1
NWOGWUGWU ULOMA O.
PG/MBA/09/53829
THE EFFECT OF GLOBAL FINANCIAL CRISIS ON
NIGERIAN ECONOMY
A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGEMENT, FACULTY OF
BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS
Management
UNIVERSITY OF NIGERIA
2011
Webmaster
Digitally Signed by Webmaster‟s Name
DN : CN = Webmaster‟s name O= University of Nigeria, Nsukka
OU = Innovation Centre
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THE EFFECT OF GLOBAL FINANCIAL CRISIS ON
NIGERIAN ECONOMY
BY
NWOGWUGWU ULOMA O.
PG/MBA/09/53829
DEPARTMENT OF MANAGEMENT,
FACULTY OF BUSINESS ADMINISTRATION,
UNIVERSITY OF NIGERIA,
ENUGU CAMPUS.
SEPTEMBER, 2011.
3
TITLE PAGE
THE EFFECT OF GLOBAL FINANCIAL CRISIS ON
NIGERIAN ECONOMY
BY
NWOGWUGWU ULOMA O.
PG/MBA/09/53829
BEING A DISSERTATION SUBMITTED IN PARTIAL
FULFILLMENT OF THE REQUIREMENT FOR THE
AWARD OF DEGREE OF MASTER IN BUSINESS
ADMINISTRATION (MBA) IN MANAGEMENT
DEPARTMENT OF MANAGEMENT,
FACULTY OF BUSINESS ADMINISTRATION,
UNIVERSITY OF NIGERIA,
ENUGU CAMPUS.
SEPTEMBER, 2011.
4
CERTIFICATION
This is to certify that this project was carried out by Nwogwugwu Uloma O. with
Registration Number PG/MBA/09/53829, in the Department of Management, Faculty of
Business Administration, University of Nigeria, Enugu Campus.
The work embodied in this research is original and has not been submitted in part
or full for any Diploma or Degree of this University or any other University.
Nwogwugwu Uloma
(Student)
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APPROVAL PAGE
This project has been approved for the Department of Management
By
__________________
Dr. C.A. Ezigbo
(Project Supervisor)
__________________
Dr. C.A. Ezigbo
(Head of Department)
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DEDICATION
To God Almighty and to my lovely mum Mrs. G.O. Nwogwugwu.
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ACKNOWLEDGEMENTS
The successful completion of this research was achieved after scaling through
some challenges
In this regard, I wish to express my gratitude to God Almighty who in his infinite
mercy saw me through the course of this study.
I express my sincere appreciation to my project supervisor and Head of
Department Dr. C.A. Ezigbo for sacrificing her time and using her vast academic
experience to ensure that this work is successful.
My special thanks and gratitude go to my wonderful parents Late Mr. and Mrs.
Nwogwugwu for their moral and financial support.
My profound gratitude goes to my friends; Agu O. Agu, Uche Amadi and Collins
Njoku for their contribution in one way or the other.
I am grateful may God bless you.
Nwogwugwu Uloma
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ABSTRACT
The study examines the effect of global financial crisis on Nigerian economy. The
objectives set for the study are; to determine the causes of the global financial crisis, to
ascertain the effects of global financial crisis, to suggest measures that would be taken to
manage the impact of global financial crisis in Nigeria. Primary and secondary data
were used, the population of the study was 1200 from which the sample size of 400 were
determined using Taro Yamani‟s formula. The research instruments used were
questionnaire and oral interview. The reliability of the research instruments were tested
using Pearson Product moment correlation coefficient; the result gave a reliability index
of 0.98 indicating a high degree of consistency. Chi-square and correlation analysis were
the statistical tools used. The findings from the study reveals that, decline in oil prices
and revenue, increase government expenditure and decline in market indices are the
challenges posed by financial crisis in Nigeria; consumption-based economy, poor
savings, high credit culture and huge financial outflow are the causes of the global
financial crisis in Nigeria; reduction in direct foreign investment and oversea
development assistance are the effects of global financial crisis to Nigeria and finally,
diversification of the economy, robust regulatory policies and professional supervision of
financial crisis in Nigeria. Based on the findings, the researcher made the following
recommendation: Nigeria should adopt tough policy measures as effective strategies
towards a comprehensive strengthening of the financial service sector, government
should ensure that policy recommendations are implemented in order to reposition the
Nigerian economy against the impact of global financial crisis, government should create
enabling environment to attract foreign investors in order to boost economic activities in
the country. Finally, government needs to sincerely focus on developing/strengthening
the economy and provide alternative sources of revenue on a sustained basis.
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TABLE OF CONTENTS
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Certification …
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Approval Page …
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Table of Contents
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List of Tables …
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CHAPTER ONE:
INTRODUCTION
Title Page
Dedication
Acknowledgements
Abstract
1.1
Background of the Study
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1.2
Statement of the Problem
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1.3
Objectives of the Study
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Research Questions
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Research Hypotheses …
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Scope of the Study
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Limitations of the Study
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Significance of the Study
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1.9
Definition of Terms
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References
CHAPTER TWO:
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REVIEW OF RELATED LITERATURE
2.1
Origin and Meaning of Global Financial Crisis
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Nature and Types of Global Financial Crisis …
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2.3
Major Causes of Global Financial Crisis
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2.4
Transmission of the Crisis to Nigeria …
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Challenges of Global Financial Crisis
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Effect of Global Financial Crisis in Nigeria …
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Consequences of the Global Financial Crisis …
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2.8
The Bad News and Good News of the Global Financial Crisis in Nigeria 20
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2.9
Steps Taken to Control the Crisis and it Responses …
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Solutions to the Impact of Global Financial Crisis in Nigeria
References
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RESEARCH METHODOLOGY
3.1
Area of the Study
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3.2
Sources of Data
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3.3
Population of the Study and Sample Size Determination
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3.4
Description of Research Instruments
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Validity of the Research Instrument …
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Reliability of the Research Instrument
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3.7
Method of Data Analysis
References
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DATA PRESENTATION, ANALYSIS
AND INTERPRETATION
4.1
Analysis of Questionnaire Distributed and Returned …
4.2
Testing of Hypotheses…
CHAPTER FIVE:
5.1
Major Findings
5.2
Conclusions
5.3
Recommendations
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SUMMARY OF FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS
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Bibliography …
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Appendix II …
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Appendix I
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LIST OF TABLES
Table 4.1:
Questionnaire Distributed, Returned and Not Returned
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Table 4.2:
Sex Distribution of the Respondents …
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Table 4.3:
Educational Qualification of the Respondents
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Table 4.4:
Staff Category of the Respondents
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Table 4.5:
Working Years of the Respondents …
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Table 4.6:
The Challenges of the Global Financial Crisis in Nigeria
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Table 4.7:
The Causes of the Global Financial Crisis
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Table 4.8:
Table 4.9:
The Effect of Global Financial Crisis to Nigeria
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Measure that would be taken to manage the Impact of
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Global Financial Crisis in Nigeria
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Table 4.10:
A Contingency table (reproduced from table 4.6) for hypothesis testing 42
Table 4.11:
A contingency table (reproduced from table 4.7) for Hypothesis I
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Table 4.12:
A contingency table (reproduced from table 4.8) for Hypothesis II
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Table 4.13:
A contingency table (reproduced from table 4.9) for Hypothesis III
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CHAPTER ONE
INTRODUCTION
1.10
BACKGROUND OF THE STUDY
Nigeria is interlinked with global financial system. As such global financial crisis
which was originated from the year 2007 mainly in U.S.A and spread in the latter part of
the year 2008 among developed nations and subsequently shifted to developing nation
has impact on the domestic economy of Nigeria. The country is in a difficult situation as
it faces, imbalances, lack of transparency in the financial markets and non-applicability of
domestic safety net.
The government has been facing the impact of global financial crisis on the
domestic economy. Nigeria is a part of the global economy, as such she has to face the
danger of the global financial crisis, which has both micro and macro impact all over the
World.
The current global financial and economic crisis started as a series of malfunction
in the financial markets, leading to credit and liquidity crises, which led to the collapse of
several „big‟ financial institutions, together with the loss of confidence in the banking
sector. It further transmitted to the real sectors, leading to decline in aggregate demand
and bringing about negative growth and job losses. The scale and speed of transmission
of the crisis and its attendant consequences presented huge global challenge such that it
has been variously described in such extreme vocabulary as “global financial meltdown”,
“global economic meltdown”, “global credit crunch” and so on.
A financial crisis is often characterized by credit crunch an disorderly contraction
in money supply and wealth creation. A credit crunch occurs when participants in an
economy lose confidence in having loans as well as recall existing loans. The great
depression occurred after a dramatic expansion in debt and money supply in the 1920‟s.
Then, an equally dramatic contraction occurred between 1929 and 1933 as debt was
default upon and resulted in a contraction in money supply and wealth.
The latest financial crisis, which has metamorphosed into a global economic
crisis, similarly has its origin in rapid risky debt accumulation. The spread of the crisis,
also now referred to as global financial meltdown, across the globe due to the fact that the
world economy has become highly interconnected as a result of the forces of
globalization operating through the network of global economic and social linkages. The
domestic economy is linked to the rest of the world economy through three markets,
namely, goods market, factor market and assets market (money and financial market).
The rest of the world influences each of this market and hence the domestic economy.
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Thus, although the current crisis has derived from a credit crunch in the United States, It
has spread to both develop and developing countries through trade and financial linkages.
And implications have tended to be the same in the economies affected by the crisis.
1.11
STATEMENT OF THE PROBLEM
The impact of the global financial crisis on the Nigerian economy was
multifaceted as it led to a dwindling of government revenues, affected the Nigerian
currency, declining capital inflows, capital market down turn, divestment by foreign
investors with tightness and possible second round effects on the balance sheet of banks
by increasing provisioning for bad debt and decrease in profitability, weakened the
banking sector and fueled unmatched stock market crash, undermining confidence in the
financial sector.
