Nigeria

Efficiency and Accountability of Public Sector Revenue and Expenditure in Nigeria (1970-2014) (Published)

Nigeria is the sixth largest producer of oil and gas in the world, but the average Nigerian on the street is poor and there is poor infrastructure like power supply, roads, hospitals etc. This study examines the efficiency and accountability of public sector revenue and expenditure in Nigeria (1970-2014). Data on total federal government revenue and expenditure, state governments’ revenue and expenditure were collected from Statistical bulletin from the Central Bank of Nigeria from 1970-2014. The results were analysed using relevant statistical tools. The findings reveals that the level of accountability is very poor in Nigeria because the attributes of accessibility, comprehensiveness, relevance, quality, reliability and timely disclosure of financial information, social and political information about government activities are completely non available or partially available for the citizens to assess the performance of public officers mostly the political office holders. Conclusively and evidently the study has revealed that there is significant relationship between efficiency of public sector expenditure, recurrent expenditure and capital expenditure in Nigeria from 1970-2014. On the basis of these, the paper recommends among others that for accountability to be successful in the management of public funds in Nigeria there must be a reduction in the level of corruption, improving public sector accounting and auditing standards, legislators as champions of accountability and restructure the public accounts committees and the value of money must be applied in the conduct of government business.

Keywords: Accountability, Financial Reporting, Financial Resources, Management, Nigeria, Public Finance, Public Sector Accounting

Analysis of the Relationship between Human Capital Development and Economic Growth in Nigeria (Published)

This research examined the effect of human capital development on the growth of Nigeria economy. The objectives of the study include to: (i) determine the extent to which significant long-run relationship exist among the human capital development and economic growth in Nigeria, (ii) determine if expenditure on education has significant effect on economic growth in Nigeria, (iii) investigate if expenditure on health has significant effect on economic growth in Nigeria. Using co integration techniques to investigate the effect of human capital development and economic growth in Nigeria, we obtained the following results. (i) there is significant long-run relationship between human capital development and economic growth in Nigeria. This is confirmed by the Johansen co-integration. (ii) It was estimated from the VECM, 1% increase in the government expenditure on education (TEDU), on the average led to 23.8% increase in GDP while. 1% increase in the government expenditure on health (THEA) caused 37.6% decrease in GDP. (iii) The two variables as human capital development factor were found to have significant effect on economic growth. However, government expenditure on education has positive relationship with GDP. This implies any increase in expenditure on education contributes positively to the growth of the economy. Based on the findings, the policy implications are in three directions (i) to retain the continuous long run relationship with GDP and human capital development, effort should be made to harmonize the activities in the health and education sector with much attention on funding. The harmonization of the activities in these two sectors will have long run effect on the economy. (ii) as one of the factors of human capital development, government expenditure on education was found to have positive effect on the economy. In the light of this, government should try as well to meet up with world standard benchmark on education expenditure in the annual budget. In so doing, this will improve on the economy. (iii) government expenditure on health was found to have negative effect on the economy. Therefore, effort should be made by government to address the agitations by the health workers which always make them to resort to frequent strike actions. If these worrying issues are addressed, the instability experienced in the health sector will be solved. This will go the long way promoting the economy. More so, efforts should be made to equip our health sector so that capital flight in the name of foreign medical treatment is reduced.

Keywords: Government Expenditure on Education, Government Expenditure on health, Human Capital Development, Nigeria

Dividend Payout Pattern: Nigeria Deposit Money Banks in Perspective (Published)

Investors invest their money with the hope to have returns that could improve their welfare in future. Dividend is one of those expectations that investors hope to get as a result of their investment. A Company pays dividend in order to encourage further investment for growth. However, the degree and extent by which dividend is made depend on the organization management decision. There has been contradicting arguments on firms dividend payout ratio such as rightist, leftist and the middle of the road hypothesis on whether firms should pay dividend or not. Hence there has not been any conclusive study on the factors that determine the dividend growth pattern of Deposit Money Banks in Nigeria. It is this perceived gap that informs the empirical analysis of growth pattern of dividend payout of quoted banks in Nigeria. The study relies majorly on secondary data sourced from the financial report of seven (7) quoted banks in the Nigeria Stock Exchange. It was found that all the explanatory variables (inflation, share price and earnings per share) have significant impact on dividend payout. The study recommends that deposit money banks in Nigeria should improve on their performance so as to increase earnings which will go a long way in determining the Dividend Payout Pattern of their banks while government should makes both investment and production environment suitable for banks to produce locally and avoid much importation to control inflation.

