and the derivation allowance to Niger Delta States exert significant negative influence on MSS in Nigeria.  The study concludes that, revenue allocation to states and derivation allowance contribute to inflation in the country and recommended stringent monetary policies that will determine the percentage of allocated revenue usage by all tiers of government in a particular period to avoid too much money in circulation.   Keywords:  Revenue distribution, allocation, money supply, economic stability, derivation.JEL CODE: E51, E64.  

scholarly journals Impact of State Government Revenues on Infrastructural Development in Bauchi State Nigeria

2020 ◽  
Vol 6 (16) ◽  
pp. 47-58
Author(s):  
Aminu HAMMAYO ◽  
◽  
Isah SHITTU ◽  
Aliyu A. ABDULLAHI ◽  
◽  
...  
Keyword(s):  
State Government ◽  
Local Governments ◽  
Capital Expenditure ◽  
Secondary Data ◽  
Least Square ◽  
Capital Projects ◽  
Policy Makers ◽  
Ordinary Least Square ◽  
Ordinary Least Square Regression ◽  
The Impact

The study examines the impact made by the efforts of Bauchi State Government in the development of infrastructure represented by the level of capital expenditure incurred through the utilization of the state’s revenues. Secondary data was obtained from the government’s Annual Financial Statements for the period 2006 to 2018. Ordinary Least Square regression was employed as the technique of analysis. The findings of the study revealed that share of allocation received from the federation account as well as debt both had a positive and significant influence in the provision of infrastructure while internally generated revenue, showed a negative and significant relationship. Other receipts comprising of contributions from Local Governments for the execution of joint projects as well as local and foreign grants and assistance received indicated a positive but insignificant relationship. The study recommends that policy makers should ensure a reasonable allocation of federation account revenues towards capital projects implementation. Efforts at the mobilization of internally generated revenue and grants should be intensified with funds realized used along with funding drawn from the Local Governments as well as proceeds of debts raised towards the provision of the infrastructural needs of the state.

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