Also, it resulted in a retardation in Gross Domestic Product (GDP), Worldwide, as
consumer spending, consumer demand and industrial output declined, while
unemployment rose; commodity prices fell sharply including oil sector which fell from a
peak of USD 147 per barrel in July 2008 to USD 33 per barrel by December 2008. given
the Nigerian economy is heavily dependent on the oil sector, the major problem on
Nigeria was the decline in oil prices which led to a dramatic decline in government
revenue as oil makes up 80% of budgeted revenues 90% of exports and 33% of GDP.
Thus, the study focuses on the effect of global financial crisis on Nigerian economy.
Nigeria economy is faced with so many global financial catastrophes. All
economic indices, including oil prices are down. The purchasing power of the people is
increasingly being eroded and the standard of living on steady decline. Major businesses
are collapsing, unemployment and inflation rates are spiraling out of control, stock
market indices recently have defied bookmakers‟ prediction and analysis and there is
global food scarcity
The global economy has been in recession as the gap between the global
economic potential growth and the actual growth performance widened over the period of
the crisis, particularly since January 2009. Families‟ life dreams had been destroyed as
they lost their homes, their jobs and their life savings in various markets in different
jurisdictions. The systemic breakdowns brought about by the phenomenon have caused
real crisis for all categories of economic agents across societies.
1.12
1]
2]
OBJECTIVES OF THE STUDY
The specific objectives of the study include the following:
To ascertain the challenges of the global financial crisis in Nigeria
To determine the causes of the global financial crisis in Nigeria
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3]
4]
To ascertain the effects of the global financial crisis to Nigeria
To suggest measures that would be taken to manage the impact of global financial
crisis in Nigeria.
1.13
RESEARCH QUESTIONS
To achieve the above objectives, the following research questions were raised:
What are the challenges of the global financial crisis in Nigeria?
What are the causes of the global financial crisis in Nigeria?
What are the effects of global financial crisis to Nigeria?
What are the measures to be taken to manage the impact of global financial crisis
in Nigeria?
1.
2.
3.
4.
1.14
1)
RESEARCH HYPOTHESES
For the purpose of the study the following research hypotheses were formulated:
Ho :
Decline in oil prices and in revenue, increase in government expenditure
and decline in market indices are not challenges posed by financial crisis
in Nigeria
Hi :
2)
Ho :
Hi :
3)
Ho :
Hi :
4)
Ho :
Hi :
Decline in oil prices and in revenue, increase in government expenditure
and decline in market indices are the challenges posed by financial crisis
in Nigeria
Consumption-based economy, poor savings, high credit culture and huge
financial outflow are not causes of the global financial crisis.
Consumption-based economy, poor savings, high credit culture and huge
financial outflow are the causes of the global financial crisis.
Reduction in direct foreign investment and oversea development
assistance are not effects of global financial to Nigeria.
Reduction in direct foreign investment and oversea development
assistance are the effects of global financial crisis.
Diversification of the economy, robust regulatory policies and
professional supervision of financial institutions are not measures to be
taken to manage the impact of global financial crisis in Nigeria.
Diversification of the economy, robust regulatory policies and
professional supervision of financial institutions are measures to be taken
to manage the impact of global financial crisis in Nigeria.
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1.15
SCOPE OF THE STUDY
The study covers the effect of global financial crisis in Nigeria. It is really an
evaluative study, which looks at the types, causes, challenges and consequences of the
global financial crisis in Nigeria.
1.7
LIMITATIONS OF THE STUDY
The constraints encountered while carrying out this study are:
Time Constraint: The researcher was faced with insufficient time to carry out the study.
Due to time constraint, the researcher could not visit places where information relevant to
the study could be obtained.
Financial Constraint: The researcher faced a lot of financial challenges during the
course of sourcing materials for the study, also included was the cost of printing and
reprinting of the work for a better result.
Attitude of the Respondents: Some of the respondents were unwilling to corporate with
the researcher, they felt that they would not benefit financially from the study and equally
have the mind set that the secret of the organization will be explored.
1.8
SIGNIFICANCE OF THE STUDY
The study determines the implications of the global economic crisis on Nigerian
economy. Since Nigeria is part of the global village and what happens in other
communities, especially the western world (the US) affects Nigeria, the study will enable
Nigerians to think globally but act locally in maximizing the benefits of globalization and
mitigating the costs and challenges of globalization.
Since this is a pioneer study, the findings will serve as a benchmark for further
research.
1.9
DEFINITION OF TERMS
Financial Crisis
Financial crisis is a sudden wide-scale drop in the value of financial assets or in
the financial institution managing those assets. (Obadan, 2008).
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Economic Crisis
This generally refers to a sudden negative turn of events in the economy. It is
usually characterized by general slow down in economic activity over a sustained period
of time. This slow down can be regarded as a period of stagnation, recession or
depression.
Stagnation, Recession and Depression
This is regarded as a long period of economic slow down that is not characterized
by negative growth. If the stagnation is characterized by a negative GDP lasting between
six months and two years it is called recession. If the stagnation prolongs beyond two
years then we have what is called Depression (Onyukwu, 2009).
Economic Meltdown
This is specifically the term used to capture the current slow down in economic
activities that began in US and spread over the whole World in 2008 and 2009. The
characteristics of this slow down are such that it can be grouped under recession
(Onodugo, 2009).
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REFERENCES
Obadan, M.I. (2008), “The Global Economic Recession and Challenges for Nigeria”, A
paper presented at the National Symposium on the Global Financial Crisis
Organized by African Institute for Applied Economics, in Abuja, June 18
Onodugo, V.A. (2009), “Global Economic Meltdown: Causes, Consequences and
Responses,” A paper being processed for publication.
Onyukwu, E.O. (2009), “The Nature and Transmission of the Global Financial and
Economic Crisis”, A paper presented at the National Symposium on the Global
Financial Crisis organized by African Institute for applied Economics, in Abuja
on June 18.
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CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1
ORIGIN OF GLOBAL FINANCIAL CRISIS
The crisis began in the United States of America and spread to Europe and finally
engulfed other parts of the world. Most analysts agree that the closest point of origin of
the global financial crisis the collapse of the US real estate market in 2006 and the
subsequent sub prime mortgage crisis triggered by a dramatic rise in mortgage
delinquencies and home foreclosures by 2007. The high failure rates of the sub-prime
mortgage were, however, just the symptom of the end to a long period of credit boom in
the United State. Thus, analysts believe that the ultimate point of the origin of the global
financial and economic crisis can be traced to an extremely indebted US. Economy
supported by a long regime of easy credit (Stiglitz, 2008).
The term Global financial crisis is used to refer to situations in which some
financial institutions or assets suddenly lose large proportions of their value. Global
financial crisis are usually associated with banking panics, stock market crashes and the
bursting of other forms of financial bubbles, currency crises and sovereign defaults.
The term economic crisis is used to refer to broaden systematic problems in the
real sector of the economy. Economic crisis is usually associated with a general slow
down in economic activity over a sustained period of time. Such a slow-down may be
called a period of economic stagnation, a recession or a depression. A long period of
economic slow-down that is not characterized by negative growth is regarded as a period
of economic stagnation.
A period of negative GDP growth lasting up to six months or more is called a
recession while a prolonged period of economic recession is called a depression. Key
macroeconomic aggregates such as, GDP, growth, employment, investment spending,
capacity-utilization, household incomes and business profits usually record decline
during a recession.
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It is called a global financial crisis because it has brought about huge reduction in
global output and employment as well as diminished cross-border financial flows. It is
indeed a crisis that has global outreach in the sense that no country has been spared its
consequences. It has manifested like a virus attack on critical sectors of most national
economics, often starting from the financial sectors and spreading to real sectors, leaving
in its trial huge declines in output and employment with attendant consequences on poor
and vulnerable groups. (Anyanwu, 2009).
2.2
NATURE AND TYPES OF GLOBAL FINANCIAL CRISIS
According to Soludo (2008), global financial crisis may be triggered by variety of
factors, but the situation is typically aggravated by negative investor sentiment-fear or
panic. The global financial crisis can be categorized into five types namely;
2.2.1
Banking Crisis
This is triggered by a sudden withdrawal of bank deposits by several clients, a
situation known as bank run. Banks may not have sufficient funds to simultaneously pay
back numerous depositors, since they loan their funds. This credit crunch situation
impacts the economy, as its affects production as well as consumption.
2.2.2
Bursting of a Bubble
Financial bubbles are caused by the over valuation of assets, with prices
exceeding with current value of the future income expected to be generated by these
assets. Bubbles are doomed to eventually burst, with crashing prices.
2.2.3
Currency Crisis
A country that maintains a fixed exchange may have to suddenly devalue its
currency. This often leads to a sudden drop in foreign investment.
2.2.4
Sovereign Default
A government may fail to repay its sovereign debt. This often leads to a sudden
decline in capital inflows and a spike in capital outflows.
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2.2.5
Wider Economic Crisis
An economy may go through period of slow or negative GDP growth. While slow
economic growth may be called economic stagnation, negative GDP growth for more
than a couple of quarters is recession. A prolonged recession is called depression (Eboh,
2010).
2.3
MAJOR CAUSES OF GLOBAL FINANCIAL CRISIS
Emerging facts show that the immediate cause of the crisis is the bubble that
busted in the mortgage industry in the U.S. However, before the burst and collapse of the
U.S. mortgage market, there must have been unnoticed accumulated pressure on the
system which was either neglected or not properly attended to. This view is supported by
Agulanna (2009:2) when he opines that “before the financial meltdown sets in, a financial
system such as banks must have experienced prolong distress which may not have been
noticed or detected or which may be hidden from the investing public”. Consequently,
this work will look at both the Immediate and Remote causes of the global financial
crisis.
