The Role Of Non Oil Export In The Economic Development Of Nigeria

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THE ROLE OF NON OIL EXPORT IN THE ECONOMIC DEVELOPMENT OF NIGERIA

ABSTRACT

Export is a catalyst necessary for the overall development of an economy. The primary objective of export policies in any economy is to increase the level of economic activities. It follows, therefore that export policies should be directed to the sector in which the impact of an increase in export demands will be both desirable and large. It is a source of foreign exchange earning since trade transaction among nations are settled in foreign exchange. The information for the study was collected using primary and secondary methods of data collection. For the primary data collection, questionnaires, personal observations and oral interviews were used while existing literature relevant to the topic was consulted for the secondary data. The researcher used chi-square statistical model to analyze the data. The researcher made the following recommendations: In other to encourage local entrepreneurs to increase their production, the government needs to restore the 25 percent import duty rebates for industrial raw materials, machineries and spare parts. The high cost of purchasing these materials constitutes a huge over head cost on the industries. The Federal Government should strengthen and revise the credit guarantee scheme. Legal and supervisory framework should be reinforced to track the use of these funds as well as identified loan defaulters. Relevant agencies overseeing the industrial sector should institute mechanism that will ensure good corporate governance among managing directors in the industry. Perceive delays and bottlenecks in the disbursement of fund should also be identified and removed to ensure prompt release and application of funds.

TABLE OF CONTENT

Title page                                                                     i

Approval  page                                                              ii

Dedication                                                                    iii

Acknowledgement                                                         iv

Abstract                                                                       v

Table of content                                                            vi

1.0      INTRODUCTION                                                     

1.1  BACKGROUND OF THE STUDY                                         1

1.2  STATEMENT OF THE PROBLEM                                         2

1.3  OBJECTIVE OF THE STUDY                                       5

1.4  RESEARCH QUESTIONS                                           5

1.5  RESEARCH HYPOTHESIS                                          6

1.6  SIGNIFICANCE OF THE STUDY                                        7

1.7  SCOPE AND LIMITATIONS OF THE STUDY                  8

1.8  DEFINITIONS OF TERMS                                          9

CHAPTER TWO

2.0      REVIEW OF RELATED LITERATUR

2.1      STRATEGIC IMPORTANCE OF NON-OIL EXPORT TO NIGERIA                                                                 11  

2.2      PROSPECT OF NIGERIAN FIRMS EXPORT MARKETING15

2.3      NIGERIAN FIRMS COMPARATIVE EXPORT MARKETING       17

2.4       DEVELOPMENT IN NIGERIA NON-OIL SECTOR          20

2.5      CHALLENGES OF EXPORT MARKETING                     22

2.6      IMPERATIVE OF EXPORT AS AGENT OF DEVELOPMENT      23

2.7      STRATEGIC IMPORTANCE OF NON-OIL EXPORT TO NIGERIN ECNOMY                                                     24

REFFERENCES

CHAPTER THREE

3.0      RESEARCH METHODOLOGY AND DESIGN

3.1      RESEARCH DESIGN                                               27

3.2      AREA OF THE STUDY                                             28

3.3      POPULATION OF THE STUDY                                         28

3.4      SAMPLE SIZE DETEMINATION                                 28

3.5      SOURCE OF DATA                                                 28

3.6      METHOD OF DATA COLLECTION                              29

3.7      ADDMINISTRATIONS OF INSTRUMENT                     29

3.8      ANALYTICAL TECHNIQUES                                     30

CHAPTER FOUR

4.0      PRESENTATIONS AND ANALYSIS OF DATA

4.1      PRESENTATION OF DATA AND ANALYSIS                 31

4.2      HYPOTHESIS TESTING                                           38

      CHAPTER FIVE

5.0      SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1      SUMMARY OF FINDING                                          47

5.2      CONCLUSION                                                       48

5.3      RECOMMENDATIONS                                             49

Appendix

Bibliography                

                                                                                                

 

 

CHAPTER ONE

INTRODUCTION

1.1            BACKGROUND OF THE STUDY:

The importance of export to a nation economic development cannot be over-emphasized. Export is a catalyst necessary for the overall development of an economy. The primary objective of export policies in any economy is to increase the level of economic activities. It follows, therefore that export policies should be directed to the sector in which the impact of an increase in export demands will be both desirable and large. It is a source of foreign exchange earning since trade transaction among nations are settled in foreign exchange.

