CRITICAL ANALYSIS OF THE PERFORMANCE OF THE NATIONAL ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGY (NEEDS) ON THE NIGERIAN ECONOMY

ABSTRACT

This research work, “A Critical analysis of the performance of the National  Empowerment  and  Development  Strategy  (NEEDE)  on  the Nigerian  Economy”,  seeks  to  look  at  the  major  causes  of  Nigeria’s economic  misfortunes  and  this  is  greatly  attributable  to  the  poor industrial      capacity      utilization,      massive      unemployment      and underemployment, high rate of inflation, high poverty rate, poor wealth distribution, mono-cultural economy (oil), high rate of corruption, etc. The main objective of this research is to find out if NEEDS has made any impact on the Nigerian economy and to analyze such impacts. To    achieve    the    above    stated    objectives    a    systematic    research methodology was adopted. A good blend of research questions and hypothesis were used on the population In addition, the macroeconomic benchmark set for NEEDS for each year of its implementation (ie. 2004 – 2007) was compared against the actual outcome of 2004, to ensure compliance with plan. It was discovered that although NEEDS is the best available option to revive the collapsing economy, there are serious implementation challenges that may bedevil. Its implementation process. Based on the findings  of  this  study,  the  following  recommendations  were  made amongst others;

i.        The institution responsible for the implementation of NEEDS Should  be  headed  by  well-qualified  citizens  of  Nigeria  with remarkable integrity.

ii.       The level of awareness/publicity of NEEDS is too low that over 70% of the country’s populations are yet in the dark about it.

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Nigeria has an estimated population of about 125 million people and a land area of about 924 square kilometers, a large proportion of which is arable. It has large deposit of oil, gas and solid minerals and a sizeable educated and skilled workforce.  Deposit these, the country has not  been  able  to  effectively  harness  its  endowment  to  develop  the economy sufficiently to improve the welfare of its people, with an estimated population growth rate of 2.8% and  a GDP growth rate of about 2.5%, per capital income growth was negative for the greater part of the 1990s. Nigerian’s urbanization rate of 5.3% is one of the highest in the world, leading to loss of virile labour force for agriculture. Besides, the rate of job creation has been far less than the rate of growth of the urban labour force. This combined education system that is not attuned to  the  population  of  the  appropriate  manpower  required  to  support robust growth has led to high levels of unemployment and underemployment.

Income distribution in the country is also stewed high such that probably less than 15% of the population actually benefits from the GDP growth. The country has a debt overhang of about US $30 billion with light servicing requirements. Currently, about 65.7% of the population lives below the poverty line, half of which probably lives on less than half a dollar per day. The situation rather than improve has been worsening over time. This has become a source of embarrassment for a country that is relatively so well endowed.

The weakness of the Nigeria economy in the past three decades is not unrelated to its dependence on oil as the mainstay of its economy. Indeed, the country is a textbook example of economy under the “Dutch disease” with its deleterious impact on the development or other aspects of the real sector. Oil currently is 90% foreign exchange earnings and about 75% of government revenues. It contributes about 3% of the available labour force. (Akpobash, 2004:2).

For several years therefore, the development challenge for Nigeria, because the diversification of the productive base away from oil. Successive governments took up these challenges in the design and implementation of several plans and policies. However, the attempts at achieving  a more  rapid  growth of  the  industrial sector led to involve estimates in several projects, which turned out to be “white elephants”. The  reason  for  this  development  is  not  far  fetched  as  (Akpobasah 2004:2) rightly put it. Firstly, the capacity to design/execute such project was lacking. Secondly, the soft loans/funds required for sustaining the projects after inception dried up following the collapse of oil prices in the early eighties. However, there is an even more significant development resulting from the attempt to put the economy right. Governments inadvertently  become  the  dominant  force  in  an  economy  employing about one million people.  The huge resource accruing to government turned into a centre for rent seeking and corruption. Though Nigeria’s rating in world corruption table is often contested, the government has acknowledged that the situation is sufficiently bad to warrant of frontal attack.

These provide the background for the recent launched economy reform agenda, the national Economic Empowerment and Development Strategy (NEEDS). The Obasanjo’s regime has also taken other measures such as the establishment of an independent corrupt practices commission (ICPC), the Economic and Financial Crime Commission (EFCC) and a due process office to screen contracts prior to execution.

1.2    STATEMENT OF PROBLEM

The National Economic Empowerment and Development Strategy (NEEDS) came in to take over from the farmer structural adjustment programmes (SAP) which was introduced by the Babangida’s administration in 1986 which emphasizes deregulation and as he put it belt tightening. Oleka (200:54) said that the devil took over economy’s mechanism.

The National Economy Empowerment and Development Strategy (NEEDS) also intend to correct the negative impacts of the SAP on the country economic growth, which has led to an unprecedented social dislocation. For example, industrial capacity utilization has fallen below 40  percent  and  over  30  percent  of  these  industries  have  shut  down nation wide. The unemployment rate is now running at about 30%. This has been difficult to keep count of the galloping figures of inflation rate but they have ranged from 15-20 percent animally, in the last few years. Over 70% of the population is now living below the perverted, that less than 3 percent of the population now living below the poverty line. The reward system is now so grossly perverted that less than three percent (3%)  of  the  population now  controls  over  60  percent of  the  nation’s wealth without adding any significant value to its productive base. The mono-cultural  economy  practiced  by  Nigeria  [i.e.  oil],  has  depressed other beneficial and elastic sector, as the economy now depends on oil as its major engine of growth and source of government revere. This and d the environmental degradation caused by oil extraction have caused a strain  between  the  oil  rest  of  country.  Corruption  has  also  done inalienable damage to the economy. In the last five years, government has not really implemented any of its budgets. The transparency international  [TI]  currently  rates  Nigeria  as  the  third  most  corrupt country  in  the  world,  which  to  many  observers  is  a  gross  under-assessment of the level of corruption that takes pale here. Therefore, the rampant outbreak of ethnic and religious violence are large attributable to the sharp decline of Nigerian’s economy and pervasive corruption in the society. [Umar, 2005:]. So, going by the above, Nigeria economic .problems can be summarized but not limited to:

(i)      poor industrial capacity  utilization

(ii)     massive unemployment and underemployment

(iii)    The rate of inflation is galloping freely.

