1.1 BACKGROUND OF THE STUDY
The attainment of a healthy and sustainable balance of payments position has become one of the major pre-occupations of policy makers worldwide.
This is understandable in view of the tremendous impact of development in the balance of payments on the national economy.
Generally, the outcome of the balance of the payments provides a useful guide of appraising the appropriateness of current economic policy measures designed to bring about a well under economic structures.
The economic policy measures on any nation could impact the balance of payments of that nation either positively or negatively depending on the conceptual design and implementation.
The Nigerian economy can largely be described as one with a strong petroleum industry superimposed over an under developed industrial base.
Despite a battery of measures in the form of industrial policies consisting of several incentives to promote an industrial base for self-sustaining growth, the Nigeria economy still exhibits very prominent features of under-development.
There exists a weak technological know-how poor managerial skill and above all, a reliance on a single export commodity oil, which in recent years has failed to provide the much needed capital sufficient enough for the conscious implementation of strategies for development.
In the past, Nigeria relied on the export of cash crops such as cocoa, groundnuts, palm oil, timber and some minerals such as tin, columbite and zinc for her foreign exchange earnings. For instance, between 1965 and 1968, agriculture contributed on the average 55.18% of total gross domestic product (GDP) and mining including production of crude oil contributed 4.16% but as from 1971 to date, the situation has changed significantly – mining, including crude oil has occupied the commanding heights, while the manufacturing and craft sectors remain abysmally negligible
According to Okafor (2004:16) “At the dawn of the current fourth Republic democracy, Nigeria’s economy had been described by the local and international economic experts and watchers of the economy as in abysmal shambles. Virtually all the critical sectors of the economy like the energy, infrastructure, manufacturing and the financial sectors where in total paralysis”
They blamed the unimpressive showing of the economy over the years for long period of military regime of which the country’s fiscal monetary and development investment policies were identified to be ill-conceived and outrightly inconsistent to the dictates of the economy. He later remarked” Besides, the economy reeled from the suffocating impact of corruption and obvious profligacy which has continued to permeate through the polity.
Long and short term economic measures adopted by a government to arrest the trend proved unworkable.
The economy as a result, continued to wobble and fumble all the way”.
This structural weakness and fragile nature of the economy has led to the fluctuation in the balance of payments position.
Thus, adverse balance of payments position or disequilibrium could give rise to such economic problems like unemployment, inflation, saturation, increase rate of smuggling. Political thuggery, cultism, ritual killings and other social vices and unless this situation is arrested it may subsequently lead to national disaster.
1.2 STATEMENT OF THE PROBLEMS
The major problems in the Nigeria balance of payments relate to the narrow base of exports, the widening deficits in the invisible trade account and the rapid growth of imports relative to exports.
In recognition of this ugly development, the pertinent question is whether it is the fault of the policy makers, the followers or the policy itself.
Today, while agriculture remains the mainstay of the economy, crude petroleum has become the leading foreign exchange earner, accounting for more than 90 percent of all the total foreign exchange earnings.
Again, due to the relative under-development of the economy, Nigeria spent more on services that are provided by other countries than it receives on the provision of identical services to the outside world.
This also explains why direct investment abroad by Nigeria is negligible. On the other hand, foreign direct investment in the economy is relatively substantial till the period of indigenization decree.
The major problems emanating from above are summarized below.
1. Nigeria has a very narrow export base with attendant unfavourable balance of payments.
2. The economic policy measures adopted by various governments do not seen to have positive impact on the nation’s balance of payments.
3. Majority of Nigerians are suffering in the country where the government is expected to and is capable of providing minimum comforts to the citizenry if the resources are properly managed.
4. This difficult time has led to high level crimes in the society.
1.3 OBJECTIVES OF THE STUDY
In conducting this research, the author has the following objectives in mind:
1. To analyze the various economic policy measures of the Federal Government of Nigeria from 1999 – 2002.
2. To analyze the balance of payments position from 1999 – 2002 with a view to ascertaining how the policies in (1) above have impacted to them.
3. To investigate factors (if any) militating against the effective implementations of the policy measures.
4. To make recommendations.
1.4 STATEMENT OF HYPOTHESIS
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