ATTENTION:
BEFORE YOU READ THE
PROJECT WORK, PLEASE READ THE INFORMATION BELOW. THANK YOU!
TO GET THE FULL
PROJECT FOR THE TOPIC BELOW PLEASE CALL:
08068231953,
08168759420
TO GET MORE PROJECT
TOPICS IN YOUR DEPARTMENT, PLEASE VISIT:
THE STRUCTURE OF
DOMESTIC DEBT AND ITS IMPACT ON NIGERIA ECONOMY, (1970 – 2009)
ABSTRACT
The primary objective of this research
is to study empirically analyze the structure of domestic debt and its impact
on Nigeria economy. To see how the debt trends have been over the years.
Looking at the empirical works that has been done on the same subject matter or
related matters, the impact of domestic debt on Nigeria economy was
investigated. This is to know whether debt has a positive or negative effect on
the economy. The empirical result revealed after using the ordinary least
square (OLS) method of regression analysis that Gross Domestic Product (GDP)
has a negative relationship with the ratio of development stock to total
domestic debt (SDD) while positively related to BDD (ratio of treasury bills to
total domestic debt), CDD (ratio of treasury certificate to total domestic
debt) and TDD (total domestic debt). This implies that the development of
Nigeria economy as measured by the Gross Domestic Product (GDP) was highly
influenced by domestic debt during the period under consideration.
TABLE OF CONTENTS
Title
Page
Table of
Contents
Abstract
CHAPTER ONE:
INTRODUCTION
1.1
Background of the Study
1.2
Statement of Research
Problem
1.3
Objectives of the
Study
1.4
Statement of Research Hypothesis
1.5
Significance of the
Study
1.6
Scope of the
Study
1.7
Limitation of the
Study
CHAPTER TWO:
LITERATURE REVIEW
2.0
Introduction
2.1
Conceptual Framework of Domestic Debt
2.1.1 Theoretical
Framewor
2.2
Debt
Character
2.3
Domestic Debt
Instruments
2.3.1 Nigeria
Treasury Bills
2.4
Debt
Structure
2.5
Debt Profile and Management
2.7 The Impact of
Domestic Debt on Nigeria Economy
CHAPTER THREE:
RESEARCH METHODOLOGY
3.0
Introduction
3.1
Sources of Data Collection
3.2
Research Design
3.3
Model Specification
3.4
Method of Data Analysis
CHAPTER
FOUR: DATA PRESENTATION AND
INTERPRETATION OF REGRESSION RESULT
4.1
Introduction
4.2
Presentation of Regression Result
CHAPTER FIVE:
SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.0
Introduction
5.1
Summary of Findings
5.2
Recommendations
5.3
Conclusion
References
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
The
beginning of the existing market for government borrowing in Nigeria is the
financial reforms introduced by the Colonial Government in 1958. These reforms
saw to the creation of the Central Bank of Nigeria (CBN) and the creation of
marketable public securities to finance fiscal deficit. In accordance to
Central Bank of Nigeria (CBN) ordinance 1958, the bank shall be entrusted with
the issue and management of Federal Government loans publicly issued in Nigeria
upon such terms and conditions as maybe agreed within the Federal Government
and the Bank.
Since
the early 1960s, the ratio of domestic debt to Gross Domestic Product (GDP)
increased. A decade later by 1974 this ratio went up slightly to 6.9% of GDP.
But by 1984, the domestic debt to GDP ratio was over 40%. Although it declined
slightly in the 1990s, it has since 2000 moved upward, (Asogwa 2009). He
further opined that, Nigeria has not been alone in experiencing escalating
levels of government domestic indebtedness, but in comparison to other
countries in sub-Sahara Africa, Nigeria’s domestic debt to GDP ratio is clearly
on the high side.
One
can analyze the evolution of the domestic debt from its size or by considering
its different components. The stock of government debt is measured relative to
national output. This is shown by the size of the domestic debt structure both
in nominal terms as a percentage of total debt has grown tremendously from N0.23
billion at inception and it stood at N1.86 billion as at 1980. It was in 1986,
at the inception of Structural Adjustment Progam (SAP) the level of external
debt for the first time became larger than the level of domestic debt, (Asogwa,
2009). Ever since then, the stock of external debt has consistently been larger
than domestic debt. Alison et al (2003) revealed three theoretical reasons
often advanced for government domestic debts. The first, is for budget deficit
financing, secondly, is for implementing monetary policy (buying and selling of
treasury bills in the open market operation) and the third is to develop the
financial instrument so as to deepen the financial markets.
In
Nigeria, several factors have been advance to explain the changing domestic debt
profile between the 1960s to date (Odozi, 1996, Rapu, 2003). The major factors
include – high budget deficits, low output growth, large expenditure growth,
high inflation rate and narrow revenue base witnessed since the 1980s. output
growth declined as it recorded annual average values of 5.9% in 1980-1984, 4%
in 1990 -1994 and 2.8% in 1998 -1999 periods respectively, (Alison el al 2003).
