Journal of Economics and Policy Analysis

The Paradox of Plenty: A Historical Perspective of the Management of the Proceeds of Nigeria Hydrocarbons

2025-01-26T11:51:14+00:00

In this research work an attempt was made to analyze the failure of the Nigerian government to save (and invest) a significant portion of the proceeds of Nigeria hydrocarbons over time. In the process, descriptive statistics, the Katona and institutional theories of saving, and the explanatory case study method were used. Our findings are that Nigeria had the ability to save but she chose to hurriedly invest in her economy instead, making mistakes in the process; and that her weak institutions might have contributed to this failure. Our recommendations are that Nigeria should embrace research-based planning, develop strong institutions, accelerate human capital development and cohesion, and learn from other resource-rich countries, the likes of Norway and Guyana, which avoided the natural resource trap phenomenon.

Assessing the Efficiency of Commercial Banks in Sierra Leone: A Data Envelopment Analysis Approach

2025-01-26T11:51:15+00:00

Over the past decades, the Bank of Sierra Leone has implemented several reforms aimed at improving the efficiency of the banking sector. Despite these reforms, the banking sector is plagued by inefficiencies, evidenced by persistently high-interest rate spread and non-performing loans. To this end, this study utilised an output-oriented data envelopment analysis (DEA) technique to evaluate the efficiency of twelve commercial banks in Sierra Leone from 2012 to 2022. The study established that banks in Sierra Leone operate below optimal efficiency, with an average inefficiency score of 52.6%. Furthermore, the study revealed that pure technical inefficiency (41.9%) rather than scale inefficiency (14.8%) was the main driver of the overall inefficiency in the banking sector in Sierra Leone. The study also identified the inputs and output adjustments that the inefficient banks would have to make inorder to achieve efficiency. Finally, the inefficient banks were benchmarked against the most efficient banks to determine the appropriate input-output production mix that the inefficient banks should adopt. The findings from the study suggest that the top management of commercial banks in Sierra Leone should improve on their operational and managerial competencies if they are to operate efficiently. Specifically, banks in Sierra Leone should increase their efficiency and performance by reducing their operating expenses, increasing their deposit mobilisation strategy, and increasing their intermediation efforts.

Foreign Exchange Market Pressure and Balance of Payment Equilibrium in Nigeria

2025-01-26T11:51:15+00:00

Within the monetary and the balance of payment approaches which established that large exchange rate fluctuations may be detrimental to economic performance, this study examined the response of exchange market pressure (EMP) on balance of payment equilibrium in Nigeria. Adopting Autoregressive Distributive Lag (ADRL), this study found that EMP had a negative and significant impact on balance of payment in Nigeria. This implies that exchange rate depreciation increased pressure on external reserve and causes deficit in the balance of payment. To correct for this, government may need to adopt measures such as economic diversification anchored on comparative advantage, rebuild the productive sectors – manufacturing and industrial to achieve higher capacity untilisation and productivity and competitvive export, encourage local refining of petroleum products, promote fiscal and monetary discipline and harmony and create an enabling environment for productive capital inflows, especially foregn direct investment.

Transport Infrastructure and Industrial Sector Productivity in ECOWAS Region

2025-01-26T11:51:15+00:00

The state of the ECOWAS road network serves as a discouragement to many foreign investors seeking to aid industrial development. Many foreign industries have ceased to operate, infant companies find it difficult to grow, and many private businesses are struggling to survive as a result of high production costs and shortages of skilled labour or industrial manpower. This is a result of poor road networks. Thus, this study looked at how road networks and transport infrastructure investments affected the productivity of the industrial sector in ECOWAS nations. The study adapted an endogenous growth model to analyse data sets for fifteen ECOWAS countries spanning the years 1975 to 2022. In order to evaluate panel causality and cross-sectional autoregressive distributed lag (CS-ARDL) models, data was obtained from the World Development Indicator (WDI). The results demonstrated that overall road network and transport infrastructure investment had both short-term and long-term positive and significant effects on industrial sector productivity. Also, a unidirectional causality was recorded between the road network and industrial sector productivity, and a feedback causal relationship was recorded between investment in transport infrastructure and industrial sector productivity. Consequently, governments and moguls in the production industry should prioritise transportation improvements as a critical strategy for enhancing industrial efficiency and competitiveness.

The Effect of Inflation Rate, Exchange Rate, Oil Price and Wage Rate Structure on the Nigerian Economy

2025-01-26T11:51:15+00:00

This study primarily looks at the effects of exchange rates, oil prices, and wage structures on economic growth. Additionally, their intricate relationship to economic growth will be covered in this paper. The study employs annual time series data from 1991 to 2022 (covering 31 observations). Accordingly, the data are sourced from the statistical bulletin of the central bank of Nigeria and World bank development indicators, 2022. The study employs real GDP (RGDP) as the dependent variable, which is a stand-in for economic growth, and exchange rate (REXRATE), oil price (OPR), and inflation as independent variables, which are stand-ins for exchange rate fluctuations in Nigeria. In order to empirically analyze the long- and short-term effects of exchange rates, oil prices, and wage structures on economic growth in Nigeria from 1991 to 2022, Pesaran et al. (2001) proposed the multiple Autoregressive Distributed Lag (ARDL) approach to co-integration, which was implemented using the E-Views 10 statistical software. In the short-run analysis, INFLARATE and WAGSTR have positive relationship with the dependent variable whereas EXCRATE and OILPRICE have a negative relationship with the dependent variable. However, in the Long-run analysis EXCRATE, INFLRATE AND WAGSTR have a positive relationship with the dependent variable while OILPRICE has a negative relationship with the dependent variable. Based on the strength of the findings in this study, the following recommendations were suggested: Adopt Comprehensive Exchange Rate Policies, Foster International Trade Relations, Diversify the Economy, Implement Effective Wage Policies, Promote Investment in Human Capital, etc. The findings conclude that economic stability and growth are contingent upon managing these macroeconomic variables effectively. Exchange rate volatility, oil price shocks, and wage disparities can collectively impede economic stability and growth if not appropriately managed.

Human Capital Development: A Pathway to Achieving Demographic Dividend in Nigeria

2025-01-26T11:51:15+00:00

The rise in the youth population growth in developing economies, as it relates to demographic dividend and economic growth, is a crucial discourse for researchers and policy makers. Presently, Nigeria is in the second stage of the demographic transition theory. Human capital development can fast track the attainment of demographic transition and subsequently demographic dividend. Right investment in human capital via education requires thorough understanding of the manpower need for a growing economy like Nigeria. This paper examined the unique correlation between human capital development and demographic dividend proxied by youth population growth in Nigeria. The Autoregressive Distributed Lag (ARDL) is employed for the analysis of this paper which spanned from 1981 to 2022. The findings suggest that human capital development is a major channel through which the demographic dividend is derived in the long run. It underscores the critical role of right investment in education and skills development for unlocking the productive potential of the youth in Nigeria. Equally crucial is the need to optimally utilize the human capital after developing them. The policy implication is that in order to achieve demographic dividend, Nigeria would require right investment in human capital which will consequently reduce fertility and mortality thereby, leading to a more sustainable youth population.