2.3.1
Immediate Causes of the Global Financial Crisis
There is convergence in the literature that the immediate cause of the global
financial crisis (between 2007-2009) was the collapse of the US mortgage market which
was transferred to other financial markets and led to the collapse of major financial
institutions with the attendant jobless, crisis of confidence on the system, panic
withdrawal and high incidence of risk averse posturing among investing public.
Specifically, two related factors could be said to have laid of foundation for the
current global financial crisis. One was the boom in the US home market between 1997
and 2006. The prices of home recorded over 124% increase within the period, which
naturally attracted the attention of the investing public. To sustain the market boom, the
brokers enticed home buyers with low income and questionable credit pedigree to take
mortgage loans in what is called Sub-prime loan arrangement. These sub-standard loan
arrangements were repackaged and sold to other unsuspecting financial institutions using
financial derivatives in what is called securitization. This arrangement allowed investors
to invest on the financial integrity of the selling institution not on the credit worthiness
of the original debtor.
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The second factor was happening during the regime of easy credit and weak
financial surveillance in America. The then chairman of the Federal Reserve Bank, Alan
Greenspan, for whatever reason, did not believe in regulating the use of financial
derivative. If anything, he encouraged its use when he lowered the Federal Fund Rate to
1% for more than a year. This helped to make fund available for the reckless mortgage
securitized investment. The chicken came to roast when sometime in 2006, home prices
began to fall and it was difficult to refinance mortgages because of the decline value of
the asset on which they were secured.
Given this scenario, the sub-prime mortgage owners began to default leading to
foreclosures of their homes. With more defaults and foreclosures the prices and value of
mortgages began to tumble. Within three months (between March and October, 2007)
the market has lost and 200 billion as a result of default. Other financial institutions
which invested in the derivatives began to suffer significant losses. This began to spread
in and out America.
2.3.2 Remote Causes of the Global Financial Crisis
It is believed that is precipitate factors that led to the eventual collapse of the
American, and by extension, the global economy must have been on far before it
manifested in 2007. What shall be done here is to paint the broad picture of some of the
inherent structural imbalances in the America economic system that must have
predisposed the system to vulnerability and volatility. Some of them are discussed as
follows:
1.
Consumption – Based Economy:
For a long time before 2007, American people have, contrary to economic
principle, turned into a consumer not an investing nation. It is common knowledge that
America became the largest market for any known consumer not an investing nation. It is
common knowledge that America became the largest market for any known consumer
product in the world. It was such that manufacturers of products must do “American
specification”, for them to sell a good chunk of their products. America, in the process
“massively owned” the rest of the world, particularly china in the last couple of years,
through accumulated trade credits and dollar denominated foreign reserves.
22
Unfortunately, America was using these credits from other countries to fund consumption
and housing rather than investments that created exportable goods”. (Onyukwu 2009:6).
The tendency created structural imbalance in the economy no country or business
unit can survive for a long time when it is consuming more than it invests in production.
2.
Poor Savings and High Credit Culture
The vogue in America for a very long time is a move away from cash to credit
economy while this has its own merits; it gradually made Americans have generated
debts that will take more than half their life span to amortize. People buy cars, homes and
other consumer goods that take sometimes up to twenty years of steady stream of income
to liquidate. It is considered strange in America for one to make down payments for
goods purchased. Again, this tendency is grossly antithetical to economic principle of
growth and sustainability. In economic theory, it is the accumulated savings that is used
to mate investments so as achieve economic growth and development. Given this
economic posturing, all that is required for the economic to come tumbling is for most
people to lose their source of income, which is most case is the only basis for retiring the
loan.
3.
Huge Financial Outflow Spent in Prosecuting War against Terrorism
The September 11, 2001 attack provoked an immediate re-definition of the
American international defense policy. It deployed a lot of resources to prosecute war
against terror. Albert, it seems that American has little options regarding defending itself,
it however under estimated the length of time it will take and the tale it will take on
American and the global economic. The war on terror took over seven years and tens of
billions of dollars was expended in the process. All these stretched American economy to
its limit and added insult to injury to the already vulnerable economy.
4.
Inadequate Regulatory Framework
It was evident that the American regulatory framework was weak, the attitude of
the regulators toward the use of financial derivatives and provision of easy credit for
reckless consumption rather than for investment showed that it was inadequate to check
the abuses in the system. This is however, not unconnected with prevailing economic
ideology of the time represented in the Washington consensus”.
23
Predominantly, the economic doctrine believes in rule-based economic
management with minimal intervention and discretion this was why the government
began massive intervention when the bubble busted.
5.
High Incidence of Fraud and Corruption:
This is another factor that put stress in the system leading to its eventual collapse.
Towards the build-up to the financial crisis, America began to witness an increased spate
to corporate corruption and fraud.
This was further worsened by complicity by audit and accounting firms. All these
put pressure on thee system making it more vulnerable to collapse (Oyebode,2009).
2.4
TRANSMISSION OF THE CRISIS TO NIGERIA
The transmission of the global financial crisis to Nigeria has been two-fold,
namely, the contagion and second- round effects.
2.4.1
Contagion Effects
Prior to the crisis, the Nigerian stock market witnessed bearish trends evidenced
in the sharp rise in the market capitalization. The situation portrayed the Nigerian stock
market as one of the fastest growing among emerging economies. Apparently, among
other factors, the market was boosted by considerable inflow of foreign finance. This
became one of the main contagion points, as the global financial crisis triggered
withdrawals of foreign investment in equities. Nigeria has become highly vulnerable as it
had become one of the emerging markets in Africa because of the rapid growth of the
Nigeria stock market in the past few years. The Nigeria stock market, with a rising profile
as an investment destination, a promise of a good return on investment, had attracted a
good chunk of foreign capital flows before the wave of the global financial crisis began
spreading. As we had pointed out earlier, capital markets usually have relatively high
vulnerability to a financial crisis considering the level of the Nigerian stock markets
exposure to foreign portfolio flows; it was affected by the panic withdrawal of investment
in equities associated with the global financial crisis. The capitalization of the market was
considerably affected as it fell from about N13 trillion as of July 2007 to less than N5
trillion by the end of 2008. The panic attack on the market may, however, have been
heightened by the ensuing spiral decline in stock values and the corresponding panic by
24
local banks given their relatively high exposure to the market through the margin facility.
It is, however important to note here that the Nigerian stock market has regained
considerable strength since January of 2009 after that initial wave of speculative attack
on it.
2.4.2
Second-Round Effects
The Global Financial Crisis was transmitted to Nigeria through what is commonly
known in the literature as the second round effect of the global financial crisis. The global
financial crisis has greater impact on Nigeria through the ensuing global economic
recession, which has brought about reduced global demand and lower prices of
commodities such as oil, as well as, reduction in financial flows to the country through
foreign direct investment, remittances trade finance and aid (Anyanwu,2009).
2.5
CHALLENGES OF GLOBAL FINANCIAL CRISIS TO NIGERIA
The increased interconnectedness of the global economy means that financial
crisis posed greater changes than ever before. Global financial crisis has disrupted the
lives of individuals in industries and nations far removed from the initial disturbances.
The most important mechanism through which the global economic recession
affected Nigeria‟s economy was through a decline in the price of oil. Throughout the
2000 there was a sustained boom in oil prices with the price of Bonny light peaking at
$147 per barrel in July 2008. The causes of this boom were increased demand due to
sustained world economic growth from 2003 to 2008 and in elastic supply. Supply was
inelastic in the 2000s because there was limited capacity in intermediate industries to
supply the necessary in puts for increased production.
This limited capacity occurred as in the 1980s and 1990s when excess capacity in
oil production and low prices meant there was little demand for these firms‟ products. So,
when spare capacity was exhausted in the early 2000s, supply could no longer keep pace
with strengthened demand. Consequently, prices increased.
The declining oil price combined with the general lack of confidence in Nigeria
economy led to sharp fall in the naira to dollar exchange rate from November 2008 to
January 2009. The decline in the price of oil also contributed to a severe decline in the
current account balance as a percentage of GDP.
25
Global financial crisis can both decrease revenue and increase expenditure.
Recession often lead to increased expenditure in developed countries as increased
unemployment and poverty automatically lead to increased welfare spending by
governments.
This can lead to increased national debt and macro economic instability. But, it
can also stimulate aggregate demand, decreasing the length of the recession of helping
recovery. Welfare spending can also partially ameliorate the human costs of economic
recession. Nigeria does not currently make significant social welfare expenditures and
thus expenditure does not automatically increase when economic growth slows or
poverty increase. It follows that the global crisis has not undermined macro economic
stability by increasing expenditures to an unsustainable level in Nigeria. However, it also
means that expenditures automatically made to reduce the hardship brought about by a
slow down in economic growth or to stimulate aggregate demand.
Also the global financial crisis manifested in the decline of market indices
(overall index and market capitalization) of the Nigerian Stock Exchange (NSE). The
NSE All-share index declined by 36.9% in the first quarter of 2009 from the level
preceding quarter. Relative to the corresponding period in 2008, total stock market
turnover volume and value fell by 72.3% and 89.2%, respectively, in the first quarter of
2009 (CBN, 2009a). Infant, the Nigerian Stock market recorded an average loss of more
than half the wealth invested at the end of July 2008. The Nigeria Stock Market losses
were believed to be magnified by the pre-crisis stock over valuation and limited
diversification of stocks. Aggregate foreign exchange flows through the economy showed
that total inflow in the second quarter of 2009 declined by 31.8% and 52.0% from the
level in the preceding quarter and the corresponding period of 2008 (CBN, 2009a)
For Nigeria in particular, the present economic downturn has underscored the
risks of heavy reliance on single export commodity-crude oil. It raises the stakes for
domestic resource mobilization, economic diversification and fiscal discipline in the
country.
