Financial Development, Currency Union and Dynamic Growth in West Africa: A Panel Investigation

The objectives of this paper are to investigate the effect of financial development and currency union on the growth of West African economies and to determine if the financial development is necessary for currency union to be more beneficial to growth in West African region. A modified model of Alfaro et al, (2004) was adopted. The sample was drawn from 12 West African countries - five  from West African Monetary zone and seven from West African Economic and Monetary Union countries. System GMM was employed to estimate the parameters. The results indicate that the effect of the currency union on West African economies is consistently negative except when interacting with market based financial system. The level of financial development is low. This implies that forming currency union will not be a good policy option at this level of financial development in West Africa as asymmetry shocks and monetary policies across countries differ. Harmonization of financial system is desired for common currency to yield intended effects. Keywords: financial development, currency union, West Africa, growth JEL Classification: F4, F360, G

Bank Lending and Output Growth in Nigeria

This paper examines the relationship between bank lending and output growth in Nigeria over the period 1981 to 2012 using annual data obtained from secondary sources. Specifically, the study examines the impact of sector level bank lending on output growth of three selected sectors measured by index of production. Using the Johansen-Fisher combined panel cointegration methodology and panel Fully Modified Ordinary Least Squares (FMOLS) as a method of estimation, the results provide evidence of a negative significant relationship between bank lending and output growth of the sectors under consideration (namely, agriculture, manufacturing, and mining and quarrying). Howerver, a positive significant relationship is found between human capital measured by secondary school enrolment and output growth of the sectors. This study concludes that the expansion needed to boost output growth in these sectors is hampered by financial constraints made possible by high interest rates charged by financial institutions and that output growth is not only a function of finance as most firms do show but also a function of human capital (that is, labour embodied with knowledge). Therefore, to ensure output growth, there is the need for government intervention to increase the volume of credit that goes to these sectors and enforcement of compliance with monetary policy guidelines. Futhermore, labour needs to be retrained on relevant skills required and there is the need for reduction in budget or current account deficit in order to drive interest rates down. Keywords: Bank lending, Output growth, Nigeri

Bank Lending and Output Growth in Nigeria

This paper examines the relationship between bank lending and output growth in Nigeria over the period 1981 to 2012 using annual data obtained from secondary sources. Specifically, the study examines the impact of sector level bank lending on output growth of three selected sectors measured by index of production. Using the Johansen-Fisher combined panel cointegration methodology and panel Fully Modified Ordinary Least Squares (FMOLS) as a method of estimation, the results provide evidence of a negative significant relationship between bank lending and output growth of the sectors under consideration (namely, agriculture, manufacturing, and mining and quarrying). However, a positive significant relationship is found between human capital measured by secondary school enrolment and output growth of the sectors. This study concludes that the expansion needed to boost output growth in these sectors is hampered by financial constraints made possible by high interest rates charged by financial institutions and that output growth is not only a function of finance as most firms do show but also a function of human capital (that is, labour embodied with knowledge). Therefore, to ensure output growth, there is the need for government intervention to increase the volume of credit that goes to these sectors and enforcement of compliance with monetary policy guidelines. Furthermore, labour needs to be retrained on relevant skills required and there is the need for reduction in budget or current account deficit in order to drive interest rates down. Keywords: Bank lending, Output growth, Nigeri

Access to credit for rice farmers and its impact on productivity: the case of Ebonyi State, Nigeria

This study examines the impact of access to bank and non-bank credit on rice productivity and output. It employed the coarsened exact matching (CEM) model and qualitative methods for primary data on a purposive sample of 450 rice farmers across three Local Government Areas of Ebonyi State, Nigeria. Pre-matching results suggest that access to non-bank credit and access to total credit significantly affected labour productivity and output, while access to bank credit significantly affected output. However, the post-matching results show that access to all three categories of credit has no significant effect on either output or capital, labour, and total factor productivity. This study therefore recommends that for an improved production and productivity yield among rice farmers in the state, policies should focus on the issues of improved quality of education and constraints in accessing loans/credits

Cluster Development in a Transforming Economy: The Case of Motorcycle Spare Parts Firms in Nnewi, Anambra State of Nigeria