However,
growth was recorded in 2003. It is usually expected that as countries expand
their output, they also tends to rely more heavily on domestic public debt
issuance to finance growth. There is thus a strong cross – country relationship
between economic growth and the total size of the debt market.
Public
expenditure as a percentage of GDP increased from 13% in the 1980-1989 periods
to 29.7% in the 1990-1994 periods. This increased public expenditures to GDP
ratio resulted from fiscal policy expansion embarked upon during the oil boom
era of the 1970s. However, as the oil boon declined in the 1980s, priorities of
government expenditure did not change.
Consequently,
the fiscal operations of the Federal Government resulted in large deficits from
the average of 0.8% of GDP in the 1970 – 1979 period, the level of deficit
increased persistently averaging 5.1% in 1980-1989 and 10.0 in 1990-1994. A
very remarkable feature of the government fiscal expansion was the financing of
the excess expenditure from domestic sources averaging 79.2% between 1980-2002,
since foreign loan was difficult to obtain. cross-country relationship between
fiscal deficits (as percentage of GDP) and the size of government debt markets
confirms that countries with larger fiscal deficits have issued more government
securities in domestic markets, (Alison et al 2003).
Generally,
declines in government revenue were met by borrowing from the Central Bank
through the instrument of ways and means advances. These advances were never
defrayed by the Federal Government but refinanced by the floatation of treasury
bills and treasury certificates are rolled over by issuing new ones to pay
holders of maturing debt instrument contributing to the continue growth of the
debt stock. The research therefore, set out to analyse the structure of
domestic debt and its impact on Nigeria economy.
1.2
STATEMENT OF RESEARCH PROBLEM
The
increasing domestic debt profile has affected the growth of the Nigeria economy
negatively. Some of the identified factors are high budget deficits, low output
growth, large expenditure growth, and high inflation rate.
In
the light of this, the following statements of research questions are being
raised.
1.
What are the factors responsible for the rising domestic government debt
profile in Nigeria?
2.
Does the increasing domestic debt profile affect the growth of Nigeria economy
negatively?
3.
Does the extra budgetary activities by the government attributes to the rise in
domestic debt profile in Nigeria.
1.3
OBJECTIVES OF THE STUDY
The
objectives of this study includes:
1.
To identify the factors responsible for the rising domestic government debt
profile in Nigeria
2.
To ascertain if the increasing domestic debt profile affect the growth of
Nigeria economy negatively
3.
To find out if the extra budgetary activities by the government attributed to
the rise in domestic debt profile in Nigeria.
1.4
STATEMENT OF RESEARCH HYPOTHESIS
According
to Agbonifoh and Yomere (1999), a hypothesis is a tentative answer to a
research question. It is often stated in the form of a relationship between a
dependent and an independent variable. In the opinion of Kelinger (1976), a
hypothesis is a tentative, conjectural statement of the relationship between
two or more variables. For the purpose of this study, the null hypothesis (Ho)
and alternative (Hi) are used.
1.
Ho: There are no
factors responsible for the rising domestic government debt profile in Nigeria.
Hi: There are factors
responsible for the rising domestic government debt profile in Nigeria
2.
H0: The increasing domestic
debt profile has not affected the growth of Nigeria economy negatively
Hi: The increasing domestic
dept profile has affects the growth of Nigeria economy negatively
3.
Ho: The extra budgetary activities
by the government are not responsible for the rise in domestic debt profile in
Nigeria.
Hi: The extra budgetary
activities by the government are responsible to the rise in domestic debt
profile in the Nigeria
1.5
SIGNIFICANCE OF THE STUDY
The
extent of a research is to add to existing knowledge, fill an existing gap,
etc. it is in this lies the relevance of this study.
This
study will be important and beneficial to stakeholders of an organization to
know the essence of the structure of domestic debt and its impact on Nigeria
economy. It will assist the government to see the reason domestic debt should
be properly managed.
This
study will help to restore the lost confidence of the public as regard the
structure of domestic debt and its impact on the Nigeria economy.
Both
academic and other future researchers in this similar subject matter will find
it a useful source of learning and research.
1.6
SCOPE OF THE STUDY
The
economy is a large component with a lot of diverse and complex parts. This
study tends to analyze the domestic debt structure of the 3 tiers of government
and its impact on the Nigerian economy by evaluating the major domestic debt
instruments which include treasury bills, treasury certificate, development
stock in proportion to Gross Domestic Product.
The
empirical analysis of the impact of government domestic debt structure on the
economy shall be restricted to the period between 1970 and 2009. It is hoped
that this will help to achieve the stated objectives of the study.
AFFILIATE LINKS:
Comments
Post a Comment