Moreover, it has highlighted the Central Economic Role of financial markets and
the fact that the domestic financial system is closely linked to the dynamics of global
finance, just as it its real economy (Onyukwu, 2009).
26
2.6
EFFECT OF GLOBAL FINANCIAL CRISIS IN NIGERIA
Although the Nigerian economy has huge potentials for growth and development
with its vast endowment of natural and mineral resources, the country has been held back
by decades of economic mismanagement. This is why the economy is already feeling the
adverse effect of the global financial crisis against the backdrop of its strong linkage to
the global economy through international trade and finance, that is, through export and
import of goods and services, and capital inflows and outflows. In this regard, crude oil
exports and refined petroleum products imports are particularly significant.
2.6.1
Government Finances and Fiscal Operations
This is a most visible area of impact because of the Nigerian economy‟s heavy
dependence on foreign trade, particularly, crude oil exports for government revenue and
foreign exchange earnings. Reduced demand for oil and the crashing of crude oil prices
have negative impacts on government finances: domestic revenue from oil and foreign
exchange earnings. The crude oil price is the major mechanism through which the impact
of the global recession is transmitted to the Nigerian macro economy. Crude oil prices
stood at about US $40 per barrel as at the first week of February, 2009 (over US$50 in
May) compared to US$147.00 per barrel in July, 2008. Because of the anticipated
shortfall in oil revenue this year, a huge fiscal deficit of N1.09 trillion, or 3.95% of GDP
was projected in the 2009 Federal Appropriation Bill. Already, tax revenue and foreign
exchange earnings have been negatively impacted. Realized government revenue from
January to March, 2009, was N353 billion compared to N477 billion expected, implying
a short fall of N124 billion. Foreign exchange earnings have dropped significantly.
Realized fiscal deficit in 2009 may be higher that what has been projected in the 2009
Appropriation Act. If government spending is adversely affected by dwindling finances
this year, then the recessionary effect on the rest of the economy may be significant,
considering that government spending as a percentage of GDP, unlike in many other
economics, is quite substantial.
2.6.2
Macroeconomic Performance
Growth prospects: Already the global financial crisis is having far reaching
effects on macroeconomic variables in the economy. Contrary to the optimism of senior
27
government officials, the economy may experience significant contraction in that the high
growth rates recorded in the past few years may slow down significantly. The growth of
the non-oil sector upon which much hope is placed by government may slow down
because of the problems in the oil sector. And so, the growth projections of 7.5-8.9% in
the 2009 Federal budget are hardly realistic.
1.
Balance of Payments and Exchange Rate: There is the possibility of a balance
of payments crisis and currency/exchange rate crisis. There has been an increased
outflow of capital, particularly portfolio investment. Portfolio investors have been forced
to liquidate their funds. Foreign exchange reserves have continued to be depleted.
Reports indicate that the stock of foreign exchange reserves which stood at over US$60.0
billion by the middle of 2008, currently stand at about US$46.0 billion. Consequent to the
shortfalls in foreign exchange earnings/supply along with intensified capital flight, the
naira has since early December 2008 been experiencing continuous pressure in the
foreign exchange market. At some point this year, the exchange rate at N160:&1.0
portrayed a depreciation of 27.5% compared to the level of N1160.0:$1.0 as at November
ending. The Government gave signal on the expected direction of the exchange rate when
it fixed the rate at N125:0$1.0 in the 2009 budget. However, government seems to be
showing concern about the developments as it had set up economic management steering
committee on the global financial crisis.
2.
Inflation and Interest Rates: These are very likely to maintain their upward
trend that was observed in 2008. Inflation will worsen as a result of the “pass-througheffects” of exchange rate depreciation and the financing of fiscal deficits. The food price
inflation was about 20 percent in 2008. Interest rates will trend upwards considering the
depreciating naira and fiscal deficit.
3.
External Debt: Nigeria exited from burdensome external debt in 2006 following
the relief obtained from the Paris Club. Now, Government plants to borrow US$500.0
million from the International Capital Market in 2009 to finance the projected fiscal
deficit. Both chambers of the National Assembly have approved the loan. This may well
mark the beginning of the country‟s unsustainable debt path as it is not clear if the
nation‟s economic managers have learned any lessons from the past.
28
2.6.3
The Financial Sector
There have been some notable developments in the Nigerian financial markets in
the last few years. Internationalization of the financial sector grew following the
liberalization measures of the late 1990s. Portfolio investors were attracted to the capital
market against the backdrop of the oil boom and high returns. Following the bank
consolidation exercise, the banks became highly capitalized and have larger amounts of
shareholder‟s funds with them than ever before. Some of them developed strong links
with the global financial system and were able to borrow from financial institutions
broad. A number of the banks developed offshore banking. So, links were established
with the global financial system through borrowing from abroad and investment in
Nigeria.
Now, with the global financial/economic crisis, there has been some withdrawal
of funds/placements by many international banks/institutions that extended credit to
Nigerian banks and businesses. Recall of funds by foreign banks has become much more
than ever before. There has been intensification of capital flight which is compounding
the downturn in the capital market as well as reduction of confirming lines by foreign
banks to their Nigerian counterparts. There have been belt-tightening measures on the
part of some Nigerian banks as part of strategic measures to minimize impact, including
slowing down lending activities. Inspite of the international crisis, the monetary authority
have continuously assured the Nigerian people that various indicators portray the
Nigerian banks as being in a state of good health. According to the ( CBN,2009a)
“Nigerian banks are robust and strong enough to take losses and they are protected from
the full effects of the global financial system. It can then be inferred that given the high
degree of capitalization of the banks; their continued posting of huge profits and their
strategic moves at the moment, they should be able to withstand shocks. They should
endeavour to boost confidence in the capital market by enhancing the liquidity of that
market. This is rather uncertain, given the revelation in the first week of February 2009
by SEC that the banks have hundreds of billions of naira unsecured loans to the capital
market.
29
2.6.4
Effects on the Stock Market
The global financial crisis has worsened the crisis in the Nigerian stock market,
engendered by a crisis of confidence, manipulation and overpricing of securities.
Nevertheless, reduced capital inflows and increased outflows occasioned by the global
crisis contributed to the crash of the Nigerian stock market. Share prices trended
downwards mirroring global trends. Reports have indicated that the stock market lost 45
percent of its value in 2008 and has lost over 37 percent since the beginning of 2009. This
has had a serious impact on banking systems exposure to the capital market estimated at
about N784.0billion (10% of total banking loans). The assets pledged for the loans by
investors are the shares purchased and because of the accelerated loss in share value, the
assets have been dubbed “toxic assets”.
2.6.5
Effects on the Real Sector
The real sector, particularly, the industrial sector, even before the crisis, was
already highly constrained by numerous problems which include high cost of production,
infrastructural failings, high interest rates, multiple taxes, insecurity etc. with the global
financial crisis, the sector‟s problems are being compounded by a depreciating naira in
the foreign exchange market, rising interest rates, rising cost of diesel etc. The
manufacturing sector is import dependent and is currently finding it difficult to establish
letters of credit due to the fall in the value of the naira, rising interest rates and low
foreign exchange supply in the market. Operators in the sector are Jeffery anticipating
more hard times in terms of lower investment, lower profits and possible retrenchment.
This is the more so, in view of the slowing of global demand. Those of them that strive to
export manufactured goods would be negatively affected (Agulanna,2009).
2.7
CONSEQUENCES OF THE GLOBAL FINANCIAL CRISIS
Due to substantial fortification of the Nigerian financial system following
consolidation, it was initially though that Nigeria will be insulated from most of the
consequences. However, with time it became obvious that no nation is spread of the
sweeping consequences of the global financial crisis. Specifically, the consequences of
the meltdown on the Nigerian economy are as follows;
30
2.7.1
Oil Prices Glut and Decline GDP
The first major hit of the global recession was the prices of the crude oil which
regrettably is our major foreign exchange earner. With declining global output of goods
and services, the demand for oil fell and with it, the prices of oil. Oil that sold for up to
$140 per barrel for most of last year hovered around $50 to $60 per barrel. This affected
our earnings and foreign reserves. This fiscal imbalance led to tight budget constraints
and fund squeeze in the economy.
2.7.2
Collapse of the Capital Market
There is hardly anywhere in the world where the capital market witnessed the
level of divestment and declining capitalization as in the Nigerian Stock Exchange (NSE)
market. Prior to the crisis, NSE was reputed as one of the fastest growing capital market
with promise of good return on investment. This posturing attracted hedge funds and FDI
from overseas to the market. With the crisis, most investors withdraw their monies and
the migrant remittances into the market ceased and the market began to tumble. Available
records show that the share lost up to 70% of its original value before the crisis.
Specifically, the market capitalization fell from N13 trillion as at July 2007 to less than
N5 trillion by the end of 2008.
2.7.3 Reduction in Oversea Development Assistance and Foreign Direct
Investment (FDI)
There is no doubt that the volume of grants, aids and development assistance from
the developed countries into the country dwindled considerably as a result of the crisis.
The same for FDI from overseas. The benefactor nations spend most of their resources
trying to cope with the challenges associated with the crisis that little is left to extend to
developing countries like Nigeria.
2.7.4
Rising Tide of Corruption and Social Vices
The global financial crisis exacerbated the already bad unemployment situation in
the country. This is believed to have given rise to the increased incidence of social vices.
The advanced fee fraud otherwise known as “419” is still in increase. It is common to see
a litany of unemployed youths in the cyber café looking for whom to trap and dupe. The
31
spate of kidnapping for ransom has been on the increase in the country. All these are
believed to be survival strategies as a result of the crisis.