(iv)    Embarrassing poverty rate

(v)     Poor wealth distribution/circulation system

(vi)    Over dependence on the oil sector as the major source of foreign exchange and government revere

(vii)   Outrageous level of corruption, e.t.c

1.3     OBJECTIVE OF THE STUDY

The main objectives;

In this research work, the main objective is to ascertain if NEEDS has made any impact on the Nigeria economy and to analyses such impacts. Other specific objectives:

(i)      To investigate how diligently the government has been keeping to its economics development roles.

(ii)     To ascertain the condition of the Nigeria economy before the invention of NEEDS.

(iii)    To   examine   how   effective   the   several   options   that   the government had employed to resuscitate the Nigeria economy were.

(iv)    To critically analyses the features of NEEDS.

(v)     To  determine  if  NEEDS  is  a  veritable  tools  to  salvage  the deteriorating Nigeria economy.

(vi)    To assess the performance of NEEDS so far.

(vii)   To   examine   the   possible   implementation   challenges   that NEEDS may encounter.

1.4    SIGNIFICANCE OF THE STUDY

(i) This work is in partial fulfillment of the requirements for the award of Masters in Business Administration (MBA) in Accountancy.

(ii)    This work will be an immense help to future researchers who will carry out their own investigations in this subject matter.

(iii)        This work will not fail to assist the government in regulating the economy  and serve  as  a guideline  for  future  economic polices and development strategies.

(iv)       This work will also help stakeholders [i.e. Nigerians] in understanding the working of the economy and how to better it.

(v)         This  work  will  be  helpful  in  restoring  or  rather  installing public confidence on NEEDS, encouraging people to support it through opinion pools, suggestions, and contribution by accepting the NEEDS as a gamine remedy to the current in conducive and in clement economic conditions.

1.5      RESEARCH QUESTION

(i)     Have  you  heard  of  the  national  economic  empowerment  and development strategy (NEEDS)?

(ii) How do you assess the performance of the Nigerian economy before the invention of NEEDS?

(iii) Since the invention of the 4year reform programmers in the year 2004 until date, has NEEDS created any reasonably impacts of the Nigeria economy?

(iv)    How  do  you  assess  the  role  of  government  in  the  nation’s economic development?

(v)     Have you felt any impact of NEEDS on the Nigerian economy since  the invention of four year economic  reform Package in March 2004?

(vi)     What type of impact has been felt?

1.6    STATEMENT OF HYPOTHESIS

1.6.1 HYPOTHESIS  ONE

The hypothesis used in this work adopted to check if NEEDS has really had any significant impact on the Nigerian economy. The adopted Hypothesis is as follows:

HO: NEEDS has no significant impact on the Nigeria economy.

Hi: NEEDS has significant impact on the Nigerian economy.

The above hypotheses were tested using chi-square approach.

1.6.2  HYPOTHESIS  TWO:   This   hypothesis   is   use   to   assess whether the performance of Nigeria’s economy before the invention of NEEDS. was as expected.

H1:  the  performance  of  Nigeria’s  economy  before  the  invention NEEDS was as expected

HO: the performance of Nigeria’s economy before the invention of NEEDS was below expectation.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

The area of this project is Enugu. The research is to determine if NEEDS can be used as a measure to buoy the sinking economy of Nigeria. The period under study is March 2004 to September 2005.

1.7.2 LIMITATIONS

In   the   process   of   carrying   this   study,   the   researcher encountered some problems, which include- finance: cost of access to areas where data are collected [i.e. Internet, libraries, banks, national planning  commission,  state  secretariat,  etc]  was  too  high  for  a student.  The  negative  attitudes  of some  CBN  officials  towards  the disclosures of information were a limiting factor. NEEDS is a new programme and as such have not textbooks and a few articles written on it. NEEDS being new in Nigeria has not gained popularity and consequently offered only respondents to the questionnaires distributed. Finally, the time for data collection always clashes with that of attending lectures and pursing other academic and social endeavors and as such was a limiting factor.

1.8     DEFINITION OF TERMS

To study NEEDS properly, it is pertinent that we understand the words used in forming the name “National Economic Empowerment and Development Strategy”.

Economic  Development:  According  to  ude  and  shaibu  [2003:12], Economic growth is the increase in the quantity of goods and services produced in a country over a year or stipulated period. While economic development on the other hand is all about the maturity of the quality and  quantity  of  goods  and  services  produced  in  a  country  over  a stipulated period usually a year going  by  the  above  definition,  goods  are  products  of  the  private sector  [i.e.  industries  not  under  government’s  control]  or  the  public sector[i.e.) Industries under government control that are tangible], while services represents the products of the private or public sectors that are intangible or invisible e.g. Banking, insurance, warehousing e.t.c.

Empowerment:  The   Longman   contemporary  [1995:450]   defined empowerment as to “give someone more control over his own life or situation. 

[2]  To give  organization the power or legal rights  do some thing.

Strategy: The same Longman [1995:1426] also defined a strategy as “a well planned series of  action for achieving an aim, especially success against an opponent.

An amalgamation of the above heading reveals that NEEDS can be defined as a well- planned service of actions for achieving a maturity of quantity of goods and services produced in Nigeria by Nigerians.

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