Keywords: Banks’, Dividend Payout Pattern, Inflation, Investment, Nigeria

Implications of Government Capital Expenditure on the Manufacturing Sector in Nigeria (Published)

Theoretically, both Keynesian and neoclassical economists provided tools for government’s intervention, particularly with regard to government capital expenditure. The aim of this project work is to investigate the effect of government capital expenditure on the manufacturing sector output in Nigeria. The study used quantitative time series data and multiple regression techniques in the analysis. The result of the co-integration test indicates long run relationship between dependent and independent variables. It also reveals that capital expenditure on road infrastructure (CEXR) and telecommunication (CEXT) affects the manufacturing sector output in Nigeria significantly while government capital expenditure on power has insignificant effect on manufacturing sector in Nigeria. The implication of this is that manufacturing sector output is clearly affected by factors both exogenous and endogenous to the government capital expenditure in Nigeria. We therefore recommend that, there is need for government to reduce its budgetary allocation to recurrent expenditure on power sector and place more emphasis on the capital expenditures so as accelerate economic growth in Nigeria through manufacturing sector output and that government should also increase spending on road infrastructure, particularly on capital budgeting. As our results showed, road infrastructure capital expenditure has the greatest impact on the long-run with manufacturing sector output in Nigeria

Keywords: Manufacturing sector, Nigeria, Output, Power Sector, Road Infrastructure, Telecommunication

Corporate Taxation and Foreign Direct Investment in Nigeria (Published)

This study examined the relationship between corporate taxation and foreign direct investment in Nigeria from 1970-1980. The annual reports were sourced from the CBN statistical bulletin, NBS and World Bank which were analyzed using Descriptive Statistic, correlation and regression. The independent variable corporate taxation was measured using corporate tax rate (CTR) whilst dependent variable foreign direct investment was measured using FDI net inflow (% of GDP). GDP, exchange rate and inflation rate were used as control variables. The result showed negative significant relationship between CTR and FDI whilst exchange rate and FDI indicated negative insignificant relationship. However, GDP was positively insignificantly related with FDI whilst inflation had positive significant relationship with FDI. Based on the findings, the study recommended that there is need for the government to lo reduce corporate tax rate in order to attract FDI into the country.

Keywords: Corporate Taxation, Foreign Direct Investment (FDI), Nigeria

DOES EARNING PER SHARE DETERMINE MARKET PRICE OF ORDINARY SHARES? EVIDENCE FROM NIGERIA BANKING SECTOR (2000 – 2013) (Published)

The study aims at examining the magnitude and nature of the relationship between earnings per share and market price of ordinary shares in Nigeria banking industry from 2004 to 2013. In addition, it aims at ascertaining the impact of earnings per share on prices of ordinary shares in Nigerian banking industry. Ordinary least squares method in the form of multiple regression was applied in the analysis. Stationarity test was conducted using the Augmented Dickey- Fuller (ADF) and Phillip Perrons (PP) tests. The result reveals that earnings per share significantly and positively influence the market price of ordinary shares; with a strong and positive association too. Earnings per share also granger causes market price of ordinary shares and these characteristics are sustainable in the long run in Nigerian banking sector. The implication of the findings is that an increase in earnings has the tendency of increasing significantly the market price of shares and earnings per share is one of the key factors responsible for fluctuations in market price of ordinary shares in Nigerian banking sector. Therefore, it is pertinent for banks targeting the enhancement of their equity price to adopt workable strategies towards attracting more deposit, increasing their lending, reducing their expenditure profile and opening up other investment avenues to improve upon their earnings.

Keywords: Banks’, Earnings, Granger, Nigeria, Regression, Shares

DOES EARNING PER SHARE DETERMINE MARKET PRICE OF ORDINARY SHARES? EVIDENCE FROM NIGERIA BANKING SECTOR (2000 – 2013). (Published)

The study aims at examining the magnitude and nature of the relationship between earnings per share and market price of ordinary shares in Nigeria banking industry from 2004 to 2013. In addition, it aims at ascertaining the impact of earnings per share on prices of ordinary shares in Nigerian banking industry. Ordinary least squares method in the form of multiple regression was applied in the analysis. Stationarity test was conducted using the Augmented Dickey- Fuller (ADF) and Phillip Perrons (PP) tests. The result reveals that earnings per share significantly and positively influence the market price of ordinary shares; with a strong and positive association too. Earnings per share also granger causes market price of ordinary shares and these characteristics are sustainable in the long run in Nigerian banking sector. The implication of the findings is that an increase in earnings has the tendency of increasing significantly the market price of shares and earnings per share is one of the key factors responsible for fluctuations in market price of ordinary shares in Nigerian banking sector. Therefore, it is pertinent for banks targeting the enhancement of their equity price to adopt workable strategies towards attracting more deposit, increasing their lending, reducing their expenditure profile and opening up other investment avenues to improve upon their earnings.