This paper examined the impact of cluster development in Nnewi, Anambra State of Nigeria. The estimated parsimonious model revealed that capital and labour were significant determinants of sales made by the firms while the cluster dummy variable was insignificant. This insignificance of the cluster dummy variable implied that, in terms of total sales, there was no significant difference between firms in the cluster and firms outside the cluster. For the profit model, we found that capital, labour and the cluster dummy were significant at 1% level. Capital, labour and cluster dummy have a positive relationship with firm profit. The positive coefficient of the cluster dummy variable indicated that the profit of firms in the cluster was significantly higher than that of the firms outside the cluster by about ₦31,050. It was therefore concluded that cluster residency made a significant difference in firm profit and recommended that government should encourage cluster development to accelerate the transformation of the economy

The Economic Costs of Unsupplied Electricity in Nigeria's Industrial Sector: The Roles of Captive Power Generation and Firm Characteristics

Power failure is the most influential business constraint in Nigeria. In this study we pursue answers to two questions concerning policies to mitigate the problem. In the first, we model firms' perception of power failure constraint and found that small and medium enterprises are most constrained. In the second, we examined firms' willingness to pay to avoid power outages and found that on average and ceteris paribus, firms are willing to commit extra 15% of their annual sales to ensure uninterrupted power supply. Furthermore, captive power generating firms are even willing to pay more for uninterrupted power supply. The analysis was based on a sample of 2,676 firms compiled from 2014 World Bank's Enterprise Survey (WBES) for Nigeria. The empirical estimations were based on ordered probit and censored Tobit models respectively.  Keywords: Power outages; industrial sector; captive power generation; firm JEL Classifications: L6; D21; C5 DOI: https://doi.org/10.32479/ijeep.768

Oil Exploration and Exploitation in Nigeria and the Challenge of Sustainable Development: An Assessment of the Niger Delta

The study seeks to evaluate the environmental problems associated with oil exploration and exploitation in the Niger Delta area of Nigeria on one part with a focus on empirical examination of one of the variables highlighted in the literature - emission of CO2 on people's health. With data 1980-2015 drawn from CBN bulletin, we employed OLS and 3SLS regression model to analyze. Life expectancy at birth is the dependent variable, while carbon emission, gross domestic product per capital, female education, and public health expenditure are explanatory variables. Findings show that Carbon emission (CO2EM) has a negative coefficient which is in line with the theoretical expectation.  It is observable that an increase in carbon emission by one unit will reduce life expectancy by 0.04 per cent. This result supports the unsustainability of the business and gas emissions and oil spill in the Delta region as harmful to the wellbeing of the masses. Keywords: Carbon emission, Oil exploration, environmental degradation, resource curse,  JEL Classifications: O13, Q33, Q34 DOI: https://doi.org/10.32479/ijeep.781

Oil price, energy consumption and carbon dioxide (CO2) emissions: Insight into sustainability challenges in Venezuela

This study provides insight into sustainability challenges in Venezuela by exploring the causal interactions between oil price, energy consumption and carbon dioxide (CO2) emissions in Venezuela. Economic growth, government consumption expenditure and trade openness are included as additional determinants in the analysis. The auto-regressive distributed lag (ARDL) bounds approach to cointegration provides evidence of long-run relationship between the variables with the incorporation of structural breaks observed in the series. The estimates suggest that an increase in crude oil price significantly increases energy consumption, government consumption expenditure and energy consumption generate CO2 emissions, and CO2 emissions exert negative effects on economic growth in the oil-rich economy. This study further examined the direction of causality between the variables using the innovative accounting approach (IAA). The results suggest that crude oil price causes energy consumption in the economy. No significant causal relationship is found between energy consumption and economic growth. Energy consumption causes CO2 emissions in the economy. In addition, a unidirectional causality runs from CO2 emissions to economic growth. The response of economic growth to CO2 emissions indicates that more CO2 emissions in the economy would exert negative effects on economic growth. It is, therefore, expected that policy makers would consider energy diversification as a major component of economic diversification policies in Venezuela

Political Environment and the Use of Energy Resources in Nigeria

This study examines the dynamic relationship between political environment and the use of energy resources in Nigeria covering the period from 1978-2017 using the autoregressive distributed lag (ARDL) bounds testing approach. The results reveal that democracy has a significant long run and short run positive influence on energy consumption in Nigeria. However, the positive effect decreases significantly with an increase in the level of oil dependence in the short run. The results of this study in general support the view that high dependence of political democratic structures on oil wealth influences the positive effects of democracy in making public goods available in developing net oil-exporting economies. Economic diversification in Nigeria may therefore require formulating policies that will enhance access to clean energy sources in the economy