IMPACT OF INSURANCE INDUSTRY ACTIVITIES ON GROWTH IN THE DEVELOPMENT OF THE MANUFACTURING SECTOR IN NIGERIA

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Research questions

1.4        Objective of the study

1.5        Significance of the study

1.6        Scope of the study

1.7       Definition of terms

CHAPETR TWO

LITERATURE REVIEW

2.1 introduction

2.2 conceptual review

2.3 empirical review

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

Abstract

The study examine the impact of insurance industry activities on the growth and development of the manufacturing sector in Nigeria the role of insurance sector on economic growth cannot be over emphasized, however, no consensus has emerged on the impact of insurance development on economic growth. Hence the need to inquire not only the growth of the insurance sector in Nigeria but also how the sector has been able to enhanced the development of the manufacturing sector in Nigeria. The objective of the study is to examine the impact of insurance sector on economic growth, the study adopted stakeholder theory as the anchor of the study, the researcher adopted the descriptive and survey design for the study as it is more appropriate for the population of the study, the method of data analysis was the simple percentage and chi-square statistics

CHAPTER ONE

                                        INTRODUCTION

  1.1 Background of the study

The structure of the Nigerian economy is typical of an underdeveloped country. Over half of the gross domestic product (GDP) is accounted for by the primary sector with agriculture continuing to play an important role. The oil and gas sector, in particular, continues to be a major driver of the economy, accounting for over 95 per cent of export earnings and about 85 per cent of government revenue between 2011 and 2012. The sector contributed 14.8 and 13.8 per cent to GDP in 2011 and 2012, respectively. It also recorded an increase in reserves from 37.119 billion barrels (bbs) in 2012 from 36.042 bbs in 2011. In contrast, the manufacturing sector in Nigeria (comprising manufacturing, mining, and utilities) accounts for a tiny proportion of economic activity (6 per cent) while the manufacturing sector contributed only 4 per cent to GDP in 2011. This is despite policy efforts, over the last 50 years, and, in particular, more recently, that have attempted to facilitate the manufacturingization process. In this paper we explore the evolution of the manufacturing sector in Nigeria over the last 50 years. To set the context we begin by providing an overview of the policy framework for manufacturing development from the 1960s to the present day. At independence in 1960 and for much of that decade, agriculture was the mainstay of the Nigerian economy providing food and employment for the populace, raw materials for the nascent manufacturing sector, and generating the bulk of government revenue and foreign exchange earnings. Following the discovery of oil and its exploration and exportation in commercial quantities, the fortunes of agriculture gradually diminished while crude petroleum replaced it as the dominant source of revenue and export earnings. This is despite a drive for manufacturing development in Nigeria dating back to the early 1960s with the first National Development Plan for the period 1962-68. Insurance is one of the cornerstones of modern day financial services sector. In addition to its traditional role of managing risk, insurance market activity, both as intermediary and as provider of risk transfer and indemnification, may promote growth by allowing different risks to be managed more efficiently, promoting long term savings and encouraging the accumulation of capital, serving as a conduit pipe to channel funds from policy holders to investment opportunities, thereby mobilizing domestic savings into productive investment (Skipper, 1997 and Arena, 1998). According to Vayanos and Hammound (2006) a thriving insurance sector is not only evidence of an efficient financial service sector, but it is also a key barometer for measuring a healthy economy. During the last decades, there have been faster growth in insurance market activity in both developing and transition economies given the process of financial liberalisation and financial integration (Brainard, 2008), which raises questions about its impact on economic growth. As noted by Wachtel (2001), Favara (2003) and Levine (2004), research efforts so far have not examined the impact of other financial markets or instruments on economic growth in similar depth. Compared to the vast literature focusing on bank, stock and bond markets and their respective environment, the insurance sector has hardly been investigated in its role in the development of manufacturing sector. The few research efforts on the insurance-growth nexus, while emphasizing the importance of the topic, concentrated on a few countries over fairly short or distant time horizons (e.g. Catalan et al, 2000; Ward and Zurbruegg, 2000), dealt with specific subsectors (Beenstock et al, 1988; Browne and Kim, 2000) only, are concerned with contagion and other possible negative effects the insurance sector can transmit onto the economy (e.g. Das et al, 2003) or treats the insurance-growth-link rather as a side issue (e.g. Holsboer, 1999). Given the growing importance of the insurance sector and the increasing number of interlinks to other financial sectors, the evolving role of insurance companies in the development of manufacturing sector and stability should be of growing relevance for policy makers and supervisors.

