EXTERNAL DEBT: A POTENTIAL TOOL FOR ECONOMIC DEVELOPMENT

Debt (domestic or external) is a feature, or rather, an integral part of eve!J' mudem econumy. Developed and developing nations borrow to enhance development. However. while the developing nations borrow to fasl-lrack the process of economic developmenl, the developed nations borrow to keep their economies running and making progress. Theoretically, nations resort to external borrowing to fast-track the process of economic development and Nigeria is not leji out. However, emerging evidence from most borrowing nations, particularly, African countries, shows that rather than develop, they end up poorer and more underdeveloped, thereby bringing to test the theoretical basis for external debt acquisition. In Nigeria, for instance, it is argued that the level of infrastructural deficiency, rising unemployment, poverty, etc do notjus(!jy the quantum of external debts outstanding as at 2004 (S35.94billion) and that the country was more developed in the 1 960s than presently. Evidence from available literatw-e however support.\" this argument A number of factors have been identified as impediments to the noble objective of external borrowing and relevant recommendations made to resolve the paradox

Risk Analysis and Uncertainties in Capital Investment Appraisal: Application of Monte Carlo Simulation

Every business decision involves risk and decision-making has become increasingly more complex today because ofrmcertainty. Since capital investmem is a long-term function, it becomes obvious that the further into the future plans are made the more uncertain are the outcome. It is expected that only top managemem will be equipped with tire management skills to predict the flllure with some degree of confidence and certainty. One way through which the management can predict the future of the outcome with some degree of confidence and certainty is through Monte CArlo simulation. Monte (Arlo simulation is a tool that shows the possible outcome based on certain key characteristics or behaviors of a system using random numbers. The paper has shown that Monte Carlo simulation enables the management predict the outcome of wrong estimates and prepare their minds better about the possible losses that may occur and thus concrete plans can be put in place to minimize the effects ofsuclr possible losses if they occur as a result of inaccurate estimates in key variables. The paper concludes that overlooking significaJrt interrelationships among the projected variables can distort the results of risk analysis and lead to misleodingconclusionr. The paper recommended that organizations should send their staff on training to upgrade their skills to enable them implement Monte Carlo simulation which will enablemww.gement make an informed decision on capital Investment decisions

EVALUATING THE PROSPECTS OF THE ANCHOR BORROWERS’ PROGRAMME FOR SMALL SCALE FARMERS IN NIGERIA

The quest to tackle the problems bedevilling the agricultural sector and help Nigeria get out of the current recession occasioned by over dependence on oil revenue, necessitated the launch of the Anchor Borrowers’ Programme (ABP) in 2015. It involves the provision of farm inputs in kind and cash (for farm labour) to smallholder farmers (SHF) to boost production of the targeted commodities. At harvest, the SHF supply his/her produce to the Agro-processor (referred to as the Anchor) who pays the cash equivalent to the farmer’s account. The ABP concept is like the contract farmer concept which has been found to be effective in other countries like India. The success of the pilot project which was carried out in Kebbi State for rice has been very remarkable. About 78,000 rural farmers in Kebbi State benefitted from the programme, which used integrated rice millers as buyers to ensure that there was a ready market for the produce. Yields as high as 7.5 to 8.0 tonnes per hectare were obtained by farmers compared with less than 2.0 tonnes per hectare previously obtained and smallholder farmers were made Naira millionaires in Kebbi State in 201

AGRICULTURAL VALUE CHAIN FINANCING AND SMALL SCALE FARMERS IN NIGERIA: THE PRE-REQUISITES

value chain is a connected string of companies, groups and other players working together to satisfy market demands for a particular product or group of products. In recent times, Financial Institutions are more interested in financing various actors along the value chain, with emphasis on cash flow rather than any form of collateral. Value chain approach to agribusiness financing considers the market first and assesses the level of development of the value chain. However, in Nigeria as in most other Sub- Saharan African countries where agriculture is still characterized by small scale producers and disjointed agricultural value chains, a lot still needs to be done to be able to achieve success with the concept of value chain financing in the bid to transform the agricultural sector and accelerate economic development. One of the pre-requisites for making the concept of agricultural value chain financing work efficiently in Nigeria where over 90 percent of agricultural output in the country is produced by small-holders with less than 2 hectares under cropping is connecting farmers to market