Furthermore, A well developed export sector will provide employment opportunity for the people with the attendant reduction in social cost of unemployment. Earning from export will reduce the strains on the balance of payment position and even improve it. Export help in increasing the level of aggregate economic activities through its multipliers effects on the level of national income (Usman and Salami, 2008). Income earned through exporting will help in increasing the level of demands within the economy

The Nigerian economy has been and is currently being characterized by a reasonable degree of openness, hence it’s performance can be enhanced through the development of the external sector. The Nigerian external sector has always been dominated by primary commodities which have the well known basic characteristic of low price and income elasticity of demand, terms of trade and instability of export earning.

1.2     STATEMENT OF THE PROBLEM its

Some challenges have been identified as being responsible for not achieving the desired economic development through export marketing. One of the problems has to do with exporting raw agricultural commodities by Nigerian exporters. And these commodities are processed and sold to Nigerian consumers at a higher price. Nwakama (1986) noted that the absence of forward integration in the Nigerian agricultural sector is largely responsible for the failure of the Nigerian agricultural sector to expand, and make meaningful progress. Lack of backward integration is also accused of been responsible for the industrial sectors low development.  To have insight to the performance of the Nigerian export promotion programmes, the number of participants and the total sum paid to beneficiaries with respect to duty drawback scheme and export expansion grant fund between 1988 to 1996 was briefly examined.

According to NEPC (1997), a total of ninety-three companies benefited under the duty drawback scheme, out of one hundred and forty-three companies that applied within the period; while about one hundred and ninety-one million naira was paid to the companies for the same period of nine years (1988 to 1996). It is worthy to remark that the number of companies that applied is small. And the numbers of the benefiting firms are not also encouraging. Hence the desired objectives could not be achieved.

Another example of Nigeria export performance can be seen from the total export expansion grant disbursed to companies from 1989 to 1996. The grant ranged from 1.7 million naira to 79 million naira. Considering the capital-intensive nature of expanding manufacturing companies, it will be correct to state that the above   sum disbursed is insignificant to make meaningful impact in the export expansion scheme of most companies within the given period.

In the same manner, the commercial banks failed persistently to comply with CBN guidelines on credit to the export sector, while it has also been observed that successive governments were simply paying “lip service” to the promotion of non-oil export. The usual complaints of NEPC since its establishment in 1976, has been that of inadequate funding which has been responsible for its ineffectiveness and inefficiencies.  

There is need for private and public sector decision makers to recognize variety of barriers that can inhibit export, and these barriers on export is very important to private and public sector of most countries, these barriers include: Government restrictions (political/legal factors), Cultural and social factors, Economic barriers, Technological Barriers, Other barriers to export marketing, include; companies ability to finance export marketing expansion,  ability to locate reliable agent/distributor,  ability to meet quality and quantity on continuous basis, competition from other domestic and foreign producers in potential markets. It was to solve some of the above challenges that the Association of Nigerian Exporters (ANE) was formed in 1984. The ANE is a private sector, non-profit organization that liaises with relevant government agencies over export matters. In other words, low marketing in under developed countries, result to producers being Although various factors have been adduced to Nigeria’s poor economic performance, the major problem has been the economy’s continued excessive reliance on the fortunes of the oil market and the failed attempts to achieve any meaningful economic diversification (Osuntogun et al., 1997), reflecting the effect of the so called “Dutch disease”. The need to correct the existing structural distortions and put the economy on the path of sustainable growth is therefore compelling. This raises the question of what else need to be done in order to diversify the economy and develop the non-oil sector in order to realize the potentials of the sector. This calls for new thoughts and initiatives, which is the essence of this project.