2.7.5
Devaluation of Naira and Rise in Inflation
The sharp drop in the prices of oil led to the depletion of the accumulated forex
reserve to sustain imports. With time, Nigeria has no choice but to devalue its currency in
the foreign exchange market. This led to increase in the prices of imported goods and
worsening of the standard of living of her citizenry (Soludo, 2008).
2.8 THE BAD NEWS AND GOOD NEWS OF THE GLOBAL FINANCIAL
CRISIS IN NIGERIA
2.8.1
Nigeria Banks were affected negatively
Easy credit from financial institutions had dried up for Nigerian banks. This has
raised the cost of funds indirectly locally. Also the crisis of confidence that has plagued
the International Inter-Bank Market has impacted negatively on the International
Finance Operations of Nigerian Banks.
2.8.2
The Downturn of the Nigerian Capital Market
The downturn in the Nigerian capital market is speculated to have been sparked
off when hedge funds withdrew about N1.5 trillion from the market. With the current
global downturn, this capital may not return soon, meaning the market may never regain
the momentum to saw it rise to new highs. Nigeria‟s capital market is currently rated as
one of the worst performing in the World.
2.8.3 Oil Revenues Dropped
Oil prices currently hover at a low of $43-$53, about one third of its $150 high
price in July 2008. This has had a crunching impact on Nigeria which earns about 90
percent of its income from sales of crude oil. Drop in oil revenue mean less revenues for
the government. That means less money to build new infrastructure, invest in new oil
production and raise our reserves and fall in our external reserves which Nigeria has
consistently built up in the last eight years. The immediate impact has been in the steep
fall in the value of the naira against the US dollar as forex inflows have dried up.
32
2.8.4
Remittances Dropped
Firms are collapsing and those not collapsing are cutting jobs. Obviously, the jobs
at risk most are those of immigrants. Fear of jobless and actual job losses are expected to
impact negatively on remittances which has become a big source of earnings for
economically disadvantaged Nigerians.
The Good News of the Global Financial Crisis in Nigeria is that:
2.8.5
Fuel Prices will be affected
Fuel prices are not likely to go up. The Federal Government was initially planning
to remove subsidies on fuel due to the rising prices of crude oil in the international
market, with crude oil prices now at all time low, the government‟s decision to remove
subsidies will not lead to increase of the pump price of fuel immediately.
2.8.6 Go for Shopping Abroad
Americans and Europeans are tightening their belts. Nigerians can now loose
theirs a bit. There are sales and sales galore everywhere as retailers compete to get
goods off their shelves.
2.8.7 Houses Dropped
House prices are dropping like hot potatoes abroad as foreclosure becomes the
order of the day. If you ever want to buy a house in London, or in United State, this may
be your best time. Stocks are also falling. So this perhaps the best time to own a little bit
of the countries dream.
2.9 STEPS TAKEN TO CONTROL THE CRISIS AND IT RESPONSES
Some of the steps taken to far to control global financial crisis include:
1.
Reduction of the MPR from 10.25percent.
2.
Reduction in Cash Reserve Requirement (CRR) from 4.0 percent to 2.0 percent.
3.
Reduction of liquidity ration from 40.0 percent to 30.0 percent.
4.
Directive to banks that they have the option to restructure margin loans up to
2009.
5.
Expanded lending facilities to banks up to 360 days.
33
6.
Introduced expanded discount window facility.
7.
Stopped liquidity mopping-up since September 2008.
Some of the Responses are as follows:
2.9.1
Policy Responses
Economic industry has shown that there seems to be a predictable response when
there is an economic crisis of this magnitude. If the crisis is thought to have arisen from
allowing excessive rule based and non-interventionist posturing, jus as the case with the
current economic meltdown, the response is usually to increase intervention and
discretion. On the other hand, if the crisis arose from excessive government discretion
and intervention, the standard response would be to allow for more rule based and less
government intervention.
Globally, the key strategic response to the current financial crisis among
developed countries of the world is the inject more money into the economy as a bail out
to vital sectors. The leading economies of the World, US, UK, France, Russia, Japan etc,
have all injected billions of dollars into the economy to stimulate demand and stem the
tide of the global recession. At the “G20” World economic summit that held in London in
April 2009, it was agreed that an additional $1.1 trillion should be injected into the global
economy to stimulate it away from recession.
It is sad to note that aside the normal CBN expansionary monetary policy
adjustments there is no coordinated response by the government of Nigeria to reverse the
economic situation of its citizenry. It was such that Oyebode (2009:19) described the
scenario below as follows:
“despite the devastating effects of the global financial crisis on the
Nigerian economy, with crash in the oil market prices, a massive foreign
divestment, the collapse of its stock market resulting in around 65% loss
of value, ballooning lending rates, incredible unemployment rates,
collapse of public infrastructure and production units, ravaging
corruption in practically every sector of the economy, lack of a safety ……
it is unbelievable that our response to the crisis has been largely timid and
unimaginable, if not, infant, a non-response”.
34
Inspite of the seemingly apathetic position of the government of Nigeria in
fashioning a coordinated policy action and response to the global economic meltdown,
we make the following suggestions as a way to mitigate the harsh realities of the crisis.
2.9.2
National Response
Below are our suggestions, on how the nation should respond:

Proper monitoring and surveillance of the Nation‟s financial system: Most
financial crisis stem from poor monitoring and supervision on the part of the
regulators. The CBN and NDIC should dispassionately monitor the economy to
ensure that financial recklessness are detected on time and nipped in the bud
before they escalate into full blown crisis.

Diversification of the Economy: It has become obvious that we cannot continue
with our mono-product economy. In the time of crisis those with diverse sources
of income stand better chances of surviving than those that depend on single
product. Diversification aside from helping us cope with economic stress will
facilitate increase in the national output and employment generation.

Creating enabling environment for doing business: The Federal Government
should embark on massive invest in infrastructural development so as to create
enabling environment for doing business. The excess crude should not be shared
for consumption but for strategic investment to develop the nation‟s
infrastructure. This will increase the chances of FDI and migrant remittances flow
for investment.

Bail-out and support for the capital market: The government should do within its
power to encourage the capital market. If it can financially bail it out fine,
otherwise necessary policy incentive should be used to stimulate active trading at
the Nigerian Stock Exchange (NSE)

Support to SMES AND Massive Industrialization of the Nigerian economy: One
sure way for Nigeria to overcome to challenges of unemployment, under
utilization of domestic resources and industrial capacity and poor domestic output
is for the government to initiate policies to encourage local manufacturers.
Policies like tax incentives, strategic cluster support, entrepreneurship promotion
35
and financial support to SMEs could be used to stimulate private sector investor
and industrialization.
2.9.3
Personal Response
Individuals can equally proactive overcome and mitigate the impact of the global
economic crisis by doing the following;

Prudent use of resources: Individuals and households should find cheaper ways of
making ends meet. This time calls for optimal utilization of resources by
everyone.

Multiple sources of income: One key strategy on how to overcome economic
stress is by having multiple sources of income. The short fall in one source could
be made up by the flow from others.

Savings and Investment Tendencies; One thing that individuals can take out of the
current economic stress is that savings and investment are indispensable to
sustainable economic welfare. Americans ran into this problem because of
excessive consumption orientation.

African social safety net: Africans have rich social tradition of helping one
another in times of stress. This is a major plank for individuals to cope with the
stress.
2.10 SOLUTIONS TO THE IMPACT OF GLOBAL FINANCIAL CRISIS IN
NIGERIA
The solution to the impact of global financial crisis is expressed in the
recommendations of the steering committee set up by president Umaru Musa Yar‟Adua
centres on:
1.
Full deregulation of the downstream sector of the oil industry, the privatization of
our refineries and the removal of fuel subsidies, reforming the Petroleum Products
Pricing and Regulatory Agency (PPPRA)
2.
The adoption of a common year end for commercial banks and the adoption of
International Financial Reporting Standards (IFRS) by all banks in the system;
36
3.
The establishment of an Asset Management Company and the setting up of a
Regulatory Financial Services Committee to monitor and review developments in
the financial system.
These recommendations collectively demonstrate that, in the first place, Nigeria
admits that things are getting out of hand in terms of the impact of the global economic
crisis on Nigeria and that Nigeria must adopt tough policy measures as effective
strategies towards a comprehensive strengthening of the financial service sector. In the
second place, it recommendations demonstrate that the foundation of the economy of
Nigeria is based on the financial and oil sectors.
In effect, with crude oil contributing about 95% of the total foreign exchange
earnings of Nigeria and the banking sector constituting about 65% of the capitalization of
the capital market of the country, the ultimate argument would be that once these two
sectors work properly, every other thing will work alright. Accordingly, it was expected
that if all recommendations are implemented to the letter, they would certainly alter the
face of the entire financial system in the country and thus reposition Nigeria against the
impact of the global economic meltdown.
However, it should be underlined that regulatory bodies, such as, the CBN,
Securities and Exchange Commission (SEC) and Nigerian Insurance Regulatory
Commission need to be strengthened for effective regulatory services. They appear weak
in relation to their responsibilities.
It should be noted that the current effort of the Government at preparing a vision
2020 document is in the right direction. But it should not be seen as an end in itself as it
will be of no use in that context. Rather, it should provide the framework for preparing a
medium term development plan containing programmes and projects geared towards
realizing vision 2020.
37
REFERENCES
Agulanna, E.C. (2009), “Coping with the Global Financial Meltdown,” paper presented
at the Conference of the National Association of Public Pharmacists, held at
Owerri in August.
Anyanwu, A. (2009), “Global Financial Meltdown and Implications for Nigeria,”
Journal of Business and Finance, , 2(1).
CBN-Central Bank of Nigeria (2009a), Economic Report for the First and Second
Quarters of 2009. Abuja.