1.2 STATEMENT OF THE PROBLEM

The insurance industry is one of the misrepresented businesses in the world today. This is mainly due to lack of knowledge on the part of the public concerning their activities. The degree of knowledge varies from century to century and is relative to the state of socio- economic development in each individual country concerned, which may in turn be governed by the level of the literacy component of each community.

In developing economy, problems association with the misconception of the impact of insurance to the development of the manufacturing sector are not as pronounced as in under developed countries, like Nigeria. All attempts in developing a sound insurance industry have been confronted by market distortions, high rate of inflation, various government regulations, unethical practices and fraudulent tendencies of the insuring public are overwhelming. This in turn affect the ability of this insurance companies to effectively provide insurance cover to manufacturing sector who are susceptible risk and mishap as a result of manufacturing activities.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to examine the impact of insurance industry activities on growth in the development of the manufacturing sector in Nigeria. But to aid the completion of the study, the researcher intend to achieve the following specific objectives;

1. i) To examine the impact of insurance sector on the growth of Nigeria manufacturing sector
2. ii) To ascertain if there is any significant relationship between insurance industry activity and the development of Nigeria manufacturing sector

iii) To examine the role of insurance sector in enhancing manufacturing activities in Nigeria

1. iv) To examine the effect of insurance industry activities on economic growth in Nigeria

1.4 RESEARCH QUESTION

The following research questions were formulated by the researcher to aid the completion of the study;

1. i) Is there any is any significant relationship between insurance industry activity and the development of Nigeria manufacturing sector?
2. ii) Does insurance sector have any impact on the growth of Nigeria manufacturing sector?

iii) Does insurance sector play any role in enhancing manufacturing activities in Nigeria?

1. iv) Does insurance industry activities have any effect on economic growth in Nigeria?

1.5 RESEARCH HYPOTHESES

The following research hypotheses were formulated by the researcher to aid the completion of the study;

H₀: there is no significant relationship between insurance industry activity and the development of Nigeria manufacturing sector

H₁: there is a significant relationship between insurance industry activity and the development of Nigeria manufacturing sector

H₀: Insurance sector does not have any impact on the growth of Nigeria manufacturing sector

H₂: Insurance sector does have an impact on the growth of Nigeria manufacturing sector

1.6 SIGNIFICANCE OF THE STUDY

The research is done a way that it will contribute to the body of knowledge of Insurance. The research work will help in popularizing the importance of insurance industry activities towards the achievement of the economic as of the country. The research work will give the general public the chance to learn about the principle on which insurance business operate and or remove doubt in the mind of the people with regards to the business style of insurance business. Finally, it is hoped that this research work would also make a great Contribution to academic development.

1.7 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the impact of insurance industry activities on the growth and development of the manufacturing sector in Nigeria. But in the course of the study, there are some constrain that limit the scope of the study which were beyond the researchers control;

TIME: A study of this nature needs relatively long time during which information for accurate or at least near accurate inference could be drawn. The period of the study was short, time posed as constraints to the research.

COST: The research would have extended the survey to other area at the empirical level, but limitation as included cost of transportation to the source of material and the cost of time setting of the already completed work.

LACK OF COOPERATION: Many of the respondents are usually aggressive to relay the issue that borders cooperation among the respondents border.

 1.8 OPERATIONAL DEFINITION OF TERMS

Risk: This can be said to be anything that occurs to an individual inform of loss something that is unforeseen, which could be detrimental partly or fully.
Fraudulent: This is illegal misappropriation of fund, which is recognized by law.

Inflation: This is where too much money is in circulation.
Distortion: This means the change in dimension of any matter or state of an event.

1.9 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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