1.3     OBJECTIVES OF THE STUDY

The main objective of this study is to examine the role of non-oil export in the economic development of Nigeria. Specific objectives of the study include;

(i) Examine the trend and composition of the non-oil export in Nigeria.

(ii) Investigate the extent of the contribution of non-oil export sector to the Nigerian economy.

(iii) Identify the factors that are responsible for the unimpressive performance of the non-oil sector of Nigeria.

(iv) Maker  recommendations based on the findings made in this research.

1.4                                RESEARCH QUESTIONS
The research questions to be examined in this study are as follows:
1. What relationship does non-oil export have to Nigeria development.
2. What impact does non-oil exports have on the economic development  of  Nigeria?
3. What factors are responsible for the unimpressive performance of the non-oil sector of Nigeria and how can they be resolved?

1.5 RESEARCH HYPOTHESIS

In evaluating this research work, we postulate the following hypothesis in determining The role of non-oil export in the economic development of Nigeria  The hypothesis are formulated in both:

Null Hypothesis (H0) and Alternative Hypothesis (H1)

1.       H0:     Non oil-export has no role to play in the economic development of Nigeria .

          H1:     Non oil-export has a significant role to play in the economic development of Nigeria.

2.       H0:     Government policies are responsible for the unimpressive performance of the non-oil sector of Nigeria.

H1:     Government policies are not responsible for the unimpressive performance of the non-oil sector of Nigeria.

3.       H0:     Non-oil export has relationship with the economic development of Nigeria       

H1:     Non-oil export has no relationship with the economic development of Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

It is important to point out that on completion of this work by the researcher, it would be of immense significance to the following:

RESEARCHERS:  Other researchers on the same or similar topic would find this work helpful as it will form a base of review of related literature and also a stepping-stone for future researchers.

ECONOMY: This work will help to improve the national output and thereby national income.  This is because of improvement in the efficiency and effectiveness of the operations as well as the over all success of companies, which will be achieved through adequate utilization of our natural resources crude oil to be specific  as prescribed by the researcher.

CORPORATION: The standard of corporations will be increased as a result of the knowledge acquired from this research work.

MANAGEMENT: This efficiency of the management would be recognized as a result of adequate knowledge on  how  non-oil export has impacted in the economic development of Nigeria.

SHAREHOLDERS: The wealth of the shareholders will be maximized due to efficiency of management.

1.7     SCOPE AND LIMITATIONS OF THE STUDY

This project work focuses on the role of non-oil export in the economic development of Nigeria, specifically on the role of the non-oil export. The causes and consequences of the neglect of the non-oil export shall be discussed in detail as well as the trend examined since 1986 in order to note its development.

The researcher in carrying out this study encountered problems, which includes:

i)       Financial.

ii)      Time and several other constraints.

i)       FINANCIAL – This included lack of enough fund to move around and visit the various areas in the state, and also lack of money to buy enough research material which constitutes on impediment to researchers high cost of transportation in the city due to long distance also imposed its own limitation on the researcher.

ii)      TIME – Time is also another constraints to the researcher.  This is because the researcher is combining school activities and at the same time, this made him unable to cover a lot of interesting areas but therefore limited his research work only at Port-Hacourt metropolis.

          Another constraint to researcher is that some of the workers find it difficult to express their problem.  .

1.8     DEFINITION OF TERMS

1. ECONOMY: This is the order of arrangement of the internal affairs of a state, or any establishment kept up by production and consumption especially, such management as directly concerns wealth as political economy.

2. DEVELOPMENT: The act of making some area of land or water more profitable or productive or useful. In order words it’s a state in which things are improving.

3. OIL: A viscous liquid derived from petroleum.

4. EXPORT: Commodities (goods or services) sold to a foreign country.            

 

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The Role Of Non Oil Export In The Economic Development Of Nigeria

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