Eboh, E.C. and Ogbu, O. (2010), The Global Economic Crisis and Nigeria. African
Institute for Applied Economics.
Onodugo, V.A. and Nwoji S. (2009), „Compounding the Dynamics of Business Ethical
Dilemma: The Globalization Equation;” A paper being processed for publication.
Onyukwu, E.O. (2009), “The Nature and Transmission of the Global Financial and
Economic Crisis,” A paper presented at the National Symposium on the Global
Financial Crisis Organized by African Institute for Applied Economics, in Abuja
on June 18.
Oyebode, A. (2009), “A Comparative Analysis of Market Reforms in the Face of the
Current Global Economic Meltdown,” Business Day Thursday, 7th May.
Soludo, C.C. (2008), Financial Globalization and Domestic Monetary Policy: Whiter the
Economics for the 21st Century, 40th Inaugural Lecture of the University of
Nigeria; October 30th.
Stiglitz, J. (2008), “Global Economic Crisis: Made in America”. Spiegel Online
International; II December; viewed Date: 10 June, 2009;
http://www-Spiegal.de/international/business/0,1518,590028.html.
38
CHAPTER THREE
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It
may be understood as a science of studying how research is done. (Osuala, 2005). This
chapter will discuss the following research procedures, area of the study, Sources of Data,
Population and Sample Size Determination, Description of the Research Instrument,
Validity of Research Instrument, Reliability of Research Instrument and Methods of Data
Analysis.
3.8
AREA OF THE STUDY
The study was carried out in the following selected Organizations: Nigeria Stock
Exchange (NSE) Onitsha, Stanbic IBTC Bank Plc Enugu and United Bank of Africa
(UBA) Enugu.
3.9
SOURCES OF DATA
Data for this study were generated from both primary and secondary sources.
3.2.1 Primary Source of Data
Primary data refers to firsthand information obtained from the respondents
through observation, interview and questionnaire. Primary data for the study was
collected through distribution of questionnaire and personal interview.
3.2.2 Secondary Source of Data
Secondary data are facts that the researcher collected from already existing sources. The
secondary source of data were from journals, textbooks, newspapers, magazines and
Internet.
3.10 POPULATION OF THE STUDY
The target population of the study includes senior and junior staff of the three (3)
selected organizations.
39
According to the information received, the populations of the selected
organizations are as follows:
Organisation
Nigeria Stock Exchange (NSE)
Mgt/Senior Staff
210
Junior Staff
400
Total
610
Stanbic IBTC Bank (IBTC)
75
128
203
United Bank for Africa (UBA)
86
301
387
Total Population
371
829
1200
Sample Size Determination
Base on the population of the selected organizations the sample size was
determined at 5% error tolerance and 95% degree of confidence, using Yamane‟s
Formula
n
=
N
1 + ne2
Where;
n
=
Population Size
N
=
Total number of staff
e
=
Error tolerance
(5%)
1
=
The theoretical constant
n
=
?
N
=
1200
e
=
0.05
Thus applying the formula:
n
=
1200
1 + 1200 (0.05)2
n
=
1200
1 + 1200 (0.0025)
1200
3.0025
1200
3.0
n
=
400
40
The Bowley’s Proportional Formula
nh
=
nNh
N
nh
=
Number of units allocated to each firm/staff category
Nh
=
Number of employees in each firm/staff stratum in the population
n
=
Total Sample Size
N
=
The total population size under study for check of accuracy thus:
Where;
n
 nh = n
1
n = 400,
N = 1200,
nh1 = 610,
nh2 = 203,
nh3 = 387
Substituting the various values into the formula:
NSE
nh1
Senior Staff
Junior Staff
=
400 x 610
1200 = 203
400 x 210
1200 = 70
400 x 400
1200 = 133
=
400 x 203
1200 = 68
400 x 75
1200 = 25
400 x 128
1200 = 43
400 x 610
1200 = 129
400 x 210
1200 = 29
400 x 400
1200 = 100
IBTC
nh2
UBA
nh3
Total Sample Size
= 400
= 124
+
n

1
nh1
=
n
Total Sample Size (n) = 203 + 68 + 129
=
400
276
41
Allocation of Sample Size
Organization
Mgt/Senior Staff
Junior Staff
Total
Nigeria Stock Exchange (NSE)
70
133
203
Stanbic IBTC Bank (IBTC)
25
43
68
United Bank for Africa (UBA)
29
100
129
Total Sample Size
124
276
400
3.11
DESCRIPTION OF RESEARCH INSTRUMENTS
The data collection instruments were questionnaire and interview.
Questionnaire
The questionnaire consist of section A and B. Section A contains bio-data from
the respondents while section B contains questions that focus on the objectives of the
study and research hypotheses. The questionnaire has 24 questions.
The instrument was designed in a 5 point Likert Scale of Strongly Agree (SA),
Agree (A), Disagree (D), Strongly Disagree (SD) and Undecided (U).
Interview
The researcher developed an interview guide to collect more information.
3.12
VALIDITY OF THE RESEARCH INSTRUMENT
Validity refers to the degree to which an instrument measured what it is supposed
to measure. (Akuezuilo, 2007). This was achieved by sending the prepared research
instrument to experts for verification in terms of relevance to the subject matter,
coverage of the content areas, appropriateness of language usage and clarity of purpose.
The validity of the instrument was ensured by structuring the questions in such a way
that they focused on the relevant information necessary for the achievement of
objectives of the study.
42
3.13
RELIABILITY OF THE RESEARCH INSTRUMENT
A test-retest was carried out using (15) copies of the questionnaire prepared and
administered to staff (respondents) of the selected organizations. After some days, the
instrument was administered for the second time. Using person product moment
correlation coefficient as the statistical tool, the result gave reliability index of 0.98
indicating a high degree of consistency.
Pearson Product Moment Correlation Coefficient
Organization
First Test
Senior
Junior
Staff
Staff
Aggregate
A.V. Response(X)
A.V. Response(y)
A.V. Response(y)
Aggregate A.V.
Response(y)
XY
X2
Y2
nxy – (x (y)
n(x2 – (x)2) (ny2 – (y)2)
Av
Response (X)
=
Av
Response (X)
r
Second Test
Senior
Junior
Staff
Staff
NSE
IBTC
5
5
4
5
9
10
5
15
5
4
10
9
90
90
81
100
100
81
UBA
Total
5
3
8
27
5
5
10
29
80
260
64
246
100
281
n = 25, X = 27, y = 29, xy = 260
x2 = 246, y2 = 281
r
r
r
=
25 (260) – (27) (29)
25 (246) – (27)2] (25(281) (29)2)
=
6500 - 783
(6150 – 729) (7025 - 841]
=
5717
(5421 – 6184)
43
r
=
5717
5789.9450
r
=
0.98740
r
=
0.98
3.14
METHOD OF DATA ANALYSIS
The data collected were presented in tables.
Chi-square (x2) statistical method was used to test hypotheses one and two, while
Pearson Product Moment Correlation (r) was used employed to test hypotheses three and
four.
Test Statistics Formula for Chi-Square is thus;
(X2) =
( Oi-Ei)2
Ei
Where;
X2
=
Chi-square

=
Summation sign
Oi
=
Observed Frequency
Ei
=
Expected Frequency
Level of significant is 0.05(5%)
Degree of freedom i.e. df = (r-1) (c-1)
Where;
r
=
Number of rows in the contingency table
c
=
Number of column in the contingency table
44
Test Statistics Formula for Correlation analysis is thus;
=
nxy – (x) (y)
[nx2 – (x)2] [ny2 – (y)2]
r
=
Coefficient of correlation
n
=
Number of observation

=
Summation/sum of
X
=
Independent variable
Y
=
Dependent variable
r
Where;
45
REFERENCES
Akuezuilo, N.A. (2007), Research and Statistics in Education and Social Sciences:
Methods and Applications, Awka: Nuel Centre Publishers and Academic Press
Ltd.
Osuala, E.C. (2005), Introduction to Research Methodology, Third Edition, Onitsha:
African First Publishers Limited.
46
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
The chapter focuses on the presentation, analysis and interpretation of the data
collected in the course of the research, using chi-square and the appropriate statistical
tool.
The chi-square (X2) provides a means of comparing a set of observed frequency
with a set of expected frequency, while correlation analysis (r) measures the degree of
association between variables.
Decision Rule
The decision rule of chi-square (X2) test is; if the observed (X2) value is 
expected critical value reject (H0) otherwise do not reject (H0).
The means that if the H0 (Null Hypothesis) is rejected, the Hi (alternative
hypothesis) will be accepted.
The decision rule for correlation analysis (r) test is to reject the H0 (Null
hypothesis) if the coefficient of correlation (r) is < 1, otherwise do not reject H0.
Table 4.1:
Questionnaire Distributed, Returned and Not Returned
Organization
No Distributed
Senior Junior
staff
staff
Nigeria Stock 70
133
No Returned
Senior
Junior
staff
staff
66
129
No Not Returned
Senior Staff Junior
staff
4
4
43
24
39
1
4
100
21
95
8
5
276
111
263
13
13
Exchange
Stanbic IBTC
United
25
Bank 29
of Africa
Total
Grand Total
124
400 (100%)
Source: Field Survey 2011.
374 (93.5%)
26 (6.5%)
47
From table 4.1, the total number of questionnaire distributed were (400, 100%),
the total number of the questionnaire returned were (374, 93.5%) while the total number
of questionnaire not returned were (26, 6.5%)
Table 4.2:
Option
Sex Distribution of the Respondents
Stanbic IBTC
UBA
Male
Nigerian
Stock
Exchange
Senior
Junior
staff
staff
29
50
Total
%
Senior
staff
9
Junior
staff
17
Senior
staff
8
Junior
staff
35
148
40%
Female
37
79
15
22
13
60
226
60%
Total
66
129
24
39
21
95
374
100%
Source: Field Survey 2011.
