Alexander Ehimare Omankhanlen

This study examined if the Nigerian agricultural output has spurred economic growth and the best fit agricultural financing gap model for growing the economy. The study explored the dynamics of different technicality approach that stepwise regression has to offer. From the seven baskets of predictors – agricultural guaranteed finance to oil palm, cocoa, groundnuts, fishery, poultry, cattle, roots and tubers – the step fitted three predictors: roots and tubers, cocoa and poultry based on “a b” parameter with the highest “t-stats” and significant p-value and subsequently executed the model using stepwise regression analysis with the help of Statistical Package for Social Sciences (SPSS) version 23. The dataset covers a thirty-six year period from 1981 to 2017. The source of the data is from the Central Bank of Nigeria 2018 statistical bulletin. The findings showed that individually, root and tubers has the most contributory impact on economic growth with 81 percent. Jointly followed is cocoa at 87 percent and poultry at 90 percent. The study thus recommends a comparative cost advantage to financing agriculture with the most impactful contribution to economic growth based on the model.

Due to a huge financing gap in many developing nations, governments use budget deficit to facilitate growth and development. However, deficit financing deepens the economic woes of these economies, leaving them in a vicious cycle of deficits. In Nigeria, for instance, fiscal deficits cause country’s bad performance and ranking both in global growth and development indicators. Thus, the use of fiscal deficit to enhance economic performance has proved to be futile and also has left bad economic consequences. Based on the econometric method of Autoregressive Distributed Lag, this study examines how selected macroeconomic indicators influence fiscal deficits in the budgetary policy of Nigeria. Historical data between 1981 and 2017 were used for the study. The study shows a significant positive effect of inflation, oil revenue, and lagged exchange rate on fiscal deficits. There is also evidence that external debt and current exchange rate decrease the level of fiscal deficits. However, the research did not prove robust evidence of fiscal deficit persistence. Government policy should target low level of inflation and exchange rate appreciation as well as the productive investment of oil revenues and economic diversification as the panacea for persistent use of fiscal deficits.

Africa has underdeveloped stock markets that have failed to meet the continent’s capital needs, such as rapid economic growth. This research analyzes the key drivers of stock market development in Africa from a macroeconomic perspective. The study examines several macroeconomic variables, including credit to the private sector, foreign direct investment, external reserves, money supply, external trade, per capita GDP, inflation, and lending rate to explain stock market development in Africa. The study builds a panel data consisting of eight African countries from 1994 to 2018 and applies the pooled mean group estimation technique. The analysis shows that in the long run, credit to the private sector, external reserves, and inflation are the most important factors that influence stock market development, while in the short run, income and trade openness are significant in explaining stock market development in Africa. The study recommends that policies to develop African stock markets should center on developing the private sector through access to credit, increased per capita income, and effective foreign reserve management to boost local and foreign investors’ confidence.

The implementation of the 2004–2005 bank capital reform in Nigeria, introduced to deepen the financial capacity of the banking system, has led to a major restructuring of the banking sector. The reform required banks to increase their equity capital by about 1150 per cent (from two billion to twenty-five billion naira) within 18 months. Due to compliance challenges, the reform formed just twenty-five out of eighty-nine banks that previously existed. More than seventy-five per cent of the banks emerged through mergers and acquisitions. However, despite the massive increase in assets and deposit growth, episodes of bank distress have remained a recurring irritant in the country’s financial system. This study compares bank performance in the pre- and post-reform periods to determine the usefulness or efficacy of the capital reform in boosting bank performance based on panel analysis of data from five banks. The study covered the period 1996–2016. The generalized method of moments was used to evaluate the parameters of the model. The result of the random effects model shows a weak positive effect of total assets and deposit growth on bank performance in the pre-reform period. However, the post-reform assessment reveals that while profitability is significantly low in large-sized banks, it is higher in smaller banks. Given the above evidence, the study asserts that profit performance of banks is substantially linked to restructuring of the sector.