Keywords: Banks’, Earnings, Granger, Nigeria, Regression, Shares

CAPITAL MARKET AND INDUSTRIAL SECTOR DEVELOPMENT IN NIGERIA- AN EMPIRICAL INVESTIGATION (Published)

This study examined the relationship between capital market and industrial sector development in Nigeria, utilizing annual time series data covering the period from 1980 to 2012. The study adopted both descriptive and analytical methodology in its investigation. The descriptive methods were used to analyze trend performances of the variables captured in the study. The analytical methodology employed modern econometric techniques such as the unit root test, co-integration test, granger causality test and the error correction mechanism (ECM) in the estimation of the relevant relationships. The results of the co-integration test showed that there existed a long run equilibrium relationship among the variables. The results of the granger causality test as presented showed that there is a bi-directional relationship between industrial output and market capitalization and between industrial output and number of deals, but a unidirectional causality relationship running from industrial sector development to value of transaction. The results of the short run dynamics revealed that capital market has positive and significant impact on industrial output in Nigeria via market capitalization and number of deals. On the other hand, value of transaction has negative and significant impact on industrial output in Nigeria during the evaluation period. The results also showed that real gross domestic product has a positive and significant impact on industrial output in Nigeria, while exchange rate and gross domestic investment have negative and significant relationship with industrial output in Nigeria. The study therefore recommended that the government should implement appropriate reform policies aimed at ensuring efficiency in the workings of the stock market in Nigeria. Also, there is need to reduce the cost of raising capital by firms on the stock as high cost and other bureaucratic delays could limited the use of capital market as veritable source of raising funds for investment.

Keywords: Capital market, Industrial Development, Nigeria

FINANCIAL LITERACY EDUCATION: KEY TO POVERTY ALLEVIATION AND NATIONAL DEVELOPMENT IN NIGERIA (Published)

Ensuring that all societies’ young people become financially capable is now widely seen as a necessary key pillar in helping Governments build economic stability in the future. The ability to read, analyze, manage, and communicate about the personal financial conditions that affect material wellbeing is of utmost importance. Being able to manage money, keep track of personal finances, plan ahead, choose financial products and stay informed about financial matters enable the avoidance of financial disaster. This research constitutes an essential component of the theory of the strategy of financial literacy framework which articulates a strategic direction for the delivery of financial education in Nigeria. Financial literacy education is very important because the journey to obtain independence and achieve financial success cannot just be prioritized by having good educational experiences, a sound résumé and a career with a nice salary. Rather, the financial freedom road requires development of good financial habits, practice and discipline. This work adopts a secondary data approach which critically examines Nigeria’s financial literacy education framework, the significance of financial literacy education, steps for best practices in financial education and awareness, and the challenges to building sustainable financial literacy education systems. It finds that promoting financial literacy among Nigerians provides them with the essential knowledge and financial responsibility to make decisions that will better their lives and ultimately grow the economy. This is because as financial markets become increasingly sophisticated and as households assume more of the responsibility and risk for financial decisions, financial education is increasingly necessary for individuals, not only to ensure their own financial well-being but also to ensure the smooth functioning of financial markets and the economy. The paper therefore strongly recommends, amongst others, the involvement of all tiers of government as well as key institutions and the private sector in the design and implementation of financial literacy programmes across all segments and sectors of the economy.

Keywords: Economic Development, Education, Financial freedom, Financial literacy, Nigeria

Reliance on Published Financial Statements and Investment Decision Making in the Nigeria Banking Sector (Published)

Financial Reporting Standards and Practices have in the recent past come under great criticisms, demanding that accountants take further steps in ensuring that the true and fair view of the actual worth of business are also incorporated in the financial statements published by them. This was triggered off by an unpresedented line up of corporate failures like that of Enron Corporation, World.com and others coupled with the emergence of the global economic crisis. In Nigeria also, corporate failures and distresses have been witnessed in the banking sector. Evidence was the huge collapse of the Cooperative and Commerce Bank (CCB), Orient Bank of Nigeria, African Continental Bank (ACB) all due to massive accounting related frauds. This problem resulted in the establishment of Asset Management Company of Nigeria (AMCON) to prevent corporate failures particularly in the Nigeria banking sector by acquiring and financially distress companies. This paper is a critical investigation on the degree of reliance of the published financial statements by corporate investors. The study employed survey research design by which data were generated by means of questionnaire administered on one hundred and fifty corporate investors and senior management officials of the selected banks. The descriptive statistics and percentage analysis were used for the data analysis and the hypotheses were tested using t-test statistic. The statistical package for social sciences (SPSS) software version 17.0 was employed in the analysis of data and test of hypotheses. The results reveal that one of the primary responsibility of management to the investors is to give a standardized financial statement evaluated and authenticated by a qualified auditor or financial experts (tcal (16.59) > tcritical (2.353). p < 0.05). It also showed investors do understand the financial statement well before investment decision (tcal (17.306) > tcritical (2.353). p < 0.05). The results of the analysis also indicated that investors depend heavily on the credibility of auditors/financial expert approval of financial statement in making investment decisions (tcal (4.592) > tcritical (2.353). p < 0.05) and as such published financial statement is very important in the investors’ decision making (tcal 74.500 > tcritical 6.314; p < 0.05). It hereby recommended that adequate care and due diligence should be maintained in preparing financial statements to avoid faulty investment decisions which could lead to loss of funds and possible litigations

Keywords: Banking Sector, Decision Making, Financial Statements, Investments, Nigeria