From table 4.2 above, 148 (40%) of the respondents were male while 226 (60%)
of the respondents were female. This shows that female respondents were greater than
male respondents.
Table 4.3:
Option
Educational Qualification of the Respondents
Nigerian
Stock Stanbic IBTC
Exchange
Senior
Junior Senior Junior
staff
staff
staff
staff
0
45
0
10
UBA
Senior Junior
staff
staff
0
55
110
29
0
75
0
12
0
30
117
31
46
9
18
17
14
10
114
31
MBA/M.Sc/Ph.D 20
0
6
0
7
0
33
9
Total
129
24
39
21
95
374
100%
SSCE
OND/Trade
Certificate
HND/B.Sc
66
Total %
Source: Field Survey 2011.
From table 4.3 above, 110(29%) of the respondents were SSCE holders,
117(31%) were OND/NCE holders, 114(31%) were HND/B.Sc holders while 33(9%)
were MBA/M.Sc/Ph.D holders. This shows that majority of the respondents holds
HND/B.Sc and OND/Trade Certificate.
48
Table 4.4:
Respondent Years of Experience
Option
UBA
0-5years
Nigerian
Stock Stanbic IBTC
Exchange
Senior
Junior Senior Junior
staff
staff
staff
staff
10
49
4
13
Total %
Senior Junior
staff
staff
9
20
105
28%
6-10years
15
56
8
7
6
36
128
34%
11-15years
30
14
10
13
4
24
95
26%
16-20years
611
10
2
6
2
15
46
12%
Total
66
129
24
39
21
95
374
100%
Source: Field Survey 2011.
From table 4.4 above, 105(28%) of the respondents worked for 0-5years,
128(34%) worked for 6-10years, 95(26%) worked for 11-15years while 46(12%) worked
for 16-20years. This show that majority of the respondents has worked for 10years.
Table 4.5:
Category of the Respondents
Option
Senior staff
Nigerian
Exchange
66
Stock Stanbic IBTC
UBA
Total %
24
21
111
30%
Junior staff
129
39
95
263
70%
Total
195
63
116
374
100%
Source: Field Survey 2011.
From table 4.5 above, 111(30%) of the respondents are senior staff while
263 (70%) of the respondents are junior staff. This shows that majority of the respondents
were junior staff.
49
Table 4.6:
The Challenges of the Global Financial Crisis in Nigeria
Responses to ascertain the challenges of the global financial crisis in Nigeria
Strongly
Disagree
Undecided
Row Total
Global financial crisis results to 90
Disagree
6
Disagree
Strongly
Agree
Agree
Agree
200
50
34
-
374
175
55
44
-
374
200
49
45
-
374
210
44
30
-
374
185
39
30
-
374
-
1870
decline in the price of oil
7
Global financial crisis
results to 100
decline in revenue and increases
expenditure
8
Global financial crisis lead to an 80
increase in national debt and macro
instability
9
Decline in market indices is an 90
outstanding challenges for the global
financial crisis
10
Global financial crisis decreases the 120
gross domestic product
Total
1450 (88%)
420 (22%)
Source: Field Survey
From table 4.6, 1450 (78%) of the respondents answered in “Agreement”
category while 420 (22%) answered within the category of “Disagreement”
50
Table 4.7: Causes of Global Financial Crisis in Nigeria
Responses to determine the causes of global financial crisis
Strongly
Disagree
undecided
Total
Consumption-based economies could 90
Disagree
11
Disagree
Strongly
Agree
Agree
Agree
214
40
30
-
374
200
50
40
-
374
174
60
40
-
374
192
50
32
-
374
180
50
50
-
374
-
1870
result to global financial crisis
12
Poor savings and high credit culture of 84
nations could bring about global
financial crisis
13
Huge financial outflow spent in 100
prosecuting war against terrorism
could bring global financial crisis
14
Inadequate regulating framework for 100
financial institutions could result to
global financial crisis
15
High
incidence
consumption
can
of
fraud
cause
and 94
global
financial crisis
Total
1428 (76%)
442(24%)
Source: Field Survey
From table 4.7, 1428(76%) of the respondents answered in “Agreement” category
while 442 (24%) answered within the category of “Disagreement”
51
Table 4.8: The effect of global financial crisis to Nigeria
Responses to ascertain the effect of global financial crisis to Nigeria
Agree
Disagree
Strongly
Disagree
Undecided
Total
Oil price glut and decline GDP are 100
Disagree
16
Strongly
Agree
Agree
Description
210
40
24
-
374
199
57
30
-
374
185
60
36
-
374
178
70
25
-
374
-
1496
effects of global financial crisis in
Nigeria
17
Collapse of the capital market is an 88
effect from global financial crisis in
Nigeria
18
Reduction in direct foreign investment 93
and oversea development assistance
are effect from global financial crisis
in Nigeria
19
Inflation is an aftermath of global 101
financial crisis in Nigeria
Total
1154 (77%)
342 (23%)
Source: Field Survey
From table 4.8, 1154(77%) of the respondents answered in the “Agreement”
category while 342 (23%) answered within category of “Disagreement”.
52
Table 4.9:
Measures to be taken to manage the impact of global financial crisis in
Nigeria
Responses to suggest some measures that would be taken to manage the impact of global
financial crisis in Nigeria
Undecided
Total
Proper monitoring and surveillance of 100
Strongly
Disagree
20
Disagree
Agree
Description
Disagree
Strongly Agree
Agree
197
40
37
-
374
188
60
40
-
374
187
70
45
-
374
180
65
30
-
374
180
50
46
-
374
the Nigerian financial system can be
employed to manage the impact of
global financial crisis
21
Diversification of the economy can be 86
used to manage the impact of global
financial crisis
22
Given support to SMEs for massive 72
industrialization could help to manage
the impact of global financial crisis
23
Full deregulation of the downstream 99
sector of the oil industry could help to
manage the impact of global financial
crisis
24
Creating enabling environment for 98
local and foreign investment can be
employed to manage the impact of
global financial crisis
Total
Source: Field Survey
1387(74%)
483(23%)
1870
53
From table 4.9, 1387 (74%) of the respondents answered in “Agreement”
category while 483 (26%) answered within the category of “Disagreement”.
4.2:
TESTING OF HYPOTHESES
Hypothesis 1
HO:
Decline in oil prices and in revenue, increase government expenditure and decline
in market indices are not challenges posed by financial crisis in Nigeria.
HI:
Decline in oil prices and in revenue, increase government expenditure and decline
in market indices are challenges posed by financial crisis in Nigeria.
To test the hypothesis, questions 6, 7, 8, 9 and 10 in the Questionnaire were used.
Table 4.10: A Contingency Table (reproduced table 4.6) for Hypothesis Testing
Description
Agreement
Category
Disagreement
Category
Row Total
Global financial crisis results to decline
in the price of oil
290 (290)
84 (84)
374
275 (290)
99 (84)
374
280 (290)
94 (84)
374
300 (290)
74 (84)
374
305 (290)
69 (84)
374
1450
420
1870
Global financial crisis declines revenue
and increased expenditure
Global
financial
increased,
crisis
national
debt
lead
and
to
an
micro
instability
Decline
in
market
indices
is
an
outstanding challenges for the global
financial crisis
Global financial crisis decreases the
Gross Domestic Product
Column Total
54
Chi-Square (X2) Table
Cell
O1
E1
O1-E1
1
290
290
0
(O1-E1)2
E1
0
2
84
84
0
0
3
275
290
-15
0.775
4
99
84
15
2.678
5
280
290
-10
0.344
6
94
84
10
1.190
7
300
290
10
0.344
8
74
84
-10
1.190
9
305
290
15
0.775
10
69
84
-15
2.678
Total
1870
1870
0
9.974
d.f
=
(r – 1) (c – 1)
=
(5 – 1) (2 – 1)
=
(4) (1)
=
4
Level of significance 0.05
X20 4 under 0.05 = 9.49 (critical chi- square value) calculated chi-square (X21) = 9.974.
Decision
Since the calculated value is greater than the tabulated value: 9.974 > 9.49. Thus
we reject the null hypothesis and accept the alternative hypothesis which states that
decline in oil prices and in revenue, increase government expenditure and decline in
market indices are challenges posed by financial crisis in Nigeria.
55
Test of Hypothesis II
HO:
Consumption-based economy, poor savings, high credit culture and huge financial
outflow are not causes of the global financial crisis.
HO:
Consumption-based economy, poor savings, high credit culture and huge financial
outflow are causes of the global financial crisis.
Table 4.11: A Contingency Table (reproduced table 4.7) for Hypothesis Testing
Agreement
Category
Consumption-based economies could result to 304 (286)
Disagreement
Category
70 (88)
Row
Total
374
90 (88)
374
100 (88)
374
82 (88)
374
100 (88)
374
442
1870
global financial crisis
Poor savings and high credit culture of nations 284 (286)
could bring about global financial crisis
Huge financial outflow spent in prosecuting 274 (286 )
war against terrorism could bring global
financial crisis
Inadequate regulating framework for financial 292 (286)
institutions could result to global financial
crisis
High incidence of fraud and consumption can 274 (286)
cause global financial crisis
Column Total
1428
56
Chi-square (X2) Table
Cell
O1
E1
O1 – E1
1
304
286
18
(O1 – E1)2
E1
1.132
2
70
88
-18
3.681
3
284
286
-2
0.013
4
90
88
2
0.045
5
274
286
-12
0.503
6
100
88
12
1.636
7
292
286
6
0.125
8
82
88
-6
0.409
9
274
286
-12
0.503
10
100
88
12
1.636
Total
1870
1870
0
9.683
d.f
=
(r – 1) (c – 1)
=
(5 – 1) (2 – 1)
=
(4) (1)
=
4
Level of significance 0.05
X20 4 under 0.05 = 9.49 (critical chi- square value) calculated chi-square (X21) = 9.683.