THE INFLUENCE OF FINANCE AND MACROECONOMIC VARIABLES ON MANUFACTURING CAPACITY UTILIZATION IN NIGERIA

This paper estimates the response of manufacturing capacity utilization in Nigeria to changes in key macroeconomic indicators in Nigeria using annual data on exchange rate, interest rate, inflation rate, external debt, terms of trade and trade openness over the period 1975 – 2012. The variance decomposition analytical technique was adopted. The study presents the following results: (i) Both the Engle and Granger (1987) and Johansen (1991) co-integration tests show evidence of co-integration between the endogenous and exogenous variables. However, the error correction mechanism (ECM) shows that the model has a low speed of adjustment to short-run disequilibrium, of approximately 6.5 per cent; (ii) The forecast error variance decomposition analysis shows that variations in manufacturing capacity utilization in Nigeria are largely driven by its own shocks. The study further shows that exchange rate, interest rate and terms of trade contribute significantly but negatively to variations in manufacturing capacity utilization. Though it shows evidence of negative contributions from inflation rate, external debt and trade openness, they do not significantly influence movements in manufacturing capacity utilization in Nigeria; (iii) The study also presents evidence of causal impact of manufacturing capacity utilization on exchange rate and manufacturing capacity utilization on interest rate and not vice versa but did not produce evidence of causality between manufacturing capacity utilization and the other exogenous variables namely, inflation rate, external debt, terms of trade and trade openness. It is strongly recommended that government should adopt drastic measures to stabilize the flow of foreign exchange as well as enthrone and sustain low interest rate regime. Government should also emphasize local content in domestic manufacturin

Implications of Accounting Information for Security Pricing in the Nigerian Stock Market

Dividend decision involves the conflicting interest of different groups of shareholders whose interests need to be ignored but should be integrated into a firms dividend policy. Depending on their individual disposition, some shareholders are interested in receiving cash dividend while some others are interested in growing their investment for the fUture. Therefore, while one school argues that information on dividend is critical to stock price movement, the other contends that earnings retention is the active force in stock price determination. Review of relevant literature, however; shows that both dividend and earnings retention are necessary decision-making variables, as each exerts a significant influence on stock price. Empirical studies have shown that dividend and earnings reports positively influence the movement of stock price. The quantum of available literature suggests that dividend ranks higher than earnings in the explanation of movements in share price. Distorted accounting information have led to business failures as the market values of stocks associated with them cannot be sustained, thus the reliability of accounting information need not be overemphasized. Information should also be timely and affordable. Variability in stock prices are sometimes not supported by the economic fUndamentals in the respective organizations, implying that variables outside dividend and earning, may also account for stock price movemen

AGRICULTURAL VALUE CHAIN FINANCING AND SMALL SCALE FARMERS IN NIGERIA: THE PRE-REQUISITES

A value chain is a connected string of companies, groups and other players working together to satisfy market demands for a particular product or group of products. In recent times, Financial Institutions are more interested in financing various actors along the value chain, with emphasis on cash flow rather than any form of collateral. Value chain approach to agribusiness financing considers the market first and assesses the level of development of the value chain. However, in Nigeria as in most other Sub-Saharan African countries where agriculture is still characterized by small scale producers and disjointed agricultural value chains, a lot still needs to be done to be able to achieve success with the concept of value chain financing in the bid to transform the agricultural sector and accelerate economic development. One of the pre-requisites for making the concept of agricultural value chain financing work efficiently in Nigeria where over 90 percent of agricultural output in the country is produced by small-holders with less than 2 hectares under cropping is connecting farmers to markets

Working Capital Management and the Performance of Consumer and Industrial Goods Sectors in Nigeria

The paper investigates the impact of working capital management on the performance of selected companies listed on the Nigerian Stock Exchange using panel data for forty (40) firms from the consumer and industrial goods sectors of the economy. Return on assets (ROA) was adopted as proxy for firm performance while cash conversion cycle (CCC), average payment period (APP), inventory collection period (ICP), and average collection period (ACP) were adopted as proxies for working capital management. Estimation of the impact of the exogenous variables (cash conversion cycle, average payment period, inventory conversion period and average conversion period) on firm performance (endogenous variable) was based on the econometric technique of the Ordinary Least Squares. The study produced evidence of significant positive impact of cash conversion cycle, average payment period, and inventory conversion period on firm performance. There is also evidence of non significant negative impact of average conversion period on the performance of the selected firms.Parameter estimates were obtained at 10 per cent level of significance. Based on the above result, the study concludes that working capital management has significant impact on the performance of firms in the consumer and industrial goods sectors of the Nigerian economy. Industry managers are therefore advised to innovate efficient strategies for managing working capital so as to optimize its potential

The Portfolio Behaviour of Employment-Based Cooperative Thrift and Credit Societies

Among the financial institutions in the informal system is the cooperative thrift and credit society which is highly prone to failure. However, some of the successful CTCS coops are employmentbased. This paper studies the determinants behind their growth and sustenance in the process of building their portfolio. The paper adopts the primary method of data gathering where 222 coop thrift officials covering 14 organisations were served with the questionnaires. 178 questionnaires were retrieved and analysed. This represented a retrieval rate of 78%. The main variables used to estimate the outputs were loans size, portfolio size and growth as dependent variables while the independent variables were, average savings, membership strength, loan access and portfolio growth other deposits from members. The techniques adopted were the ordinary least squares (OLS) and the Two stage least square (2SLS) regressions. The results indicate that membership strength is significant across the different regressions as well as supporting finance from deposits of members and other sources such as loans. The paper recommends that this type coop should be engrafted into the mainstream workplace and financial institutions and more of this type of coops should be encouraged in the system