Decision
Since the calculated value is greater than the tabulated value: 9.683 > 9.49. Thus
we reject the null hypothesis and accept the alternative hypothesis which states that
consumption – based economy, poor savings, high credit culture and huge financial
outflow are the causes of the global financial crisis.
57
Test of Hypothesis III
HO:
Reduction in direct foreign investment and oversea development assistance are
not effects of global financial crisis to Nigeria.
HI:
Reduction in direct foreign investment and oversea development assistance are
effects of global financial crisis to Nigeria.
Table 4.12: A Contingency Table (reproduced table 4.8) for Hypothesis Testing
X
Y
XY
X2
Y2
1
1154
1154
1
1331716
2
342
684
4
116964
X = 3
Y = 1496
XY = 1838
X2 = 5
Y2 = 1,448,680
From the above table, the independent variable (X) were derived using the 5 point
likert scale while the dependent variable (Y) were derived using the total sum under
agreement category and disagreement category.
Applying the correlation analysis formula:
=
nxy – (x (y)
[nx2 – (x)2] [ny2 – (y)2]
=
4(1838) –(3) (1496)
[4(5-(3)2] [4 (1, 448680) – (1496)2]
r
=
7352 – 4488
(20 - 9) (5,794,720 – 2238016)
r
=
2864
(11) (3556704)
r
r
r
=
2864
6254.897601
r
=
0.45788
r
=
0.45
58
Decision
Reject the null hypothesis (H0) if the coefficient of the correlation (r) is < 1;
otherwise do not reject H0 since the coefficient of correlation (r) is less than one i.e.
(0.45 < 1) we reject the null hypothesis and accept the alternative hypothesis which states
that reduction in direct foreign investment and oversea development assistance are the
effects of global financial crisis to Nigeria.
Test of Hypothesis IV
HO:
Diversification of the economy, robust regulatory policies and professional
supervision of financial institutions are not measures to be taken to manage the
impact of financial crisis.
HO:
Diversification of the economy, robust regulatory policies and professional
supervision of financial institutions are measures to be taken to manage the
impact of financial crisis.
Table 4.13: A Contingency Table (reproduced table 4.9) for Hypothesis Testing
X
1
Y
1387
XY
1387
X2
1
Y2
1923769
2
483
966
4
233289
X = 3
Y = 1870
XY = 2353
X2 = 5
Y2 = 2157058
From the table, the independent variable (x) were derived using the 5 point likert
scale while dependent variable (y) were derived using the total sum under “Agreement
category” and disagreement category.
Applying the correlation analysis formula
=
nxy – (x (y)
[nx2 – (x)2) (ny2 – (y)2]
r
=
5(2353) –(3) (1870)
[5(5)-(3)2 (5 (2157058) – (1870)2]
r
=
11765 – 5610
(25 - 9) (10785290 – 3496900)
r
59
r
=
6155
(16) (7288390)
r
=
6155
10798.80734
r
=
0.569970
r
=
0.56
Decision
Reject the null hypothesis (H0) if the coefficient of the correlation (r) is < 1,
otherwise do not reject H0 since the coefficient of correlation (r) is less than one i.e. (0.56
< 1) we reject the null hypothesis and accept the alternative hypothesis which states that
diversification of economy, robust regulatory policies and professional supervision of
financial institutions are measures to be taken to manage the impact of global financial
crisis to Nigeria.
60
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.4
MAJOR FINDINGS
The major findings at the end of this research investigation include the following;
1)
Decline in oil prices and in revenue, increase in government expenditure and
decline in market indices are the challenges posed by financial crisis in Nigeria.
Test of hypothesis (i) proved this; 9.974 > 9.49
2)
Consumption-based economy, poor savings, high credit culture and huge financial
outflow are the causes of the global financial crisis.
Test of hypothesis (ii) proved this; 9.683 > 9.49
3)
Reduction in direct foreign investment and oversea development assistance are
the effects of global financial crisis to Nigeria.
Test of hypothesis (iii) proved this; 0.45 < 1
4)
Diversification of the economy, robust regulatory policies and professional
supervision of financial institutions are measures to be taken to manage the
impact of global financial crisis in Nigeria
Test of hypothesis (iv) proved this; 0.56 < 1
5.5
CONCLUSIONS
The conclusion drawn on this study is that global financial crisis has had far
reaching impact on both developed and developing economies. In dealing with the crisis,
the Central Bank tried to maintain macroeconomic stability of the economy and ensure
the proper functioning of the monetary economy (payments and settlement systems).
Nigeria is presently using fiscal policies to ease the pressure of the financial crunch. The
CBN has also put in place several measures to enable the country cope. The Nigerians
government has made a reasonable effort using differing strategies of which include the
draw down of reserves to finance sudden shortfalls in capital inflows and interest cuts.
With depleted or no reserve, financial crisis will continue to deepen. Nigerians may
therefore have their budgets strained in the near future, register unprecedented rise in the
61
rates of their inflation, contend with high cost of living and experience severe balance of
payment problems.
5.6
RECOMMENDATIONS
Based on the findings of the study, the researcher made the following
recommendations:
1)
Nigeria should adopt tough policy measures as effective strategies towards a
comprehensive strengthening of the financial service sector.
2)
3)
4)
Government should ensure that policy recommendations are implemented in order
to reposition the Nigerian economy against the impact of global financial crisis.
Government should create enabling environment, to attract foreign investors in
order to boost economic activities in the country.
Government needs to sincerely focus on developing/strengthening agriculture,
manufacturing and other sectors that can drive the economy and provide
alternative sources of revenue on a sustained basis.
62
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Current Global Economic Meltdown,” Business Day Thursday, 7th May.
Soludo, C.C. (2008), Financial Globalization and Domestic Monetary Policy: Whiter the
Economics for the 21st Century, 40th Inaugural Lecture of the University of
Nigeria; October 30th.
Stiglitz, J. (2008), “Global Economic Crisis: Made in America”. Spiegel Online
International; II December; viewed Date: 10 June, 2009;
63
APPENDIX I
Department of Management
Faculty of Business Administration
University of Nigeria
Enugu Campus.
September, 2011.
Dear Respondent,
I am a Post Graduate Student of the Faculty of Business Administration, in the
Department of Management, University of Nigeria, Enugu Campus.
I am undertaking a research on The Effect of Global Financial Crisis in Nigerian
Economy.
Kindly study the attached questionnaire and supply the required information by
indicating the option(s) which best answer(s) the questions.
All information provided will be treated as strictly confidential.
Thanks for your corporation.
Yours sincerely,
Nwogwugwu Uloma O.
64
QUESTIONNAIRE
SECTION A
Instruction: Please tick {} or fill in the boxes provided.
1.
Name of your Organization
………………………………………………………………………………………
2.
3.
4.
5.
Sex
a)
Male {
}
b)
Female {
}
Educational Qualification
a)
SSCE or Equivalent {
}
b)
OND/Trade Certificate
{
}
c)
HND/B.Sc or Equivalent
{
}
d)
MBA/M.Sc/Ph.D
{
}
Number of years worked in the Organization
a)
0-5years
{
}
b)
6-15years
{
}
c)
16-25years
d)
26years and above
{
}
{
}
Category of Staff
a)
Junior staff
{
}
b)
Senior staff
{
}
65
SECTION B
Instruction:
6
Please indicate your views about the statements by ticking the option
which most closely matches your opinion. Use the responses of
Agree (A), Strongly Agree (A), Disagree (D), Strongly Disagree
(SD), Undecided (U
A
SA
D
SD
U
To ascertain the challenges of the global
financial crisis in Nigeria
Global financial crisis results to decline in
the price of oil
7
Global financial crisis results to decline in
revenue and increases expenditure
8
Global financial crisis lead to an increase in
national
debt
and
macro
economic
instability
9
Decline in market indices is an outstanding
challenge from global financial crisis
10
Global financial crisis decreases the gross
domestic product.
11
To determine the causes of the global
financial crisis
Consumption-based economies could result
to global financial crisis
12
Poor savings and high credit culture of
nations could bring about global financial
crisis
13
Huge financial outflow spent in prosecuting
war against terrorism could bring global
financial crisis
14
15
Inadequate regulatory framework for
financial institutions could result to Global
financial crisis
High incidence of fraud and corruption can
cause global financial crisis
66
To ascertain the effect of global financial
crisis to Nigeria
16
Oil price glut and decline GDP are effects
of global financial crisis
17
Collapse of the capital market is an effect of
global financial crisis
18
Reduction in direct foreign investment and
oversea development assistance are effects
of global financial crisis
19
Inflation is an aftermath of global financial
crisis.
To suggest some measures that would be
taken to manage the impact of global
financial crisis in Nigeria
20
Proper monitoring and surveillance of the
Nigerian financial system can be employed
to manage the impact of global financial
crisis
21
Diversification of the economy can be used
to manage the impact of global financial
crisis.
22
Given support to SME‟s for massive
industrialization could help to manage the
impact of global financial crisis
23
Full deregulation of the downstream sector
of the oil industry could help to manage the
impact of global financial crisis
24
Creating enabling environment for local and
foreign investment can be employed to
manage the impact of global financial crisis.
67
APPENDIX II
INTERVIEW GUIDE
1)
What contributed to global financial crisis in Nigeria?
2)
What are the implications of global financial crisis?
3)
What is the extent of global financial crisis in Nigeria?
4)
What are the problems Nigerians faced during the period of global financial
crisis?
5)
What do you think will help to solve the problem posed by global financial crisis?